Boston, MA -- (SBWIRE) -- 12/05/2012 -- BMI View: The increase in private healthcare fees will be welcomed by Lebanon's private providers, but not so by the general private sector, given the significant increase in the 2% contribution made by employees earning over LBP16.7mn (US$11,082) per annum. The heavily-indebted National Social Security Fund (NSSF) remains woefully inefficient and the private sector will continue to feel aggrieved about an increase in contributions to such a wasteful organisation. We also believe this sentiment could encourage high earners to leave the NSSF programme and take out insurance with a purely private insurance organisation, which would clearly have a negative impact on NSSF income.

Headline Expenditure Projections

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- Pharmaceuticals: LBP1,807bn (US$1.20bn) in 2011 to LBP1,925bn (US$1.28bn) in 2012; +6.5% in local currency terms and +6.4% in US dollar terms. Forecast broadly unchanged from Q312.
- Healthcare: LBP4,426bn (US$2.94bn) in 2011 to LBP4,741bn (US$3.15bn) in 2012; +7.1% in local currency terms and +7.0% in US dollar terms. Forecast broadly unchanged from Q312.
- Medical Devices: LBP408.07bn (US$271mn) in 2011 to LBP451.23bn (US$299mn) in 2012; +10.6% in local currency terms and +10.4% in US dollar terms. Forecast broadly unchanged from Q312.

Risk/Reward Rating: Lebanon once again remains ranked eighth out of the 30 markets surveyed in the Middle East and Africa (MEA) region's Q412 Risk Reward Rating (RRRs) matrix. However, its composite score is some 4.0% lower since Q312, on account of the perception that its industry rewards - as well as its industry risks - component has worsened slightly. Generally speaking, Lebanon's rewards and risks profiles are illustrative of the emerging nature of the country's pharmaceutical market, even though both scores are superior to the regional averages.

Key Trends & Developments

- Workers at private hospitals in Lebanon began a strike in April 2012, turning away all nonemergency patients insured by the NSSF in protest against the fact that the fees payable for treatments have not risen in 15 years, despite the increasing cost of providing care. This does not sound plausible, so BMI takes this to mean that fees have not risen above the rate of inflation for 15 years.
- In May 2012, the private sector reopened its doors after the NSSF agreed to triple the fee for overnight stays in hospital to LBP90,000 (US$60). The NSSF had been stalling on making this increase as it is already heavily in debt. In order to afford an increase in payments to hospitals it has received approval from the government to increase the cap on maximum contributions to the sickness and maternity scheme by 66%, from LBP1.5mn (US$997) to LBP2.5mn (US$1,662). This will mean higher earners and the companies that employ them will need to make significantly greater contributions to the NSSF.

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