Israeli Drug Manufacturing Continues to Target Exports

Israel's drug manufacturing sector continues to target export markets in view of the relatively small and volatile local sector, where sales are becoming increasingly dominated by imports. Official statistics indicate that monthly exports totalled US$123mn in January 2005, compared to US$117mn in January 2004. In the month, drug imports totalled US$70mn, against at total of US$55mn in January last year.

The market share of imports in Israel was estimated at around 72% in 2002, compared to around 50% in 1996, and exports account for more than half of the country's entire annual pharmaceuticals production. This trend is perhaps unsurprising given Israel's open import policy and the strong performance of leading locally based firms such as Teva, Agis Industries, Koffolk, Trima and Unipharm, which overwhelmingly produce generic drugs.

Meanwhile, unless Israeli and US negotiators can reach agreement on ambiguities in local patent law, multinational manufacturing presence is likely to remain limited in the medium term, with most companies restricting themselves local distribution alliances.