United Arab Emirates Pharmaceuticals & Healthcare Report Q1 2008

The United Arab Emirates may not be the largest pharmaceutical market in the Middle East and Africa (MEA), but it possesses several advantages that make it an attractive prospect. The drug market is estimated to be worth US$0.9bn in 2007 and it should display a strong CAGR of 10% to reach a value of US$1.45bn by 2012. Drivers of growth will be increasing public and private wealth fuelled by the oil boom, and a strong healthcare infrastructure that ensures high-tech treatments are always available. A friendly regulatory environment and absence of significant local competitors are other factors influencing a growing number of small research firms locating to the country.

The government is keen to attract foreign investment and diversify the country's economy, which is highly reliant on oil. To this end, the government has identified the pharmaceutical and healthcare industries as important industries to develop. Authorities have created two notable free zones to attract foreign investment. DuBiotech is aimed at developing the UAE's biotech industry, while Dubai Healthcare City (DHCC) should enhance the country's healthcare system and should enhance the UAE's reputation as a centre for premium healthcare, encouraging growth as a medical tourism destination.

Meanwhile, the pharmaceutical manufacturing business is in danger of getting left behind the fastdeveloping biotech and healthcare sectors. The largest domestic player, Julphar, only generates 7% of sales in the UAE. A wealthy population with a preference for novel therapies ensures there is a high demand for imports of patented drugs. Consequently, the pharmaceutical trade balance is in the red and expected to become more negative over the five year forecast period, although a relaxation of the rules governing foreign ownership of companies should serve to boost investment in the local manufacturing industry.

For Q108 BMI has overhauled its business environment ratings methodology. Under the new system, the UAE is placed first in the Middle East and Africa (MEA) region, with a lead of eight points over second place Turkey. With a smaller pharmaceutical market than Turkey or Saudi Arabia, the UAE relies on a sound regulatory regime, a stable, Western-friendly political leadership and favourable country structure to boost its score.