Pharma logistics market to reach $18bn

The regional market for pharmaceutical logistics services is forecast to reach $18 billion (Dh66.11bn) within the next five years regardless of any slowdown in economic growth, said a top industry executive.

The market, currently estimated at $5bn is expected to grow by 50 per cent year-on-year up to 2013.

"Pharmaceutical products are a necessity of life, so no slowdown in demand is expected despite a drop in economic growth. The market will remain firm in the next five years," Maher Kheder, Group Business Development Director for Pharma World Holdings (PWH) told Emirates Business.

"The potential for investment in the pharmaceutical logistics market will remain high and we will see more players entering this sector due to the immense opportunities it offers."

Kheder said the demand for pharmaceutical logistics services was growing as the industry enhances efficiency to ensure quick delivery and constant stock supply.

PWH is investing up to Dh300 million in the region in the next three years to streamline its pharmaceutical logistics business, which commences in May. It is initially investing Dh30m in a state-of-the-art automated 10,000 square metre warehouse in Jebel Ali Free Zone, which will be opened in April and will provide storage facilities for a wide range of pharmaceutical products.

"As the first dedicated pharmaceutical logistics provider in the region, our target is to give ourselves a solid foundation that will enable us to withstand any future competition," said Kheder. "For sure there will be competition as the market continues to attract more players, but we want to make ourselves indispensable."

Currently the UAE imports more than 90 per cent of the drugs used locally due to a low level of pharmaceutical production.

The Jebel Ali facility will be expanded by an extra 30,000 square metres in the next two years, with local demand anticipated to rise.

After consolidating, PWH intends to spread its wings to other major markets within the region such as Saudi Arabia and Egypt.

"Currently, 65 per cent of the regional market for pharmaceutical logistics is in Saudi Arabia. We have options of setting up a warehouse hub in King Abdullah Economic City in Saudi Arabia to cater to the local market and also the Levant countries," said Kheder.

Another hub is being considered in a free zone in Egypt to cater to the African market, especially North Africa. PWH was created in November 2007 through a 50/50 joint venture between UAE-based Ithmar Capital, Fund I and Saudi Arabia's Banaja International Group, which has been in the pharmaceutical distribution business since 1940.

PWH has already registered positive response from international pharmaceutical manufacturers and is currently in direct talks with major US manufacturers, Wyeth and Baxter pharmaceuticals. Negotiations are also on with Johnson & Johnson, GSK, J&J, Bayer, BMS, Novartis and Merckand.

The pharmaceutical industry is one of the world's largest, with sales exceeding $300bn annually.

The industrial countries, where 14 per cent of the world's population lives, consume medicines worth $240bn per year.

Consumption in Arab countries, which contain 4.5 per cent of the world's population, is just $5bn.

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