A Healthier MENA: The Balancing Act in Growing the Pharmaceutical Industry

The Middle East & North Africa (MENA) region is grappling with a complex interplay of factors driving health care demand. Increasing life expectancy, coupled with lifestyle changes as well as the fact that the region is undergoing considerable change in epidemiology, health care spending and coverage, has led to a surge in non-communicable diseases (NCDs) such as diabetes, cancer and heart disease. The combination of NCD prevalence, economic and fiscal pressures, as well as national priorities in some countries to achieve universal health insurance provides a challenging environment for health care services and their components.

To address these challenges, governments across the region have embarked on ambitious health care reforms, with significant implications for the pharmaceutical industry.

The pharmaceutical industry in the region has grown impressively in recent years and is predicted to reach about $60 billion by 2025. Out of 19 countries in the MENA region, the pharmaceutical market of Bahrain remains the smallest at $465 million while the Kingdom of Saudi Arabia (KSA) and the United Arab Emirates (UAE) are the largest at $11.6 billion and $4.1 billion, respectively.

Currently the MENA region’s pharmaceutical industry is undergoing significant transformation, driven by a complex interplay of factors:

• Rising health care demands and government reforms have created both opportunities and challenges. While increased demand for medicines, particularly for NCDs, has presented growth prospects, government policies like price controls, localization and the introduction of generics have exerted pressure on industry margins and innovation.
• Technological advancements and improved supply chain management have contributed to industry expansion. Local pharmaceutical companies predominantly focus on generic drugs or collaborate with foreign partners, benefiting from the region’s high number of pending patent expirations.
• Price controls in the MENA region have been a double-edged sword. While they have made essential medicines more affordable for patients, they have also raised concerns about their potential negative impact on innovation and investment. The Gulf Central Committee (GCC) Price Harmonization Policy, implemented to address price variability among member states, is an example of the region’s increasing focus on health care cost containment. However, the long-term implications of this policy on the market, pharmaceutical companies and health care in the GCC remain uncertain.
• Improved regulatory environment with the establishment of government regulatory bodies, such as the Saudi Food and Drug Authority (SFDA) and the Emirates Drug Establishment (EDE), play essential roles in ensuring drug safety and quality. They play a central role in streamlining drug registration processes and promoting local manufacturing.
• Generics and biosimilars are gaining traction as cost-saving measures, but intellectual property and quality issues persist. Government initiatives, including limiting branded imports and promoting local production, are crucial for fostering the growth of the generic drug market. The Saudi government is aggressively attempting to encourage generic consumption by limiting imported branded pharmaceuticals and encouraging local generic manufacturing, to reduce health care costs and diversify their economy. Recently, there have been some major investments made by international companies in the nation, including joint ventures with domestic producers and the construction of new facilities.
• Strategic partnerships between governments and multinational pharmaceutical companies are emerging, facilitating knowledge exchange and investment. This clearly aligns with widespread regional plans for economic diversification away from an oil-centric market, and the various Vision 2030 strategies in place in Saudi Arabia, the UAE and Qatar, supported by government initiatives designed to boost local production. This is further buoyed by public-private partnership investment and involvement. However, their success hinges on factors like continued government funding and long-term strategic planning.
• Saudi Arabia is a key player, aiming to increase domestic pharmaceutical production and become a regional leader. The Kingdom’s Vision 2030 Health Sector Transformation Program (HSTP) emphasizes the importance of the pharmaceutical sector due to high local demand and favorable trade agreements. While the goal of producing 40% of all pharmaceuticals domestically is ambitious, challenges such as increased competition from China and India may hinder its achievement.
• The United Arab Emirates is also actively promoting pharmaceutical manufacturing as part of its industrialization. The government’s incentives and support have attracted investors and manufacturing companies to the UAE.

The Future of the Pharmaceutical Industry in the MENA

The MENA region’s pharmaceutical industry faces a complex landscape, balancing growth opportunities with challenges posed by health care reforms and market dynamics.

To navigate this environment, pharmaceutical companies should focus on developing high-value products, partnering with local manufacturers, investing in research and development, embracing digital health and prioritizing patient centricity.

Governments play a crucial role in shaping the industry’s future. They can support the industry by providing a conducive regulatory environment, investing in health care infrastructure, promoting public-private partnerships and funding research and development.

Challenges such as poor patent enforcement, aggressive pricing regimes and protectionism hinder the region’s progress toward global pharmaceutical leadership. To establish international credibility and access global markets, countries must address these issues and align their regulatory frameworks with international standards.

Government support, economic diversification and a shifting disease profile towards chronic diseases are driving investment in the pharmaceutical sector. Governments are actively pursuing partnerships with multinational pharmaceutical companies to increase self-sufficiency and drug security.

Major drugmakers are capitalizing on these opportunities by launching innovative products in key therapeutic areas. Generics production is a key driver of local manufacturing development. While partnerships with multinationals are essential in the short term, countries must invest in infrastructure, attract talent and develop higher education options to build long-term domestic capabilities.

Medical tourism and logistics are emerging as additional growth drivers. The UAE’s plans to become a medical tourism hub and initiatives like the Hope Consortium for vaccine distribution highlight the region’s potential in these areas.

The future of the MENA pharmaceutical industry is promising, but it will require proactive measures and nurturing to address challenges and capitalize on opportunities. Governments, regulators and industry players must continue to work together to create a conducive environment for innovation, investment and growth.