Boston, MA -- (SBWIRE) -- 04/10/2014 -- Israel's pharmaceutical industry is well developed and export-driven. It is also a very attractive prospect for multinationals looking to launch innovative medicines due to a greater need for specialty treatments, thereby capitalising on the country's strong academic research infrastructure. Favourable factors include high per capita spending on medicines, a market size approaching US$2bn, a high proportion of pensioners and a largely urbanised population. However, we caution that poor patent respect and a lack of business transparency remain key threats to company revenues. Additionally, we hold a relatively less optimistic outlook for growth in the market, based on weaker private consumption over the medium term.
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Headline Expenditure Projections
- Pharmaceuticals: ILS7.31bn (US$2.02bn) in 2013 to ILS7.48bn (US$2.11bn) in 2014; +2.4% in local currency terms and 4.4% in US dollar terms. Forecast remains broadly in line with Q114.
- Healthcare: ILS73.59bn (US$20.39bn) in 2013 to ILS78.32bn (US$22.12bn) in 2014; +6.4% in local currency terms and 8.5% in US dollar terms. Forecast lower than in Q114 due to impact of austerity measures.
The Israeli pharmaceutical sector boasts a number of key qualities. These include a largely urbanised population and a significant pensioner proportion. However, we highlight weak intellectual property (IP) laws and long drug approval times as severe hindrances to multinational drugmakers maximising their returns in the market. In BMI's Pharmaceutical Risk/Reward Ratings (RRRs) matrix, the country scores 55.8 out of 100 in Q214, making it the fifth most attractive market for pharmaceutical investment in the Middle East and Africa (MEA). Israel dropped one spot in our rankings, with its overall score falling from 57 out of 100 in Q114.
Key Trends And Developments
In February 2014, Israeli drugmaker Teva Pharmaceutical Industries concluded its tender offer for all outstanding shares in US-based speciality pharmaceutical company NuPathe on February 21. In January 2014, Teva Pharmaceutical Industries named turnaround specialist Erez Vigodman as its CEO and agreed to buy NuPathe to expand its portfolio of medicines to treat conditions affecting the central nervous system. Vigodman is expected to initiate cost cuts and then move to reduce Teva's reliance on copycat medicines, whose profits are waning as competition grows and business opportunities dwindle.
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