Neopharma to produce Merck Serono branded meds in Middle East

Merck Serono hopes to get a jump on the competition by picking United Arab Emirates-based Neopharma as its manufacturing partner in the region.

According to officials in the U.A.E., it the first time the local drug manufacturer has partnered with a multinational drug company to produce branded drugs to meet regional demand. The pact will kick off in 2013 with Neopharma producing Merck Serono's Type 2 diabetes drug Glucophage, as well as its thyroid medicine Euthyrox. Merck Serono is a division of Merck KGaA of Germany.

Merck Serono CEO Stefan Oschmann said his company checked out the capabilities of a number of drug manufacturing companies in the Middle East before landing on Neopharma. He said Merck "identified Neopharma as having the most advanced, European-standard manufacturing facilities capable of producing significant quantities of both hormone and regular pharmaceutical drug products."

Neopharma's manufacturing plant uses modular manufacturing and benchmarks global standards, according to Neopharma CEO Dr. B.R. Shetty. By getting a "technology transfer" from Merck, it will be able to manufacture complex hormone therapies like Merck's Euthyrox.

While the U.A.E. has high rates of diabetes, it has had to import most of the drugs for treating it, which has been a drag on the U.A.E. economy, Shetty said. Before this deal, he said local manufacturers have mostly produced basic drugs for the local market. U.A.E. Sheikh Nahyan bin Mubarak Al Nahyan, who is both chairman of Neopharma and U.A.E. minister of higher education and scientific research, pointed out that the country has the wherewithal to pay for higher quality, branded medications. "The U.A.E. pharmaceutical market is one of the most developed markets in the Middle East, with a strong healthcare infrastructure and the highest per-capita medicine expenditure in the region," he said.

There has been a burst of drug manufacturing activity by domestic producers in the Middle East in the last year. Jordan-based Hikma Pharmaceuticals earlier this year said it had $300 million earmarked for M&A and organic growth with plans to target the Middle East and North African markets. And officials in Qatar recently announced that there were three companies there intended to open drug manufacturing plants to make meds for the local market.

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