We expect total drug spending in Lebanon to increase from under US$500mn in 2008 to US$605mn in 2013, a compound annual growth rate (CAGR) of 3.9% in US dollar terms, with 1.75% of GDP dedicated to pharmaceutical expenditure by 2013.

The Minister of Health, Mohammad Jawad Khalifeh, has held the position since 2005 and has dramatically reformed drug pricing in the country, highlighting the fact that other countries in the region with similar economies were paying significantly less for medicines than Lebanon. Following a lengthy period of pressure, the government finally reduced average pharmaceutical prices by 5%, with the momentum and support gained in the process providing the impetus for other regulatory changes, including the introduction of transparency guidelines.

Public sector health provisions have been scrutinised and challenged by Khalifeh in light of high unmet demand for subsidised services. He said the budget for the Ministry of Public Health in 2005 was only 3.5% of GDP and subsequently the department ran into deficit every year. While a small population will restrict growth, we believe government subsidisation will do much to boost the drug market. More affordable prices and access to hospitals will allow people to spend more on medicines instead of forgoing treatment altogether.

Despite the price differences, there is little perceivable demand for off-patent drugs outside of the public healthcare sector. However, the prescribing habits of doctors are a major factor in determining demand.

The lack of transparency and registration notification to physicians for new generic drugs exacerbates this problem. While government websites aim to clarify which patented medicines have a generic equivalent in the country, the low exposure of off-patent medicines to the patient is the reason the CAGR for this sector is only 3.85% between 2008 and 2013.

The generic drug sector in Lebanon will experience slow growth over the next five years, largely due to established partnerships between the private sector and the government in determining procurement policies. Critics of the Ministry of Public Health have said that importers and wholesalers in the country cannot profit as much from selling generic medicines as patented – an obvious incentive against ordering cheaper drugs. In this sense, the pharmaceutical industry in Lebanon is not being regulated in favour of the patient.

Another key issue is that the country lacks an internationally accredited drug testing and analysis laboratory, and therefore relies on patented medicines as these are already approved by the US Food and Drug Administration (FDA) or the European Medicines Agency (EMEA). Relying on international regulatory standards is a means of assuring quality if the country does not have the means to do so itself.

The expense of reopening a laboratory that closed in 2007 remains off-putting and continues to inhibit progress. However, Lebanon’s pharmaceutical sector cannot progress without a centralised drug testing laboratory and as a result is set to remain restricted in terms of drug choice and market growth.