The United Arab Emirates pharmaceutical market will reach a value of $1.59 billion this year, growing 14.9% from last year’s total of $1.38 billion, say new forecasts.
By 2014, national drug expenditure in the UAE will reach $2.46 billion, equating to a compound annual growth rate of 12.21%, but the CAGR for 2009-2019 will slow to 10.01% and at the end of this period the market will be worth $3.59 billion, according to the report, from Business Monitor International.
Most of the value development will come from the prescription sector, boosted by a growing population and changing diseases profile; in particular, the UAE is tackling an obesity and diabetes epidemic, which will also require the long-term treatment of related conditions such as increased blood pressure, says BMI. In addition, the single market of the six Gulf Cooperation States (GCC) states – Saudi Arabia, Oman, Qatar, Bahrain, the UAE and Kuwait – will facilitate the placement of foreign products in the region, it notes.
The health challenges facing the UAE are reflected in the wider GCC community; together, the six states have the highest rates of obesity in the world and, within 10 years, their population is expected to increase by a third to reach 53 million.
Earlier this year, BMI noted that drug prices in the UAE are up to 23 times higher than World Health Organization (WHO)-recommended international prices, and that the 2009 World Health Statistics report had shown that UAE residents pay up to 13.8 times more for generic medicines than the average prices across a selection of emerging markets. __It can be argued, according to BMI, that prices are higher in the Emirates irrespective of its wealth, as it has a small population – around 4.7 million people – and therefore a smaller total pharmaceutical market size compared with larger neighbours like Saudi Arabia, which has the lowest medicine prices of the GCC states.
In its latest report, published yesterday, BMI goes on to note that the UAE has continued to improve its business environment and make concerted efforts to maintain and increase foreign direct investment (FDI) into manufacturing and diversifying the economy. For the pharmaceutical sector, this has been relatively successful, particularly with the DuBiotech complex and the ongoing construction of health cities and complexes. Also, health care reforms in the region have increased the potential for higher per-capita spending on medicines, while government budgets allocated to pharmaceuticals have also increased, it adds.
The Middle Eastern region holds great potential for drugmakers in terms of sales, especially in the generic drug sector, but local manufacturing needs greater investment in order to meet demand and stay competitive with regional rivals, especially in terms of price. One of the UAE’s oldest drugmakers, Julphar, distributes just 10% of its output within the Emirates, focusing the rest on exports, says BMI, which adds that, since the UAE is likely to have limited domestic demand in the medium and long term, this strategy is particularly wise.
Egypt, Jordan and Saudi Arabia are providing more competition for generics makers, although this is largely due to high local demand which has necessitated and supported the growth of local manufacturers. In contrast, the UAE industry has had to rely on exports for revenue growth, but this is not entirely bad – local drugmakers in the country are geared toward this business model – but this heavy reliance on imports points to a lack of diversification within the local manufacturing sector, BMI concludes.
