The Middle East, with its political turmoil, has not drawn the same level of heated interest from drugmakers looking to place new manufacturing facilities as other parts of the world, but there are signs that is changing. The largest drugmaker in the world is setting up shop there.
Pfizer ($PFE) has kicked off construction of a plant in Saudi Arabia, its first in the Gulf Cooperation Council area that also includes Kuwait, Bahrain, Qatar, the United Arab Emirates, and the Sultanate of Oman. The 32,000-square-meter facility is being built in Rabigh on the western coast of Saudi Arabia. It is slated to be operational in 2015, according to the Middle East North Africa Financial Network. The plant will make a number of Pfizer drugs, and production is slated to hit 18 million packs per year.
Aparna Krishnan, a senior research analyst with IHS Global Insight, noted in a 2010 whitepaper that only about 2% of global pharmaceutical sales were in the Middle East and North Africa. She pointed out that the regulatory and investment climates were tough but that the population growth in the area was faster than the global average and that most of local production was of generics. She said that Saudi Arabia was importing 85% of the drugs being sold there.
Pfizer is not the only drugmaker banking on the upside potential there. Indian generics maker Ranbaxy Laboratories is building a plant in Morocco as a base for selling in North Africa. Merck Serono recently partnered with United Arab Emirates-based Neopharma, which will manufacture Merck's Type 2 diabetes drug Glucophage, as well as its thyroid medicine Euthyrox for sale in the UAE. Jordan-based Hikma Pharmaceuticals ($HIK) last year noted it had suffered from the uprisings that have roiled the area since late 2010 but still planned to invest $300 million in the region. It said annual market growth should be about 12%, compared to the 2% forecast for Europe.
The Saudi Press Agency reported that Pfizer executives also pointed to the growth potential in Saudi Arabia and throughout the Middle East as one reason to build there.