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Energy Boardroom

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Big Pharma puts the UAE in its sights

13.03.2014 / Pharmaboardroom

“Over the past twenty years, we have seen a drastic change in the socio-economic climate of the Gulf region and neighboring countries. There has been considerable growth in terms of wealth and a sharp increase in health expenditures, which was mandated by the Ministry of Health”, explains Ayman Sahli, CEO of Gulf Pharmaceutical Industries (Julphar), the UAE’s leading manufacturer.

This trend of increased expenditures in healthcare can be seen across the entire Middle East and North Africa (MENA) region, yet it is led by the oil rich Gulf Cooperation Council (GCC) countries whose spending on healthcare has averaged a 7.9 percent annual increase since 2000. “Within the Middle East, demand is driving the development of advanced infrastructure, inclusive of clinics, hospitals and universities. It is essential that local and regional companies focus on supplying these modern organizations with the right pharmaceuticals,” adds Sahli. Recent years have shown that for GCC countries, the right pharmaceuticals have generally been the most innovative and advanced treatments available.

The sharp rise of healthcare spending is commensurate to the demographics of the region, with more than 50 percent of the population under 25 years of age and fertility rates higher than those of India, China and the US. In light of such a young and expanding population, governments are taking heed of a future ballooning healthcare burden and are therefore laying the ground to rein in forthcoming costs. It is estimated that GCC health expenditures will reach US$79 billion for a population of almost 50 million by 2015, of which 64 percent will come from government coffers. By 2020, the pharmaceutical market alone is expected to reach US$20 billion.

Burgeoning wealth has also sparked a shift towards westernized lifestyles that have raised the prevalence of diseases typically related to unfit diets and sedentary routines, such as diabetes and cardiovascular conditions. It is no coincidence that Qatar, the UAE and Kuwait all rank amongst the top 10 countries with highest GDPs per capita, while at the same time standing within the top 10 countries with the highest prevalence of diabetes alongside the rest of the GCC nations.

“The incidence of diabetes is a major issue for Gulf countries, and it must be addressed today. Whereas cur-rent estimates place the incidence of diabetes at 1 out of 4 people, this is soon expected to reach 2 out of 4 given current trends”, details Paolo Carli, head of Middle East, Saudi Arabia (KSA) & Egypt for Merck Serono. There are many factors that exacerbate the situation, including environmental, genetic and lifestyle conditions. Environmentally, the weather here is simply too hot for people to be sufficiently active outside, particularly since air conditioning is now a staple comfort in all settings. People move from their air conditioned home, to their air conditioned car to reach their air conditioned office, and so on.”

When you combine all these factors it becomes evident that we have a ticking bomb on our hands that we must avert as best we can.”

“Furthermore, given that locals were originally desert dwellers, their genetic makeup had adapted to live under conditions of general food scarcity and strenuous conditions. These genetic predispositions are now overwhelmed with modern eating and lifestyle habits, which include lack of exercise, consumption of excess sugar and non-healthy food. Finally, there is an added factor of Arab culture that values great hospitality involving long meals with abundant food. When you combine all these factors it becomes evident that we have a ticking bomb on our hands that we must avert as best we can. The same goes for hypertension, which is diagnosed in 25 percent of the population”, Carli concludes.

Pharmaceutical companies, both local and international, have been feverishly working with health authorities to address this spike in lifestyle diseases before costs overtake national budgets. Whereas most of Big Pharma used to operate in the region through local distributors, the last five years have witnessed the greatest wave of investments the Middle East has ever seen from the pharmaceutical industry. Most of the top 20 companies have established dedicated sales & marketing offices throughout the region, and in some cases even localized training centers, logistics depots and manufacturing facilities. The UAE has snatched the bulk of these investments due to its political and economic stability, coupled with a keen penchant to cater to international businesses.

“Over the past 3-4 years we have started very comprehensively to at-tract foreign investments in the field of pharmaceutical industry and medical practice”, asserts Amin Al Amiri, un-dersecretary for medical practice and license at the UAE’s Ministry of Health (MOH). “In general we have been very convincing in getting international pharmaceutical companies here, considering that almost 90 percent of them have opened regional offices here and UAE is their hub for this region.”

GSK’s vice president and general manager for the GCC and Levant, Mohammad Zafrullah, arouses awe when speaking of the transformation that the UAE has witnessed in the past decade “If you came to Dubai 10 years ago, you would not believe your eyes. What this country, United Arab Emirates has achieved in such a short period of time is truly exceptional. This is the result of the vision of the leadership of this country. They haven’t done this without private overseas investment, which has come from all parts of the world. You see similar things beyond UAE in the region.

If you came to Dubai 10 years ago, you would not believe your eyes. What this country, United Arab Emirates has achieved in such a short period of time is truly exceptional.” GSK is the leading pharmaceutical company in the UAE and most Middle Eastern markets, due to its longstanding presence in the region for over half a century. Zafrullah adds that they “have managed to build strong partnerships not just with healthcare authorities but also our business partners. There is trust in these relation-ships in the true sense of the word and this has been developed over the years on the basis of transparency and open communication. Trust takes years to build but can be broken in an instant, so this is something we protect, no matter what.” Their constant investment in the region, such as through the establishment of manufacturing facilities in Saudi Arabia and Iraq, are testaments to their conviction that this region holds bountiful rewards.

Indeed this is the notion that the UAE has been trying to sell to health-care companies for the last ten years. “What we are witnessing in the UAE is a general move to diversify the country’s economy beyond oil revenues. As part of this evolution, healthcare has been identified as a priority segment within which the government is investing heavily. This includes the construction of new hospitals, the updating of the regulatory environment, as well as setting in place business incentives for healthcare companies to enter the market, such as through free trade zones like Dubai Healthcare City and Dubiotech”, explain Bassem Abdallah, Bayer Healthcare’s country division head for Gulf states.

To read more articles and interviews from the UAE, and to download the latest free report on the country, click here.

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