The Indian drug exporters exploring Saudi Arabian markets is facing the heat of acute protectionist measures adopted by the Middle East countries, it is learnt. The exporters find the stipulation of these governments to sell the products at par with the prices of the 'country of origin' killing their profit margins.

According to sources, the major problem being faced by exporters targeting Saudi market is the time consuming regulatory procedures. The exporters complain that the Arab countries are giving preferential treatment to members of the Gulf Coordination Council (GCC) countries. "The extremely high GCC protection is creating a non-tariff barrier," they said. The GCC includes countries like Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates and the Sultanate of Oman.

"There is a poor image for products originating from developing countries including India. The stringent regulatory requirements include the stipulation that the same drug has to be marketed in developed countries like the US and UK if it has marketing clearance in Saudi Arabia. The formulation has to be the same and it has to be manufactured from the same site where the products meant for exports to the US or UK is manufactured," they informed.

Interestingly, the same drugs originating from within GCC members are accorded marketing permission with less stringent conditions. In the case of drugs originating from India, Zone 4 stability data is required, they said.

The Indian companies are also facing the problem of price regulation. "The Saudi Government wants us to quote the lowest price which is at par with the domestic price of the product. The stipulation to mention the lowest price at which the same product is available in Indian market has resulted in Indian companies losing interest in the Saudi markets. We get very little or no profits if we market the products at such a low rate," they added.

There is a great potential in Saudi market. But the biased approach of the authorities which is compelling us to market the medicines at low cost after absorbing the high operational costs is turning us away. The authorities need to take a rational approach, exporters suggest.

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. The UK-based GlaxoSmithKline is one of the leading pharmaceuticals companies in Saudi Arabia, with a market share of 13.2%. The leading local producer is Spimaco, ranked second with a market share of 6.3%. The Saudi market is expected to remain heavily dependent on imports, with local industry remaining in its infancy.

The five main Gulf countries represent an import-dependent marketplace for medical products worth US$2 billion a year. With average pharmaceutical expenditure running at US$58 per capita in 2005, the Gulf States represent valuable and strong markets.