Medicine prices fell by 0.3 per cent last month from June, according to the UAE Government's consumer price index, while companies are reporting strong sales and looking to expand.
Ras Al Khaimah-based Julphar will build two new manufacturing plants as pharmaceutical companies in the UAE benefit from the increased sales.
Julphar, also known as Gulf Pharmaceutical Industries, will open a factory in Jebel Ali by the end of this year and another in Abu Dhabi by the first half of next year.
The plants will concentrate on products related to chronic diseases, said Basel Abou Jalala, the company's director for the Arabian Gulf.
"We are trying to relook at the portfolio and revitalise the organisation when it comes sales and marketing operations as well as manufacturing facilities," Mr Abou Jalala said. The company has 11 plants in RAK and one in Ethiopia.
"The UAE market has great potential and due to the prevalence of lifestyle diseases such as cardiovascular diseases and diabetes, and there is a place for lots of companies [to do business]," said Karim El Alaoui, the managing director at Boehringer.
Overseas firms are also benefiting. Germany'sBoehringer Ingelheimsaid UAE sales jumped 23.6 per cent in the first half of the year, after rising 15.4 per cent last year over 2011.
Hikma, the Jordanian drugmaker, said its global revenues rose 20 per cent in the first half.
"We do see price erosion in the region, however, this won't materially impact our business as we strategically introduce higher value products and focus on marketing capabilities which drive good growth," a Hikma spokesman said.
The Ministry of Health introduced price caps this year and in previous years to try to rein in healthcare costs. In 2011, the ministry reported that prices for 565 drugs fell by between 5 and 60 per cent after negotiations with foreign drug makers.
The ministry in June slashed prices of 6,632 medicines, 94 per cent of all products available in the market, in June.
Hikmasaid it was not concerned about the price cap, while NMC group, which operates hospitals and distributes medicines, also foresees no ill effects.
"We expect any negative impact to our distribution business to be offset by a positive impact to our retail pharmacy business and therefore we expect the overall impact to be negligible," said Binay Shetty, NMC's chief operating officer.