Regulatory hurdles are stopping international life sciences companies from setting up manufacturing and research facilities in the Mena region, according to a new report.
Mena barriers holding back the drug makers
Price controls and difficulties in registering new drugs are among the barriers holding back international drug makers from setting up in the Middle East and North Africa, a new report states.
“When combined with the region’s instability, these issues are expected to curb significantly the appetite of international drug companies to manufacture and/or do research in the Middle East/North Africa [Mena],” the report from the professional services company Deloitte said.
The UAE, Saudi Arabia, Egypt, Jordan and Syria were the key life sciences markets in the Mena region, with activity also present in Bahrain, Kuwait, Oman and Qatar, Deloitte said in its 2014 Global life sciences outlook. The report delved into the outlook for the industry across the Middle East, Africa, Asia, Europe and the Americas.
In the GCC, a growing and ageing population and rising healthcare spending per capita were supportive of the industry’s growth, the report noted.
“This is in part due to the spread of chronic diseases, as the region is experiencing epidemics in diabetes and cardiovascular illnesses,” said Hassib Jaber, the life sciences sector leader at Deloitte Middle East.
The GCC’s population is expected to grow by 5 per cent a year, driven mainly by an influx of expatriates. While the dominant age group is estimated to be 30 to 44 years, the 45 to 65, and 65 and over groups are expected to grow cumulatively by an average of 6 per cent between 2011 and 2020, it said.
But the report said hurdles still remained.
“A key challenge is the speed of registering and approving new drugs,” it said. “Each country has a government agency responsible for regulating the healthcare and life sciences industry; in addition, the Health Ministers’ Council promotes coordination among member states to advance achievement in preventative, curative and rehabilitation care.”
Price controls were stringent and were mainly driven by the pricing mechanism set by the council, the report noted.
In a rare example of an international investment in the UAE’s pharmaceutical industry, the German company Merck Serono in 2012 partnered with the local manufacturer Neopharma to produce two Merck-branded drugs.
“I think tie-ups will dominate the market and I wish there were more companies like Neopharma because there are not enough companies to do tie-ups with here,” said Marwan Abdulaziz, the executive director of Dubai Biotechnology and Research Park (DuBiotech), a life-sciences cluster in Dubai. “I receive so many inquiries from [international] companies looking for a joint venture with a local company.”
He said such deals suited international companies that were wary of a more comprehensive capital expenditure in the region because of uncertainty in Syria and Egypt.
In April 2012, DuBiotech signed up with Pharmax Pharmaceuticals, a subsidiary of UAE pharmaceutical distributor Ittihad Drug Store. The company is working on a Dh40 million 90,000 square feet facility at DuBiotech. Mr Abdulaziz expects it to be complete in a year’s time.
It will manufacture tablets and capsules for diabetes, hypertension, peptic ulcers, psychiatric conditions, neurological and respiratory tract disorders.
There were more deals in the pipeline with generic drug manufacturers, he said.