A New Pharmaceutial Logistics Paradigm for the Middle East



Pharma IQ
10/28/2011

The Middle East is one of the largest and most complex regions in the world, home to countries which are suffering from political tension or providing an abode for people in need of pharmaceuticals. Logistics throughout the area is the key factor in delivering products safely to those who are most in need.

Many pharmaceutical companies have chosen to set up their business or operate from within the Middle East, with bases in Egypt, Israel, Jordan, Saudi Arabia and the United Arab Emirates to name a few.

A swelling population is also creating a massive demand for absolutely everything, from food and water to clothing and pharmaceuticals, with logistics playing a massive part in getting these vital products to people wherever they are on the planet.

PWC said that there is a "growing burden of chronic diseases" in the Middle East, while an "increased focus on promoting innovation in service delivery, funding and the use of technology together with better resource allocation and a continuous drive to process improvement are no longer options. They are essential for the survival of health systems in the region."

According to Ernst & Young, the worldwide pharmaceutical market will grow by nearly seven per cent per year over the next decade, although this could be double in Middle Eastern markets, giving manufacturers a fighting chance of confronting the region's health issues among a booming population.

However, despite the potential that the region offers, a lack of infrastructure is one of the key issues which are holding back pharmaceutical logistics in the Middle East, said Mohammed Esa, senior vice-president of Agility.

He told ArabianSupplyChain.com that the industry has witnessed a "paradigm shift" recently and a 'hub and spoke' model is now being used, whereby pharma products are stored in a central location before then being distributed elsewhere.

"This model also enables pharmaceutical companies to better serve their customers, react to commercial opportunities and have greater control over product integrity before reaching their distributors," he said, noting that government investment and local manufacturing has had a role to play.

Government investment in the Middle East, and particularly from those that are oil-rich, was prevalent between 2003 and 2008 before the global financial crisis dug its claws in, with those in charge looking to boost infrastructure and industrial projects.

According to PortStrategy.com, half a decade of consumer spending boosted imports, although many of the area's hub ports struggled to cope with the additional supply.

Further investment was promised in the region, but not all of these projects came to fruition, with the crashing of the financial markets and Dubai's real estate bubble bursting to add extra pressure.

With the realisation that upgrades are needed to support economic growth, construction is continuing in Abu Dhabi, with its Khalifa Port due to open in 2012, while Kizad is hoping to attract a host of pharmaceutical firms, logistics and distribution companies, according to PortStrategy.com.

Get the logistics and supply chains right in the Middle East and pharmaceutical companies will flourish.

That is the hope of Said Darwazah, chief executive of Hikma Pharmaceuticals, who was speaking to the Financial Times after his firm paid $111 million (£69 million) for a controlling stake in Promopharm.

The London-listed but Jordan-based group recently halved sales growth forecasts after experiencing difficulties in the Middle Eastern markets, however, it is deciding to place its faith in the region.

"[Promopharm] does several things for us.  It will allow us to introduce a lot of our own products into Morocco and with its 3.5 percent market share already gives us a foothold in the country," stated Mr Darwazah.

This view was backed up by analyst James Vane-Tempest, from Jeffries, who told the source that the acquisition completes Hikma's Middle East and North Africa footprint.

One thing is for certain, as the population rapidly ticks over the seven billion mark, health issues are going to affect more and more people, leading to a greater reliance on pharmaceuticals.

While in many cases manufacturing processes are in place, distribution and logistics is the hurdle which now needs crossing to help the region be as healthy as possible.

Have Your Say
Rate this feature and give us your feedback in the comments section below