November 2011

Middle East Generics Pharma

Ata D. Nazer

Pharma Strategist

The Middle East

Topics

• Facts about ME markets

• Demand/ Growth Drivers

• Growth – What are the issues?

• ME Generics Challenges

• Registration Barriers

• Pricing

• Generics Share by Country

• Outlook 2011 - 2014

• The ME Opportunity

• Jordan – As a generic hub

Facts about ME market - 1

• ME markets have high dependency on imported drugs

• All ME countries with the exception of Bahrain have or started local production of generics

• Jordan is the leading Arab pharmaceutical exporter

• Lebanon, an almost exclusive import market

• Saudi Arabia, the largest market of the Arabian Gulf

• The United Arab Emirates, has the highest-priced market in the region

Facts about ME market - 2

• Overall the Middle East’s pharmaceutical market is valued at more than $9.7bn and is expected to grow at healthy 10-15% annually.

• There are more than 120 pharmaceutical manufacturers in the Middle East- With the exception of Syria, all Middle Eastern countries are high importers of branded drugs.

• Saudi Arabia, as the richest regional market, has embarked on an ambitious hospital building project - growth is partly driven by greater access to generics

• Local manufacturing capabilities are constrained to generics or under license from originators

Generics Share by Country

2010 Local

Production Population GDP

Pharma

Sales

Generics

% Value

Bahrain No 1.0 22.3 118 9.0% 11

Oman 2000 3.1 62.2 152 6.0% 9

WB & Gaza 1960s 4.1 6.6 200 35.0% 70

Qatar 2008 1.0 109.0 227 10.0% 23

Kuwait 1992 3.6 144.2 374 30.0% 112

Jordan 1957 6.0 27.5 400 54.0% 216

Yemen 1980s 24.1 31.2 565 30.0% 170

Syria 1970s 22.5 59.0 800 70.0% 560

Lebanon 1960s 4.1 39.2 914 39.0% 356

Iraq 1970s 30.0 82.1 1,300 60.0% 780

UAE 1984 5.0 250.6 1,841 9.0% 166

Saudi Arabia 1986 26.1 442.9 2,860 12.0% 343

Totals 130.6 9,751 28.9% 2,815

Per Capita Pharma Expenditure

0

50

100

150

200

250

300

350

400

23 36 43 49 4967

104 110 118

223 227

368USD

Source: JAPM, BMI 2010

USA: 956, Spain: 578

Size of ME Markets

-

500

1,000

1,500

2,000

2,500

3,000

118 152 200 227 374 400

565 800 914

1,300

1,841

2,860

USD

Mill

ion

Source: JAPM, BMI 2010

Total: USD 9.7 Billion – 1% of Global Market

Share of Generic

-

500

1,000

1,500

2,000

2,500

3,000

USD

Mill

ion

Source: JAPM, BMI 2010

Highest: Syria 70%, Lowest: Oman 6%

9% 6%

30%

70%39%

60%

9%

12%

35% 10%

30% 54%

Demand/ Growth Drivers

• Acceptance and use of branded generics is growing

• Governments' support for domestic production

• Increase health insurance coverage

• Population growth is higher than global average

Growth- What are the issues?

Limited Market Access

Regulatory Scrutiny

Required marketing spending

Internal Capabilities

Limited production capacities specially for injectables which accounts for 34% of products to be off patent by 2014

ME producers will struggle to capture market share in this decade due to:

Availability of skilled technical staff

ME Generics Challenges

Market Challenges

Development Investment

Price competition

& erosion

Reference Pricing

Availability of Expertise

Slow Registration

Consumer Awareness

Marketing Expenses vs.

originator

Lack of strategic vision

for growth

Registration Barriers

• Registration time takes 1 to 3 years

• Some countries give preferential treatment to local producers reflected by:

– Faster registration time

– Preferential pricing

– Limitation on imports

• Saudi FDA has stringent regulations influencing other GCC countries

Pricing is controlled

• Prices are controlled by health authorities

• First generic is priced 20% or lower than originator

• Prices are determined by:

– Country of origin price

– Reference countries’ prices

IP Protection Developing

Country WTO Membership TRIPS Implementation

Bahrain January 1995

Iraq Observer

Jordan April 2000

Kuwait January 1995

Lebanon Observer

Oman November 2000

Palestine N.A.

Qatar January 1996

Saudi Arabia December 2005

Syria Observer

Yemen Observer

Initiated IP protection legislation Considering IP legislation

Top Manufacturers by Country

Country Company

1 Saudi Arabia SPIMACO, TABUK

2 Jordan Hikmah, Dar Al Dawa, Midpharma

3 UAE JULPHAR

4 Iraq State Drug Industry Company (SDI)

5 Syria Thameco, Asia, Oubari

Outlook 2011-2014

• It is estimated that USD 200 billion worth of drugs will go off patent by 2014

• ME share of the global is 1%, the potential new generic sales by 2014 is up to USD 900 million

• Average generic prices in ME is about 50% of originator, which means USD 450 million of new sales

• More privatization of the industry is encouraged for the few countries that have high government involvement

• Better implementation of TRIPS

The ME Opportunity

• Demand for generics in ME will have CAGR of 15%

• Manufacturers will need to establish new facilities, expand existing capacities, and look for acquisitions.

• Labor costs in ME are relatively low

• All ME governments support local pharma production

Pharma in Jordan

• Pharmaceutical exports reach more than 60

countries worldwide with more than 80 patents

registered in Europe, the United States and

Japan.

• A low cost regional manufacturing/sales hub

• Exports reaching $US 620 million in 2010

• 30% less cost than Europe and USA in clinical

trial testing and bioequivalence studies.

• Market driven legislations: Strict adherence to

Intellectual property laws and enforcement

• 11 universities with medical subjects, 8

pharmacy colleges, 7 clinical research

organizations (CROs).

• World class Medical infrastructure: Jordan is

the region’s medical treatment hub (ranked no.1

as medical tourism destination according to

World Bank)

Turn to Jordan

Scored 68.9 on Economic Freedom World Av. 59.7

4th Most Free Economy in the Region

Scored 70.0 on Investment Freedom World Av. 50.2