Right now, the gulf is in the middle of a war that it looks unlikely to win. An estimated 20 percent — or roughly one in every family — of the region’s inhabitants now has diabetes, and, if current trends persist, that number is likely to double by 2030. Some estimates suggest that the UAE alone spends half a billion dollars every year combating the disease, but — despite the vast outlay, and the strain on Gulf exchequers — disease incidence has thus far shown no sign of waning.
One local company, however, has decided to take the bit between its teeth. Gulf Pharmaceutical Industries — Julphar — has already invested over $150m in the development of a new facility that is on the cusp of full production. So what will this plant be providing? Insulin — the hormone that is desperately needed by diabetes sufferers due to the fact that their bodies are unable to supply it.
“We have a social responsibility to secure medicines for the people of this region,” says HH Sheikh Faisal Bin Saqr Al Qasimi, the chairman of Julphar and a key proponent of the company’s new initiative. “Today, this technology is a highly sophisticated one — it needs a lot of capital investment. We have already committed more than half a billion dirhams to this product, which the market desperately needs. We think we will be able to serve areas where other companies have not reached.”
For Ras Al Khaimah (RAK)-based Julphar, the move to produce insulin represents something of a technical leap into the unknown. While at first one might question why no other firm in the region has attempted to manufacture a product when demand is so clearly sky-high, the fact remains that the insulin production process is technically very complex. Barely a handful of companies have mastered the art, and the majority of these only provide insulin to their own markets. Given that diabetes incidence is rising — especially in the Middle East and Asia — it seems Julphar is backing the right horse.
In particular, thinks Julphar CEO Ayman Sahli, the company’s lengthy experience in the local market means that its distribution channels are the envy of its big-spending multinational counterparts.
“We think of our area as an under-served area,” he says. “As we always say — if you look 500km outside the capital of many countries in the Middle East, is there insulin coverage? Are the doctors trained? I don’t think so.”
The facts would seem to bear out Sahli’s argument. More than three decades after Julphar started churning out pharmaceuticals from the first plant at its site on the emirate’s Airport Road, the company has a claim to having the most diversified sales base in the Gulf. It makes more than 800 drugs which are distributed over more than 40 countries, with Saudi Arabia now its largest market, buying up over 32 percent of its sales in 2011.
From its first plant back in 1980, Julphar is putting the finishing touches to its eleventh facility, all of which are based on the now-sprawling site in RAK. That plant, Julphar XI, will be dedicated entirely to insulin production. But Sahli says that insulin is just one piece in the wider diabetes puzzle.
“We view it as a platform — this is not a product, it’s a concept more than a treatment,” he says. “A patient may take insulin, but he might also take other products as well. Julphar will provide the whole basket of products, so what we are offering is a management of treatment, not just insulin.”
Eventually, say company executives, Julphar XI will be able to provide enough insulin to supply the entire region — using its tried-and-tested distribution network — and beyond. When fully operational, the plant will produce 1,500kg of crystals — which translates to around 40m vials.
Julphar’s ability to produce insulin has been built on the back of a strong track record in sales. Last year, the firm passed the one-billion-dirham ($272m) sales mark for the first time. Anti-infectives were the biggest seller, taking up a third of all sales, followed by ‘oral cavity and gastrointestinal tract’ medicines (fifteen percent), ‘nutrition and blood’ (13.9 percent) and skin medicines (13.2 percent).
“We have been growing double-digit for the last few years, and we will maintain this, even with the unfortunate disturbances in the market,” says Sheikh Faisal, when asked what he thinks the firm’s performance will be this year. “I hope we will continue that growth and be closed to AED1.2bn in sales.”
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It’s not hard to guess what the chairman means by “disturbances”. As a regionwide company, Julphar is active in Afghanistan (5.3 percent of sales last year), Egypt, Libya, Syria and Yemen. However, given the nature of its work, pulling out from the countries hit hardest by the Arab Spring was clearly not an option.
“We had to adjust; we had to take more risk in some areas because we cannot pull out of our region,” Sheikh Faisal says. “This is our region, and our core market, and we have successfully been able to recover what was lost during those six months or so.”
Product-wise, Julphar’s future plans seem to involve further diversification. Aside from diabetes management and further investment into biotech, the firm is also looking to continue launching the traditional ‘blockbuster’ generics in the region — but it also has its eye on a treatment that has done particularly well in the West, but has thus far not taken a foothold in the Middle East.
“Who says women’s health cannot sell here?” questions Sahli. “Hormone replacement therapy [HRT] is a big thing in the West, but it does not exist here. As we always say, ‘my mother will not use HRT, but my wife will’. I want to make that product available to them.”
Outside RAK, Julphar is also hard at work expanding its facilities abroad. The company is hard at work building a plant just north of Jeddah in conjunction with local partner Cigalah Group.
“We also have a plant in Ethiopia under construction,” adds Sahli. “And there is ongoing discussion with the government in Algeria to have a joint venture with the Ministry of Health there. So I think this trend will continue.”
“Right now, we have a view to ease a little bit here, and move a little bit outside, because there’s an advantage to building a plant outside,” says Sahli. “You can take advantage of local regulations that allow you to have better penetration and a better pricing structure. But even if we beat our forecasts, we will always try to take whatever opportunities come our way.”
A further prospect in the pipeline is the possibility of teaming up with some of the global players in the industry. With the likes of Pfizer and Sanofi-Aventis making big investments in the region, it seems obvious that they might want to leverage Julphar’s local expertise. But the CEO says that the ball is currently not in his court.
“The previous experience for us when we talk to many of them is that they are just inspecting, checking, venturing, and trying to understand the market,” adds Sahli. “Julphar is the leading generics provider in the Middle East, with a massive distribution network, and the big companies tend to be originators — they tend to put a key product in a key hospital in a key city.
“It’s a completely different concept when it comes to leveraging the two strategies together. They have to come to Julphar’s side to understand that coverage, to use Julphar’s vehicles to penetrate the market and gain a greater understanding. So far, my feeling about what’s gone on in the Middle East is that they try — not only with Julphar but with others — but I don’t think it has yielded anything. But it’s not that this a matter of the case being closed — not at all.”
Right now, Julphar seems to be performing pretty well without the assistance of Big Pharma. Last week, the firm announced its first-quarter results, showing sales rising by 10.7 percent and net profits up by 12.5 percent quarter-on-quarter. As the healthcare industry continues to grow rapidly in the Middle East, Julphar’s recent investments in the insulin and biotechnology space look set to pay dividends. In addition, Sahli also feels that lighter regulations will also allow new generics onto the market.
“With the emergence of the superpower generics, Julphar will definitely be the leader in that bracket because we already have the set,” he says. “We have the resources, the strategy, we have the plant and we have the strong industrial base. The investment has already taken place, the products are already in the market, and ten years from now, sales of these products will be multiplied by many times over.”
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