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Macro-environmental conditions affected by political unrest
In spite of recent political unrest, economic, social and demographic changes are making the pharmaceutical markets in the Middle East & North Africa (MENA) region more attractive. The Economist Intelligence Unit (EIU) forecasts that the five MENA markets covered in this collection will represent a combined GDP of US$2.5 trillion in 2016, led by Turkey and Saudi Arabia. Economic development is changing the epidemiological health profile in the region, with the increasing prevalence of communicable diseases. In demographic terms, the population in these five MENA markets is still young and expected to reach 246.2 million in 2016, led by Egypt and Turkey. Nevertheless, there is a sizeable elderly population that will increase demand for healthcare services.
Healthcare development towards privatisation
The population has different levels of expectations in each national healthcare system. The healthcare system in Egypt, for instance, is in a transitory phase, characterised by progress towards privatisation. While access to free healthcare exists, private services are appearing as a result of the decline in the standard of public sector care. There is a need for considerable investment in order to continue the modernisation of programmes and maintain the existing facilities. There are two main areas of reform: primary healthcare and the provision of a national health insurance scheme. In Morocco, the health insurance system is in a transitional phase. Overall, opportunities exist, particularly in Turkey and Egypt, as combined health expenditure in these five markets is projected at US$153.2 billion in 2016.
Increasing pharmaceutical demand
International companies recognise the value and potential of these five MENA pharmaceutical markets. Sanofi, for instance, is the largest pharmaceutical operation in Morocco, whilst GlaxoSmithKline is the leader in Saudi Arabia. Some local producers, such as Hikma from Jordan and SPIMACO from Saudi Arabia, aim to become regional leaders. The projected CAGR for the region is very attractive compared to mature markets or other emerging markets. In fact, pharmaceutical sales in these five MENA markets are expected to amount to a combined value of US$35.8 billion at retail prices in 2016, including pharmacy and hospital sales. The region is led by Turkey, followed by Egypt and Saudi Arabia. Local manufacturing production is fragmented and geared towards branded generics, but a reliance on imports remains. The biotechnology industry is still in its infancy.
5 KEY MARKETS COVERED
Highly detailed analysis providing comprehensive regularly updated reports for leading markets in the region:
HIGHLIGHTS FROM THE REGION
The Egyptian pharmaceutical industry has enjoyed a period of considerable development in recent years. There is a strong domestic production sector and, while the majority is destined for the domestic market and imports play an important role, Egypt has emerged as a leading exporter of pharmaceuticals to Arab, Asian and Eastern European markets. Public production, represented by the state-owned holding company HOLDIPHARMA, accounts for around one-tenth of sales by value and nearly two-tenths by volume. There are a number of leading local private producers, some of them involved in biotechnology, which are strengthening their capabilities; Minapharm Pharmaceuticals, for example, acquired 95.0% of the share capital of the German ProBioGen in June 2010. Some leading multinational producers also manufacture in Egypt, including AstraZeneca, Eli Lilly, GlaxoSmithKline, Hikma, Novartis and Sanofi, in spite of weak IPR standards, particularly in terms of data exclusivity. In 2011, GlaxoSmithKline announced investments of LE500.0 million (US$82.0 million) in Egypt over a five-year period.
The Jordanian pharmaceutical market is expected to grow by a high CAGR between 2011 and 2016. Jordan has a relatively-strong level of domestic production; however, the majority is exported, resulting in a market still dependent on imports. Jordan imported pharmaceutical products valued at US$0.5 billion in 2010, an increase of 12.0% over 2009; Switzerland and the UK were the leading suppliers. Exports totalled US$0.7 billion in 2010, an increase of 32.7% over 2009. The majority of pharmaceutical exports were destined for other countries in the Middle East & Africa region.
The Moroccan pharmaceutical sector has entered a new phase of development with the adoption of new legislation that provides a modern legal framework for the pharmaceutical sector, which aims to address some of the structural weaknesses inherent in the previous system and open up the pharmaceutical sector to foreign investment by abolishing the requirement that pharmaceutical companies be majority-owned by a pharmacist. A patent law has also been ratified, which, although not meeting all the demands of the international pharmaceutical industry, provides a much clearer legal framework regarding intellectual property rights. The Moroccan pharmaceutical industry is represented by two major trade organisations; AMIP and MIS. Multinationals with a strong presence in the Moroccan market include GlaxoSmithKline, Pfizer, Ranbaxy and Sanofi. Hikma is also expected to increase its market penetration, following the completion of a mandatory tender offer for 30.2% of Promopharm in January 2012, increasing its stake in the company to 94.1%. Independent local manufacturers primarily operate under licence or produce generics. Leading indigenous producers include Cooper Pharma, Laprophan and Sothéma.
The Saudi pharmaceutical market is the richest in the Gulf region and is expected to rise by a high single-digit CAGR in the 2011-2016 period. The private pharmacy sector tends to favour branded pharmaceuticals, but is marked by tight price controls. The leading companies operating in the sector are GlaxoSmithKline and Saudi Pharmaceutical Industries & Medical Appliances Corporation (SPIMACO). The public sector, more generic-led, is dependent on oil revenues, and characterised by cost-containment and late payments for tenders. There is little domestic production in Saudi Arabia, therefore the vast majority of the market is provided by imports. However, Saudi Arabia imports a large amount of semi-finished medicaments, some of which are then relabelled, repackaged and exported. There are only a few major domestic manufacturers in the country. Locally-made pharmaceuticals supply only around 15% of the market and the rest of the output is mainly exported to other Gulf Cooperation Council countries.
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