Industry Trend Analysis - GCC Well-Placed To Attract Pharmaceutical Investment - JUNE 2017

BMI View : The Gulf Cooperation Council countries offer the most significant commercial opportunities for drugmakers. Despite suffering from a host of economic and political fragilities, the overall outlook is a favourable one, with the Gulf States well- positioned within the wider Middle East and Africa region. I t is vital that pharmaceutical companies identify those markets with high growth potential as well as the levels of risk involved.

The pharmaceutical markets of the Gulf Cooperation Council (GCC), compromised of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE, will continue to present sizable opportunities to drugmakers operating in the wider Middle East and Africa (MEA) region. While economic and political turmoil remains widespread throughout the MEA region, the GCC boasts a number of strategic advantages that will continue to arousesignificant multinational interest.

The GCC: Favourable Characteristics

Broadly, the GCC has an more attractive pharmaceutical profile than the MEA region with drug approvals tending to be quicker in these countries. Saudi Arabia and the UAE continue to stand out as the region's most lucrative prospects for innovative drugmakers given the developed nature of their respective pharmaceutical industries. High per capita pharmaceutical expenditure, more developed healthcare systems and greater affordability among payers and patients means that drugmakers will favour these countries.

The oil-abundant wealthier GCC markets consistently benefit from infrastructure plans in the wider economy, with healthcare being well-positioned to benefit from such plans. The UAE and Qatar are particularly well-placed to advance their levels of healthcare infrastructure given the upcoming Dubai Expo 2020 and FIFA World Cup 2022, respectively.

Significant Expansion Opportunities
GCC - Pharmaceutical Market Expenditure (USDbn)
f = BMI forecast. Source: BMI, UN Comtrade Database

Crucially, discrepancies exist at the national level with regard to market attractiveness. As such, the smaller markets of Bahrain, Kuwait and Qatar are somewhat overshadowed by the larger and more lucrative neighbouring markets of the UAE and Saudi Arabia. Nevertheless, analogous growth drivers within these smaller markets ensure they maintain a healthy position in the wider MEA region in terms of market attractiveness. These drivers include a strong demand for patented innovative drugs, sizeable expatriate communities, the rollout of compulsory health insurance schemes, the promotion of medical tourism and greater international collaboration.

Whilst austerity and regional instability is set to remain the norm in key markets in the GCC, most countries will look to restrain public sector wage bills and advance cost-containment measures within the pharmaceutical sector - presenting an inherent risk to pharmaceutical companies. Despite this, we maintain our view that the GCC stands out as the most attractive sub region within MEA.