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Why Pharmaceutical Companies Struggle in the Middle East – How to Navigate through the Minefield

1st May, 2016

Category: Regulatory Compliance

With increasing demand for better healthcare and innovative drugs, the Middle East is fast becoming a regional hub for many pharmaceutical companies. However, most will testify that the process of establishing a pharma company in the region and particularly in marketing products is painstakingly long and cumbersome. As a result, we are seeing the Middle East pharmaceutical industry lagging behind other global markets.

Whether it’s registering a new drug, navigating through the regulations or setting up shop, understanding the local process is key. Having witnessed pharma companies struggle with this, we have decided to publish a series of posts aimed at informing pharma companies on the things to be aware of when approaching the market, as well as some tips on making a real impact in the region.

There are numerous key factors that are holding pharma companies back in the Middle East, including:

  1. Timeliness of drug launch
  2. Government policies
  3. Poor patient engagement
  4. Selection of the appropriate distributor

In this series of articles we’ll do a deep dive into all four areas, starting with timeliness of drug launch. It is very common to see delayed launch of new drugs in the region. But why is this?

Drug registration and approval process

The registration process is a minefield with few guidelines to follow to increase the likelihood of success. To top it off, there is a multitude of supplementary documentation that needs to be submitted along with the application form, the result of which means that pharma companies need to plan getting a product registered well in advance of initial estimates. It should be noted that within the UAE, the Ministry of Health has introduced a fast track process for drugs considered innovative; although this does not apply to all GCC markets.

Pricing negotiations

Pricing negotiations in the Middle East are far from transparent. While regulations are in place to guide drug pricing with several countries applying international references for pricing, the final pricing decisions often do not reflect these guidelines – negotiations often have to take place in order to settle on a final list price.

Local presence

In recent years, we have seen an increasing number of big Pharma companies having a local presence. Within the UAE, about 90 international pharmaceutical companies have established themselves in the country. Last year, Sanofi signed a manufacturing deal with Globalpharma in the UAE while Pfizer has established a manufacturing plant in King Abdullah Economic City (KAEC), Saudi Arabia.

While an imported drug can take between 1-2 years to get approval, local presence and manufacturing results in preferential regulatory assessments and hence reducing market authorization timeline to 3-6 months.

Other drivers for pharma companies deciding to have a local presence include the preference these companies get when bidding for Gulf tenders, understanding of local practices and lower operational costs particularly when partnering with local companies. This ultimately means that pharma companies have wider access with a faster route to the region. So how does a pharma company get local presence?

Partnering with local companies

Partnering with local companies can be in the form of distribution or manufacturing. In the GCC, foreign drug manufacturers are required to sell their products through local importing and distribution companies.

From a manufacturing perspective, tie-ups with local companies are usually long-term agreements, which can be renewed at regular intervals. One thing to bear in mind is that due to the limited number of local manufacturers and regulatory delays, partnerships can a lot of time. However, the long-term benefits can yield to a solid ROI.

Setting up a company locally

In addition to tailoring marketing initiatives to local nuances, setting up a company locally also exposes pharma companies to new opportunities such as partnering with local government agencies to deliver on health care including research and development.

How have your experiences been in set up, registration or distribution in the Middle East? Feel free to share your thoughts and comments below.