The German pharmaceutical company Merck Serono has entered into an agreement with the UAE's Neopharma to produce Merck-branded drugs here. Neopharma will initially make two Merck drugs: Euthyrox, a hormone therapy, and Glucophage, an oral treatment for people with type 2 diabetes that helps to control blood-sugar levels.
This is the first time a multinational company has forged ties with an Emirati company to make pharmaceuticals. Production will start at the manufacturing plant in Abu Dhabi next year, and the drugs will be distributed across the entire Middle East. The two firms aim to meet total regional demand for such drugs. "After careful consideration of the production capabilities of various companies across the Middle East, we identified Neopharma as having the most advanced, European-standard manufacturing facilities capable of producing significant quantities of both hormone and regular pharmaceutical drug products," said Merck's chief executive Stefan Oschmann.
Of the world's 10 countries with the highest prevalence of diabetes, six of them are in the Middle East: Kuwait, Lebanon, Qatar, Saudi Arabia, Bahrain and the United Arab Emirates. The UAE has the highest prevalence rate in the Arabian Gulf region, currently estimated at 18.7 per cent of the adult population by the International Diabetes Federation. If current trends continue, 32 per cent of the adult population will have the disease by 2020.
Direct treatment of diabetes accounts for about 40 per cent of the nation's healthcare expenditure.
To date, domestic drugs manufacturing has been relatively small and clinicians have had to rely on imports when prescribing drugs. In 2010, about 64 per cent of those imports were from Europe, 8 per cent from North America and a further 8 per cent from elsewhere in the Middle East and North Africa region.
Merck, for its part, is coming under "tremendous price pressure" in Europe as a result of austerity measures, and it makes sense for the company to look for new markets in the Middle East, said Martin Voegtli, an analyst at Kepler Capital Markets in Zurich.
He added that Merck already had "decent exposure to emerging markets - primarily Asian markets".
Sales from emerging markets account for a third of Merck's total revenue, Reuters cited Mr Oschmann as saying.