A growing number of Indian pharmaceutical companies are looking towards the Middle East health industry to market their products and set up operations, in countries such as Saudi Arabia, Bahrain, Kuwait, Oman, Qatar, UAE, Lebanon Jordan and Egypt to name a few.
The industry has thus far successfully established its brand image worldwide and is now focused on bringing in valuable foreign exchange. Indian companies have entered the Middle East region aggressively by offering cost effective medicines, thereby proving competitive to multinational firms already present in the area, according to Pharmabiz. The region is especially appealing since it is only semi-regulated. An added draw for such companies is that rising medical awareness amongst Middle East residents and growth in per capita income is also raising demand for more advanced pharmaceutical products.
The Indian pharmaceutical industry is rated one of the world's largest, and has in recent years invested large funds in research and development, including in the areas of biotechnology and biopharmaceuticals. Furthermore, having a significant base of approved facilities, Indian firms are in a position to undertake contract manufacturing for major global pharmaceuticals companies. They have thus built a robust distribution network made of dealers and distributors who are monitored by their own subsidiaries.
Despite stiff competition from MNCs in the Middle East region, the Indian pharma companies are set to grow rapidly and already have a strong base in the region. Indian companies such as Ranbaxy, India's top generic company, has three brands in the top 50 list of medicines sold in the UAE, and Cipla, the second largest Indian pharma company after Ranbaxy, maintains a strong presence in the Middle East; the company's exports to the Middle East region comprise more than 10% of its total export earnings.
Other companies such as Orchid Chemicals and Pharmaceuticals Ltd. recently increased its exports to the region, exporting formulations to over 28 countries, while Kopran recently established a joint venture, expected to significantly increase operations in the area, and is in the process of getting registration for several new products. Other companies include Lupin, Panacea Biotec, Divi's Laboratories, Ind-Swift Laboratories Ltd., and Dishman Pharmaceutical, which has established a 100 percent wholly owned subsidiary called Dishman FZE in Dubai which earned an impressive net profit of Rs 1.79 crore during its first year of operations alone in 2004-05. Dishman has also executed various agreements with Arab Company for Drug Industries and Medical Appliances (ACDIMA) for a joint venture.
Lastly, Glenmark Pharmaceuticals (which has a relatively small hold in the region compared to other firms) has also established roots in the Middle East.
To this date, however, Glenmark has a relatively weak base in the reigon, with sales limited to Yemen, Oman and the UAE. Furthermore, the company's sales to the UAE consist solely of the tonic and restorative herb, Ginseng, under the brand name of Glenseng. Such limited operation in the area may be in part to recent complications the company has encountered, including questions of proper quality control of its products and clinical trials in several countries. In addition, the US FDA recently suspended clinical trials on a new drug of the company following the deaths of several monkeys who were administered doses of the drug in laboratory tests.
Such developments, however, should not come as a surprise since despite the impressive growth of India's pharmaceutical industry, widespread problems exists within it, including corruption and bureaucratic obstacles.
According to a report published in India, "It is very difficult for US companies to apply FDA rules to a manufacturing site in India." The author of the report, H. Joshie, goes on to point out that "American companies must examine the aspects very carefully and should have definite policies in place before entering the Indian pharmaceutical industry." Furthermore, "Corruption and bureaucracy exist from top to bottom…widespread corruption and a deeply integrated system of bribery make every transaction complicated and expensive."
Despite such obstacles, it is clear that such companies will continue to strive to expand their operations, not only in the Middle East, but in other international arenas as well. Companies dealing with such firms, be they local pharmas or distributors in the Middle East or MNCs working in collaboration with them, will need to be prepared to deal with the challenges brought by such collaborations in order to also reap their benefits.
© 2007 Mena Report (www.menareport.com)
