Despite risks involved, Indian pharma companies in the medium and large segment are gearing up for share of the US$ 6.35 billion Middle East pharmaceutical market which has now turned attractive because of the growing demand for generics from the region.
Middle East markets cover Bahrain, Cyprus, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syria, United Arab Emirates, Yemen and Palestine Territories. After Israel, Iran, Jordan, Lebanon and Yemen, the drug sector industry in the Middle East region is primarily driven by the Gulf Cooperation Council (GCC) countries which are Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates and the Sultanate of Oman. The region is recognised as an import-dependent marketplace for pharmaceuticals and the economy revolves round fluctuating oil prices, which direct pharmaceutical and healthcare sectors.

The market is fiercely competitive and yet pricey, dominated by branded medicines and prescription drugs, which account for about 90 percent of the market spend. The development of the local industry has given a push to the generics market, but it remains small with just five percent of the market share. With a sizeable expatriate community, which is not covered by the universal healthcare insurance policy, the branded drug sector is strong.

"The Indian pharmaceutical caravan heading towards the Middle East has been significant . The focus towards generics is to avoid cost involved in establishing a brand which could threaten a price war that could reduce the brand to nothing at any given time. This is an expected future with countries like China entering the generic space, stated VR Kannan, pharma consultant.

In the new patent regime, Middle East customers prefer to go in for drugs manufactured via the non-infringing route.

Multinational companies held sway in the Middle East pharmaceuticals market till recently. Now with the patent regime, customers there, prefer to go in for drugs manufactured via the non-infringing route. The cost management factor is also generating an interest for Indian drugs," stated pharma company heads who are exporting to the Middle East.

Sources indicate that annual per capita pharmaceutical spending is the highest in the Middle East where hospital supplies account for 90 percent of sales followed by pharmacies and others. Industry sources add that by 2009, healthcare spending will peak and the `over the counter drugs are expected to garner a robust growth.

The GCC region has a brisk domestic drug manufacturing activity and exports to other countries in the region.

The key driver of the Middle East market are rising population, which leads to increasing number of diseases from lifestyle disorders to critical ailments.

While Israel has the most advanced pharmaceuticals sector in the Middle East, Saudi Arabia is the largest Gulf market. In Saudi, the market is dominated by prescription drugs, which account for about 90 percent and over the counter (OTC) is 10 percent of the total health spending. The generics sector, which is mostly made up of imports, is also expected to grow.

Bahrain's pharmaceuticals market is tiny, but has shown a strong growth mainly because of huge government investments in healthcare. The scene in Kuwait is that despite a small presence of the pharmaceuticals industry, its healthcare expenditure is among the highest in the region. In Oman, the market is projecting healthy growth mainly because of government investment in public health and signs of transformation in the existing pharma industry.

Among the Indian companies present in the region are Ranbaxy, Dr Reddys, Cipla, Zydus Cadila, Aurobindo Pharma, Lyka, Hetero, Biocon, Bal Pharma, Micro Labs, to name a few.

Formulation and bulk actives are in demand. Prescription drugs dominated the market, because medical professionals and hospitals are the main access. Now generics are opted for because of fall in government spends in healthcare.

War and reconstruction have led to a substantial demand for drugs from Iran, Iraq and Afghanistan. This had led to a growing demand for antibiotics, pain killers including Non Steroidal Anti-Inflammatory Drugs (NSAIDs), OTC products, IV fluids and ophthalmics. In the high end treatment segment, cardiovascular, diabetes are increasing continues to grow.

The main problems in the region are the political instability and war-like situations in certain countries. This makes the region high risk and a low-return destination. There is also a need for companies to be recognised by the present elected government for drug supplies and when in times of anarchy and change of administration, pharma companies need to register themselves afresh. Other issues include stringent and time consuming regulatory approvals, dominant presence of multinational companies and solid local manufacturing base in some countries. All these prove deterrents for medium sized companies, informed pharma exporters.