FINDING THE RIGHT CHEMISTRY
The UAE's pharmaceutical market presents significant growth opportunities for multinational drug makers, yet the impact of lower medicine prices will create challenges for innovative companies operating in the Emirates.
In January 2018, the Ministry of Health and Prevention reduced the prices of 762 generic and innovative medicines, for health issues ranging from bacterial infections to cancer and heart illness. The reduction follows a trend initiated in 2011, when 565 innovative medicines saw their prices go down. Since then, 8,732 pharmaceutical prices have been re-adjusted, with the majority being for the treatment of chronic diseases. The latest round was officially implemented in September 2017 following negotiations between the Ministry of Health, local pharmaceutical companies, and multinational firm Sanofi.
The decision has been framed as a step to encourage international pharmaceutical companies to locally manufacture their products. Dr. Amin Hussein Al Amiri, the UAE's assistant undersecretary for public health policy, confirmed this priority: “Our commitment to encouraging international pharmaceutical companies to locally manufacture will not only give patients access to affordable but innovative medicines, but also benefit local factories through technology transfer." However, a brief look to the national pharmaceutical industry reveals that the ultimate goal of lowering prices is to protect end users. The implications of such pricing adjustments reflect the current landscape of a pharmaceutical industry that in the UAE is still heavily reliant on imports. It is estimated that between 75-85% of pharmaceuticals used in the UAE healthcare sector are imported from abroad; this trend is mirrored within the IV Solutions market that is largely dominated by overseas suppliers. This is especially true when looking at Abu Dhabi. Multinational companies such as Johnson & Johnson, Colgate, Roche, Sanofi, GlaxoSmithKline, and Quest Vitamins are all based in Dubai, leaving the capital of the UAE and its surrounding regions with a small, consolidated market where the same distributor buys both general and specialized products to fill in the needs of the local population.
Abu Dhabi's pharmaceutical sector is still presented with different challenges. Enhancing intellectual property rights, revising international trade agreements, and establishing a reliable drug-testing and approval system are all paramount targets to attract foreign investments. In this sense, the implementation of an efficient digital system will be crucial. A good model to follow could be Fast Track Innovator, an effective fast track system for registration of innovator drugs that makes it easier to conduct payments for those who seek treatment in the UAE.
In addition to the streamlining and standardization process that technological upgrades could bring, manufacturing plants in Abu Dhabi face the same challenges currently faced by the industrial sector, which, unless properly addressed, are likely to discourage foreign companies from setting up their operations in the Emirate. However, the regulatory environment still presents wide opportunities for players on all sides of the spectrum. As pointed out by Dr. Abdul Rauf Jabour, founder and CEO of Pharmalink, the UAE is becoming more accepting of new and innovative medicines. Proposed reforms to the country's drug regulatory system will likely gain traction over the coming years, especially in Abu Dhabi, where the pharmaceutical sector is included within one of the seven pillars of the Emirate's Economic Vision 2030. By 2020, it is calculated that drug expenditure will reach a value of USD3.58 billion, equaling to a compound annual growth rate of 8.2% since 2013 and 6.1% since 2016. By 2025, those numbers are expected to almost double, with drug expenditure to reach USD5.92 billion, driven by population growth, a changing disease profile, and the use of modern medicines such as biotechnology drugs.
With vocational training playing an increasingly important role in shaping the future workforce of the country, Abu Dhabi's phrmaceutical sector is in the midst of an evolution that has the potential to bring extremely rewarding results in the medium to long term. It is all about finding a balance.

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