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+971556008944
+971(4)4470864
info@hermsglobal.com
The Middle East and North Africa consists of 18 countries from Morocco to Iran. The region has gradually developed its pharma market and more than 140 companies are operating in the region. MENA pharmaceutical market accounts for approximately 2% of the world market.
The pharmaceutical sector in the Middle East and North Africa (MENA) has observed remarkable growth over the last few years and is estimated to reach around US$60 billion by 2025, with US$1.2 billion allocated for the healthcare system in the 2019 budget.
With governments in the region focusing more and more on the well-being of a growing population and enhancing healthcare services, timely and safe delivery of medical supplies and pharmaceuticals products has laid down the promising future for pharmaceutical industry in the region. According to studies, the pharma sector’s growth in the region is largely driven by high population growth, increased life expectancy and the predominance of lifestyle-related diseases such as diabetes, as well as the desire for excellent healthcare services among countries in the region.
Promising demographics and increase in life expectancy is shifting the demographic pattern (rising ageing population) and is expected to drive pharmaceutical demand in the Middle East. During the next 10 years, the share of population that is over 65 years is expected to grow from 2.7% to 4% in overall population.
The Middle East population growth has averaged over 2.7% per annum. High life expectancy and steep population growth are expected to drive demand for pharmaceuticals in the coming years. Increasing healthcare consciousness and growth in per capita income have created higher healthcare demand. The infant mortality rate has significantly declined over the years due to availability of better healthcare facilities and medication.
Moreover, governments are launching various national health programme to increase awareness of diseases. For example, the UAE is leading the growth with over US$1.2 billion funneled into the healthcare system in the 2019 budget, on top of substantial funds allotted in the US$540 million innovation fund set up by Sheikh Mohammed bin Rashid Al Maktoum.
Other lifestyle diseases are also rising in the region thus boosting the growth of pharmaceutical firms. The UAE ranks second in the world and first in the Middle East region for diabetes prevalence (20%), followed regionally by Saudi Arabia (16.7%), Bahrain (15.2%), Kuwait (14.4%), Syria (10.8%), Iraq (10.2%), Jordan (10.1%), Palestine (8.6%), and Lebanon (7.8%). Moreover, obesity related, and other coronary diseases are rising in the region. Middle-East generic manufacturers, although excited about the growth prospects of 15% compound annual growth rate, face stiff competition with international firms.
One of the decisive phases of the MENA pharma market is the existence of the Gulf Cooperation Council (GCC). The GCC is a multinational partnership consisting of Bahrain, Oman, Saudi Arabia, Kuwait, the UAE, and Qatar, who came together in 2014 to establish a drug price harmonization strategy in order to standardize drug prices within the region. GCC has contributed significantly to the growth of pharmaceutical industry in the region.
In the Middle East, Saudi Arabia is the largest pharmaceutical market with 60 per cent of regional share followed by the UAE. Saudi Arabia has the largest manufacturing segment in the Gulf, however, most of the local production is destined for export markets. Domestic production accounts for around 15% of the overall supply of pharmaceuticals in the market. There are around 15-20 pharmaceutical manufacturers operating in the kingdom including indigenous companies and subsidiaries of multinational pharmaceutical giants.
Leading indigenous players in the region include Spimaco, Jamjoom Pharma, Tabuk Pharmaceutical Manufacturing, Jazeera Pharmaceutical Industries and Julphar. The locally grown companies predominantly make generic drugs, while some also undertake under-license manufacturing on behalf of multinational pharmaceutical companies for supply in the domestic and regional markets. Top multinational companies like GSK, Sanofi and Abbott Laboratories have also set up manufacturing units in the region.
Accelerated drug-registration systems, investments in R&D, innovation, and technological advancement, have led to a rise in the number of international pharmaceutical companies from 30 in 2013 to 47 in 2016, and is expected to reach 75 in 2020. Moreover, around 95% of the global pharmaceutical companies have a base in the UAE, which gives them logistics access to 43 countries worldwide.
Opening of the Dubai Silk Road Strategy and prevailing outstanding logistics infrastructure, the UAE is fast turning into a source market in the supply chain, manufacturing and exporting pharmaceuticals to high-demand markets such as Africa and Asia.
Apart from Saudi Arabia and the UAE, other countries which are fast catching up in terms of demand as well as production are Qatar and Bahrain. The Qatari pharmaceutical industry will benefit from the implementation of the national health insurance programme. At the same time, in Bahrain, the government is increasingly encouraging the use of generic medicines among the doctors and patients. The healthcare industry in Bahrain is largely funded by the government contributing around 70% of the total healthcare expenditure every year.
Pharmaceutical spending ranges between 0.36% and 3.47% of GDP and between 11% and 49.3% of health expenditure in the MENA countries. Pharmaceutical spending as a proportion of health expenditure is highest in Lebanon (49.3%), Jordan (33.8%) and Algeria (31.2%).
Likewise, pharmaceutical spending as a proportion of GDP is highest in the same three countries: Lebanon (3.47%), Jordan (2.85%), and Algeria (2.31%). Pharmaceutical spending is lowest as a proportion of GDP or health expenditure in Qatar (0.36% and 11.0%, respectively), the UAE (0.67% and 16.3%, respectively), and Kuwait (0.93% and 18.1%, respectively).
The size of market in terms of total sales has shown an impressive figure of $32 billion across MENA as a whole – the Middle East accounts for $20.3 billion and North Africa $10.7 billion. Saudi Arabia is the top pharmaceutical market among Middle East countries according to 2017 sales numbers at $7.5bn and grew at 13% in value terms and 15% in volume terms, with Turkey ($6.9bn), Egypt ($3.4bn) and the UAE ($3.17bn) following closely behind. However, overall, the North Africa region is expected to see faster growth rates in the next couple of years at 7.6% CAGR.
While MNCs account for 62% market share growing at 9% previous period growth (PPG); indigenous companies have grown faster at 19% PPG taking away share from MNC. Firms like Sophal, Dar Al Dawa, Sun Pharma, and Taha Pharma are the fastest growing corporations in Algeria, the UAE, Morocco, and Tunisia respectively. Alimentary tract is the top selling TA (Therapy Area) holding 21% of the market share with the highest growth in Saudi Arabia (12% PPG) and Algeria (12% PPG) followed by Tunisia (9% PPG).
The UAE market is valued at $2.2 billion, growing by 12% over last year with retail channel being dominant, having 79% share growing at 14% previous growth. Alimentary TA accounts for 24% of the market share growing at 12% PPG generating additional approximately $51mn in 2018. Multinationals dominate the market in sales with Novartis ($210mn) being the leading player, however local players like Julphar ($100mn) feature among top 10 and Dar Al Dawa (78% PPG) is the fastest growing corporation.
Egypt pharma market is valued at $3.4bn with a growth rate of 26% over last year. Alimentary and anti-infectives are the top selling TAs, together accounting for 36% sales of the total market. Novartis is the leading corporation with $267mn sales in 2018 while Medical Union Pharma is the fastest growing corporation experiencing a growth rate of 55% over last year.
Morocco market has grown at 12% PPG reaching close to 1.0 bn sales in 2018. Sanofi with $89mn sales is the leading player, GSK’s Augmentin with $17mn sales is the top selling brand and Sun Pharma with 45% PPG is the fastest growing corporation.
The Lebanese market grew at 4.8% PPG, to reach $0.8 bn sales; top 10 corporations comprise 42% of the total sales in Lebanon which include 2 local/regional companies. Alimentary and Cardiovascular are the top 2 TAs together accounting for 37% market share in 2018. GSK’s Panadol leads among top 10 products while MSD’s Zocor and Temodal slowed down at -9%PPG and -8% PPG respectively.
Another part of the Middle East region that has a strong established pharmaceutical market at the moment is Israel. The market has been projected to grow to $2.12 billion by 2020, at a compound annual growth rate of 3.9%, according to a study by Global Data. Israel already has a strong network of academic and research institutes, R&D facilities, and advanced medical facilities. Advancing biotech will likely be a driver of the market in future. Israel’s generics market, which accounts for around 20% of the market sales, is underpinned by Teva, the world’s leading generics manufacturer, which owns several manufacturing and export facilities across Israel, North America, and Europe.
The diverse economic, political, cultural, and public health profiles in the Middle East countries are echoed by a highly varied market environment for the pharmaceutical industry. Overall, prospects look good for both foreign and local firms, with growing populations and longer life expectancies producing a much greater demand for pharmaceuticals in the Middle East and North Africa, with huge growth in the market anticipated over the coming years. Local generic manufacturers, and potentially overseas generic firms from countries such as India, who could set up manufacturing bases in the region and export from there, are likely to have good prospects.