Country Report: UAE - Pharmaceutical Executive

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Country Report: UAE

Pharmaceutical Executive


FLUSH WITH CASH, BETTING ON HEALTH


H.E. Amin Al Amiri, assistant undersecretary for medical practices and licensing, Ministry of Health
"Over the past twenty years, we have seen a drastic change in the socio-economic climate of the Gulf region and neighboring countries. There has been considerable growth in terms of wealth and a sharp increase in health expenditures, which was mandated by the Ministry of Health", explains Ayman Sahli, CEO of Gulf Pharmaceutical Industries (Julphar), the UAE's leading manufacturer.

This trend of increased expenditures in healthcare can be seen across the entire Middle East and North Africa (MENA) region, yet it is led by the oil rich Gulf Cooperation Council (GCC) countries whose spending on healthcare has averaged a 7.9% annual increase since 2000. "Within the Middle East, demand is driving the development of advanced infrastructure, inclusive of clinics, hospitals and universities. It is essential that local and regional companies focus on supplying these modern organizations with the right pharmaceuticals", adds Sahli. Recent years have shown that for GCC countries, the right pharmaceuticals have generally been the most innovative and advanced treatments available.

The sharp rise of healthcare spending is commensurate to the demographics of the region, with more than 50% of the population under 25 years of age and fertility rates higher than those of India, China and the US. In light of such a young and expanding population, governments are taking heed of a future ballooning healthcare burden and are ­therefore laying the ground to rein in forthcoming costs. It is estimated that GCC health expenditures will reach US$79 billion for a population of almost 50 million by 2015, of which 64% will come from government coffers. By 2020, the pharmaceutical market alone is expected to reach US$20 billion.


Ayman Sahli, ceo of Gulf Pharmaceutical Industries (Julphar)
Burgeoning wealth has also sparked a shift towards westernized lifestyles that have raised the prevalence of diseases typically related to unfit diets and sedentary routines, such as diabetes and cardiovascular conditions. It is no coincidence that Qatar, the UAE and Kuwait all rank amongst the top 10 countries with highest GDPs per capita, while at the same time standing within the top 10 countries with the highest prevalence of diabetes alongside the rest of the GCC nations.

"The incidence of diabetes is a major issue for Gulf countries, and it must be addressed today. Whereas current estimates place the incidence of diabetes at 1 out of 4 people, this is soon expected to reach 2 out of 4 given current trends", details Paolo Carli, head of Middle East, Saudi Arabia (KSA) & Egypt for Merck Serono. There are many factors that exacerbate the situation, including environmental, genetic and lifestyle conditions. Environmentally, the weather here is simply too hot for people to be sufficiently active outside, particularly since air conditioning is now a staple comfort in all settings. People move from their air conditioned home, to their air conditioned car to reach their air conditioned office, and so on."




"Furthermore, given that locals were originally desert dwellers, their genetic makeup had adapted to live under conditions of general food scarcity and strenuous conditions. These genetic predispositions are now overwhelmed with modern eating and lifestyle habits, which include lack of exercise, consumption of excess sugar and non-healthy food. Finally, there is an added factor of Arab culture that values great hospitality involving long meals with abundant food. When you combine all these factors it becomes evident that we have a ticking bomb on our hands that we must avert as best we can. The same goes for hypertension, which is diagnosed in 25% of the population", Carli concludes.

Pharmaceutical companies, both local and international, have been feverishly working with health authorities to address this spike in lifestyle diseases before costs overtake national budgets. Whereas most of Big Pharma used to operate in the region through local distributors, the last five years have witnessed the greatest wave of investments the Middle East has ever seen from the pharmaceutical industry. Most of the top 20 companies have established dedicated sales & marketing offices throughout the region, and in some cases even localized training centers, logistics depots and manufacturing facilities. The UAE has snatched the bulk of these investments due to its political and economic stability, coupled with a keen penchant to cater to international businesses.

"Over the past 3-4 years we have started very comprehensively to attract foreign investments in the field of pharmaceutical industry and medical practice", asserts Amin Al Amiri, undersecretary for medical practice and license at the UAE's Ministry of Health (MOH). "In general we have been very convincing in getting international pharmaceutical companies here, considering that almost 90% of them have opened regional offices here and UAE is their hub for this region."

GSK's vice president and general manager for the GCC and Levant, Mohammad Zafrullah, arouses awe when speaking of the transformation that the UAE has witnessed in the past decade "If you came to Dubai 10 years ago, you would not believe your eyes. What this country, United Arab Emirates has achieved in such a short period of time is truly exceptional. This is the result of the vision of the leadership of this country. They haven't done this without private overseas investment, which has come from all parts of the world. You see similar things beyond UAE in the region."


Ashraf Allam, former managing director of Middle East and Africa for Amgen
GSK is the leading pharmaceutical company in the UAE and most Middle Eastern markets, due to its longstanding presence in the region for over half a century. Zafrullah adds that they "have managed to build strong partnerships not just with healthcare authorities but also our business partners. There is trust in these relationships in the true sense of the word and this has been developed over the years on the basis of transparency and open communication. Trust takes years to build but can be broken in an instant, so this is something we protect, no matter what." Their constant investment in the region, such as through the establishment of manufacturing facilities in Saudi Arabia and Iraq, are testaments to their conviction that this region holds bountiful rewards.

Indeed this is the notion that the UAE has been trying to sell to healthcare companies for the last ten years. "What we are witnessing in the UAE is a general move to diversify the country's economy beyond oil revenues. As part of this evolution, healthcare has been identified as a priority segment within which the government is investing heavily. This includes the construction of new hospitals, the updating of the regulatory environment, as well as setting in place business incentives for healthcare companies to enter the market, such as through free trade zones like Dubai Healthcare City and Dubiotech", explain Bassem Abdallah, Bayer Healthcare's country division head for Gulf states.


Marwan Abdulaziz, executive director of Dubiotech
In 2002, the Prime Minister of the UAE and Ruler of Dubai, HH Sheikh Mohammed Bin Rashid Al Maktoum, established Dubai Healthcare City (DHCC) as the city's prime location for healthcare provision. Covering an area of 4.1 million square feet comprised of two hospitals and hundreds of laboratories and medical centers, DHCC is the most comprehensive healthcare conglomeration in the country, focusing on patient-centered solutions. The vision behind this project was to attract some of the most respected healthcare companies to Dubai in order to offer their first-class services to the local population. In 2005 the city bolstered appeal to such companies by setting up the Dubai Biotechnology & Research Park (DuBiotech).




"Aligned with the government's vision of promoting this sector, DuBiotech was set up as a free zone to attract foreign companies and investors. Our aim is to be close to the companies that set up their operations here by trying to understand their needs and accommodating that as much as possible. Whether they are setting up a laboratory, or a business center or a logistics warehouse, it is up to us to make any possibility a reality", details Marwan Abdulaziz, executive director of DuBiotech. As its name suggests, this free zone area was established by one of the UAE's top real-estate developers, ­deeply tied to the government, to attract research-based scientific companies to Dubai.

Abdulaziz further adds that, "in addition to the infrastructure we provide, we also have two unique services that we offer companies. The first is what we call 'delivering partners', which entails connecting companies who need each other or partners outside of the park, such as distributors, investors, bankers, etc. The second service we offer is providing regulatory advice for all types of companies, in order to facilitate the initial stages of their operations." DuBiotech today boasts over 125 companies registered under its name, including majors such as Pfizer, Genzyme and Amgen, some of which only came to the country since the opening of the free zone.


Bridging East and West for Biotech
Ashraf Allam, former regional managing director of Middle East & Africa (MEA) for Amgen, pioneered the company's incursion into the region when he established the regional offices from scratch. "We are very proud to have been the first biotechnology company to establish itself in Dubai back in 2006. It took us a couple of years to become fully operational while we built up our local team and waited for our products to receive regulatory approvals from the local authorities. Today, the MEA region is the fastest growing area for Amgen across the world, even more than other larger emerging markets. Due to this, the region is perceived as an icon of success, and I am quite certain that many multinational pharmaceutical companies view MEA as a key growth region." Last year Amgen recorded 45% annual growth in comparison to the previous year. Allam has since moved on to become the vice president of Middle East & Africa for Mundipharma.

"Unlike other governments in the region, the UAE administration is welcoming and understanding of international companies, trying to accommodate as much as possible their needs. They treat companies as customers rather than simply ­enforcing laws and regulations without listening to the industry. In some cases they go as far as assigning specific representatives to work together with a company, to facilitate the start-up phase that typically involves large volumes of paperwork", explains Allam. It is no wonder that some companies who had regional offices in legacy markets, such as Egypt or Turkey, have now opted for Dubai's juicy offer of spanking new buildings and affluent clients.


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Source: Pharmaceutical Executive,
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