Drivers of Growth for the Pharmaceutical Industry in MEA Region

If asked to nominate which sector of the economy benefitted most from the recent global COVID pandemic, many would propose ‘Pharmaceuticals’, and they would be right. Data from various market research firms suggest the global value of the pharmaceutical sector is anticipated to reach US$1.5 trillion by the end of 2023 and the industry is estimated to grow to over $2.4 trillion by the end of 2029.

According to IQVIA’s research, the pharmaceutical market in the Middle East and Africa (MEA) has surpassed $25B in value, exhibiting an impressive compound annual growth rate (CAGR) of 8%. This growth rate outperforms the expected global CAGR of 5.27%

It is logical to infer that the Middle East and Africa (MEA) market is one of the growth drivers of the global pharmaceutical market and the region would continue to draw investment towards pharmaceutical manufacturing and marketing sectors.

While there are clearly major differences across the region, we have identified five broad trends which may drive the growth of the pharmaceutical sector over the next decade. 

1. Government support towards balancing Affordability and Access:

• UHC2030, a global platform which brings together multiple stakeholders to take action to advance progress towards universal health coverage stated, “Universal health coverage should be essential foundation for effective pandemic prevention, preparedness, response, and recovery of health systems”
  
  
• Most countries around the globe are moving in a promising direction towards better access to healthcare and medicine. Enhanced access to medicine would mean more consumption of medicine at affordable prices. These factors are positively influencing government policies to support and incentivize the localization of medicine manufacturing.

The unbiased insights beyond data from consulting agencies may increase the likelihood of acceptance from healthcare authorities in favor of equitable pricing and faster market access to drugs.

2. Mergers, Acquisitions and MOUs

Like other sectors, pharmaceutical businesses must expand economies of scale to more effectively at the global level as well as at the regional level. Pfizer’s purchase of Seagan at 46B USD on global scale, while on the regional front KSA based AJA Pharma signing a MOU with UAE’s Bioventure FX-LLC to license and supply new pharmaceutical products are a few examples.

In the pharmaceutical sector, these deals are largely driven by the strategic intent to further consolidate or diversify the portfolio based on various factors like epidemiological insights, pharmacoeconomic factors, and to reach a larger target population across different countries.

3. Increased collaboration in manufacturing capacity within the MEA region

Post Covid, policymakers around the world are placing increased emphasis on the importance of becoming self-reliant on medicine for national interest. MoHAP (Ministry of Health and Prevention) UAE has been instrumental in encouraging the production of new products once patents for innovative drugs expire and open up market opportunities; acting as a facilitator for the industry to expand.

As per a recently published report by Dubai World Trade Centre, UAE has 23 pharmaceutical manufacturing facilities compared to just 4 back in 2010.

In late 2021, Mubadala Investment Company also partnered with G42 to set up a biopharmaceutical manufacturing campus in Abu Dhabi. This will explore opportunities in global vaccine and therapeutic products for regional distribution.

4. Export to neighboring countries

Despite being a relatively new player on the global pharma manufacturing landscape, the UAE was quick to establish its credibility as a quality-led manufacturing hub. This achievement can be attributed to the diligent efforts of the Ministry of Health and Prevention (MoHAP) that have played a pivotal role in ensuring the product quality and acting as an industry guardian.

According to ADQ’s 2022 Redefining Regional Pharma white paper UAE Pharma Exports forecast to grow to around $297 million by 2025, up 15% from 2021.

5. Emergence of online Pharmacies to further improve the access to medicine

Online pharmacies gained more traction during COVID-19 pandemic because of the convenience during the quarantine protocols. A survey conducted by International Pharmaceutical Federation states. ‘it has improved access to medicine with better pricing thereby helped in enhancing patient care’.

Chain of Pharmacies already existing in MEA region have been ahead of the curve to capitalize this new driver of growth.

However, like any new business this also comes with its own set of opportunities and challenges when it comes to market and location mapping, customer targeting, distribution, and supply chain management. It is prudent to seek complete mapping done by expert consultants with a comprehensive understanding of the entire value chain.

Summary

Middle East and Africa offers unique business opportunities because GCC Countries make a sizeable contribution to the value market, have patent protection, and the business is driven by high value branded and branded generic products. While Africa makes a sizeable contribution to the volume business since most African countries are waived from Patent Protection, medicines are sold at a much lesser price as a generic product to improve access to medicine.

Having a manufacturing plant in the Middle East offers faster access to value driven markets of the Middle East and volume-driven markets of Africa (which essentially covers the operational costs of the plant considering minimum batch size), also products manufactured in GCC Countries command a better price premium in Africa and neighboring markets compared to products manufactured in other geographies.