The Middle East with its refurbished image as a safe haven for pharma business is increasingly casting a spell on Indian players to strike business deals with the region. The liberalised economic policies, privatisation of pharmaceutical and healthcare industries and mass health insurance programme have reshaped the facet of what otherwise would have been a sluggish Middle East pharma industry into a glossy one, turning it into an export destination for Indian pharmaceutical companies.
As Middle East region largely depends on imported drugs for meeting a lion's share of their medicinal needs, the regulatory changes are a welcome move for the Indian pharma houses that are eyeing a pie of the region's import market. Industry experts believe that economic liberalisation alone will drive Middle East pharma market size to more than US $12 billion by 2010. Given this, an entry into the Middle East pharma market holds a lot of growth opportunities for the foreign players, especially the Indian companies focusing on bulk drugs.
"The Middle East region is largely influenced by the western world that helps run its natural resources. Policy making, in all sectors, mainly favours the advanced world. Indian companies, so far, are just breaking through in bulk drug supplies. Industry estimates that India's bulk drug exports to Middle East to be less than 30 per cent and the country's formulations export to the region to be less than 5 per cent, said, Vinod Dhawan, president, business development, Lupin. "The growth opportunity provided by Middle East is tremendous if the entry barriers can be overcome," he stressed.
Since Middle East region comprises of a couple of countries - Egypt, Turkey, Syria, Israel, Iran, Iraq, Jordan, Sudan, Oman, Saudi Arabia, United Arab Emirates, Yemen, Ethiopia and Cyprus - it is easy for the Indian players to select a destination of their choice for export activities after a careful examination of business prospects that each country offers. Given the quantum jump in the country's export of drugs, pharmaceuticals and fine chemicals to different parts of Middle East during April 2006 to March 2007, it seems that Indian players have found right export destinations within the Middle East region.
While the country's export of drugs, pharmaceuticals and fine chemicals to Turkey increased to $100.32 million during April 2006 to March 2007 from $94.71 million in the corresponding period of the previous year, its export to Israel rose to $118.58 million in 2006-07 from $68.96 million in the year-ago period. During the period under review, India's export to Iran stood at $78.75 million, up from $66.05 million in the comparable period of the prior year, while its export to Egypt increased to $31.77 million from $20.24 million. However, the country's export to Jordan declined to $20.65 million in 2006-07 from $25.05 million in 2005-06.
Apart from the export activities, Indian firms are also present in the Middle East through joint ventures and strategic alliances. While the Mumbai-based Lupin, Ahmedabad-based Dishman Pharmaceuticals, Bangalore-based Biocon and Mumbai-based Kopran followed the path of either joint ventures or strategic alliances to penetrate the Middle East pharma market, the Mumbai-based Cipla set up a wholly owned subsidiary - Cipla FZE - in Dubai to explore export opportunities in the Middle East countries.
Asked whether JVs and alliances are the best way to enter the Middle East market, Vinod Dhawan, said, "At the moment, strategic alliances may be the only way in which Indian companies can enter the Middle East pharma market, though the track record, so far, is dismal. Government to Government intervention at the Commerce Ministry level is of paramount importance. The recent visit of His Royal Excellency from Saudi Arabia is a step in the right direction."
"Lupin, which is playing a pioneering role in MENA (Middle East and North Africa), has strategic alliances in UAE, Saudi Arabia, Lebanon, Kuwait, Algeria, Oman and Yemen. It has forged cooperations in development, marketing and manufacturing. The company will shortly be scaling up its operations to be a major force to reckon with in the Middle East," he added.
On its part, the leading pharma player Dishman Group has signed a joint venture agreement with Arab Company for Drug Industries and Medical Appliances, Saudi Pharmaceutical Industries and Medical Appliances Corporation and Takamul Holding Company for Investments to set up CAD Middle East Pharmaceutical Industries Ltd.
When contacted, Dr Vyas of Dishman Pharmaceuticals said, "We along with our partners are in the process of setting up an active pharmaceutical ingredient (API) plant. It is a US $100 million project and the plant would become operational by the middle of January 2009." The company is expected to mainly supply all the intermediates required for the manufacture of various APIs by the JV company.
Also, to make it big in the Middle East region, the Bangalore-based Biocon has forged a joint venture company - NeoBiocon - by joining hands with the UAE-based Neopharma to manufacture and market a range of biopharmaceuticals. "Since the Middle East has a huge population suffering from diabetes, cancer and other kinds of metabolic diseases, the situation is suitable for marketing the company's product basket. Hence I think Middle East provides a lot of growth opportunities to the company," said, Dr Kiran Mazumdar-Shaw, chairman and managing director, Biocon. "NeoBiocon has already started working on its products and the company will take these products to market in January 2008, she added.
Though struggling for its survival, the Mumbai-based Kopran Ltd has made its presence in the Middle East market through a joint venture with Dubai Investment Corporation. Kopran, which is running in loss for a while, is reportedly present in the region with finished dosage forms, active pharmaceutical ingredients and over the counter products.
Middle East -Strategic areas
The Middle East comprises of three principal regions - The Arab Peninsula, the Persian Gulf and the Levant. The region, though largely Arabic speaking, has widely disparate characteristics. The Arab Peninsula is by far, the most promising for pharma business. It has principally the Gulf Cooperation Countries that are trying to model their economic structure on the European Union model. The Persian Gulf consists of Turkey and some Central Asian states that border it, while the Levant region comprises of Jordan, Syria and Egypt.
The Maghreb countries of Algeria, Morocco, Tunisia, Libya broaden the region to what is now known as Middle East and North Africa (MENA). The MENA region is estimated to have a pharmaceutical market of US $10 billion with a population of over 300 million.
The region is characterised by large immigration populations from lower to middle income groups and the extremely affluent local populations that control the lifeline of the world - Oil. Hence, the situation is feasible for the Indian pharma companies to win a whopping share of Middle East pharma market with its low priced generics, formulations and other kinds of drugs, noted Vinod Dhawan.