Fitch Solutions expects pharmaceutical market in GCC to double by 2028

The pharmaceutical sector in the Arabian Gulf continues to expand at a rapid pace and is expected to almost double from $13.9 billion in 2018 to $25.7bn in the next decade. Urbanisation, an ageing population and chronic lifestyle-related diseases are likely to boost demand for pharmaceutical products, according to a new report.

“The pharmaceutical markets in the GCC are well developed and have relatively high per capita spending when compared to the rest of the Middle East and North Africa,” Fitch Solutions, a unit of Fitch Ratings, said in a report released yesterday. “Consequently they are some of the most attractive to drug makers.”

“The establishment of the GGC Common Market in 2008 [also] increased intra-GCC trade, further boosting pharmaceutical market growth for some of the more developed markets in the region, such as the UAE and Saudi Arabia.”

Recent economic growth in the GGC, which is home to about a third of the world’s proven oil reserves, has led to an increase in urbanisation and infrastructure development across the region.

Crude oil price volatility has pushed sovereigns in the region to begin pursuing economic diversification initiatives, such as Saudi Arabia’s Vision 2030 and the Dubai Industrial Strategy 2030. The focal point of most of these strategies is developing local manufacturing capacity, and the pharmaceutical industry is well positioned to benefit from these plans, Fitch Solutions said.

Countries such as the UAE are taking active measures for the development of the sector with initiatives such as the Ministry of Health and Prevention’s agreements with Logistics District at the Dubai South free zone and Jebel Ali free zone, aimed at lowering restrictions and attracting more pharmaceutical manufacturers.

GCC governments are committed to investing in and developing their pharmaceutical industries, according to the report, especially local pharmaceutical production to meet the increasing demand for products and reduced import reliance. In 2018, imports made up 95.6 per cent of Dubai’s pharmaceutical market.

In June 2017 Bahrain began construction of its $1bn King Abdullah Medical City, which is scheduled to open in 2021. Felix Pharmaceutical Industries is also constructing a pharmaceutical plant and logistics centre at the Salalah free zone in Oman.

The report said regional governments would also use incentives such as reduced taxes and import tariffs to attract investment from multinational drug makers. Opportunities will exist for both generic and innovative manufacturers.

However, Gulf states, will need to improve their regulatory transparency and harmonisation to convince major drug manufacturers to establish bases in the local markets, it said.

GCC governments are committed to developing their pharmaceutical industries, especially local production