Various deals have shown how strategically important the UAE’s pharma market has been for investors over the years.
The local pharma sector has grown rapidly and is forecast to be valued at approximately $4.7 billion by 2025, from $1.5bn in 2011, according to a report by Fitch Solutions.
The UAE's ageing population intensifies the need for a robust supply of medicines as elderly residents are expected to make up 29 per cent of the country's population by 2050. This is compounded by the UAE importing approximately 80 per cent of its pharmaceutical products and rising costs, which are expected to increase by 8 per cent this year.
Even before the pandemic, establishing a manufacturing base has been imperative to fortify supplies, reduce costs and avoid shortages of medicines and treatments.
There are more than 6,100 generic medicines and products available in the UAE, according to the UAE Ministry of Health and Prevention. Steps have already been taken to transform pharmaceutical manufacturing, underpinned by a strategic collaboration between the private sector and public institutions. The ministry initiated a joint committee in 2015 comprising private companies and Abu Dhabi’s health authority to facilitate more licensing and registration of novel medicines.
This characterisation of the market crystallises the opportunities for institutional investment, which can help strengthen the UAE’s pharmaceutical manufacturing capabilities, reducing medical costs in the long run.
Developing the UAE as a strong pharma hub
Institutional investments can further supplement government efforts to boost the pharma sector and establish it as a regional pharma and manufacturing hub.
ADQ’s strategic acquisition of Pharmax Pharmaceuticals, a specialist manufacturer of branded generic medication at its UAE and EU-accredited facility, helps increase affordability. Meanwhile, our investment in Biocon Biologics, India’s largest biopharmaceutical company, aims to advance the production of biosimilar medications – medicines made from living organisms – in the UAE that are almost identical to their reference product.
Acquisitions such as Egypt's Amoun will promote manufacturing, commercialisation and distribution in neighbouring markets through the companies’ extensive networks. Additionally, ADQ plans to expand its footprint in pharma manufacturing in the UAE, through greenfield projects, through international partnerships, further enhancing the nation’s capabilities in different areas of manufacturing.
From the UAE government's side, clinical trials are under way for new medications and vaccines and notably the government is allocating further budget to boost productivity under the Smart Manufacturing Project, launched by the Abu Dhabi Department of Economic Development.
The Department of Health is a case in point, co-operating with researchers and global experts to protect the integrity of clinical trials of novel vaccines to the highest international standards.
The UAE has already constructed state-of-the-art infrastructure such as AD Ports Group, which contributes 13.6 per cent of Abu Dhabi’s non-oil gross domestic product growth, and industrial zones including those in Khalifa Industrial Zone Abu Dhabi (Kizad), that form the foundation of a national pharma ecosystem.
Mobilising distribution is just as important, as the UAE has demonstrated, building an ecosystem that captures the opportunities to drive further economic growth.
The Hope consortium’s vaccine supply chain leverages existing resources and capabilities including those of Etihad Cargo, Kizad, Rafed and Maqta Gateway, offering the UAE a conduit to the Middle East and North Africa region while also deploying the technology, science and partnerships needed to handle over 100 million vaccine doses across 40 countries.
Opportunities for institutional investors in pharma
Undoubtedly, health care has transformed since 2020. The seismic events of the past two years have encouraged governments to proactively spend more with a 5.6 per cent of GDP increase from 2019 levels expected in the Mena region.
Integrating the region offers ripe opportunity for further investment. Governments are encouraging private sector investments that will benefit local manufacturers. In Africa alone, the continent imports nearly 95 per cent of its pharmaceutical and medicinal product needs, according to the UN, presenting opportunities for distribution from the UAE given its proximity.
Private investment is largely expected to cover future healthcare costs as public-private partnerships drive increased private spending in the sector. This naturally follows a collaborative model, but institutional investment accelerates the transformation of core sectors and optimises the performance of businesses to create value.
Combined with government efforts to expand the nation’s pharma capabilities, there is a powerful outcome that could be achieved for the benefit of people.
Undeniably, access to high quality medicines and pharmaceuticals is essential for national health. For decades, investment in world-class healthcare facilities and services has been robust and this is the optimal time to increase investment in pharma.
Through the successes and learnings of recent events, we must channel our efforts into creating an end-to-end ecosystem that integrates the pharma value chain at every layer.
By leveraging the UAE’s global connectivity, robust infrastructure and, importantly, the power of partnerships – we can galvanise industry leaders, investors and government to redefine regional pharma for future generations.
Fahad Al Qassim is executive director, Healthcare & Life Sciences, ADQ
