Pharmabiz
 

Better opportunities for Indian players in ME

L V SatyanarayanThursday, October 19, 2006, 08:00 Hrs  [IST]

The recent developments in the Gulf Cooperation Council (GCC) countries along with Republic of Yemen could be the hub of Indian Pharmaceutical industry to grow up in the Middle East, African countries with a rapid hike in business opportunities. One of the significant change evolved in the social and financial mindset of the ME countries in the recent past against the west should be a growing opportunity to the Indian players to dominate in the market in the next couple of years. The keen observers of the ME market and the Indian interference in this field envisages that the business share of Indian players in Gulf area will increase upto around Rs 2000 to Rs 3000 crore, from the current participation of a mere three to five percent of the total market. The KSA and the Republic of Yemen (added with GCC only for transaction of medical products), jointly make the biggest market in the Middle East sector. The opportunity for Indian companies were not a significant one in the overall market of these countries till the recent past. The Indian companies have to build up a high reputation and authenticity to sustain the market with the global giants. But one could look into the situation as an opportunity at present, because of the high price of products from MNCs and the changing environment of the sector after the 9/11 incident. The ME countries had passed through various restrictions and mental strains in the post 9/11 era, which has hopefully changed the attitude towards the eastern countries like India and China. The gulf countries are now showing interest for business alliance with Indian companies, provided there should be a standard facility to ensure quality products according to the US standards. The investors who were looking at the west for business activities are also ready to invest for the companies from eastern companies, as the result of these changes. Thus, the opportunity is open before Indian pharma if it is able to match the quality in terms of their regulatory standards. The Indian companies, which are mostly into marketing alliance with the local companies for distribution of their products, have even the facility to set up their own manufacturing facilities in the ME countries. Though the mechanism of product registration in the sector is very stringent, some of the companies like Ranbaxy and Banner Pharma have already established their manufacturing units in these area and some more companies are in talks with the authority to set up package units in UAE and KSA. Cipla, Wockhardt and Cadila are some of the other major companies successfully forayed the Middle East market. But the size of the Indian players in monetary terms is a mere amount of around Rs 20 crore to 30 crore at present. The companies which are ready to set up their market in ME should be conscious about the brand building exercise, as the market is highly brand conscious even though the price is very high. Here, again a challenge to the new players in export is that they have to give up the brand for the export business in the ME countries, and hardly any of the new companies, which have build up their own brand with so much effort would give up the brand for an export market. The stringent regulatory standards, along with such challenges results in a situation that only large players from the Indian pharma industry have a better role in the ME market. In the regulatory side, the companies which are planning to export in the country should first of all register their product with the relevant authority. For example, if the company is targeting UAE, they should register the brand with the regulatory office at Abu Dabi, and the regulatory authority will inspect the manufacturing plant with the information filed by the company. It is also possible to set up a dedicated marketing office in the sector or can approach some of the distribution companies in the country. The process is much rigid than this when it comes to a marketing right for the entire GCC nations, which should be attained from KSA. Can the companies manufacture own manufacturing facility in ME? Yes, it is also possible, as the authorities are opening up with health cities for the foreign companies to set up their manufacturing facility in the region. For example, KSA is ready with a health city at Dubai and the similar plan is executed by UAE to offer mega-manufacturing facilitiesincluding land, technical support for products, which are globally competent. But it should also be considered that it would be a bit costly rather than setting up manufacturing facility in India. If we have to spend a minimum of Rs 10 crore to Rs 15 crore for a plant, it would be some where from Rs 20 crore to Rs 25 crore in these countries. Around USD 15 million would be enough to set up a high standard pharma unit for solid dosage and liquid dosage forms. The position of Middle East countries is also significant for Indian companies for strategic developments. Setting up a manufacturing or marketing unit in these countries will act as a hub for the company's further operations at the African countries. With one facility in the Middle East, the company can cover the ME market along with the Central and South Africa, a couple of countries nearby and the Eastern European countries which does not have membership in European Union. The business environment in India is another major factor in involvement of more and more players in the ME exports. The promotion of more Special Economic Zones (SEZs) with reasonable amount of comforts in tariffs, assured power, designated space and a common ETP, in the country will be a support for the domestic companies to think about the better opportunities of exports. Through the mandatory implementation of Schedule M, India's drug makers are also very near to comply with the global standards in drug manufacturing, with a comparatively lesser price. While the MNCs charging eight to ten times the Indian price in the ME countries, Indian players can offer the same combinations at a cheaper rate. This factor of cost effectiveness is also under scrutiny of the ME regulatory authorities and their citizens. The Government of India would have a better role in promoting the Indian companies in their export market. The government should support the companies with some or the other kind of subsidies in large investments and along with the trade promotion organizations, they can create canvassing opportunities for the Indian companies. The Small and Medium Entrepreneurs (SMEs) in the Pharma sector should also come forward to grab such export opportunities, as of now, there are a few small and medium players from the country are setting up their marketing and manufacturing units in the ME. The significant target of the Indian companies is obviously a large number of NRIs living in these gulf countries. They prefer the Indian products, because of the familiarity of the company and products, for example, the ayurveda market in these countries It is obvious that there is a great opportunity for the Indian players to have a better game in the ME market in the near future. The trends show that the Indian drug industry can carve out around 20 to 25 percent of the ME market, if properly focused on the area. The attitude of the authorities in the Gulf countries is also very much for this development. There is a clear tilt among the governments in these countries towards the development of business. A significant number of government-to-government exchanges, industrial exchanges and trade promotion activities will elevate the industry of the both parties to grab the growing opportunities. (As spoken to Gireesh Babu, Chennai Bureau) (The author is head-Finance & Corporate Affairs, Apex Laboratories Limited, Chennai)

 
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