Israel has the most advanced pharmaceuticals sector in the Middle East. At US$235, annual per capita pharmaceutical spending is the highest in the region. The market is dominated by institutions, with the four main 'not-for-profit' healthcare/sick funds accounting for over 90% of sales. Pharmacies and government bodies represent the remainder.
Healthcare spending is set to reach US$2.0 bn at retail prices by 2009, with the OTC sector likely to see the strongest growth.
Other than Israel, Iran, Jordan, Lebanon, Yemen, the pharmaceutical industry in the Middle East region is primarily driven by the Gulf countries. The five main Gulf countries represent an import-dependent marketplace for medical products worth US$2 billion a year. These countries are: Saudi Arabia, UAE, Bahrain, Oman and Kuwait. All of them are heavily reliant on the fluctuating price of oil, which dictates the strength of the economy and, in turn, healthcare provision and the pharmaceutical market. With average pharmaceutical expenditure running at US$58 per capita in 2005 - and growing - the Gulf states represent valuable and strong markets.
All the five markets are dependent on imports of pharmaceuticals. Even markets like the UAE, which does have domestic manufacturing capacity, export greater part of their production to other countries in the Gulf region.
One of the most significant forces driving expansion of Gulf health systems is the rapid growth in population - fuelled by indigenous population increase and the significant number of migrant workers employed in the region. Over the last five years, the collective population has risen from 28.6 million to an estimated 34.1 million.
The Gulf countries invested a total of US$793.2 million in pharmaceutical industry and had 55 factories producing medicines in 2004 as against US$ 174.4 million with 18 factories operational in 1995.
A report published recently by the Gulf Organisation for Industry Consulting noted that Saudi Arabia was leading the AGCC countries in terms of the number of pharmaceutical factories (27) and the volume of investment in the industry (US$ 619 million), followed by UAE which has 8 factories and invested US $ 64.2 million and then Kuwait, Qatar, Oman and Bahrain.
According to Oman News Agency, the report indicated that the per capita consumption of pharmaceuticals in the Gulf states stood at US$52 in 2004 and in Arab countries at US$20.3, adding that the overall consumption in the Arab countries, including the AGCC states constituted 1.5% of the world annual consumption.
Figures released by the Arab Organisation for Industrial Development and Mining indicated that Arab production of pharmaceuticals covers 45% of the Arab world demand with an estimated cost of US$ 5.5 billion annually and that the value of investment in manufacturing pharmaceuticals in the Arab world reached US$ 4 billion.
The largest Gulf market for pharmaceuticals is Saudi Arabia, valued at US$1.2 billion in 2005. The Saudi market is dominated by prescription drugs, which account for about 90% of the total health spending, reflecting that country's affluent nature. The OTC market is relatively small, just about 10% of the market. Generics are expected to grow. Much of that market however, is supplied by foreign imports. UK-based GlaxoSmithKline is one of the leading pharmaceuticals company in Saudi Arabia, with a market share of 13.2%. The leading local producer is Spimaco, ranked second overall with a market share of 6.3%. The Saudi market is expected to remain heavily dependent on imports, with local industry remaining in infancy.
If Saudi Arabia is the largest Gulf market for pharmaceuticals, United Arab Emirates (UAE) is perhaps the most developed one in the region, with a per capita expenditure of US$120 on drugs and pharmaceuticals. The market is fiercely competitive and yet pricey. It is dominated by branded medicines and prescription drugs, which account for about 90% of the market spend. The development of the local industry has given a push to the generics market, but it remains small with just 5% of the market share. Foreign investment is increasing steadily with a number of MNCs such as UK-based GSK, Swiss drug major Novartis, America's Wyeth and Johnson & Johnson having expansion plans for the market.
Bahrain
Bahrain's pharmaceuticals market is tiny, but has shown a robust growth of 10% in recent years as the government is investing heavily in improving healthcare provision. Its health system has been modernised and boasts of an extensive primary healthcare network offering a variety of services. In 2003, Bahrain imported US$48.1 million of pharmaceuticals, the majority of which was in retail form. Domestic production is extremely limited. Prescription drugs account for 95% of the market, as people rely on doctors and hospitals, who in turn depend on this form of health care. Public sector procurement is carried out through closed international tenders, bulk procurement by Gulf Cooperation Council (GCC) and direct purchasing. Government purchasing is mostly based on branded products, but the share of generics is increasing. Imports account for about 95% of the spending, as the local sector is tiny with just four producers. Key suppliers to the Bahrain market, chiefly via GCC tenders, include GlaxoSmithKline, Roche, Bristol-Myers Squibb, Sandoz, Merck & Co., Pfizer and AstraZeneca.
Kuwait
Kuwait is one of the wealthiest countries in the Gulf. Although its pharmaceuticals industry is small, it is one of the more developed, with per capita health spending among the highest in the region, at around $150 in 2003. The market size is expected to reach $390 million by 2007. Key areas of market development surround drug pricing regulation and patent law. The government has sought, without much success, to control drug prices in order to discourage outbound healthcare tourism. Prescription drugs dominate the market, with doctors and hospitals as the primary access points to healthcare. Despite the country's generics-focused public sector procurement policy, the low cost sector accounts for only around 15% of the market in value, though over 50% in volume terms. The branded drug sector is strong owing to the sizeable expatriate community, which is not covered by the universal healthcare insurance policy, and the country's general wealth with a significant demand for more sophisticated, hi-tech medicine. Imports were valued at US$163.5 million in 2003, nearly 85% of which was in the form of retail medicaments. Exports amounted to US$8.1 million, nearly all of which went to other Gulf States.
Oman
Although small in size, Oman pharmaceuticals market has been growing at a robust rate of 10%, fuelled by emergence of private sector, modernization of the drug industry and substantial government investment in public health leading to modern hospitals and good primary coverage in urban areas. The Omani pharmaceutical market is also limited by its small population. Its size is expected to reach $110 million at retail prices by 2007. Prescription drugs account for about 90% of the market, reflecting the status of doctors and hospitals as the primary access points to health care. Public sector procurement is carried out through closed international tenders, bulk procurement by Gulf Cooperation Council (GCC) and direct purchasing. Government purchasing is mostly based on branded products, but the share of generics is increasing. Imports account for about 95% of the spending, as the local sector is tiny with just two notable manufacturers. Key suppliers to the Bahrain market, chiefly via GCC tenders, include GlaxoSmithKline, Roche, Bristol-Myers Squibb, Sandoz, Merck & Co., Pfizer and AstraZeneca.