Oman Pharmaceuticals and Healthcare Report Q2 2008

Oman's drug market is expected to grow strongly over the forecast period (2008-2012) to reach a value of US$181.7mn by 2012. Growth in the pharmaceutical sector will be aided by a strong healthcare system, which is regarded as one of the best funded and most efficient in the Middle East and Africa (MEA).

The drug market will remain relatively minor in global terms as a consequence of Oman's population of just 3.2mn. However, improved health policy coordination across the Gulf Cooperation Council (GCC) and a common market that has operated since the beginning of 2008 should serve to boost the attractiveness of member states' drug markets. With most multinationals already operating out of Saudi Arabia or the UAE, BMI expects this GCC integration to have a relatively minor impact on the dynamics of the Omani market.

Oil revenues should mean that the government continues to operate a comprehensive system of medical care for the medium term. The trend for cost containment that is emerging across Middle Eastern states, and in Saudi Arabia in particular, is yet to afflict Oman. Patented drugs continue to dominate the market.

However, a growing chronic disease burden and aging population (the Ministry of Health forecasts that 10% of the population will be over 65 by 2025) may result in the government taking steps to encourage generic substitution.

The over-the-counter (OTC) drug market remains underdeveloped due to a general lack of medical knowledge among citizens and a strong healthcare system that reduces the need for self-medication.

Government education campaigns to raise awareness of health issues should help to develop the OTC sector and consequently, it should beat overall market growth to account for 13% of drug market expenditure by 2012.

In BMI's updated Business Environment Rankings for Q208, Oman remains in equal eight position of the 14 MEA markets surveyed. The country scores 48, up one point from 47. It posts a strong score for the country risk sub-category, indicating the stable political and economic situation, but is let down by a small overall pharmaceutical market size.

The private healthcare sector should be driven by the country's expatriate population, who are excluded from government healthcare. Growth in the medical tourism market could also give private healthcare a boost as in other Gulf states - most notably the UAE and Bahrain.