Lebanon's pharmaceutical market benefits from high drug prices where branded generic drugs account for a large portion of the market. The country's high per capita spending on pharmaceuticals, along with increased efforts in providing investment incentives are key factors in driving market growth. However, the ongoing civil war in Syria shows no signs of abating and is continuing to cause both political and economic strain within Lebanon, negatively impacting our projections in Q214
Headline Expenditure Projections
- Pharmaceuticals: LBP2,057bn (US$1.36bn) in 2013 to LBP2,180bn (US$1.46bn) in 2014; +6.0% in local currency and +6.8.% in US dollar terms. Forecast broadly in line with Q1 2014.
- Healthcare: LBP4,626bn (US$3.07bn) in 2013 to LBP5,003bn (US$3.34bn) in 2014; +8.1% in local currency and +9.0% US dollar terms. Forecast broadly in line with Q1 2014.
For Q2 2014, Lebanon's Pharmaceutical Risk/Reward Rating (RRR) score is calculated at 52.7 out of 100, placing the country in eighth position in the Middle East and Africa region. This score is lower than its Q1 2014 score of 54 and previous ranking of sixth. The negative movement is associated to a lower Industry Rewards score.
Key Trends & Developments
The price of a vital cancer drug in Lebanon, Nexavar, has been found to be approximately twice that of what it is abroad according to a source close to the Health Ministry. The drug is used in the treatment of thyroid and other cancers and is produce in Germany by Bayer. The local price per pack of 60 tablets was confirmed to be US$3,735 in contrast to US$1,860 in the United States. The Health Ministry defended the mark up on economic grounds.
In December 2013, a new pharmaceutical plant, Arwan opened in the Chouf town of Jadra, some 20 kilometres south of Beirut. The 17,000 square metre building is the latest of several developments seen in Lebanon from drug manufacturers over the years and was supported by the Investment Development Authority of Lebanon (IDAL), which provides incentives including exemption from corporate income taxes. The investment was estimated at US$17mn and is expected to create more than 83 new jobs.
A critical shortage of medication for the treatment of epilepsy is affecting doctors and patients in Lebanon. Drugs are being withdrawn from the market with no certainty of when new supplies will arrive. The shortage follows a scarcity of the active pharmaceutical ingredient phenytoin throughout 2013. However, the constraints are expected to be resolved in the first half of 2014.
BMI Economic View: Lebanon's energy ministry postponed the deadline of a licensing auction for gas exploration offshore the country from January 10 to April 10 2014, it was announced at the beginning of January. The decision comes after the caretaker cabinet refused to convene to pass two decrees linked to the number of blocks to be auctioned and to revenue sharing. Lebanon has reserves of around 850mn barrels of oil equivalent (boe) and 2.71tcm of gas, according to estimates from the Energy Ministry. However, political wrangling is impeding the country's economy to benefit from its hydrocarbon wealth.
BMI Political View: An attack by a suspected suicide car bomber killed at least four people in a Hizbullah stronghold in a Shia-dominated suburb of Beirut on January 21. Earlier, a car bomb exploded near a Hizbullah base in eastern Lebanon on December 17 2013, killing at least two people. The ongoing civil war in neighbouring Syria has aggravated sectarian violence in Lebanon, with risks to political stability having increased significantly over the past few months. We expect violence to remain elevated in Lebanon in 2014.