Drug cos eye 'loose' Middle East, Africa

US, Japan and the UK, the largest pharmaceutical markets, are fast losing sheen for many Indian drugmakers.

Mid-sized drug manufacturers such as Intas Biopharmaceuticals, Mission Vivacare, Plethico Pharmaceuticals are betting big on markets like Morocco, Algeria, Ivory Coast, Cameroon, Senegal, Bahrain, Oman, Qatar, Kuwait, etc — collectively called the Middle East and North Africa (MENA) region. Pharma giants such as Cipla, Wockhardt, Ranbaxy Laboratories and multinationals like Johnson & Johnson, Roche, Amgen, Teva, Sandoz, etc are already present in the region.

According to experts, regulatory bodies in the semi-regulated MENA markets are not as stringent as the United States Food and Drug Administration (USFDA) or the UK Medicines and Healthcare Products Regulatory Agency (UKMHRA). Simon Daniel, chief executive (marketing) at Gujarat-based Intas Biopharma, said, "Countries such as Syria, Yemen, Morocco, Egypt, Libya are comparatively liberal in intellectual property rights."

Besides this, consulting and analytics firm IMS projects the US pharma market to grow at a slow 1-2% and the European Union (EU) one at 3-4%. This makes emerging markets more interesting to explore. Akkshay G Mehta, managing director of Mumbai-based drugmaker Mission Vivacare, said the MENA region is worth about $10 billion, growing at 20% annually. "Countries in the MENA region are not as competitive as the US and the UK," he added.

Indian mid-sized players are focusing on specific areas such as cancer (Intas Biopharma) or nutraceuticals (Plethico Pharma and Mission Vivacare) in the MENA region. Intas Biopharma, which is expecting a turnover of Rs 100 crore by March, gets about 30% of its revenues from international markets. Daniel said the company is exploring possibilities of technology transfer and joint ventures in areas such as biopharma and chemotherapy in the MENA region. "We are also looking at the possibility of a subsidiary through partnership with local companies in that region," he said.

Mission Vivacare's Mehta said that at present, about 30% of the drugmaker's Rs 200-crore revenues come from the MENA market. "It is a good market for branded generics and we can get better valuations," he said.

Sanjay Pai, the chief financial officer at the Mumbai-based Plethico Pharma, sees the MENA region as a turning point for the company. "We expect our business to grow by 40-50% in this region. Regions in the Middle East have been impacted by the slowdown, but not the extent to which countries like the US, Japan and Commonwealth of Independent States (CIS) have been hit."

Analysts, however, feel this isn't the right time to expand into the Middle East as oil-rich economies, too, are bearing the brunt of the economic slowdown. Ranjit Kapadia, head of private client group at financial services firm Prabhudas Lilladher, said, "Companies doing business in that region, especially the Middle East, may face problems on the receivables front."
Priyanka Golikeri  DNA-Daily News & Analysis Source: 3D Syndication

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