The outlook for pharmaceuticals in the middle east and north africa
The Outlook for Pharmaceuticals in the Middle East andNorth AfricaReport SummaryAttractive macro-environmental conditionsIn spite of recent political unrest, economic, social and demographic changes are making thepharmaceutical markets in the Middle East & North Africa (MENA) region more attractive.The Economist Intelligence Unit (EIU) forecasts that the five MENA markets covered in thiscollection will represent a combined GDP of US$2.5 trillion in 2016, led by Turkey and SaudiArabia. Economic development is changing the epidemiological health profile in the region,with the increasing prevalence of communicable diseases. In demographic terms, thepopulation in these five MENA pharmaceuticals market is still young and is expected toreach 246.2 million in 2016, headed by Egypt and Turkey. Nevertheless, there is a sizeableelderly population that will increase demand for healthcare services.Healthcare development towards privatisationThe population has different levels of expectations in each national healthcare system. Thehealthcare system in Egypt, for instance, is in a transitory phase, characterised by progresstowards privatisation. While access to free healthcare exists, private services are appearing as aresult of the decline in the standard of public sector care. There is a need for considerableinvestment in order to continue the modernisation of programmes and maintain the existingfacilities. There are two main areas of reform: primary healthcare and the provision of anational health insurance scheme. In Morocco, the health insurance system is in a transitionalphase. Overall, opportunities exist, particularly in Turkey and Egypt, as combined healthexpenditure in these five markets is projected at US$153.2 billion in 2016.Increasing pharmaceutical demandInternational companies recognise the value and potential of these five MENA pharmaceuticalmarkets. Sanofi, for instance, is the largest pharmaceutical operation in Morocco, whilstGlaxoSmithKline is the leader in Saudi Arabia. Some local producers, such as Hikma fromJordan and SPIMACO from Saudi Arabia, aim to become regional leaders. The projectedCAGR 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 acombined value of US$35.8 billion at retail prices in 2016, including pharmacy and hospitalsales. The region is headed by Turkey, followed by Egypt and Saudi Arabia. Localmanufacturing production is fragmented and geared towards branded generics, but reliance onimports remains. Biotechnology is still in its infancy.
HIGHLIGHTS FROM THE REGIONEGYPTEgypt is expected to be the second leading pharmaceutical market in the MEA region in 2016.Providing the political situation stabilises and the economy continues to perform well, theEgyptian pharmaceutical market at retail prices is expected to rise by a high CAGR in US dollarterms between 2011 and 2016. Espicom estimates that the market increased by nearly fivetimes between 1995 and 2010. Nevertheless, per capita consumption is still low. In spite ofrecent production problems, production is expected to rise as the healthcare system continuesits transition towards modernisation. Considering opportunities beyond BRIC pharmaceuticalmarkets, Egypt is becoming a very attractive market for multinational pharmaceuticalcompanies focused on emerging markets.JORDANJordan has a relatively strong level of domestic production; however, the majority is exported,resulting in a market still dependent on imports. Most imported pharmaceuticals are retailmedicaments from countries located in Western Europe, such as Switzerland and Germany,while exports are primarily semi-finished and retail medicaments destined for other countriesin the MENA region. The largest pharmaceutical company in Jordan is HikmaPharmaceuticals, with a market share of over 10%. The company has a number ofmanufacturing facilities in Jordan, as well as R&D facilities. In October 2010, Hikmaannounced it was to acquire an injectables business from a US company, which willsignificantly enhance the scope of the company’s injectables business worldwide. Previously,Hikma acquired an Algerian company in April 2010 and a Tunisian company in March 2010,strengthening its presence in the MENA region.MOROCCOAlthough the Moroccan pharmaceutical market is small in global terms, per capita spending onpharmaceutical products is comparatively high for an African country. The pharmaceuticalmarket, which was stagnating prior to the launch of the universal health insurance scheme in2006, is expected to grow by a moderate CAGR between 2011 and 2016. Over 50% of thepharmaceutical companies operating in the country are owned by foreign interests, and thesecompanies are responsible for more than half of industry turnover. Multinationals with astrong presence in the Moroccan pharmaceutical market include Sanofi, GlaxoSmithKline andPfizer. Hikma is also expected to increase its market penetration, following its acquisition of63.9% of Promopharm, announced in October 2011. Independent local manufacturersprimarily manufacture under licence or produce generics. Leading indigenous producersinclude Cooper Pharma, Laprophan and Sothéma.SAUDI ARABIAThe Saudi pharmaceutical market is the richest in the Gulf region and is expected to rise by aCAGR in the high single digits during the 2011-2016 period. The private pharmacy sector tendsto favour branded pharmaceuticals but is marked by tight price controls. The leadingcompanies operating in the sector are GlaxoSmithKline and SPIMACO. The public sector,more generic-led, is dependent on oil revenues and is characterised by cost-containment andlate payments for tenders. There is little domestic production in Saudi Arabia, therefore thevast majority of the market is provided by imports. There are only a few major domesticmanufacturers in the country. Locally made pharmaceuticals supply only around 15% of themarket, and the rest of the output is mainly exported to other Gulf Cooperation Council (GCC)
countries.TURKEYTurkey is the largest MENA pharmaceutical market, due to the size of its population and GDP.The Turkish pharmaceutical market is expected to grow by a high single digit CAGR in USdollar terms between 2011 and 2016. While the overall pharmaceutical market size is amongstthe top 30 largest in the world, per capita spending on pharmaceuticals in Turkey remains low,especially when compared with a European country. Given the possible accession to the EU,though this is still at least a few years away, the potential for growth is very promising,compared to more established and mature markets in Western Europe. There is a stronggenerics industry; according to the Pharmaceutical Manufacturers’ Association of Turkey(IEIS), generics account for over a third of the market in value terms and just over half involume terms. There is room for this sector to expand as physicians are not activelyencouraged to prescribe generic drugs and there are no incentives for pharmacists to dispensethem.THESE REPORTS ANALYSE THE ISSUESThe Outlook for Pharmaceuticals in the Middle East and North Africa is a unique collection ofmanagement reports from Espicom Business Intelligence. Each report provides individual andhighly-detailed analysis of each market, looking at the key regulatory, political, economic andcorporate developments in the wider context of market structure, service and access. Thereports are available individually, or as a discounted collection, and prices include 4 completelyupdated reports sent quarterly, together with a comprehensive statistical appendix. There areover 60 markets covered in the worldwide series.Latest Research Reports: World Cement to 2015 World Industrial Valves to 2015 Global STM Publishing 2010-2011 Oilfield Chemicals to 2015 World Nutraceutical Ingredients to 2015 Roofing to 2015 HVAC Equipment to 2015 (Heating, Ventilation & Air Conditioning) Filters to 2015
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