Innovating Growth: Advancing Healthcare & Biopharma across MENA

The Middle East & North Africa (MENA) region is grappling with complex factors driving healthcare demand.

Increasing life expectancy, coupled with lifestyle changes besides the fact that the area 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.

This edition of Arar Notes addresses these challenges since governments across the region have embarked on ambitious healthcare 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 while the Kingdom of Saudi Arabia (KSA) and the United Arab Emirates (UAE) are the largest.

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

1. Rising healthcare 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.
2. 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.
3. Price controls in the MENA region have been a double-edged blade. 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 healthcare cost containment. However, the long-term implications of this policy on the market, pharmaceutical companies, and health care in the GCC remain uncertain.
4. Advancing the regulatory environment with the establishment of government regulatory bodies, such as the Saudi Food and Drug Authority (SFDA) and the Jordan Food and Drug Authority (JFDA) play essential roles in ensuring drug safety and quality. They play a central role in streamlining drug registration processes and promoting local manufacturing.
5. Generics & 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 healthcare costs and diversify their economy. Recently the investments made by international companies in the nation, including joint ventures with domestic producers and the construction of new facilities.
6. Strategic partnerships between governments and multinational pharmaceutical companies are emerging, facilitating knowledge exchange and investment. This aligns with widespread regional plans for economic diversification away from an oil-centric market, and the various Vision 2030 strategies 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 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 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 healthcare 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 healthcare 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 drive 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. Generic 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 & growth.

Stay tuned for more updates on how global efforts are shaping the future of public health and enabling countries to tackle complex challenges head-on.

Arar Notes is Bayan A. Arar newsletter issued monthly with the latest updates across HealthCare & Life Sciences. Read about this month’s insights and subscribe for monthly updates on the latest in global health, Life Sciences, wellness, and more.