With the number of pharmaceutical manufacturing plants expected to double in the UAE in the next five years, a number of major players in the international and regional pharmaceutical industry are looking to the UAE as a potential market and a regional base to support their operations elsewhere in the Middle East, Africa and South Asia.
Mr Amin Al Amiri, the assistant undersecretary of Public Health Policy and Licensing at the UAE Ministry of Health has recently indicated that this expansion will be unhindered by oil prices because the economy relies on many other things “beyond oil”. The UAE’s health budget is expected to be increased from AED10.32 billion in 2015 to AED13.97 billion in 2019.
This increased focus on the development of the pharmaceutical industry has motivated and encouraged certain international companies to become more involved in the UAE pharmaceutical industry. Some are looking to start obtaining the necessary approvals from the relevant regulators to establish R&D laboratories or manufacturing plants in the UAE.
Currently in Dubai, free zones appear to be the favourite location for opening manufacturing facilities, with free zones such as the Dubai Science Park being set up with a specific focus on biotechnology and research (among other things such as renewable energy). They provide the opportunity to establish a presence with flexible ownership structures allowing up to 100% foreign ownership, with potential tax benefits. Companies such as Bristol-Myers, Pfizer and Amgen have all opened there.
If companies are interested in carrying out medicine manufacturing activities outside the free zones, i.e. ‘onshore’ in the UAE, they would need to obtain a licence from the Economic Development Department in the relevant Emirate, as well as the UAE Ministry of Health. In the Emirate of Dubai, the approval of Dubai Municipality would also be required. At the time being, a company looking to carry out any activities related to the manufacture or sale of pharmaceuticals ‘onshore’ in the UAE must be set-up as a limited liability company or a sole establishment.
Companies wishing to set up as pharmacies will, in addition to a licence from the relevant Economic Development Department, need to obtain the approval of the Dubai Health Authority (DHA) in the Emirate of Dubai, or the Health Authority in Abu Dhabi (HAAD) in the Emirate of Abu Dhabi.
Although companies have reported that the lack of local talent is a large barrier leading to increased manufacturing costs, some international pharmaceutical companies appear to have combated this by pairing up with existing local manufacturers who already have the infrastructure and personnel on the ground. These partnerships can take the form of a joint venture or a contractual partnership arrangement.
Regardless of their methods of entry, pharmaceutical companies are continuing to enter the UAE to cement themselves in a leading pharmaceuticals hub of the GCC and wider geographical region.