Ingo Lüderwald

While the Gulf region has already become well-known for its globally accepted infrastructure, and large projects in tourism and other service areas, major investments in healthcare or pharmaceuticals have failed to develop as well. 

For many years, the pharmaceutical industry in the region has mainly been domestic. Pharmaceutical companies in the Gulf countries were focused on the supply of their local markets, and local drug manufacturers were mainly providing off-patent products for the public sector in local tender businesses. 

International companies have established local sales offices, but not manufacturing facilities. Only a few domestic pharmaceutical manufacturing companies situated in the Gulf region have successfully moved outside their domestic market, with most of their activities limited to exports into low-regulated markets such as Africa and South East Asia. 

Business conditions in the Gulf countries.			

During the past three decades, the member countries of the Cooperation Council of the Arab States of the Gulf (GCC) — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates — have witnessed an unprecedented economic and social transformation. Life expectancy in the GCC area increased by almost 10 years to 74 years during 1980–2000, and literacy rates have increased from 60% to 80% over the same period. Average per capita income in the GCC countries was estimated at approximately $12000 in 2002, with their combined nominal gross domestic product (GDP) reaching close to $340 billion. With very low inflation, overall real economic growth has averaged 4% a year during the past 30 years, while the importance of non-oil economic activities has grown steadily, reflecting GCC countries' efforts at economic diversity. This progress has been achieved with an open exchange and trade system, and liberal capital flows, as well as open borders for foreign labour. The GCC area has become an important centre for regional economic growth. 

Also, the pharmaceutical market in the Gulf is developing at great pace. The volume of the pharmaceutical market in the GCC countries is exceeding $4 billion and is growing at 10% per year, which is almost twice the growth rate of the global pharmaceutical market in recent years. Saudi Arabia and United Arab Emirates account for about 85% of the total pharmaceutical sales in the GCC countries.  

For many years, a strong public market characterized the markets in the region with governments being the main purchasers of drugs through tenders. However, within recent years, the importance of the private market has increased dramatically for the following two reasons: 			

 The private market is growing at a strong rate because of the large proportion of the expatriate labour force in many of the GCC countries, which are excluded from state healthcare. 

 The wealthy individuals in the GCC countries who were formerly seeking medicinal treatment abroad, either in Europe or in the US, are now treated locally in one of the high-class private clinics and hospitals operated by expatriate surgeons and medical doctors from Europe or the US. Many of these clinics and hospitals have opened their doors recently to the public, and are even attracting patients from Western countries for specific treatments. 

In addition, both the patient's needs and the overall pharmaceutical market in the GCC countries are moving away from the drugs that are typical for developing countries, such as antibiotics and vitamins, towards a market characterized by common diseases of developing countries, including diabetes, cardiovascular diseases and oncology. 

Front view of the facility in Salalah.			

The business environment in the Gulf region, particularly the Sultanate of Oman, offers a wide range of unparalleled strategic advantages. The Sultanate of Oman enjoys a stable political, economic and social system, which is enhanced by the excellent relationships between the Sultanate and neighbouring countries. Within the last 30 years, it has built a state-of-the-art infrastructure that is comparable to Western standards. Frequent flights into Europe and Asia from Seeb International Airport in Muscat guarantee short travel times, and the port in Salalah is ideally located in the centre of the Indian Ocean Rim for supplies into Europe, Asia and Africa.  

Power and water supplies are reliably available in state-of-the-art quality and energy costs are among the lowest in the world. These infrastructural conditions differ considerably from other low-cost countries of the region such as India at present times where, for example, uncertainties of the power supply is still a major issue. 

Because of its geographical proximity and liberal immigration practice, the Sultanate of Oman provides access to the talent pool of well-educated labour from India. There are plenty of university-trained pharmacists, chemists and biologists who have obtained postgraduate qualifications outside India or have professional experience with international pharmaceutical companies in and outside of India. These experienced scientists can assume positions in pharmaceutical formulation development, manufacturing and quality management. Conversely, there is a huge labour force of well-educated and well-trained pharmaceutical operators in India that is used to work under current good manufacturing practice (cGMP) conditions.  

Both types of experienced pharmaceutical professionals can be hired at competitive prices from India. Many of them have been trained abroad, either in the US or in the EU, and have gained experience with International Conference on Harmonisation (ICH) regulatory standards. 

Because of Oman's aim to broaden the private sector, and to diversify the economic base and sources of national income, the government encourages and supports market-orientated policies and private sector development. Investors are offered significant allowances and other benefits to promote private investments. Furthermore, there are no individual income taxes in Oman, which attracts people to work in the country. Take all these basic conditions into consideration and the country offers an attractive business environment that also invites for exploitation in the area of pharmaceutical manufacturing. 

Manufacturing technologies and capacities.			

Before this backdrop, an Omani investor has built a pharmaceutical contract manufacturing facility that has been inspected and approved by EU regulatory authorities. The Al Bahja Group embarked on this project to build a state-of-the-art pharmaceutical dosage form and packaging production facility: Oman Pharmaceutical Products Co. LLC (OPP).

The aim of the project was to take advantage of the easy access to well-educated pharmaceutical professionals from India and use these low-cost conditions to set up a facility for supplies into the highly regulated markets of the EU and the US. Hence, already from the planning-stage of the facility, EU and FDA guidelines were taken as a basis for the build-up and commissioning. 

Western consultants were engaged in the project from the beginning, developing the long-term business strategy, which consists of three consecutive phases: 					

Build up local business in the GCC countries to gain experience and build track record.

Get approval from Western  regulatory authorities.

Expand into the highly regulated  markets of the EU and the US by attracting EU and US customers for contract manufacturing, and by licensing products for the GCC markets from international  companies. 

OPP — a $50 million investment — was inaugurated in January 2004 at Raysul Industrial Estate, which is neighbouring the port of Salalah. The total area of the manufacturing site is about 32800 m

 . The manufacturing site accommodates a large dedicated manufacturing building with separate suites for hormone and steroid products, and a separate antibiotic manufacturing building. In addition, there are separate buildings for quality control and development, as well as for engineering and utilities. Currently, OPP is the only manufacturing facility that has a dedicated hormone facility in this part of the world. 

The company has the capacity to manufacture oral solid, oral liquid and semisolid dosage forms, and to pack in tubes, bottles and blisters. The facility has installed annual capacities to produce more than 900 million tablets, 300 million capsules, 12 million bottles of oral liquids, 7.5 million tubes of ointment, creams and gels, and 7.5 million bottles of dry powder for oral suspension. The facility is designed for further expansion, and production capacities can easily be expanded. 

Qualified and state-of-the-art equipment in the QC laboratories.			

As compliance with ICH quality standards has always been a guiding target, the facility is equipped with state-of-the-art equipment, mostly of European suppliers. The HVAC system comprising 72 air-handling units comes from the UK and the water system is of Swiss origin. QC laboratories are equipped with qualified and computerized chromatographic and spectroscopic equipment and all necessary calibration and maintenance procedures are in place. 

After successful installations and operational qualification in summer 2003, and the official inauguration in early 2004, OPP was first inspected by local authorities (Oman Ministry of Health, [MOH]) in March 2004 and received approval. After obtaining the GMP certificate from the Oman MOH the company could then launch its own product range with off-patent products under the corporate brand ZYNOVA in Oman. Later in 2004, the company was inspected by the Gulf Cooperation Council (GCC), a centralized committee for drug registration, and obtained their GMP certificate in November 2004. Consequently, the marketing and supply of the ZYNOVA products were expanded into all Gulf countries in 2005. 

At present, the ZYNOVA product range consists of more than 30 products including medicines for diabetes, cardiovascular, dermatology, gastrointestinal and neurological disease, as well as antibiotics, analgesics and cough syrups. The product range is continuously expanded in line with patent expirations and according to the requirements of the market. OPP operates a growing marketing and sales network throughout the GCC countries and could become an interesting cooperation opportunity for international pharmaceutical companies. 

After the successful build-up of the local business and establishment of a track record in the GCC countries, the next challenge was to expand into the highly regulated markets such as the EU. 

Today, OPP is the first and only manufacturer with a European approval in the Sultanate of Oman and operates one of the most state-of-the-art facilities in the Gulf region. This opens opportunities for successful cooperations with international pharmaceutical companies, as well as for contract manufacturing into Europe.  

is a partner, both at Interpharmalink AG (Switzerland).

Articles

While the Gulf region has already become well-known for its globally accepted infrastructure, and large projects in tourism and other service areas, major investments in healthcare or pharmaceuticals have failed to develop as well.