It perhaps comes as no surprise that health care is one of the fastest-growing industries in the Middle East and North Africa (Mena), given the demographic trends within the region.
While Mena’s explosive population growth has been well documented, crucially the region’s elderly population, who generally seek more medical care than their younger counterparts, is forecast to rise on average by 4.1 per cent per year between 2010-2020, compared with 3.6 per cent in South East Asia and just 1.4 per cent in Europe and central Asia, according to figures from the World Bank.
Al Masah Capital forecasts that the Mena healthcare market will be worth US$144 billion this year, up from $81bn in 2011, with the GCC’s market rising to $69bn from $47bn over the same period.
In the face of such growth prospects, pharmaceutical companies have been keen to establish a greater presence in this country, as a launching pad for the wider region.
France’s Sanofi signed an agreement in May with Dubai Investment for the promotion of a new generics portfolio in the UAE and the wider Middle East, via DI subsidiary Globalpharma.
The deal came shortly after an agreement between Abu Dhabi’s Neopharma with the Pfizer subsidiary Wyeth for manufacturing selected drugs at the company’s facilities in Mussafah, to go on sale in the UAE next year.
The Ras Al Khaimah-based Gulf Pharmaceutical Industries (Julphar) announced a five-year licensing agreement with MSD, the international operations arm of the pharmaceuticals conglomerate Merck, in April.
As the region’s healthcare sector (and foreign investment flows within that sector) expands, the region needs to keep an eye on potentially corrupt practices within the industry, as witnessed in several high-profile international cases.
It emerged last month via a report from Reuters that the British pharmaceuticals multinational GlaxoSmithKline (GSK) has launched an internal investigation into its business within the UAE and the wider Middle East, regrading alleged improper payments laid out in a whistleblower’s email sent to the company’s top management.
The email, said to be from a GSK sales manager in the UAE, claims GSK made direct payments to healthcare professionals, hospitals, clinics and pharmacies to secure business. These payments included cash for educational meetings, together with schemes to pay customers for taking prescription drugs by giving them bonus over-the-counter products.
The company is reported to also be investigating alleged similar practices in other countries in the region including Lebanon, Jordan, Syria and Iraq.
News of the UAE investigation came a month after GSK was fined a record 3bn yuan (Dh1.79bn) in China for paying doctors to use its drugs, after a long and humiliating trial.
The China verdict came months after a $105 million settlement with 44 US states and the District of Columbia over the mispromotion of three drugs.
Such allegations are in no way confined to GSK; Sanofi has informed US authorities of allegations of improper payments by its employees to healthcare professionals in the region and has also launched an investigation.
“The investigations – which are in certain parts of the Middle East and Africa – are still ongoing and are expected to take some time given that the allegations date back seven years,” says a Sanofi spokesman in Paris.
“At this stage, it is too early to draw conclusions,” he adds, noting the investigation is likely to run well into next year.
A local GSK spokesman declined to comment on the progress of its investigation.
A spokeswoman from the Ministry of Health did not respond to requests for comment on whether the Ministry was aware of such allegations, or if it was conducting an investigation of its own.
Aside from direct payments made to promote particular products, many of the allegations of corrupt practices levelled at pharmaceutical companies and their counterparts within the medical device manufacturing sector centre on the provision of funding to healthcare professionals and organisations for the sponsorship and attendance of medical conferences and training events.
Such initiatives are not in and of themselves illegal but they are open to abuse by both the funding organisations and the healthcare professionals themselves, with conferences and training events in the past held in exotic locations, while the content of the events are often of little relevance to the professionals attending them and, ultimately, are more about influencing their perception of the sponsor’s products.
A study conducted by UC San Diego, published in January, confirms that a healthcare professional is more likely to prescribe a company’s drug when he or she is receiving such payments from that company, whether those payments are legal or not. The healthcare industry is taking such matters increasingly seriously, according to Rami Rajab of the medical device manufacturer the Sorin Group who is the chairman of the industry body Mecomed.
“Companies are increasingly scrutinising whether sponsoring a healthcare professional to attend a medical congress is the role of a healthcare company, or the professional’s government,” he says.
“When it’s the role of the companies, there needs to be a vetting system in place for the congress and the venue, as well as the topic of the meeting.”
International pharmaceutical companies are increasingly backing away from holding such events in places identified first and foremost as leisure destinations, according to Tim Worden, a partner at TaylorWessing in the United Kingdom, specialising in regulatory issues in the pharmaceutical industry.
“If you’re having a bonafide medical meeting for doctors in a relevant therapeutic area, it’s very clear that you can’t have that at a venue which would attract people simply because of where it is,” says Mr Worden.
“In the UK, for example, you can’t have an event at Gleneagles golf course even though it has a conference venue, because it will look like people want to go there first and foremost to play golf,” he notes.
“It needs to be clear that a conference is being held in a particular city or venue because it’s a convenient place to meet and travel to.”
Mr Rajab speculates that increasing scrutiny may well scale back international training events for healthcare professionals, bringing training directly to the countries in which they operate instead. International scrutiny of payments and sponsorship of healthcare professionals is set to increase further in the coming years.
The European Federation of Pharmaceutical Industries and Associations (EFPIA) – whose members include the world’s 15 largest pharmaceutical companies by revenue – last year introduced a new disclosure code of transfers of value to healthcare professionals and organisations, requiring its members to disclose all transfers of value to professionals and organisations in the previous year.
Crucially, the new code, which will come into effect in 2016 for payments made in 2015, will require member companies to disclose the names of professionals and organisations receiving payments or transfers of value, together with the justification for the payment and the amount.
“We’re moving to a situation where companies will have to disclose the level of payment made to the professional with which they interact, whether on a consultancy basis or an education basis,” says Mr Worden.
“There will be more scrutiny of the payments being made, as well as the professional and the organisation, who may not be willing to have such payments disclosed, as it may lead to allegations that they’re being swayed.”
Such regulations are almost certain to be adopted within the Middle East healthcare sector as well, according to Ghadeer Alyacoub, Johnson & Johnson’s regional healthcare compliance officer. “Definitely there will be a change, whether its more regulation or different formats of sponsorship, but we’ll definitely see changes,” she says.
What the experts say about the region’s healthcare market
• Marwan Abedin: The chief executive of Dubai Healthcare City and a member of the board at the Dubai Healthcare City Authority. "Moving forward, the healthcare industry as a whole will witness a paradigm shift towards preventive care, cope with challenges to manage the growing burden of healthcare expenditure from non-communicable diseases like diabetes, and see an increased focus on research and development. In the UAE, the healthcare sector has the legislative and infrastructural framework for growth. The mandatory health insurance law is but one example. Undoubtedly, the law will transform the healthcare sector on par with international best practice and increase its competitiveness."
• Dr Kassem Alom: The chief executive of Al Noor Hospitals Group.
“The UAE healthcare market is fast-growing and we expect this to continue for the foreseeable future. As the largest private hospital group in the UAE, Al Noor is benefiting strongly from this market performance and also from delivery of our organic and acquisition based growth strategy.
In the short and medium term our focus will be on the UAE as we see so much potential here for Al Noor. However, in the longer term, we will seek to identify healthcare growth opportunities across the wider GCC region.”
• Dr M I Sahadulla: The chairman and managing director of the Kerala Institute of Medical Sciences (KIMS Group). "Healthcare spending in the GCC has witnessed significant growth over the past few years. GCC governments are trying to make significant investments to support healthcare infrastructure and help the industry to grow to international standards. Several GCC nations have announced plans to ramp up infrastructure to cater to rising demand, with major healthcare projects across the region being planned to accommodate the ever-growing demand. We observe good progress in training the local citizens to fill up the skills gap for quality healthcare delivery. Another trend being noticed is a rise in wellness-based care and cosmetic care centres. However, challenges of complexity and lack of standardisation in regulations in recruitment and licences, as well as heavy reliance on government funding, do exist.
“Nonetheless, we expect the growth in the healthcare sector to continue in the future with a higher incidence of lifestyle diseases and an increasing amount of GCC governments enforcing mandatory medical insurance.”
• Dr Jamil Ahmed: The director of Prime Healthcare Group.
“With the mandatory health insurance in place and the Expo 2020 to look forward to, the healthcare industry is certainly poised for a period of rapid growth. Managing the inherent risk and controlling the cost to the end user – the patient, will be the challenge for all stakeholders in the industry.”
* Source: Alpen Capital
jeverington@thenational.ae
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