As drugmakers search the horizon for new markets where they can get some growth and perhaps get a jump on the competition, the Middle East is looking increasingly attractive. At least Merck Serono thinks so.
The German drugmaker is partnering with United Arab Emirates-based Neopharma, which will manufacture some of Merck KGaA's branded drugs for the regional market.
The pact will get under way next year, 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. 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.
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, according to Neopharma CEO Dr. B.R. Shetty. Before this deal, he said local manufacturers mostly produced basic drugs for the local market. 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.
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."
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 that intended to open drug manufacturing plants to make meds for the local market.
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