New policies encouraging the use of generic drugs are set to reduce the cost of health care in Abu Dhabi, which is likely to attract more investment to the pharmaceuticals manufacturing industry.
Under reforms that came into effect on September 1, patients in the emirate are now able to access generic treatments through their pharmacies, and medical professionals can use generic products in health facilities, thereby cutting retail and wholesale costs.
The change, announced by the Health Authority - Abu Dhabi (HAAD) in a circular issued on July 23, means that patients can now choose between name-brand products or generics, with health insurance covering the cost of the latter. Those wishing to buy branded products will be required to pay the difference from the generic option’s listed price.
In a subsequent statement on July 31, HAAD said the increased use of generics would not only improve access to health care, but also create new opportunities for domestic production.
According to estimates from some pharmaceuticals players, the switch from name-brand to generic products could result in cost savings of up to 60%. Locally produced generic drugs would bring even greater benefits, allowing for substantially lower logistics costs and more control over the supply of vital treatments.
Unlocking the potential of this market could bring significant opportunities, as national demand for pharmaceuticals is set to rise steadily in the medium term. Spending on pharmaceuticals in the UAE is estimated to increase from Dh9.61bn ($2.6bn) in 2016 to Dh14.11bn ($3.8bn) by 2020 and Dh21.74bn ($5.9bn) by 2025. At least part of this extra demand is set to be met by domestic production.
According to estimates by the UAE’s Ministry of Health, the number of pharmaceuticals production facilities in the country will more than double by 2020, with up to 34 production centres scheduled to be in operation, up from 16 last year. The ministry reports that generic drugs should play a key role in supporting this expansion.
Pharmaceuticals producers are positioning themselves to capture part of this market by increasing their investment in production capacity in Abu Dhabi.
Late last year local firm Neopharma launched feasibility studies into developing a second manufacturing hub at the Khalifa Industrial Zone Abu Dhabi (KIZAD). The proposed $100m investment would bring Neopharma’s KIZAD facilities to a total of 160,000 sq metres.
Company officials say this is part of a larger push to expand Neopharma’s role in the region and beyond, as it looks to add more generic and value-added drugs to its repertoire of general products and beta lactams, a class of broad-spectrum antibiotics. In March the firm was granted EU GMP certification, which should further facilitate efforts to branch out into new markets in the European bloc.
Additionally, by the end of 2018 Dubai-based Life Pharma aims to begin production at a new facility, which has been under development since 2014 at KIZAD.
The plant, built on a 158,000-sq-metre plot, will have four units. One will be dedicated to oncology treatments and research, while the others will be used as manufacturing centres for vaccines, sterile injectors and oral solid dosage products.
HAAD’s decision to broaden the use of generics has been largely welcomed by industry stakeholders, with this move set to attract more pharmaceuticals players to the local market and stimulate product expansion.
“With the ruling, more affordable medicines could extend treatment options in the public health sector, where fixed budgets place limits on treatment,” Jerome Carle, general manager of UAE-based pharmaceuticals manufacturer Julphar, told local media.
These cost savings could be directed towards the research and development of new treatments, which, along with stronger demand for local products, would further bolster the market.
While largely welcomed, some analysts believe there could be initial resistance to the wider use of generics, with information programmes likely required to ensure widespread public understanding that generic products are as safe and effective as their name-brand counterparts.
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