November 2011
Middle East Generics Pharma
Ata D. Nazer
Pharma Strategist
The Middle East
Topics
• Facts about ME markets
• Demand/ Growth Drivers
• Growth – What are the issues?
• ME Generics Challenges
• Registration Barriers
• Pricing
• Generics Share by Country
• Outlook 2011 - 2014
• The ME Opportunity
• Jordan – As a generic hub
Facts about ME market - 1
• ME markets have high dependency on imported drugs
• All ME countries with the exception of Bahrain have or started local production of generics
• Jordan is the leading Arab pharmaceutical exporter
• Lebanon, an almost exclusive import market
• Saudi Arabia, the largest market of the Arabian Gulf
• The United Arab Emirates, has the highest-priced market in the region
Facts about ME market - 2
• Overall the Middle East’s pharmaceutical market is valued at more than $9.7bn and is expected to grow at healthy 10-15% annually.
• There are more than 120 pharmaceutical manufacturers in the Middle East- With the exception of Syria, all Middle Eastern countries are high importers of branded drugs.
• Saudi Arabia, as the richest regional market, has embarked on an ambitious hospital building project - growth is partly driven by greater access to generics
• Local manufacturing capabilities are constrained to generics or under license from originators
Generics Share by Country
2010 Local
Production Population GDP
Pharma
Sales
Generics
% Value
Bahrain No 1.0 22.3 118 9.0% 11
Oman 2000 3.1 62.2 152 6.0% 9
WB & Gaza 1960s 4.1 6.6 200 35.0% 70
Qatar 2008 1.0 109.0 227 10.0% 23
Kuwait 1992 3.6 144.2 374 30.0% 112
Jordan 1957 6.0 27.5 400 54.0% 216
Yemen 1980s 24.1 31.2 565 30.0% 170
Syria 1970s 22.5 59.0 800 70.0% 560
Lebanon 1960s 4.1 39.2 914 39.0% 356
Iraq 1970s 30.0 82.1 1,300 60.0% 780
UAE 1984 5.0 250.6 1,841 9.0% 166
Saudi Arabia 1986 26.1 442.9 2,860 12.0% 343
Totals 130.6 9,751 28.9% 2,815
Per Capita Pharma Expenditure
0
50
100
150
200
250
300
350
400
23 36 43 49 4967
104 110 118
223 227
368USD
Source: JAPM, BMI 2010
USA: 956, Spain: 578
Size of ME Markets
-
500
1,000
1,500
2,000
2,500
3,000
118 152 200 227 374 400
565 800 914
1,300
1,841
2,860
USD
Mill
ion
Source: JAPM, BMI 2010
Total: USD 9.7 Billion – 1% of Global Market
Share of Generic
-
500
1,000
1,500
2,000
2,500
3,000
USD
Mill
ion
Source: JAPM, BMI 2010
Highest: Syria 70%, Lowest: Oman 6%
9% 6%
30%
70%39%
60%
9%
12%
35% 10%
30% 54%
Demand/ Growth Drivers
• Acceptance and use of branded generics is growing
• Governments' support for domestic production
• Increase health insurance coverage
• Population growth is higher than global average
Growth- What are the issues?
Limited Market Access
Regulatory Scrutiny
Required marketing spending
Internal Capabilities
Limited production capacities specially for injectables which accounts for 34% of products to be off patent by 2014
ME producers will struggle to capture market share in this decade due to:
Availability of skilled technical staff
ME Generics Challenges
Market Challenges
Development Investment
Price competition
& erosion
Reference Pricing
Availability of Expertise
Slow Registration
Consumer Awareness
Marketing Expenses vs.
originator
Lack of strategic vision
for growth
Registration Barriers
• Registration time takes 1 to 3 years
• Some countries give preferential treatment to local producers reflected by:
– Faster registration time
– Preferential pricing
– Limitation on imports
• Saudi FDA has stringent regulations influencing other GCC countries
Pricing is controlled
• Prices are controlled by health authorities
• First generic is priced 20% or lower than originator
• Prices are determined by:
– Country of origin price
– Reference countries’ prices
IP Protection Developing
Country WTO Membership TRIPS Implementation
Bahrain January 1995
Iraq Observer
Jordan April 2000
Kuwait January 1995
Lebanon Observer
Oman November 2000
Palestine N.A.
Qatar January 1996
Saudi Arabia December 2005
Syria Observer
Yemen Observer
Initiated IP protection legislation Considering IP legislation
Top Manufacturers by Country
Country Company
1 Saudi Arabia SPIMACO, TABUK
2 Jordan Hikmah, Dar Al Dawa, Midpharma
3 UAE JULPHAR
4 Iraq State Drug Industry Company (SDI)
5 Syria Thameco, Asia, Oubari
Outlook 2011-2014
• It is estimated that USD 200 billion worth of drugs will go off patent by 2014
• ME share of the global is 1%, the potential new generic sales by 2014 is up to USD 900 million
• Average generic prices in ME is about 50% of originator, which means USD 450 million of new sales
• More privatization of the industry is encouraged for the few countries that have high government involvement
• Better implementation of TRIPS
The ME Opportunity
• Demand for generics in ME will have CAGR of 15%
• Manufacturers will need to establish new facilities, expand existing capacities, and look for acquisitions.
• Labor costs in ME are relatively low
• All ME governments support local pharma production
Pharma in Jordan
• Pharmaceutical exports reach more than 60
countries worldwide with more than 80 patents
registered in Europe, the United States and
Japan.
• A low cost regional manufacturing/sales hub
• Exports reaching $US 620 million in 2010
• 30% less cost than Europe and USA in clinical
trial testing and bioequivalence studies.
• Market driven legislations: Strict adherence to
Intellectual property laws and enforcement
• 11 universities with medical subjects, 8
pharmacy colleges, 7 clinical research
organizations (CROs).
• World class Medical infrastructure: Jordan is
the region’s medical treatment hub (ranked no.1
as medical tourism destination according to
World Bank)
Turn to Jordan
Scored 68.9 on Economic Freedom World Av. 59.7
4th Most Free Economy in the Region
Scored 70.0 on Investment Freedom World Av. 50.2