Business operations of Indian pharmaceutical companies are taking new turn in the Middle East region with more and more marketing tie-ups and launching of products. Despite significant domination of multinational companies, the Indian companies are now spreading their network after successfully establishing presence.
With the rising health awareness and better growth in economic indicators, the Middle East markets have created huge opportunities to cost effective Indian firms. In the GCC region (UAE, Bahrain, Saudi Arabia, Oman, Qatar and Kuwait) economic activity has been robust, boosted by soaring hydrocarbon prices and production. These countries adopted expansionary fiscal policies with low interest rates. Increased export revenues have resulted in substantial current account surpluses, accompanied by increase in foreign exchange reserves.
Indian pharmaceutical segment recorded excellent export growth of 20.8 per cent during 2005-06. The total pharmaceuticals exports from the country was recorded at Rs 21,579 crore, as against the figure of Rs 17,858 crore in 2004-05. The total exports during the current year upto July 2006 was Rs 8,123.54 crore indicating a 30 per cent growth by the end of current fiscal.
During the year 2005-06 exports to Middle East countries reached at Rs 1359 crore. Small pharma companies contribute 20 to 25 per cent of total exports from India. Although the contribution is less compared to the big companies, encouraging such companies is very much essential to sustain growth in exports from the country.
Indian pharmaceutical industry is investing huge amount in plant and machinery to meet the challenges from ever increasing competition in the international as well domestic markets. The investment in fixed assets, including research and development (R&D), started yielding results during the last couple of years. This has significantly pushed up the capacity utilization of the Indian companies during 2005-06. With investment in assets, Indian Pharma companies are now in a position to give a tough competition to international giants by launching cost effective products.
India's trade with countries in the Middle East region went up sharply, underlined by rise in both exports to and imports from the region. During the period 2000-01 to 2004-05, India's total trade with this region has risen almost three-fold, from US$7.6 billion to $21.1 billion. The UAE and Saudi Arabia are the leading trade partners for India in the Middle East region, accounting for around two-third of total trade with the region.
The Middle East market has achieved impressive growth to reach US$ 8 billion in 2005 and the regional pharmaceutical combined annual growth rate between 1999-2003 was second only to Southeast Asia and China. The Middle East market is a high-import market. Jordan, Saudi Arabia and Lebanon import more than 75 per cent their pharmaceutical needs. Local manufacturing capabilities are constrained to generics and region is highly depend on Western medicines.
Currently major Indian companies like Ranbaxy Laboratories, Cipla, Orchid Chemicals and Pharmaceuticals, Glenmark Pharmaceuticals, Lupin Panacea Biotec, Kopran, Divi's Laboratories, Ind-Swift Laboratories and Dishman Pharmaceutical have set up operations in the Middle East. Recently Biocon Ltd has also entered the field by signing MoU to establish a joint venture for manufacture and marketing a range of bio-pharmaceuticals for Gulf Corporation Council (GCC) countries. It signed MoU with Abu Dhabi based pharmaceutical company Neopharma to establish a joint venture (JV) to manufacture and market a range of bio-pharmaceuticals for the GCC countries (Gulf Cooperation Council). This landmark agreement between the two companies heralds the region's first foray to develop and market life saving biopharmaceutical products.
Dr Kiran Mazumdar-Shaw, chairman and managing director, of the company said, "The GCC region is an important market for Biocon and the JV with Neopharma is an important milestone for Biocon's global foray. Neopharma has established a world class manufacturing facility for finished formulations, which was inaugurated by president APJ Abdul Kalam in 2003".
The JV will leverage the leadership position that Neopharma commands in the region and expand Neopharma's existing portfolio with a range of the company's generic and novel therapeutics that encompass diabetes, CVS, oncology, auto-immune and immunosuppressive drugs.
Dishman Group has entered into a Joint Venture (JV) agreement with Arab Company for Drug Industries and Medical Appliances (ACDIMA), Saudi Pharmaceutical Industries & Medical Appliances Corporation (SPIMACO) and Takamul Holding Company for Investments (THC), daughter company of Capital Advisory Group.
Dishman's export earning on FOB basis reached at Rs 154.81 crore during the year ended March 2006 from Rs 117.47 crore in the previous year.
Cipla Ltd, the second largest pharmaceutical company in India, has set up a wholly owned subsidiary in Dubai in a bid to explore export opportunities in the middle-east countries. It has set up the subsidiary, Cipla FZE, at Jebel Ali Free Zone in Dubai, United Arab Emirates (UAE). The company's total exports for the year 2005-06 reached to Rs 1514 crore and out of this its exports to Middle East worked out to 8 per cent.
Ranbaxy Laboratories' consolidated international sales reached at US$ 1060 million during the year ended December 2006, a strong growth of 18 per cent. Commenting on the continuing positive performance, Malvinder Singh, CEO & managing director, Ranbaxy, said, "We have had an extremely good year 2006 with robust sales across markets in US, BRICS, Africa, Latin America, Middle East and the Asia Pacific. I believe, Ranbaxy is well positioned to gain from the opportunities emerging in the global generics space."
Glenmark Pharmaceuticals has presence in over sixty markets of Asia, Africa, Russia and the CIS states in which it operates a branded generic business model. Currently, Glenmark has one product registered in the UAE. Five more products have been lined up for registration, to help Glenmark establish itself as a major player. Glenmark commenced its operations in Oman more than two decades ago and has emerged as a leader in dermatology with its topical antifungal preparation 'Candid'.
Panacea Biotec, with a special focus on biotechnology, has broadened its global presence by exporting products to countries like Middle East, Afganistan, Angola, Somalia, Mauritius, South Africa and Asian sub-continent region. During the year 2005-06, the company has for the first time, made supplies of oral polio vaccines to various countries through UNICEF against their global tenders and achieved a turnover of Rs 27 crore.
Lupin has ventured and penetrated into chosen markets represented by its Asia, Africa, Middle East & Latin America (AAMLA) division. Lupin has adopted the strategy of entering into alliances, joint ventures and synergistic partnerships with some of the leading players in the respective markets. The company received approval for its plant by the Gulf Corporative Council (GCC). It envisages capitalizing its early entry in this region by garnering better margins and establishing market depth.