GCC pharmaceutical market to double by 2028, Fitch Solutions says
Urbanisation, ageing demographics and rise in chronic lifestyle-related diseases are boosting demand for pharmaceutical products
The pharmaceutical sector in the Arabian Gulf continues to expand at a rapid pace and is expected to almost double from $13.9 billion (Dh51bn) in 2018 to $25.7bn in the next decade as urbanisation, an ageing population and chronic lifestyle-related diseases boost demand for pharmaceutical products, according to a new report.
"The pharmaceutical markets in the GCC are well developed and have relatively high per capita spending when compared to the rest of the Middle East and North Africa, and consequently they are some of the most attractive to drug makers,” Fitch Solutions, a unit of Fitch Ratings said in a report released on Monday.
“The establishment of the GGC Common Market in 2008 [also] increased intra-GCC trade, further boosting pharmaceutical market growth for some of the more developed markets in the region, such as the UAE and Saudi Arabia.”
Economic growth in the GGC, which is home to about a third of the world’s proven oil reserves, over recent years has led to an increase in urbanisation and infrastructure development across the region. The crude price volatility in the past few years has pushed the sovereigns in the region to begin pursuing economic diversification initiatives, such as Saudi Arabia’s Vision 2030 and the Dubai Industrial Strategy 2030. The focal point of most of the diversification strategies in the region is developing local manufacturing capacity, and the pharmaceutical industry is well-positioned to benefit from these plans, Fitch Solutions noted.
Countries such as the UAE are taking active measures for the development of the sector with initiatives such as the UAE Ministry of Health and Prevention’s agreements with Logistics District at the Dubai South freezone and Jebel Ali free zone, aimed at lowering restrictions and attracting more pharmaceutical manufacturers to the freezones.
GCC governments are committed to investing in and developing their pharmaceutical industries, according to the report, especially local pharmaceutical production to meet the increasing demand for products and decrease import reliance. In 2018, imports made up 95.6 per cent of Dubai's pharmaceutical market.
Bahrain began construction of its $1bn King Abdullah Medical City in June 2017, which is scheduled to open in 2021. Felix Pharmaceutical Industries is also constructing a pharmaceutical plant and logistics centre at the Salalah Free Zone in Oman.
Regional governments, the report said, will also use various incentives, such as reduced taxes and import tariffs to attract investment from multinational drug makers. Opportunities will exist for both generic and innovative manufacturers.
The Gulf states, however, will not only have to develop their infrastructure, but they also need to improve their regulatory transparency and harmonisation across the region to convince major drug manufacturers to establish bases in the local markets, it said.
Updated: January 14, 2019 04:53 PM