Country Report: UAE

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Rumor has it the BRIC palace is crumbling. Perhaps that's overdramatic, but at the very least the BRIC oven is cooling off. Where to now? The US and Europe remain in a state of languid stagnation, while Asia and Africa are largely addressing basic healthcare needs with low-cost generic medicine.

As the world reveled in the glory of the BRICs and the MISTs (Mexico, Indonesia, South Korea and Turkey) for the past decade, the Middle East and North Africa (MENA) region was generally disregarded as a blind spot for the pharmaceutical industry. Decades of conflict and strife in the region have done a great disservice to attract business, but recent events like the Arab Spring have unveiled a vibrant MENA, eager to shed its inadequate reputation.

Vibrant Future by Khalid Mezaina www.khalidmezaina.blogspot.com

Leading this move for international recognition is the United Arab Emirates (UAE), who for more than a decade has dazzled the world with its economic growth and opulent lifestyle. Holding the seventh largest crude oil reserves in the world, the UAE experienced one of the most unprecedented transformations from a land of desert dwellers and seafaring trade-posts 40 years ago, to becoming a global business foci and tourist destination. As we speak, this tiny nation of 4.8 million is bidding to host the 2020 World Expo and has made it a sport to break world records.

Striving to diversify their economy away from oil revenues, the visionary royal leaders have most recently endeavored to transform the nation into a model of healthcare development, successfully attracting pharmaceutical companies of every nationality and erecting dozens of world-class hospitals. In many ways, the UAE is leading the Middle East region as the new source of satiety for pharmaceutical companies. At last, an oasis for the industry surfaces; and no, it is not a mirage.

FLUSH WITH CASH, BETTING ON HEALTH

"Over the past twenty years, we have seen a drastic change in the socio-economic climate of the Gulf region and neighboring countries. There has been considerable growth in terms of wealth and a sharp increase in health expenditures, which was mandated by the Ministry of Health", explains Ayman Sahli, CEO of Gulf Pharmaceutical Industries (Julphar), the UAE's leading manufacturer.

H.E. Amin Al Amiri, assistant undersecretary for medical practices and licensing, Ministry of Health

This trend of increased expenditures in healthcare can be seen across the entire Middle East and North Africa (MENA) region, yet it is led by the oil rich Gulf Cooperation Council (GCC) countries whose spending on healthcare has averaged a 7.9% annual increase since 2000. "Within the Middle East, demand is driving the development of advanced infrastructure, inclusive of clinics, hospitals and universities. It is essential that local and regional companies focus on supplying these modern organizations with the right pharmaceuticals", adds Sahli. Recent years have shown that for GCC countries, the right pharmaceuticals have generally been the most innovative and advanced treatments available.

The sharp rise of healthcare spending is commensurate to the demographics of the region, with more than 50% of the population under 25 years of age and fertility rates higher than those of India, China and the US. In light of such a young and expanding population, governments are taking heed of a future ballooning healthcare burden and are ­therefore laying the ground to rein in forthcoming costs. It is estimated that GCC health expenditures will reach US$79 billion for a population of almost 50 million by 2015, of which 64% will come from government coffers. By 2020, the pharmaceutical market alone is expected to reach US$20 billion.

Burgeoning wealth has also sparked a shift towards westernized lifestyles that have raised the prevalence of diseases typically related to unfit diets and sedentary routines, such as diabetes and cardiovascular conditions. It is no coincidence that Qatar, the UAE and Kuwait all rank amongst the top 10 countries with highest GDPs per capita, while at the same time standing within the top 10 countries with the highest prevalence of diabetes alongside the rest of the GCC nations.

Ayman Sahli, ceo of Gulf Pharmaceutical Industries (Julphar)

"The incidence of diabetes is a major issue for Gulf countries, and it must be addressed today. Whereas current estimates place the incidence of diabetes at 1 out of 4 people, this is soon expected to reach 2 out of 4 given current trends", details Paolo Carli, head of Middle East, Saudi Arabia (KSA) & Egypt for Merck Serono. There are many factors that exacerbate the situation, including environmental, genetic and lifestyle conditions. Environmentally, the weather here is simply too hot for people to be sufficiently active outside, particularly since air conditioning is now a staple comfort in all settings. People move from their air conditioned home, to their air conditioned car to reach their air conditioned office, and so on."

"Furthermore, given that locals were originally desert dwellers, their genetic makeup had adapted to live under conditions of general food scarcity and strenuous conditions. These genetic predispositions are now overwhelmed with modern eating and lifestyle habits, which include lack of exercise, consumption of excess sugar and non-healthy food. Finally, there is an added factor of Arab culture that values great hospitality involving long meals with abundant food. When you combine all these factors it becomes evident that we have a ticking bomb on our hands that we must avert as best we can. The same goes for hypertension, which is diagnosed in 25% of the population", Carli concludes.

Pharmaceutical companies, both local and international, have been feverishly working with health authorities to address this spike in lifestyle diseases before costs overtake national budgets. Whereas most of Big Pharma used to operate in the region through local distributors, the last five years have witnessed the greatest wave of investments the Middle East has ever seen from the pharmaceutical industry. Most of the top 20 companies have established dedicated sales & marketing offices throughout the region, and in some cases even localized training centers, logistics depots and manufacturing facilities. The UAE has snatched the bulk of these investments due to its political and economic stability, coupled with a keen penchant to cater to international businesses.

"Over the past 3-4 years we have started very comprehensively to attract foreign investments in the field of pharmaceutical industry and medical practice", asserts Amin Al Amiri, undersecretary for medical practice and license at the UAE's Ministry of Health (MOH). "In general we have been very convincing in getting international pharmaceutical companies here, considering that almost 90% of them have opened regional offices here and UAE is their hub for this region."

GSK's vice president and general manager for the GCC and Levant, Mohammad Zafrullah, arouses awe when speaking of the transformation that the UAE has witnessed in the past decade "If you came to Dubai 10 years ago, you would not believe your eyes. What this country, United Arab Emirates has achieved in such a short period of time is truly exceptional. This is the result of the vision of the leadership of this country. They haven't done this without private overseas investment, which has come from all parts of the world. You see similar things beyond UAE in the region."

GSK is the leading pharmaceutical company in the UAE and most Middle Eastern markets, due to its longstanding presence in the region for over half a century. Zafrullah adds that they "have managed to build strong partnerships not just with healthcare authorities but also our business partners. There is trust in these relationships in the true sense of the word and this has been developed over the years on the basis of transparency and open communication. Trust takes years to build but can be broken in an instant, so this is something we protect, no matter what." Their constant investment in the region, such as through the establishment of manufacturing facilities in Saudi Arabia and Iraq, are testaments to their conviction that this region holds bountiful rewards.

Ashraf Allam, former managing director of Middle East and Africa for Amgen

Indeed this is the notion that the UAE has been trying to sell to healthcare companies for the last ten years. "What we are witnessing in the UAE is a general move to diversify the country's economy beyond oil revenues. As part of this evolution, healthcare has been identified as a priority segment within which the government is investing heavily. This includes the construction of new hospitals, the updating of the regulatory environment, as well as setting in place business incentives for healthcare companies to enter the market, such as through free trade zones like Dubai Healthcare City and Dubiotech", explain Bassem Abdallah, Bayer Healthcare's country division head for Gulf states.

In 2002, the Prime Minister of the UAE and Ruler of Dubai, HH Sheikh Mohammed Bin Rashid Al Maktoum, established Dubai Healthcare City (DHCC) as the city's prime location for healthcare provision. Covering an area of 4.1 million square feet comprised of two hospitals and hundreds of laboratories and medical centers, DHCC is the most comprehensive healthcare conglomeration in the country, focusing on patient-centered solutions. The vision behind this project was to attract some of the most respected healthcare companies to Dubai in order to offer their first-class services to the local population. In 2005 the city bolstered appeal to such companies by setting up the Dubai Biotechnology & Research Park (DuBiotech).

Marwan Abdulaziz, executive director of Dubiotech

"Aligned with the government's vision of promoting this sector, DuBiotech was set up as a free zone to attract foreign companies and investors. Our aim is to be close to the companies that set up their operations here by trying to understand their needs and accommodating that as much as possible. Whether they are setting up a laboratory, or a business center or a logistics warehouse, it is up to us to make any possibility a reality", details Marwan Abdulaziz, executive director of DuBiotech. As its name suggests, this free zone area was established by one of the UAE's top real-estate developers, ­deeply tied to the government, to attract research-based scientific companies to Dubai.

Abdulaziz further adds that, "in addition to the infrastructure we provide, we also have two unique services that we offer companies. The first is what we call 'delivering partners', which entails connecting companies who need each other or partners outside of the park, such as distributors, investors, bankers, etc. The second service we offer is providing regulatory advice for all types of companies, in order to facilitate the initial stages of their operations." DuBiotech today boasts over 125 companies registered under its name, including majors such as Pfizer, Genzyme and Amgen, some of which only came to the country since the opening of the free zone.

Ashraf Allam, former regional managing director of Middle East & Africa (MEA) for Amgen, pioneered the company's incursion into the region when he established the regional offices from scratch. "We are very proud to have been the first biotechnology company to establish itself in Dubai back in 2006. It took us a couple of years to become fully operational while we built up our local team and waited for our products to receive regulatory approvals from the local authorities. Today, the MEA region is the fastest growing area for Amgen across the world, even more than other larger emerging markets. Due to this, the region is perceived as an icon of success, and I am quite certain that many multinational pharmaceutical companies view MEA as a key growth region." Last year Amgen recorded 45% annual growth in comparison to the previous year. Allam has since moved on to become the vice president of Middle East & Africa for Mundipharma.

Bridging East and West for Biotech

"Unlike other governments in the region, the UAE administration is welcoming and understanding of international companies, trying to accommodate as much as possible their needs. They treat companies as customers rather than simply ­enforcing laws and regulations without listening to the industry. In some cases they go as far as assigning specific representatives to work together with a company, to facilitate the start-up phase that typically involves large volumes of paperwork", explains Allam. It is no wonder that some companies who had regional offices in legacy markets, such as Egypt or Turkey, have now opted for Dubai's juicy offer of spanking new buildings and affluent clients.

HARDER, BETTER, FASTER, STRONGER

But how quickly can a country truly transform its healthcare system, while making it sustainable for the future? The mindset of Emiratis is that anything that is feasible and beneficial for the country should and will be done, regardless of the cost. This is why health authorities have been moving at record speed to build new infrastructure and shape regulatory frameworks worthy of a first-class healthcare system.

Walid Kattouha, head of Middle East Cluster for Novartis

Al Amiri from the MOH augurs that "the UAE is different from all other Arab countries. Certainly we are moving to improve harmonization with GCC countries and other Arab countries, but the UAE has a different situation. Our ­business opportunities are unique, the system of governmental procedure and regulations implemented here in the Emirates are completely different. We do everything as a fast-track process, we support foreign investment and we consider them as strategic partners. The UAE does not have difficulties with regulations because we are used to high transparency in our work and are moving to digitalize our services so that they are available online."

Moritz Hartmann, general manager of Middle East for Roche Diagnostics

While the transparency of the country's government is generally lauded as exceptional in the world, particularly for the Middle East region, some inefficiencies regarding health authorities do exist. Most notably is the tripartite split of regulatory agencies, consisting of the MOH, Health Authority Abu Dhabi (HAAD) and Dubai Health Authority (DHA). Similar to the American system of governance, where states are responsible for the laws specific to their geographies, the UAE is composed of seven Emirates, each with its own government.

Giles Platford, area head of Middle East, Africa & Turkey for Takeda

Abu Dhabi is the political seat of the country as well as the oil basin, whereas Dubai has transformed itself into a financial powerhouse by leveraging a service-intensive economy. As both these Emirates have progressed light years ahead of their five other counterparts, they each decided to establish independent health authorities to regulate healthcare services. The MOH is responsible for country-wide regulations, including product registration, import/export processes and pricing, as well as overseeing healthcare provision in the less fortunate Emirates. In parallel, HAAD and the DHA each establish independent regulations for reimbursement and the distribution of products in their respective Emirates. Basic economic theory would alert to redundancies in such a system, where resources are wasted due to overlap and fragmentation.

Making a Stand for Rare Diseases

Despite this unusual set up, the common goal of bringing innovation as speedily as possible does seem to unite all three parties. Executives in other parts of the world believe that innovation comes late to the Middle East, but nothing could be further from the truth. Whereas in the past the region was slow to bring innovation, doctors today are very eager to use new products and to have access to them. Now with the internet and all the available media, practitioners learn about the latest treatments and immediately start searching for ways to use these new products for their patients.

Mohammad Zafrullah, vice president and general manager of GCC and Levant for GSK

Having arrived in Dubai only a few months ago to head Takeda's Middle East operations, Giles Platford provides his first impressions of the GCC markets. "The UAE and KSA are markets where you have very professional healthcare institutions. Your private hospitals are like five-star hotels, you've got public hospitals that are like private hospitals in other countries. Definitely the standard of care here is good. The willingness to receive innovation is very high. An efficient approval process is reflecting that. Typically, companies will foresee that the UAE will be the first market to launch in the region. I think the perception of the UAE is very positive in the least."

Tailoring Diabetes to the Middle East

Almost unanimously, the UAE is considered the fastest adopter of innovation in the Middle East, allowing for the registration of products immediately after they have been approved by the US FDA or the European Medicines Agency (EMA). This process can take as little as 3-4 months, which has led some companies to designate the UAE as a priority launch country ahead of any other ­emerging market.

Bassem Abdallah, country division head for Gulf States at Bayer Healthcare

AstraZeneca's president for the Gulf, Samer Al Hallaq, recounts that "generally the challenges in the Gulf region are related to the fast pace of the market, which demands the introduction of new products into these markets. I would say these are positive challenges and we are lucky to be considered early launch markets within the Middle East, because the healthcare system here allows for speedy approvals and registration. We can bring innovation very quickly to this part of the world because of this support to bring breakthrough and innovative medications."

Estimated Number of People Living with Diabetes in the MENA region (94% increase between 2010 and 2030)

"The real challenge then becomes ensuring access to the medication for all patients in the market and in all parts of the country. Given that we have to deal with both private and public sectors, and each one has a different timeframe and approval process, bridging those two is our priority. The advantage is that the private sector generally has a quick uptake of innovative products, and governments support the fast entry of those products into the market to benefit those patients who can afford them." This is particularly true for specialty and rare disease pharmaceuticals whose patient populations are tiny in a country as small as the UAE.

Tara Banasi, regional manager of MENA for Aspen Pharmaceuticals

Until June 2013, the pricing of pharmaceutical products was entirely unregulated and companies were allowed to set prices according to the general laws of market demand. On average, the UAE had some of the highest prices in the region for innovative products given that healthcare is free for all Emiratis, and the majority of expatriates (about 90% of the population) are insured by their employers. Furthermore, 80% of all pharmaceutical products are imported from the US and Europe, which inherently makes them more expensive than locally manufactured drugs. European products in particular experienced drastic markups given that they were purchased in Euros, while the local currency is pegged to the dollar, which exposed those products to currency exchange fluctuations.

Jan Van der Goten, managing director of the GCC for Janssen

In a move to stabilize such oscillations, this past June the government implemented a round of price cuts that affected over 6600 pharmaceutical products out of a total 7500 registered. Beyond simple price slashing and price capping, the new regulation mandates that all pharmaceutical products be priced according to their dollar value. As such, many products experienced price decreases between 1-40%, while some products actually saw small increases. Nevertheless, the move has generally been welcomed by the industry as it allows for improved forecasting now that prices will remain constant. Furthermore, as the GCC countries move towards greater harmonization of regulation and pricing, these lower prices are better referenced with those of neighboring countries.

"Some markets like UAE and Kuwait are willing to pay premium prices for innovation, but then when those products enter lower-income neighboring countries, there needs to be an alignment in terms of prices. Typically this means that initially we have to set lower prices in the higher-priced markets, so that they are comparable to prices in other countries", elaborates AstraZeneca's Al Hallaq.

Bayer Healthcare's Abdallah explains that "at Bayer we have established a policy of referencing prices across the entire region. Eventually there might be some variations in the final price to consumers, but this is due to markups imposed by agents and distributors, which of course vary from country to country. Currently there are efforts to unify prices across all the GCC countries, including Saudi Arabia, with the aim of protecting the final consumer."

PROPPING UP A HEALTHCARE ECOSYSTEM

There are not many countries in the world where the government aims to develop a role model type of healthcare system not only for its own people, but also to attract medical tourists whose healthcare options back home are more limited. Following their success in turning the UAE into a financial, retail and tourist hub, Emirati authorities have made clear their intentions to transform the country into a preferred destination for world-class medical services.

Paolo Carli, head of Middle East, KSA & Egypt for Merck Serono

In fact, the UAE was the first country out of the Americas to have a hospital accredited by the Joint Commission International when the American Hospital Dubai opened its doors in mid 2000. Since then the hospital has been re-accredited an additional four times, the latest being in 2012. In the meantime, other first-class hospitals are being built in partnership with some of the world's most respected healthcare providers, including Mayo and Cleveland Clinics. Even public hospitals in the UAE will surpass global standards, with the announcement in May that Dubai's main public healthcare institution, Rashid Hospital, will undergo a facelift costing more than US$800 million.

Similar colossal investment plans for hospital infrastructure are underway in other countries in the region, notably KSA who in 2011 announced its intention to construct 121 hospitals over a five-year period. "The plan for the region by 2020 is to add almost 100,000 beds, which is the number needed to match the international standards of beds per number of people. If by that year we reach the numbers that are forecasted, the standards will certainly rise", deduces Jihad Hussami, managing director of Eastern Europe, Middle East and Africa for Hill-Rom.

As a specialist in hospital beds, furniture and interiors, Hill-Rom has been tailoring its product offering to the Middle East's discerning taste for luxury. "Even the aesthetics, such as the interior, are very important in this region. Most of the newly built hospitals requested VIP rooms, which is where we have played a role as well. Certain Hill-Rom bed units are designed for the patient not to feel as if they are in a hospital. All the equipment needed for the patient is concealed, since comfort is associated with healing benefits. It is a win-win situation for the hospital management to have the best design and for the patient to heal faster", elucidates Hussami.

Samer Al Hallaq, president of Gulf for AstraZeneca

Nevertheless, Siemens Healthcare's CEO for the Middle East, Waclaw Lukowicz, counters that "it's relatively easy to build a hospital; it will take two years to get the bricks and mortar and even outfit it with the latest equipment. On the other hand it will take between 10-15 years to train the necessary staff to run such a hospital. When I sit with some of the ministries we do exchange best practices on how to address this issue, because clearly the pool of local talent that is specialized in those requirements is not very large. It's really a big challenge to do it and to get the right skill set. This is why we are sitting down to have these discussions with authorities in all countries."

"In Saudi Arabia, for example, we have hired local engineers and then trained them at one of our global excellence centers. Sure this is a challenge, and there is no magical solution for it, but it is also something that governments ­understand. This is a very encouraging sign and they realize that it is a key to their success. Nevertheless, it is something that will take many years", opines Lukowicz.

Indeed the lack of local talent is a challenge cited by both healthcare and pharmaceutical companies. The reality is that the UAE and wider region are deficient of healthcare practitioners and educational institutions that can train future generations in this field. Until now they have been relying on imported international talent by offering attractive salaries and benefits beyond what healthcare practitioners can expect in their home markets.

Founder of the healthcare conglomerate, the NMC Group, BR Shetty is an Indian national who arrived in Dubai in 1973 and set up a one-room clinic out of his apartment. Today he is ranked one of the GCC top Indian billionaires owed to his chain of hospitals and pharmaceutical distribution business. As an innate visionary, his next plan is to provide more opportunities for medical education in the UAE.

"The NMC group has gone initially from a pharmacy to hospital and pharmaceutical distribution, to a manufacturing factory, and with the inclusion of R&D, it equals one circle. On the healthcare end, I have started a clinic, a medical center, a hospital, specialty hospitals, and now the only element lacking is health education. Hence, I am intending to open a medical college in Abu Dhabi in collaboration with Duke University. It will focus on translational research, with a center for entrepreneurship and innovation on one integrated campus. The aim is to incorporate informatics and IT in order to advance our healthcare systems and life sciences. This endeavor will be my dream come true, since it is the final missing link to complete the cycle."

Karim El-Alaoui, managing director of MENA for Boehringer Ingelheim

Shetty's pharmaceutical manufacturer, Neopharma, is also setting precedents by establishing the first partnership with a multinational company to manufacture one of their products locally. Earlier this year the company signed an agreement with Merck Serono to begin packaging two of their products by the end of 2013, with a longer term plan involving full production and a transfer of technology to Neopharma.

Dubai Health Authoriy's director of pharmaceutical services, Ali Al Sayed, believes that "the increased presence of international pharmaceutical companies is raising the prospect of research and trials to be conducted locally. This is now one of our priorities. We are encouraging the ­companies to do trials, to conduct research here. This is one of the reasons many multinational companies moved their offices to Dubai. This city is becoming a hub for medicines and soon we expect companies to research and manufacture their own products here to then export them to other countries."

Most multinational companies sustain these convictions given that they see localization as an integral part of the industry's progression in the region. Takeda's Platford goes as far as expressing that "there are some countries in the region where the localization is fundamental. In those cases acquisitions can make sense to establish a local footprint. It helps in terms of access and it shows sustainable growth in that country." Many predict that the market will be growing through local manufacturing alliances, some of which we are already witnessing in markets like Saudi Arabia. Furthermore, the Middle East will become a logistics hub for the global industry, serving not only the immediate region but also Asia and Africa. Dubai is certainly well-positioned to fulfill this role as it is geographically very strategically located.

The newest trend amongst local manufacturers is to invest in R&D, with some even venturing into biotechnology. UAE leader Julphar is already producing recombinant insulin and is the first Middle East company to successfully ­manufacture and export a biotech product. Similarly, Neopharma already has partnerships with Hetero Pharmaceuticals and Biocon. Even smaller generic manufacturers are experiencing unprecedented growth that has allowed them to expand their operations and diversify their manufacturing activities. While times are visibly propitious for the local industry there are still some growing pains ahead for the UAE and wider Middle East region.

Manufacturing Agreement Signing Ceremony – Dr BR Shetty, Managing Director and CEO of Neophama, and Dr Stefan Oschmann, CEO of Merck Serono

WORKING OUT THE KINKS

One of the main challenges that still lurk for pharmaceutical companies in the UAE is mostly tied to the lack of a scientific and research base in the country that is reflected in the lack of market data. This issue is acknowledged by the government, who has understood that without such metrics it is difficult to gauge health outcomes and the pharma-economics of specific products. Over the last couple of years authorities have been trying to implement advanced IT systems in order to catch up and capture in figures the results of their healthcare policies so far.

Jihad Hussami, managing director of Eastern Europe, Middle East & Africa for Hill-Rom

"The UAE is shifting the way they basically have been doing healthcare. Over the last few years the country has witnessed major changes in the implementation of healthcare IT solutions. Abu Dhabi now processes all prescriptions electronically, as well as all reimbursement transactions. Dubai is similarly moving in this direction, which means there is a lot of data that is available on these systems", states Omar Ghosheh, CEO and founder of Dimensions Healthcare. As informatics experts, Dimensions has become the sole provider of pharmacy ­benefit management (PBM) and E-claims ­solutions for the DHA, and also works closely with HAAD in improving their IT platforms. The company was nominated as the top performing SME in Dubai in 2011, and is well on track to revolutionize healthcare in collaboration with the authorities.

"Both Abu Dhabi and Dubai are aggressively installing IT systems to increase the control and monitoring of pharmaceutical products as a means to improve their healthcare systems. They will be looking for health outcomes; they will be monitoring drug consumption, to then determine where their strengths and weaknesses lie. Maybe in two years time Dubai will have a real example of how healthcare outcomes will be integrated into the entire decision-making process that will ensure quality standards and sound ­pharma-economics. It's all very exciting", concludes Ghosheh.

Waclaw Lukowicz, ceo of Middle East for Siemens Healthcare

Latching on to the movement towards IT and e-technologies, Bayer Healthcare has been moving to digitalize much of its interactions with customers and health practitioners. Certainly e-Health is a global trend, but Bassem Abdallah explains why it makes plenty of sense in the UAE:

"This is probably one of the regions where such initiatives are most effective when estimates claim that there are 2.3 cell phones per capita in countries like the UAE. Since last year we have converted our entire product detailing into digital format and have stopped printing such material. Occasionally, we still use some flyers but in general most of the information that we transmit to physicians is now digital and is presented to them on Ipads with specially designed apps that we have created for our products.

We have also created apps for the general population, such as for multiple sclerosis patients, that serves as a communication platform between patients, doctors and nurses. This application is entirely free and is not related to our products in any way, but is simply a unique way of raising awareness and improving the lives of patients that live with this disease. As a public service we have made this application available for Apple and Android users."

DuBiotech

Beyond the risks involved in operating within a market that produces minimal data to accurately forecast sales, the UAE is also unique in that it does not have a well-defined IP protection legislation that is essential to pharmaceutical companies. Currently, the industry operates under a sort of gentleman's agreement that ensures their intellectual property will be protected by the government until the day patents expire. Until today the agreement has held strong with few cases of IP violations, nevertheless, most companies still wish for a formal legal framework to protect their assets.

GLOBAL LESSONS UNLEASHED IN THE MIDDLE EAST

In 2012, Roche Diagnostics opened its first management center outside of its home country in Dubai, out of which it manages 20 countries. The company's Middle East general manager, Moritz Hartmann, affirms that "we are moving away from a traditional export approach as regards the Middle East region. In the past we used a centralized department at our global logistics hub to serve these markets. However, with the diversification of our business and the increasing importance of the medical value of our products, we realized that the Middle Eastern markets need a specific approach in order to succeed here."

Mads Bo Larsen, vice president of Africa, Gulf & India for Novo Nordisk

"On the one hand, one of the reasons to establish our management center in the UAE was to become a more attractive organization to source talented people. On the other hand, the need for qualified people within the region is very high. These countries need to develop the skills of the population to be able to fill such vacancies. This is a perfect example of how Roche Diagnostics customizes to the local ­market. We have set up our own training center here in Dubai, which is something unique when compared to other markets. At the moment, this training center is still virtual and operates remotely, however, we are now building a dedicated facility to start operating next year", concludes Hartmann.

The fact that the Middle East region on average represents a mere 2% of a global company's pharmaceutical revenues is evidence of the vast untapped potential that is latent in a region of almost 250 million people. It is further indicative of the industry's historical tepid approach to conducting business here, which is why innovative operational models are now required to harness recent growth in the region.

"Most people believe that the Middle East markets are all the same, but this couldn't be further from the truth. There are so many specific characteristics to each market, due to their political situation and history, which require us to operate very differently from one country to the next. It is this adaptability that makes a real difference when it comes to the success of a company in the region. This is why local knowledge is essential to succeed in these markets. One advantage of the region is that we can learn from our lessons in other markets around the world and tailor those strategies to specific situations and conditions in the region", explains Walid Kattouha, head of the Middle East Cluster for Novartis based in Dubai.

Maher Abouzeid, president and ceo of Middle East for GE Healthcare

"In the Middle East, it has only been in recent years that pharmaceutical companies are perceived as healthcare partners by health authorities. This is partly due to the fact that most major pharmaceutical companies used to operate through representative offices and local agents, meaning it was perceived that they were only here to sell their products, sometimes at very high prices. In the last 10 years there has been a shift to build rapport with local health authorities and to determine how the expertise of companies around the world can serve them in a better way.

INNOVATION OUTSIDE THE LAB

As the industry wakes up to the new reality of the Middle East, they have been sourcing some of their brightest minds to head their regional operations and grow their businesses as quickly as possible. Jan Van der Goten, managing director for Janssen in the GCC, arrived in Dubai in early 2013 with the task to restructure the company's regional organization to leverage a new portfolio of breakthrough products. With vast experience in marketing and strategic roles at Janssen in the US and Europe, Van der Goten is confident that some of the innovative business approaches implemented in those markets can be rewired to the peculiarities of the Gulf countries. In his esteem, collaboration with authorities, academia and other businesses is the only way to reach a solution to the pressing health needs of the region, such as diabetes.

"We have had preliminary discussions and there is a lot of traction on these kinds of approaches. The authorities are happy to work together in a different context. What the new scenario is going to look like is still under discussion and something that I am uncertain of myself. The important thing at the moment is that we understand the framework that needs to be implemented beyond a classical marketing approach", he claims.

"A fresh framework will take into account educational needs as part of the budget, because right now is the key moment to build needed awareness to curb the prevalence of diabetes. This must be done now because the government still has sufficient funds to manage the burden of the disease for decades to come, but that is only if we manage to control and prevent further propagation. The answers we seek together with the authorities are regarding how to do this best. Clearly there are some inherent risks in doing this, but the only way to innovate and generate true changes in how we approach healthcare is by taking risks and trying new things."

Julphar Manufacturing Facilities

Karim El-Alaoui, managing director of MENA for Boheringer Ingelheim, echoes the need to strengthen alliances in order to drive business beyond the pills and sales rep model. Contrary to traditional perceptions of competition, Boehringer Ingelheim has forged a partnership with diabetes expert, Lilly, in order to maximize their local efforts against the disease. El-Alaoui boasts that "the main objective of this alliance is to make sure that we can provide medications to the patients who need it. By joining forces we will be able to demonstrate that 1 + 1 = 3, in the sense that more investments will be made in the field of diabetes. As regards the sales-force it will also be bolstered and essentially doubled as both companies will be working together to ensure that more patients have access to these products."

"The reality is that as long as companies are enhancing their diabetes portfolios, naturally, they would like to generate awareness around it. However, industry initiatives are not sufficient – they will never be enough – because it all has to be done in partnership with the Ministries of Health and medical community of the countries we operate in. The key to effective awareness is to work with the support and hand-in-hand with local authorities so that we can tackle the disease on all fronts."

From such experiences it is evident that the Middle East is serving as an entrepreneurial hotbed for pharmaceutical executives who are keen to experiment with innovative business strategies. Pooling lessons from other markets and with incomparable growth opportunities, managers are willing to take greater risks to excel.

For the last two years Aspen Pharmaceuticals' regional manager for MENA, Tara Banasi, has been responsible for launching the company's tailored portfolio in the region, which mostly consists of divested products acquired from Big Pharma. At times this has meant launching 12 new brands within in a 3-4 month period, which has demanded new ­approaches to individual markets and a great deal of ­experimentation.

Dubai Healthcare City

"Across the region, we have many third party distributors who simply take the goods from the warehouses to the customers. I realized there was no one truly looking after our business in those countries. Many of our distributors lacked the necessary passion and know-how to drive our products into the market as successfully as I would like. I then decided to hire key account managers who could take on that responsibility and manage a very strategic portfolio. I started off hiring 20 people in Egypt through outsourcing companies and many people thought I was crazy because we are speaking about a country of 80 million people. The outsourcing model, where you pay the people's salary and train them but are not liable for them, is really only seen in Europe. So far it has paid off incredibly well and we are trying to replicate it in other markets," beams Banasi.

"You can't call Aspen an innovative company because all of our products are bought from other companies. Nevertheless, we have innovative business models where we are doing something different. In KSA, for example, I decided to hire pure Saudis straight out of university. I molded them, trained them and paid them well, and these are the people who are responsible for growing our market share by 30%. No one else had done this in KSA, and the authorities were very impressed by the initiative, which has gained us much recognition in their eyes."

All the signs are palpable that the Middle East region, led by the UAE, will continue to set benchmarks for the development of healthcare. But for how long will this golden era last for the global pharmaceutical industry? Estimates predict that double digit growth will continue for the next three years, after which annual increases will then stabilize around 8-9% CAGR.

Genpharm's Smaira summarizes this forecast succinctly in saying that "the maturity of these markets is being accelerated. Today a product is launched in Europe and the following year it is here, so these markets won't be "emerging" for a very long term. As this is a transitional phase in the pharmaceutical market, we think there are still windows of opportunity. The markets are heterogeneous and strategies have to be different and flexible. Some markets are very brand oriented others are moving towards a generic model." For the time being, it seems like the Middle East will remain the apple for most pharmaceutical ­companies eyes.