Cost-containment and imports will restrain Israel Pharma market growth

The Israeli pharmaceutical market, worth some 6.15 billion Israeli shekels ($1.59 billion) in 2009, is forecast to grow marginally in the medium term, according to Business Monitor International's Israel Pharmaceutical and Healthcare Report Q2 2010.

By 2014, its value is expected to reach 6.52 billion shekels at retail prices, indicating a compound annual growth rate (CAGR) of just 1.89% in local currency terms and 1.56% in US dollars. Key factors shaping this forecast are cost-containment measures that will negate volume increases through pressure on prices. An increasing reliance on imports of non-patented medicines will also subdue growth as the government seeks to cut health care costs.

Therefore, in BMI's updated Business Environment Ratings for the second quarter of 2010, Israel remains ranked 12th of the 17 Middle East and African (MEA) markets surveyed, down from sixth in the same quarter of the previous year. While the country scores strongly across the country structure and the country risk categories due to its urbanized nature and developed economy, a risky regulatory environment, strong cost-containment pressures, strict reimbursement practices and the unstable political situation serve to limit Israel's overall potential. Globally, therefore, Israel is found in the bottom third of the 71 markets surveyed by BMI for their pharmaceutical attractiveness.