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Unformatted text preview: IMPORTANT NOTICE: The information in this PDF file is subject to Business Monitor International’s full copyright and entitlements as defined and protected by international law. The contents of the file are for the sole use of the addressee. All content in this file is owned and operated by Business Monitor International, and the copying or distribution of this file, internally or externally, is strictly prohibited without the prior written permission and consent of Business Monitor International Ltd. If you wish to distribute the file, please email the Subscriptions Department at [email protected], providing details of your subscription and the number of recipients you wish to forward or distribute this information to. DISCLAIMER All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time of publishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, Business Monitor International accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the publication. All information is provided without warranty, and Business Monitor International makes no representation of warranty of any kind as to the accuracy or completeness of any information hereto contained. November 2007 ISSN: 1750-7553 Issue 19 INSIGHT Middle East & Africa Pharma & Healthcare BMI’s monthly market intelligence, trend analysis and forecasts for the pharmaceutical & healthcare industry across the Middle East & Africa REGIONAL FOCUS Sub-Saharan Africa – A Base For Generic Production? Following reports of robust growth of close to 10% in sub-Saharan Africa’s pharmaceutical market, BMI takes a look at the prospects for a region that has traditionally been shunned by the major pharmaceutical companies. The value of the regional market is predicted almost to double over the next five years – a trend that will benefit local generics producers in particular. The sub-Saharan market is small by international standards, with South Africa, the dominant economy, accounting for around threequarters of regional demand in 2006, according to estimates by BMI. The biggest growth should be seen in the regional hubs – South Africa for southern Africa, Kenya for eastern Africa, and Nigeria for western Africa – that form the centres of regional production towards which financial and human resources tend to flow. Products expected to perform well over the coming years are those focused on primary healthcare with high-volume sales, including antibiotics and analgesics. The low disposable income and small government health budgets in most African countries will ensure that demand remains focused on the low cost end of the market, meaning generics. This will limit the interest of major research-based pharmaceutical CONTENTS multinationals, leaving the battle between local generics producers and their international counterparts. The manufacturing sector of most African countries is small and focuses on meeting local demand. South Africa is the exception – industry leader Aspen Pharmacare ranks in the top 20 generic drugmakers in the world and exports its range of antiretrovirals (ARVs) throughout the region. Despite recent falls in the number of HIV/AIDS patients reported in several African countries, including South Africa, ARVs will continue to be the most in-demand pharmaceuticals, especially given the World Health Organization (WHO)’s aim for universal access by 2011. Generic ARVs are a high-volume, low margin business, so it is vital that producers make their products available to the widest possible market. Individuals cannot generally afford the sustained costs involved, so a strong presence in government and international aid agency tenders is necessary for companies to post a profit. BMI expects this trend to strengthen, with governments and NGOs being responsible for the majority of demand through bulk procurement decisions over the next five years. Demonstrating the need for high-volume sales, Aspen is reportedly Continued on next page... INDUSTRY DATA Regional Focus Cipla Under Investigation Over Pricing Claims ......................................................... 2 South Africa All Change At Enaleni ........................................................................................... 3 South Africa Dominates Regional Demand FirstRand Chooses Its Horse In Health Insurance Sector ......................................... 4 Per-Capita Government Expenditure On Health Selected African Countries, 2003 (US$) Adcock Ingram Wins Merck ARV Licence ................................................................ 4 Nigeria/Na�ibia/�hana Na�ibia/�hana Alpa Enters Through Imports ................................................................................ 5 Chinese Firm Constructs Malaria Drug Factory ........................................................ 5 Nigeria Government Prepares For Regulatory Shake-Up ...................................................... 6 Drug Pricing Regulation On The Agenda................................................................. 6 Turkey Kenya Zentiva Targets Generics ....................................................................................... 7 Major Multinational Poised For Entry ...................................................................... 7 Tanzania Jordan/�nited Arab ��irates �nited Hikma Boosted By The Power Of The Brand ........................................................... 8 Healthcare Privatisation On The Agenda................................................................. 9 Anti-Counterfeit Packaging To Reduce Fake Drug Threat ......................................... 9 South Africa Pfizer Launces Smoking Cessation Drug For Ramadan ............................................10 Israel/Iran 0 Teva Enters Into Research Collaboration ...............................................................10 Hepatitis C Drug Discovery Demonstrates IP Failings ..............................................11 20 40 60 80 100 120 Source: WHO Lebanon/Saudi Arabia Pharmacy Software Firm Looking For Gulf Expansion .............................................11 State Medical Supplier Created .............................................................................12 Subscriptions Office: New Online Access • Mermaid House, 2 Puddle Dock, London EC4V 3DS, UK Full subscribers to the Middle East & Africa Pharma & Healthcare Insight now have online access to all the content relating to this report at www.pharmaceuticalsinsight.com • Tel: +44 (0)20 7248 0468 Fax: +44 (0)20 7248 0467 email: [email protected] www.businessmonitor.com • Unlimited 24-hour access to the latest analysis, data, charts and forecasts from the Middle East & Africa Pharma & Healthcare Insight as soon as they are produced Fully searchable content allowing you to search by country, by topic or by a specific keyword across issues from the last 6 months Access to the latest PDF Monitor reports on the day of publication, as well as archive access to all the back issues since May 2006 For instant access please contact Eszter Solyom on +44 (0)20 7246 5150 or at [email protected] rEgIoNAl focuS Middle Middle East & Africa Pharma & Healthcare ...continued fro� previous page WHO approval before they can purchase locally-produced drugs. Typifying the investment shortage, Datlabs, a subsidiary of South looking to increase sales of its ARV range three-fold from the curAfrica’s Adcock Ingram, was recently rent 300,000 users, to make ‘incremental recoveries’. HIV/AIDS Burden Drives Pharmaceutical Demand reported to have been forced to reduce its product range in Zimbabwe in the face of The substantial threat posed by Leading Causes Of Death In Africa, 2002 a lack of capital. BMI believes the best counterfeit and sub-standard medicines Rank Disease Rank Disease way for local producers to get a slice of to drug sales to individuals makes it ndividuals 1 HIV/AIDS 11 Violence the ARV market is via partnerships with doubly important for firms to gain a 2 Malaria 12 Whooping cough multinationals, which have the finanslice of government supply contracts. cial muscle to meet strict international This is where local firms can claim an 3 Lower respiratory 13 Chronic obstructive infections pulmonary disease regulatory requirements, providing the advantage over their larger international maximum possible market access. rivals. Many African governments are 4 Diarrhoeal 14 Protein-energy diseases malnutrition African markets have seen growkeen to give domestic producers a boost ing interest from foreign companies in with favourable positions in government 5 Perinatal 15 Nephritis and conditions nephrosis recent years. BMI has recently reported tenders. The Tanzanian government reon the progress of new manufacturing cently introduced a 10% tariff on most 6 Cerbrovascular 16 Syphilis disease plants by India’s Venus Remedies in pharmaceutical imports after receiving Zimbabwe and China’s Sichuan Zhongfunding from Thailand in 2005 to pro7 Tuberculosis 17 War kang Guangda Pharmaceuticals in duce ARVs domestically. Moves such 8 Ischaemic heart 18 Tetanus Nigeria. These companies will focus as these will lead foreign generics firms disease on high volume generics production of to look seriously at establishing manu9 Measles 19 Diabetes mellitus drugs favoured by the respective governfacturing bases in Africa as imports ments and aid agencies in the countries. struggle to remain competitive. Source: WHO A strategy focusing on the demands of A major cause of local firms’ domestic focus is a lack of available investment, meaning producers procurement agencies rather than individuals, who will continue to struggle to meet the safety requirements of foreign markets. An represent a small fraction of demand, is likely to be the key to success in the growing regional market. example is Ghana-based DanAdams, Brain Drain A possible future development is a joint venture between Chinese firm Outflow Of Health Workers From Africa, 2003 the West African Health Organisation’s A dams Pharmaceutical a nd Gha Other p lans to introduce a scheme allowna’s Danpong Pharmaceuticals. The Kenya 29% 24% ing locally manufactured ARVs to be company has successfully developed distributed throughout the ECOWAS a generic version of a triple fixed dose Nigeria trade bloc. The region claims the trading ARV, which has been purchased by the 3% scheme is legal under the WTO’s ‘30th government for local distribution. HowCote d'Ivoire August 2003 Access to Medicine’ ruling. ever, according to a report in The Lancet, 9% Tanzania Ghana Zambia Should the scheme be passed into law, the company lacks the available capital 6% 16% 13% it will allow access to a greater number to fund the tests required by the WHO to of markets for local producers and allow show that the drug meets bioequivalence Source: WHO them to participate in aid agency tenders standards. This places serious limits on the drug’s market, especially as major sources of demand, such as without the need to comply with WHO requirements, so increasing the Global Fund to Fight AIDS, Tuberculosis and Malaria, require the attractiveness of Nigeria as a regional production base. coMPANy NEwS AlErt Cipla Under Investigation Over Pricing Claims Indian generic drug major Cipla is on the offensive after claims by Lulla has accused the AHF of defamation and stated that, if a public US based NGO the AIDS Healthcare Foundation (AHF) that the apology is not forthcoming, Cipla will launch claims for damages against the NGO. The AHF shows no company sells one of its ARVs at a lower sign of backing down, however, and price in Africa than in India. Africa – An Important Market Cipla Exports By Region, Year Ending March 31 2007 is urging the MRTPC’s inquiry to be India’s Monopolies and Restrictive extended to cover Cipla’s ARV pricing Trade Practices Commission (MRTPC) Americas Africa 33% policy in general. launched an investigation following 28% BMI is sitting on the fence regardclaims that Cilpa’s generic formulation ing the MRTPC’s decision. Both sides of US giant Bristol Myers Squibb and seem confident in their respective acGilead Sciences’ triple combination cusations and happy to court publicity ARV Atripla (efavirenz, emtricitabine Australasia to air their views on the matter. Cipla and tenofovir disoproxil fumarate) is on Middle East 11% 7% has strongly denied selling any of the sale in Africa at 40% of the Indian price, Europe drug in question in Africa, yet AHF has something the company hotly contests. 21% Cipla’s joint managing director Amar Source: Cipla Continued on next page...  rEgIoNAl focuS/SoutH AfrIcA Middle East & Africa ...continued fro� previous page Pharma & Healthcare The price of ARVs is difficult to determine across countries, given the complexity of currency fluctuations, import tariffs, tenders and trade agreements surrounding their export to Africa. This may explain the differing stances of Cipla and the AHF, and make it difficult for the MRTPC to make a true comparison of prices between India and Africa. Whatever the outcome, the dispute is potentially damaging for Cipla’s reputation with its customers, given that NGOs make up a large proportion of ARV demand. Cipla’s threats to sue the AHF will likewise do nothing to endear it to the charitable sector. countered that the company offered the drug at a rebated price to international aid group Médecins Sans Frontières (MSF) in a deal that was never finalised. If the inquiry finds against Cipla, there could be serious consequences for the firm’s revenues, given that generic ARVs are sold at razor thin margins in a crowded marketplace. Cipla is the largest generic ARV manufacturer in the world by volume, but this does not translate into first place in terms of revenue, suggesting Cipla could be in serious trouble if found guilty of discriminatory pricing. SoutH AfrIcA coMPANy NEwS AlErt All Change At Enaleni 2006 2005 2004 South Africa’s leading black-empowerment drugmaker Enaleni and running within a week, and that the closure has served to speed Pharmaceuticals is to undergo a number of changes over the com- up a ZAR100mn (US$13.8mn) upgrade of the factory. The facilities ing months, which will radically alter the shape of the business. will become the first in the country to comply with the new Pharmaceuticals Inspectorate Co-operation Only created in 2003, BMI takes a look A Profitable Venture Scheme (PIC/S) when the upgrade work at how the upheavals will affect the Enaleni Group Revenue And Profits is complete. Enaleni was able to minicountry’s sixth-largest pharmaceutical 120 30 mise disruption to clients, which include company. Sales (US$mn), LHS Merck Generics, Reckitt-Benckiser SA Enaleni has seen a rapid expansion Operating Profit (%), RHS 100 25 and Unilever, through the distribution since it was formed following a manof existing stock. However, there was agement buyout of Reckitt-Benckiser 80 20 a significant toll on company profits, SA’s Durban manufacturing plant four with a ZAR2.4mn (US$332,000) decline years ago. The dramatic rise has been 60 15 reported for the first half of 2007. catalysed by two successful acquisitions BMI believes a main reason for the early in the company’s life. FirstPharm, 40 10 plant closure was an attempt by the a l ocal generics and OTC supplier, 20 5 company to have the improvement work was purchased in September 2005 for completed in time for the new governZAR32mn (US$5mn). This was closely 0 0 ment ARV tender to be announced in followed by the ZAR1.2bn (US$194mn) the first quarter of 2008. The improveacquisition of Cipla Medpro, a local ments are expected to lead to a four-fold affiliate of India’s Cipla. These two Source: Enaleni increase in production capacity at the subsidiaries turned the company into the country’s third largest generics manufacturer, and gave it a major plant. The upgrade had been scheduled for completion in June 2008, slice of government contracts, making it the second-largest supplier but with the new government contracts to be announced in early 2008, Enaleni will be keen to demonstrate the improved producof drugs to government health facilities. The appointment of a new group CEO, Jerome Smith, who was tion capabilities to the authorities as they contemplate awarding the lucrative contracts. previously the managing director of Soon To Be Separated South Africa’s ARV market is set to Cipla Medpro, in June 2007, demonEnaleni Pharmaceuticals – Group Structure reach ZAR4bn (US$566mn) in the short strates Enaleni’s move towards a generPharmaceuticals Cipla Medpro term, according to estimates by BMI. ics focus, given Smith’s expertise in this Division FirstPharm Pharmaceuticals Cipla Medpro has a range of ARVs, area. Smith will take over full-time at the Enaleni Pharma - contract including Cipla-Duovir (zidovudine end of 2007. Further shake-ups in the manufacturing + lamivudine), which it is hoping to boardroom this year include the resignaConsumer and Vitality Consumer Division manufacture at the upgraded plant. Enaltion of the group’s chief financial officer Division Bioharmony eni has been able to launch more new and the replacement of the commercial Muscle Science products than any of its competitors, director. The new directors arrive as the and it now claims to have a ‘formidable’ company plans a major streamlining of Source: Enaleni basket of ARVs that will help the group the business. The first challenge for the new team will be to reopen Enaleni’s compete in the upcoming round of government tenders, where it is key Durban manufacturing facility, operated by the contract manu- hoping to win a ZAR1bn (US$142mn) order. The second challenge for the new management team will be the facturing division, which was closed by bosses in July after concerns that it was not yet ready to comply with South Africa’s newly imple- integration of FirstPharm into Cipla Medpro’s over-the-counter mented current Good Manufacturing Practice(GMP) laws. Company (OTC) division, while decoupling the firm’s consumer and vitality Continued on next page... sources claimed in early September that the plant would be back up  SoutH AfrIcA Middle Middle East & Africa Pharma & Healthcare ...continued fro� previous page division. The decision in July to streamline the business by selling off its consumer division and focus solely on pharmaceuticals came as something of a surprise, given rival Tiger Brands’ plan to move in the opposite direction and let go of its pharmaceutical division, Adcock Ingram, to concentrate on the consumer health sector. Enaleni’s planned exit from the consumer health sector comes at a time when the OTC market is booming as health awareness and consumer spending power continue to rise. In 2005 approximately 10,500 new consumer health products were launched in South Africa, compared to 30,000 for the US, according to a report by consultancy firm AC Nielsen. BMI estimates that in 2006, the OTC drug sector was worth US$860mn and forecasts that it will grow to US$1.43bn by 2011. coMPANy fINANcE AlErt FirstRand Chooses Its Horse In Health Insurance Sector 2006 2005 2004 2003 2002 2001 2000 South African banking group FirstRand is to sell its ZAR9bn failed to meet requirements under the Medical Schemes Act that it (US$1.2bn) stake in the country’s largest health insurer, Discovery must hold 25% of contributions in reserves and has struck a deal Holdings, in a sign that investors are becoming increasingly wary with the regulator to increase its solvency ratio by 2% by the end of the year. o f Discovery’s struggling overseas FirstRand’s move will come as a interests. FirstRand is to rid itself of its Sales Rise, But Confidence Falls Discovery Income (ZARmn) major blow for Discovery, as the loss of 57% holding in what the group’s CEO one of its founding investors in favour of Paul Harris described as a change in the 6,000 a direct competitor will seriously dent its company’s ‘two horses in the race’ stratstanding in the industry. Despite Discovegy, whereby it has controlling interests 5,000 ery’s problems, it was able to post strong in two insurance companies. FirstRand 4,000 profits of ZAR1.5bn (US$207mn) for also owns Momentum, South Africa’s the year ending June 2007, an increase fourth-largest insurer. 3,000 of 20% on the previous. Discovery has been struggling under BMI is maintaining its forecasts of the weight of its loss-making foreign 2,000 robust growth in South Africa’s health operations for some time. Despite iminsurance sector. Private health insurpressive profits in its home market, the 1,000 ance spending almost doubled in the five company’s US health insurance business 0 years to 2005, according to the WHO. Destiny Health continues to lose money Although nearly half of South Africa’s as does its UK joint venture PruHealth. healthcare expenditure is met by private The company is to make a decision Source: Discovery Health insurance schemes, the private sector on whether to offload its US business soon, following losses amounting to ZAR102mn (US$14mn) in accounts for only 20% of the population. This proportion is set to grow as the government is seeking to redress the imbalance through May and June. Discovery is also under pressure on the home front from regula- the creation of a National Health Insurance scheme, which would tor the Council for Medical Schemes. The company has reportedly provide coverage for all of the country’s citizens. coMPANy NEwS AlErt Adcock Ingram Wins Merck ARV Licence With competition for South Africa’s government HIV/AIDS drug tenders hotting up, it has recently emerged that Merck Sharp & Dohme (MSD), the subsidiary of US drug giant Merck & Co, has granted local drugmaker Adcock Ingram a licence to make copies of one of its key ARVs. The agreement is a non-exclusive, royaltyfree licence for efavirenz, a non-nucleoside reverse transcriptase inhibitor that is marketed as Sustiva in the US and Stocrin in other countries. MSD is currently the sole supplier of the drug to the South African government. Given that most government clinics supply a triple therapy of stavudine, lamivudine and either nevirapine or efavirenz, the new deal is a potentially massive boost to Adcock’s ARV division. The deal will add to Adcock’s range of generic ARVs, which were developed in-house and launched earlier this year. The range currently consists of three branded generics: Adco-Lamivudine (lamivudine), Adco-Nevirapine (nevirapine) and Adco-Zidovudine (zidovudine). However, there is still a considerable hurdle to overcome – the agreement cannot come into effect until the Medicines Control  Council (MCC) gives regulatory approval for the generic version of the drug. Adcock will be hoping for the green light in time for the announcement of the new government HIV/AIDS drug tenders early next year. Domestic rival Aspen Pharmacare was awarded a licence for efavirenz two years ago. Yet it too is still awaiting regulatory approval. BMI expects the looming ARV tender deadline to spur the MCC into action over the pending approvals, since they will increase competition among ARV providers and potentially lead to lower prices. Adcock Ingram’s managing director, Jonathan Lowe, claims that its efavirenz offering would be sold at a significant discount to MSD’s branded version. However, BMI is sceptical, given that MSD sells the product on a non-profit basis in South Africa at a low cost of ZAR4.71 (US$0.65) per patient per day. The move will certainly increase competition in the ARV market. However, MSD will prevent Aspen and Adcock from incorporating efavirenz into fixed-dose combination pills, thereby excluding the companies from a large section of the drug’s demand. NIgErIA Middle East & Africa Pharma & Healthcare coMPANy NEwS AlErt Alpa Enters Through Imports India’s Alpa Laboratories continues to focus on the world’s less particularly strong. Its range includes analgesics, such as ibuprofen, developed pharmaceutical markets after revealing plans to expand and antimalarials, such as chloroquine. However, an import presence alone may not be the best strategy its imports into Nigeria. The company announced the appointment of local firm Tinez Pharmaceuticals as its distribution agent in in Nigeria. The government is increasingly favouring its domestic Nigeria. Alpa sells products in markets such as Sierra Leone, Na- industry, something that could work against Alpa, which has no mibia and Sudan, in addition to several Caribbean nations and its plans to establish a manufacturing base outside its home market of India. The government has set particularly high registration fees domestic market, India. Alpa has received regulatory approval for its drugs from Nigeria’s for the import of OTC drugs, with fees of NGN1mn (US$7,900) National Agency for Food and Drug Administration and Control per registration and an annual renewal fee of 60%. This compares extremely unfavourably with (NAFDAC), and is looking More Expensive To Import the registration of locallyto generate sales of US$6Nigeria – Drug Registration Tariffs (US$) produced drugs, for which 8mn in its first year. 700 Registration certificate 9,000 Annual renewal Registration certificate the NAFDAC charges just Alpa follows in the wake 600 Annual renewal f ee = 60% Annual renewal Processing fees Processing fees 8,000 f ee = 50% f ee = 50% Permit to import NGN70,000 (US$560) and of several other Indian firms 7,000 500 an annual renewal charge in expanding its African op6,000 of 50%. erations. In May 2007 Ran- 400 5,000 4,000 With Indian and Chinese baxy purchased South Afri- 300 3,000 Annual renewal f irms jockeying for posi can drugmaker Be-Tabs for 200 f ee = 100% 2,000 tion in Africa, the strategy ZAR500mn (US$72.2mn), 100 1,000 o f Chinese firm S ichuan with plans to manufacture its 0 0 OTC drug Prescription drug Orphan drug OTC drug Prescription drug Orphan drug Zhongkang Guangda generic range of ARVs at the Source: NAFDAC Pharmaceuticals may pay firm’s local facilities. off. The firm is in the procBMI sees Alpa’s focus on countries normally shunned by major multinationals, particu- ess of setting up Nigerian manufacturing operations, which will larly those in sub-Saharan Africa, as sensible. These markets tend produce in-favour antimalarial artemisinin. These operations will to have lower entry barriers, and thus require less initial capital to bypass the NAFDAC’s high import fees, thereby putting them at carve out a market share. African nations are characterised by a high a significant price advantage against foreign firms acting through demand for basic medicines, in which Alpha’s product portfolio is imports alone. coMPANy NEwS AlErt Chinese Firm Constructs Malaria Drug Factory Nigeria Niger Ethiopia Eritrea Dem. Rep. of Congo Burkina Faso Benin Sichuan Zhongkang Guangda is likely to have taken note of In a boost to Nigeria’s pharmaceutical industry, Chinese firm Sichuan Zhongkang Guangda Pharmaceuticals has begun construc- the World Bank Booster Program For Malaria Control in Africa when planning its move. As part of the tion of a plant to produce the in-favour A Drug In Demand Program, the World Bank has already anti-malarial artemisinin. The active World Bank Malaria Booster Program – Approved Distribution Of provided assistance totalling US$395mn ingredient of the drug has long been Artemisinin-Based Therapies To Date t o African countries, with Nigeria used in traditional Chinese medicine, 18,000,000 receiving US$180mn, making it the but has come to worldwide attention 16,000,000 biggest recipient of funding. The asin recent years as the resistance of ma14,000,000 sistance focuses on achieving ‘concrete laria parasite Plasmodium falciparum to 12,000,000 and measurable results’, meaning the Western-produced anti-malarials, such 10,000,000 provision of bed-nets and artemisininas chloroquine, has grown. 8,000,000 based combination therapies (ACTs). The battle against malaria in Africa 6,000,000 The World Bank boasts that over 42mn has taken centre stage recently, as many 4,000,000 doses of ACTs will be distributed durcountries have reported progress in tack2,000,000 ing the lifetime of the project, ensuring ling their HIV/AIDS epidemics. South 0 a high demand for artemisinin in Africa Africa has heralded the beginning of over the next few years. a downward trend in HIV/AIDS cases Sichuan Zhongkang Guangda will be after estimates emerged that 5.41mn expecting a busy time when its factory is citizens are currently infected with HIV/ Source: World Bank completed. China’s growing trade links AIDS, down from 5.54mn last year. with African nations have been well The WHO stimulated the pharmaceutical industry’s interest in artemisinin after recommending a switch reported. Nigeria recently announced that China had overtaken the to the drug in all countries where parasitic resistance to chloroquine US to become the country’s largest trade partner, and an estimated 20,000 Chinese citizens currently live and work in the country. has become widespread.  NAMIBIA/gHANA Middle Middle East & Africa Pharma & Healthcare INduStry NEwS Government Prepares For Regulatory Shake-Up Namibia’s health minister, Dr Richard Kamwi, has revealed plans mirroring trends in neighbouring South Africa, which has been for all drug manufacturers and distributors to be registered with the aiming for self-sufficiency in ARV production. Medicines Control Council, in the biggest development in the counFor several years, the Ministry has been touting for international try’s drug regulations since the Medicines and Related Substances funding for the development of Medalutu Pharmaceuticals’ manuControl Act was drafted in 2003. facturing plant – a company that has close links to the country’s According to government sources, the 2003 Act is finally ready to ruling party. According to government projections, the plant will be be implemented pending the addition of capable of producing 200,000 tablets a Stimulating Local Industry rules governing company registrations, year in 2007, increasing to over 450,000 Namibia’s Ministry Of Trade And Industry four years after it was first debated in tablets a year by 2010, of which 3% will Reasons For The Establishment Of Local Pharmaceutical Manufacturing parliament. The bill was introduced in be targeted at the export market. 1 Increase availability of generic drugs order to control the quality of mediBMI w elcomes the long-awaited 2 Increase flexibility to respond to national health cines sold in Namibia – and eventulaw, which will mark a major step in emergencies ally exported if ambitious government bringing Namibia’s regulatory standards 3 Reduce reliance on imported drugs plans come to fruition. However, the towards international norms, yet feels law’s application was delayed when it has a long way to go before most 4 Increase local employment members of parliament realised that, countries will consider the laws up to 5 Develop more advanced local industry without knowledge of which company the level they require for the licensing 6 Increase the affordability drugs manufacturers and distributes each drug, of imported drugs. For this reason, BMI effective regulation would be extremely Source: Ministry of Trade and Industry expects Namibian drugs to have limited challenging. impact on the export market. The country has a small domestic pharmaceutical manufacturing The country shares a border with South Africa, the continent’s industry, mostly focused on the manufacture of basic medicines, most developed pharmaceutical market, which will provide stiff making Namibia highly reliant on imported medicines. The Ministry competition. Meanwhile, Namibia’s regulatory standards still fall of Trade and Industry is keen to address this with ambitious plans far short of its more developed neighbour, despite the improvements to stimulate the sector, particularly in the manufacture of ARVs, in the registration process. gHANA INduStry NEwS Drug Pricing Regulation On The Agenda Meanwhile, a major problem for the rural population is a lack Lending weight to government moves to establish the country’s first national drug pricing policy, a study by Health Action International of access to government health facilities. Ghana has a 7,000-strong (HAI) – a pan-African network that includes NGOs, health profes- private sector of licensed chemical sellers (LCSs), which are predominantly located in rural areas sionals and consumer health groups that have few government pharmacies – has shown the price of medicine to be Not Just A Pricing Problem or public health facilities. The rural a major factor limiting access to healthGhana: Reasons For Failure To Obtain Prescription Drugs population often have no choice but to care in Ghana. No time turn to the private sector to meet their 2% HAI Director Charles Allotey stated Price health needs, which, without a medicines that medicines are currently ‘set at the 31% pricing policy, is subject to much less rate that it is perceived the patient is stringent regulation. This makes the willing or able to pay, rather than a task of creating a transparent pricing mark-up cost from the acquisition price’. system extremely challenging for the While this may be suitable for certain government. h ealth and beauty products, HAI is Lack of availability HAI’s own analysis of pricing found calling on the government to intervene 67% that private costs for generic drugs were, to end the sale of essential drugs at the Source: WHO on average, 12% higher than prices in market rate. the public sector. The prices of patented The Ghanaian Ministry of Health is already committed to establishing standardised medicines pricing drugs were higher still – for a basic monthly treatment for a peptic under Ghana’s National Drug Policy guidelines. Current regulations ulcer from a private pharmacy, for example, the price would require state that government health facilities should buy first from the almost 3 months of wages from a low-paid government worker for a public sector and should mark up at a fixed 10% margin. However, patented drug compared to just 11 days for its generic equivalent. While price is a major factor preventing access to medicine for this margin is often exceeded by institutions and, more importantly, Continued on next page... does not apply to the country’s substantial private sector.  gHANA/turKEy Middle East & Africa ...continued fro� previous page impoverished citizens of developing nations, it does not appear to be the main limitation on the availability of drugs in Ghana. BMI points to a recent survey by the WHO, in which two-thirds of patients blamed a lack of available drugs at hospitals and dispensaries as the reason they were unable to obtain their prescription. One-quarter of people claimed to not have enough money, and only 6% blamed Pharma & Healthcare the high price of the drug. While the very poorest citizens would not be included in the survey, as they would be unlikely to attempt to obtain medical assistance in the first place, the survey does indicate that supply chain issues also represent a significant barrier to health access in Ghana. The problem may not be solved, and indeed may be exacerbated, by more stringent pricing regulation. turKEy coMPANy NEwS AlErt Zentiva Targets Generics 2011f 2010f 2009f 2008f 2007f 2006e Czech drugmaker Zentiva has outlined its strategy to develop the unregistered copies, a factor that is holding back considerably the company’s Turkish operations, seeing generics as a key growth sector’s high potential. However, Zentiva and other manufacturers with strong branded generic lines will area. After completing the purchase of Growing Sector be hoping that Turkey will eventually a 75% stake in Turkish generics player Turkey Generics Market Forecast, 2006-2011 be able to join the EU, which will force Eczacibasi Pharmaceuticals in July 6 42.5 Generics Market (US$bn), LHS the country to address this problem, and 2007, Zentiva now has a strong producGenerics Market as % Of Total Market, RHS 42.0 5 will provide a major boost to their sales tion base in Turkey. volumes. The company is planning to use the 41.5 local facilities to incorporate its own 4 41.0 Export Strength range of generics, which include the 3 Zentiva also hopes to use Turkey as a cardiovascular drug Torvacard (atorv40.5 Central and Eastern Europe export base astatin), into the generic portfolio of a 2 40.0 – m irroring moves by major R&Dnew subsidiary, Eczacibasi-Zentiva, focused multinationals in recent years, from 2008. 1 39.5 including Novartis and GlaxoSmithKEczacibasi-Zentiva aims to become aims 39.0 line. Many firms are becoming aware of the country’s leading generics manu- 0 the European export potential provided facturer over the next five years. Ecby Turkey, which will receive a maszacibasi Pharmaceuticals currently has e/f = estimate/forecast. Source: BMI sive boost if the country is admitted to just a 3% share of the Turkish generics the EU. market, which may appear small until Eastern Europe Focus Company plans also reveal that the fragmented nature of the market is Zentiva’s Sales By Country, H10�� ���� ���� Zentiva hopes to use Turkey as a base taken into account – Turkey’s leading Other for low cost European manufacturing, m anufacturer, A bdi Ibrahim h as a Czech 8% Poland Republic rather than as a springboard for expanmarket share of only 7%. 15% 32% sion into the Middle East. Zentiva is BMI agrees with Zentiva’s strategy, planning to use Eczacibasi’s facilities and is expecting the generics market to to manufacture drugs for export to its perform particularly strongly over the key markets, which include the Czech coming years. The sector is forecast to Republic, Romania, Slovakia and the reach a value US$5.2bn by the end of Russia 9% Baltic states our forecast period, in 2011, double its Romania Slovakia 20% The company, however, has no plans 2005 size, even beating impressive over16% to expand eastwards and seems content all drug market growth of 85% between Source: Zentiva to consolidate its position as a leading 2005 and 2011. A significant proportion of generic sales in Turkey comprise Central and Eastern European drugmaker. coMPANy NEwS AlErt Major Multinational Poised For Entry The increasingly attractive Turkish pharmaceutical market may soon see a major new player, according to US-based contract sales organisation (CSO) Innovex. The company has revealed that it is in talks to provide its post-production outsourcing services with ‘a pharmaceutical giant’ that is planning to begin operation in Turkey shortly. While Innovex has disclosed no names, BMI believes that there is a strong possibility that US multinational Merck & Co will emerge as the company in question. Merck is conspicuous in its lack of local manufacturing facilities, putting it at a severe disadvantage against global competitors, such as GlaxoSmithKline, Pfizer and Novartis, which all have production plants in Turkey. The size and rapid growth of the US$8bn Turkish drug market Continued on next page...  turKEy/JordAN Middle Middle East & Africa Pharma & Healthcare ...continued fro� previous page Drugmakers are generally looking for lower costs of production has been attracting the attention of foreign firms. Recent years have and for increased access to markets with high potential for growth, yet discriminatory import regulations. been characterised by improvements in Where Innovex steps in is to provide theTurkish regulatory environment and Growing Attraction Turkey – Pharmaceuticals Market an outsourcing service for the firms’ stronger trade links with Europe, buoyed 180 post-production phases, such as sales by the country’s aspirations eventually 14 Drug market expenditure (US$bn) a nd marketing, which can prove to 160 to join the EU. Most foreign drugmak- 12 Drug market expenditure per capita (US$) (RHS) be a challenge for firms without local ers with sales in Turkey have moved 140 knowledge. to establish production facilities in the 10 120 Drug companies that have taken country, which benefit from Turkey’s 8 100 a dvantage of Innovex’ services in lower production costs and regional r ecent years include N ovo Nordisk export potential. 80 6 and Eli Lilly. Novo Nordisk signed a Merck, through its subsidiary Mer60 4 two year agreement in 2004 in which ck, Sharpe & Dohme (MSD) may no 40 Innovex supplied 100 sales representalonger be content to act through imports 2 20 tives to aid the commercialisation of alone. MSD’s revenues have grown rapits female hormone therapies Activella idly in recent years, with the company 0 0 2006e 2007f 2008f 2009f 2010 (estradiol + norethindrone acetate) and reported 11% year-on-year (y-o-y) sales Vagifem (estradiol) in the US market. growth in the five years to 2005 in the e/f = BMI estimate/forecast. Source: �N�� IEIS�� Ministry of Health�� National Statistics Office, UNCTAD/WTO, BMI Meanwhile, Eli Lilly’s treatment for emerging markets of Russia, Turkey depression, Cymbalta (duloxetine) was and Hungary. Innovex, the world’s leading CSO, hopes to benefit from the commercialised with the help of some 500 of Innovex’ staff in the stream of foreign firms setting up operations in emerging markets. US in 2002. JordAN coMPANy fINANcE AlErt Hikma Boosted By The Power Of The Brand Hikma seems to recognise the power of the brand. Its sales and Demonstrating that the benefits of a strong brand name are not reserved for patented drugs, Jordan’s best known drugmaker Hikma marketing team numbers 437 people, one of the largest in the Middle Pharmaceuticals has recorded strong sales of US$225mn for the East and Africa. A recognisable brand provides a useful weapon, first half of 2007, an increase of some 45% compared with the same which Hikma can use to its advantage in its battle against unbranded period in the previous year. Its branded generics business was par- competitors based in countries where factors of production cost substantially less. ticularly strong, accounting for nearly half of sales. During the first half of the year the company renewed its focus on the Middle East and Africa, with the acquisition of Egyptian Middle East Hikma’s Strongest Market firm Alkan Pharma for EGP342mn (US$61mn). Hikma also Almost half of Hikma’s revenue is generated in the Middle East, a proportion that has been began production at its new The Power Of The Brand growing over recent years. plant in Portugal, which is Hikma’s Revenue By Sector Strong growth in its home to supply the anti-bacterial region has made up for disagent cephalosporin to the Other Other 2% appointments in the US, Middle East, North Africa Generics 1% Generics 26% Branded 35% where sales fell by 1.3% in and Europe. The company 46% 2006. The company blamed sells a total of 83 branded the decrease on a series of generic products, and has price reductions, forced by particularly strong sales in Injectables Injectables strong competition in the unJordan, Algeria and Saudi 27% 22% branded-generics business. Arabia. Source: BMI�� Hikma W hile Hikma sees its BMI sees branded generhome region as having strong ics as a key area for growth in the Middle East and Africa. The low cost of generics, combined growth potential, one downside that it faces there, more than in the with a name that patients can trust, make for a winning combina- developed markets of the US and Europe, is the threat from countion in emerging markets, where many consumers do not have the terfeit drugs. The Jordanian Pharmaceutical Association recently spending power necessary to purchase patented drugs. Without a announced that the country’s counterfeit drug trade had reached strong brand name to differentiate them, companies must compete US$14mn, which is significant when compared with the relatively on price alone, something that is becoming increasingly difficult small US$196mn legal pharmaceutical market. The rise of illegal in a marketplace that is crowded with cheap Chinese and Indian copies has been attributed to higher costs of pharmaceuticals driven by an appreciating dinar/euro exchange rate. generics.  uNItEd ArAB EMIrAtES Middle East & Africa Pharma & Healthcare INduStry trENdS ANd dEvEloPMENtS Healthcare Privatisation On The Agenda 2011f 2010f 2009f 2008f 2007f 2006 2005 2004 The UAE government has been manoeuvring towards the priva- to meet the demands of citizens, whose desire for high quality treattisation of health services for some time. In its strongest signal ment saw around 62,000 UAE nationals travel to Thailand to undergo yet, the chairman of the Abu Dhabi General Authority for Health medical procedures in the first seven months of 2006. The country Services (GAHS), Dr Ahmed Mubarak Al Mazrouel, has stated the loses out on some US$200mn spent on medical services abroad each Authority’s desire to remove itself from all elements of healthcare year. Interest in premium medical services has risen as the oil-boom provision and focus solely on regulation has created a large privately-insured Premium Demand Outstrips Supply and licensing. expatriate population and increased the UAE Health Expenditure And Hospital Market The government remains the largest 8 disposable income of citizens. 70 Number of hospitals, RHS provider of healthcare in the emirate, The substantial outflow of medical Health expenditure (US$bn), LHS 7 with responsibility for 55% of the martourists will be of particular concern. 60 ket. But this is set to change: over the 6 The UAE has the world’s first health50 coming years the GAHS is hoping to 5 orientated free-zone, Dubai Healthcare place Abu Dhabi’s healthcare almost City, which includes organisations such 40 entirely in the hands of the private sec- 4 as the Mayo Clinic and the American 30 tor. Eventually the UAE government en- 3 Academy of Cosmetic Surgery that aim visages taking operational roles only in 2 to attract medical tourists from around 20 remote areas of the Emirates and in the the world. The government’s privatisa10 1 provision of preventative medicine. tion moves mean that its hopes of turning With demand rising faster than 0 the country into a regional health tourist 0 supply, there is now a shortage of an magnet will lie with the private sector. estimated 2,000 beds in the UAE. The The GAHS was set up in 2001 with f = forecast. Source: BMI �� WHO�� Ministry of Health government finds healthcare co-ordinathe aim of ‘providing the best health tion problematic due to the division of services according to international qualhealth policy between nationwide and emirate-specific authorities. ity standards’. However, the authority has moved away from large This has led to difficulties in presenting a common policy on issues parts of its operational role by bringing in international companies to such as standardised pay for public-sector hospital workers. This manage its hospitals. Many public hospitals have ceded, or are in the month the Dubai Health Authority (DHA) announced a 20% pay process of ceding, administrative and operational functions to private rise for its doctors, a move that will do nothing to placate doctors in companies. In the UAE as a whole, the government has announced the Northern Emirates who have been demanding equal pay. the instillation of independent managerial boards in every governThe government hopes that the private sector will be better placed ment-run hospital in a move to decentralise decision making. coMPANy NEwS AlErt Anti-Counterfeit Packaging To Reduce Fake Drug Threat Demonstrating that some firms can derive benefits from the health professionals. booming illegal trade in counterfeit drugs, Indian pharmaceutical The threat posed by counterfeiters is particularly strong for packaging provider Ess Dee Aluminium is to launch a range of research-based multinationals, who invest large sums of money in anti-counterfeit packaging solutions in the UAE. It has submitted R&D in order to develop blockbuster drugs. Ess Dee’s managing proposals to the UAE government for d irector, Sudip Dutta, claims major Types Of Medicinal Product Counterfeited the construction of a manufacturing brands, such as US-giant Pizer’s Viagra plant in the UAE, which is expected to (sildenafil citrate), lose 30-35% of sales High volume (high level of prescribing) be approved soon. to fakes. Ess Dee counts such names as High price (non-reimbursed, high price differential) The company will invest US$25mn Pfizer, Bayer and Ranbaxy among its Known brand (‘blockbusters’) in its worldwide R&D operations over customers. Lifestyle (embarrassment/stigmatised drugs) the next few years to develop its antiFake drugs are a major problem in Unauthorised drugs counterfeit packaging technology, the UAE. Its position as a major trade including the incorporation of various hub makes it a target for counterfeiters. Drugs with off-label use indications three-dimensional and reflective images According to a recently published EuDrugs in short supply onto aluminium blister pack foil. The ropean Commission (EC) report, 80% Parenterals (in less developed/regulated countries) anti-counterfeit line will complement of the counterfeit drugs entering the EU its range of laminates that include child- Source: The Stockholm Network originate from China, the UAE or India. proof packaging. The UAE government has been keen to The products will be targeted at high demand, well known crack down on the trade, following increasing complaints from the pharmaceutical brands, particularly those in the OTC sector. This public over fake and substandard drugs. Since many pills look almost area is at risk from fake drugs due to the high volume sales and identical, BMI sees distinctive packaging as the best way for customs becasue medicines are purchased by the general public rather than officials and the general public to ensure drugs are genuine.  uNItEd ArAB EMIrAtES/ISrAEl Middle Middle East & Africa Pharma & Healthcare coMPANy NEwS AlErt Pfizer Launches Smoking Cessation Drug For Ramadan Stimulated by its own research into smoking habits, US-giant The effects of Champix are two-fold. Firstly, it reduces the smoker’s Pfizer is to launch its powerful smoking-cessation drug Champix craving for nicotine by binding to nicotine receptors in the brain and (varenicline) in the UAE to coincide with the Muslim holy month therefore reducing the symptoms of withdrawal. Secondly, it reduces of Ramadan. Pfizer’s study found that 63% of the country’s smok- the satisfaction a smoker receives when smoking a cigarette. The UAE, in common with many ers were actively seeking treatment to Looking To Quit? Middle Eastern countries, is becomquit their habit, suggesting there will Pfizer’s UAE Smoking Survey �� of smokers�� ing increasingly aware of the dangers be strong demand for the new drug. Have not of smoking. According to local press Champix is the most powerful cessationsmoked for Actively past 6 seeking reports, 14% of young males and 24% aid on the market – the company claims months treatment of adults living in the UAE smoke. The that the pontential blockbuster is twice 12% 63% country’s National Cancer Registry Reas effective as its nearest competitor Zyport of 2001 indicated that lung cancer ban (bupropion), which is manufactured accounts for more than 10% of deaths by the UK-based GlaxoSmithKline a mong young people. Interestingly, (GSK). Not actively seeking studies have shown that smoking habits Champix is the company’s secondtreatment 25% actually increase during Ramadan, most biggest seller in the cardiovascular and likely because people try to take their metabolic disease segment, generating Sample of 500 smokers. Source: Pfizer mind off fasting, something of which sales of some US$200mn in the first half Pfizer will have taken note when timing of 2007. Despite this healthy performance, the drug was heavily reliant on the US market, where it is the drug’s launch in the Middle East. Government support for reducing smoking is strong. The govknown as Chantix. US sales accounted for 84% of revenue, explainernment has stepped up its anti-smoking drive, with a smoking ban ing why Pfizer is looking to expand the drug’s worldwide reach. The drug was approved by the US Food and Drug Administration in Dubai’s public malls coming into force. Previously, the UAE’s (FDA) in May 2006 following successful trials in which 44% of the Central Department of Health Education had formed a partnership group treated with Champix had stopped smoking after receiving with Swiss drugmaker Novartis in which volunteers from the the drug for 12 weeks, as opposed to 11% of smokers taking the company visited a number of shopping malls and raised awareness placebo – representing four times the strength of willpower alone. about the dangers of smoking. ISrAEl coMPANy NEwS AlErt Teva Enters Into Research Collaboration In a sign that the world’s largest generics drugmaker is considering branching out into a more research-focused product base, Teva Pharmaceuticals has entered into a collaboration with fellow Israeli firm Compugen, which focuses on the discovery and development of cancer, immune-related and cardiovascular therapies. Under the agreement, Compugen will supply Teva with quantities of CGEN-54, its novel spice variant of monocyte chemoattractant protein 1 (MCP1), for in vivo validation experiments. The molecule has been shown to inhibit MCP1, so has potential applications in the treatment of chronic inflammatory diseases including multiple sclerosis, for which Teva has already become a world-leader with the success of its novel drug Copaxone (glatiramer acetate). Compugen will benefit both from Teva’s financial muscle and Continued on next page... TEVA’S RESEARCH STRENGTHS Research area Disease Product Neurological/Neurodegenerative Diseases Multiple Sclerosis Copaxone (glatiramer acetate) Multiple Sclerosis Laquinimod Parkinson’s disease Azilect (rasagiline mesylate) ALS Glatiramer acetate Phase II Alzheimer’s disease Rasagiline mesylate Phase II ALS Talampanel Phase II Lupus Edratide Phase II Psoriasis TV-3813 Pre-clinical Hemato-oncological indications Stem Ex (with Gamida-Cell) Phase III Glioma Talampanel Phase II Auto-Immune/Inflammatory Diseases Oncology Source: Teva 10 Development stage Approved Phase III Approved ISrAEl/IrAN/lEBANoN Middle East & Africa ...continued fro� previous page its marketing strengths as the molecule’s development enters the most expensive stages of clinical trials followed by regulatory approval. Teva will have licensing rights for any products developed from CGEN-54 in exchange for milestone and royalty payments to Compugen. The two companies’ research interests tie up well – both have strengths in inflammatory diseases, cardiovascular diseases and oncology. These areas are of particular interest to research-based drugmakers as they dominate the disease profiles of developed countries, where demand for patented drugs is highest. Further signs of Teva’s interest in drug development can be seen its collaboration with Israeli biotech company ProCognia, which will provide drug development equipment including glycoanalysis Pharma & Healthcare and protein function array test kits, items that will be in demand as Teva expands its drug testing base. BMI expects Teva to make tentative moves towards researchbased drug development, given its success in the generics market, and the higher risks associated with patented drug development. Initially, this will likely take the form of increasing numbers of research collaborations, where some of the initial risk of drug discovery is farmed out to smaller specialist companies. Once a potential compound is produced, Teva can use its financial strength and experience with regulators to push the compound through the latter stages of development and production. In the medium term, Teva can use the success of these collaborations to weigh up a move towards its own specialist research base, which would see it alongside multinational research giants such as Pfizer and GlaxoSmithKline. IrAN rEgulAtory dEvEloPMENt Hepatitis C Drug Discovery Demonstrates IP Failings 2011f 2010f 2009f 2008f 2007f 2006e In a development that calls into question the effectiveness of Iran’s clude the US and EU. Schering Plough manufactures Peg-intron intellectual property (IP) regime, Iranian scientists have successfully (peg-interferon-2b), while Roche manufactures Pegasys (peg-inmanufactured polyethylene glycol (peg), a key molecule in the treat- terferon-2a). The two companies were involved in a patent dispute ment of chronic liver disease hepatitis C. concerning the similar products 2001, Unlikely To Reach Foreign Markets The substance is used in peg-interferon but entered into a licence agreement Iran Pharmaceutical Trade Balance (US$mn) combination therapy, and subject to pat- 800 under which all lawsuits were dropped ent protection in many countries. relating to European and US filings in Imports Attaching peg to interferon has been 700 return for the cross-licensing of each Exports shown to increase the length for which 600 others existing patents. therapies are effective by reducing the 500 According to Article 28 of the Law rate at which the body breaks down inof Registration of Marks and Patents 400 terferon. Use of peg in the combination in Iran, pharmaceutical formulae and therapy means the viral load reduces 300 compounds are not patentable, but a faster and the frequency of interferon 200 patent may be filed for processes related injections can be decreased. to the manufacture of pharmaceuticals. 100 Deputy head of the Growth Centre However, according to specially devised 0 for Pharmaceutical Technology Units at legislation, pharmaceutical products Tehran University of Medical Sciences, must have a registered trademark. D r Seyyed Mohsen Nayebpour, an The Iranian hepatitis C market is e/f= estimate/forecast. Source: BMI�� WHO�� World Bank�� Ministry of Health nounced that the technology to produce small – the country reports an infection peg-interferon was introduced into Iran’s rate of less than 1%, one of the lowest pharmaceutical industry in September. Nayebpour believes Iran’s levels in the world. Thus, Schering Plough and Roche will not lose production can challenge the dominance of multinationals. However, sleep over lost revenue from the Iranian move. The consequences BMI expects lawsuits to flood in if Iranian companies attempt to are likely to be more serious for Iran, which is in the process of market the market on worldwide pharmaceutical markets. applying to join the WTO. Cases such as this serve to highlight the Drug giants US-based Schering Plough and Swiss firm Roche massive changes that are needed in Iran’s IP climate to comply with both hold patents for peg-interferon products in markets that in- the WTO’s conditions of membership. lEBANoN coMPANy NEwS AlErt Pharmacy Software Firm Looking For Gulf Expansion In a sign of the trend towards technology in Middle Eastern pharmacies, Lebanon-based New Information Technology (NIT) is looking to expand sales into the Gulf Co-operation Council (GCC) region. The company promoted its computerised drug-dispensary solution at the Middle East’s most important technology exhibition, GITEX Technology Week in the UAE, held on September 8-12, in the hope of attracting a regional distributor. Continued on next page... 11 lEBANoN/SAudI ArABIA Middle East & Africa vEN Pharma & Healthcare ...continued fro� previous page 2011f 2010f 2009f 2008f 2007f 2006e Services operates more than 60 pharmacies across the country. NIT’s flagship product, SoftPharm, a computer program designed There are estimated to be 11,000 pharmacies in Saudi Arabia, for pharmacies, has taken the Lebanese market by storm. Company but NIT has so far been unable to gain access to the market. Saudi sources claim to have the software inArabia is the region’s largest OTC secLow Domestic Demand stalled at 1,100 sites in its home market, tor, which B MI e xpects to reach a Lebanon OTC And Prescription Drug Market Forecasts, 2006-2011 representing the vast majority of pharma- 700 value of US$470mn by 2011. The OTC cies in Lebanon. However, the country’s market has expanded rapidly over the Prescription market (US$mn) OTC market (US$mn) pharmacy network is relatively small 600 last two years, following the switching and underdeveloped, with fewer than 500 of several products from prescription to 1,500 independent and hospital-based non-prescription status, with most sales dispensaries, meaning the company must 400 conducted through pharmacies. look abroad to boost sales. The fragmented nature of the coun300 The program has proved equally try’s pharmaceutical market will furpopular in overseas markets such as 200 ther boost demand for technological Jordan and Syria, which have similar 100 solutions. The high number of supplilaws governing pharmacies to Lebanon. ers makes it difficult for pharmacies to 0 However, further expansion into the keep track of stock. Local drugmaker region’s most lucrative markets – the S PIMACO i s the leading player in GCC member states – is posing a chal- e/f = estimate/forecast. Source: BMI the OTC market. GSK Saudi Arabia lenge due to differing regulations. In i s the second-largest OTC supplier, Lebanon, the market is made up of single with a number of high selling products pharmacies, which are prevented from opening further branches including the analgesics Panadol Acti-Fast (paracetamol) and the by law, whereas in the GCC countries the market is dominated by cough and cold treatment Panadol Sinus (paracetamol + pseuchain pharmacies. For example, Saudi Arabia’s Al Dawaa Medical doephedrine). SAudI ArABIA coMPANy NEwS AlErt State Medical Supplier Created The Saudi Arabian government is to tighten its grip on medical supplies with the establishment of a national company that will be the sole provider of medicines and medical appliances to public health institutions. Industry observers are seeing the move as an attempt to overcome the difficulties associated with the country’s fragmented SAR5bn (US$1.3bn) medical supply market. The National Company for Unified Purchase of Medicines and Medical Appliances will begin operations with an injection of SAR2bn (US$533mn) from the authorities. The government will initially have full control of the company, but it reportedly plans to sell up to 30% of the shares in an initial public offering (IPO) later in the year. In what will prove a controversial move, local sources claim that the government will prevent leading private firms from taking a stake in the new company. The company’s creation will result in the substantial loss to private firms of their 35% tender for the supply of government hospitals, leading some of the smaller firms to fear that they will be driven out of business. The government, through the Ministry of Health and Secretariat General of Health (SGH) for the GCC dominates demand for pharmaceuticals, accounting for around 70% of health expenditure. The new company will become the largest supplier in Saudi Arabia, taking over from largest private importer Banaja Saudi Import Company, which is one of 10 private companies sharing around 50% of the market. The move follows recent trends towards centralised control of medicine prices across the Middle East. GCC members have attempted to align their drug pricing policies in recent years, with the approval of a unified pricing mechanism for the public and private sectors and the submission of joint tenders. Saudi Arabia is highly dependent on drug imports, which leaves it exposed to external factors such as currency fluctuations for the cost of pharmaceuticals. The government insistence on strict price controls has squeezed the profit margins of private importers, making it increasingly unattractive for firms to import medicines. Thus the government has seemingly decided that dealing with a single medical supply company, over which it has significant control, will simplify the process and reduce dissent over low profit margins. SAUDI ARABIA – MARKET FORECASTS (US$MN) 2006 Pharmaceutical imports, total Pharmaceutical exports Pharmaceutical trade balance 2007f 2008f 2009f 2010f 2011f 1,015.0 1,040.0 1,092.0 1,147.0 1,204.0 1,264.0 120.0 123.0 148.0 177.0 213.0 255.0 -895.0 -917.0 -944.4 -969.5 -991.4 -1,009.1 f = BMI forecast. Source: BMI, UN, Ministry of Health Analyst: Thomas Butt Editor: Jamie Davies Sub-Editor: Nicola Gollan Subscriptions Manager: Ezster Solyom Marketing Manager:Charlie Ranger Production: Jaspal Mandla/Angela Thomas/Melissa Cuk Publishers: Richard Londesborough/Jonathan Feroze © 2007 Business Monitor International. All rights reserved. Copy deadline 1 October 2007 All information, analysis, forecasts and data provided by Business Monitor International Ltd is for the exclusive use of subscribing persons or organisations (including those using the service on a trial basis). All such content is copyrighted in the name of Business Monitor International, and as such no part of this content may be reproduced, repackaged, copied or redistributed without the express consent of Business Monitor International Ltd. All content, including forecasts, analysis and opinion, has been based on information and sources believed to be accurate and reliable at the time of publishing. Business Monitor International Ltd makes no representation of warranty of any kind as to the accuracy or completeness of any information provided, and accepts no liability whatsoever for any loss or damage resulting from opinion, errors, inaccuracies or omissions affecting any part of the content. ...
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