Jordan's pharmaceuticals go global

By PAM DOUGHERTY AMMAN

Pharmaceuticals are Jordan's second largest export earner - worth $170 million in 2000 and $185-190 million last year - but those in the business see this as just the beginning. "The Middle East and North Africa [MENA] region is our main market now, but there is huge potential in the European market," says Maher Matalka, the secretary general of the Jordanian Association of Manufacturers of Pharmaceuticals & Medical Appliances (JAPM). "We are aiming for a vertical integration of the industry that will open even more opportunities."
Joint ventures. By Jordanian standards, the industry has a long history. The first local manufacturer, the Arab Pharmaceutical Manufacturing Company (APM), started production back in 1966. It was followed by Dar Al Dawa in 1975 and Hikma Pharmaceuticals in 1978. A couple of more companies were established in the following decade, and there was a surge of investment in the 1990s, with nine new companies setting up shop. Sixteen companies are currently in production and two more are under construction. One of the latest is a joint venture with Organics of France for the first insulin production facility in the Middle East.
Jordan's small domestic market forced even the earliest producers to look for export markets, and 80 percent of all production currently goes abroad. While most exports still go to the MENA region, with smaller amounts to sub-Saharan Africa, the Far East and Eastern Europe, two companies have broken into the European Union market. United Pharmaceuticals has secured a $50 million contract with Germany, while Hikma Pharmaceuticals is now selling antibiotics in the British market. The European market is attractive for both its size and its proximity, although standards are high and only three other local companies are close to the final stage of gaining European good manufacturing practice approval for their facilities. Even at home, local producers have always had to work in a competitive environment, as Jordan has never allowed protection for pharmaceuticals. Local companies currently take $40 million of $150-160 million total local sales annually.
Company activities in the country include the manufacturing of raw materials, gelatin capsules and formulation; Jordan also has several bio-equivalence centers.
Matalka sees the next stage in its development as a stronger vertical integration that will attract foreign investors to use Jordan as a base for the MENA, European and US markets.
He says a major step forward was a new patent law that brought Jordan into line with international standards. It has been moderately successful so far, but one US-Jordanian joint venture is up and running. In 1999, Schein Pharmaceuticals of the United States took a 21 percent share in the local company Pharma International, which has a US Food and Drug Administration-standard plant near Amman producing a range of generics. Schein was subsequently bought out by Watson Pharmaceuticals of California, bringing Pharma International into partnership with the largest US-owned generics company.
Pharma International's general manager, Paul Glover, says after just 12 months in production, the company now has 39 products on the Jordanian market and has ambitions to be one of the top local companies within four to five years. Jordan is just its starting point, though. The company is already exporting to Oman and has had inspections from four other countries in the region. "Our big year in the region will be 2002," he predicts, "and we will also be going to Europe, with the US market to follow by 2004 or 2005."
Glover has been impressed by the infrastructure available in Jordan. "I came to Jordan after 25 years working in the pharmaceuticals industry in the United States, Britain, southern Africa and Iran, and found the quality of facilities and technical personnel very high," he says. "In fact, technically Jordan would stack up with most countries"
He sees the major domestic weakness in the upper management area. "Most companies do not really have a strategic vision," he says. A major exception is the Hikma Group, which now includes Hikma Pharmaceuticals and Hikma Chemicals in Jordan, together with the wholly owned Hikma Pharmaceuticals in Portugal and Westward Pharmaceuticals in the United States, and two joint ventures, Hikma Ibn Bitar in Tunisia and Jazeera Pharmaceuticals in Saudi Arabia. "More Jordanian companies should follow the same route," suggests Glover, who believes that establishing manufacturing bases abroad and going for more contract production are the two most effective ways of overcoming investor reluctance to come into what is perceived as an unstable region.
Under contract. APM and Hikma Pharmaceuticals have already chalked up some success in the contract manufacturing area, particularly with Japanese manufacturers that do not generally have well established sales networks in the MENA region, while Advanced Pharmaceutical Industries is producing under license from two Swiss companies.
Despite its growing strength, Jordan's pharmaceutical industry has one major challenge to overcome in the form of World Trade Organization (WTO) membership. Jordan joined the WTO in 2000, and companies have only until 2005 to make sure that their production is fully in line with international patent regulations and standards. Matalka is confident that most companies will be up to standard by then; he suggests, however, that tough times might compel some to merge. He welcomes anything that will strengthen the industry. "People abroad do not distinguish between companies," Matalka says. "They just see Jordanian medicine, and the regulations are getting tougher every day."
Most areas of the pharmaceutical infrastructure have now been upgraded. Drug laws have been revised to take account of modern developments, and contract-manufacturing regulations are in place. Jordan already has a number of bio-testing centers and a new law covering clinical testing on humans was issued in early November. The ministry of health has also established a drug-vigilance center.
"Jordan now has what it takes to be part of the R&D [research and development] matrix worldwide," says Matalka. "We also have good physicians, private hospitals and laboratories, and the proper legal umbrella, including the best intellectual property protection laws between India and Europe."
Local companies should benefit from an article in the patents law that allows then to develop products under patent for the purposes of preparing a registration dossier, something also allowed in US law but not common in Europe. "A submission takes two years to organize, and it is gives a company an enormous advantage if it can submit the day a patent runs out," says Matalka. Finding a way around the complication of international patents and registration is not easy for small companies, but members of the JAPM now have the advantage of access to software that enables them to see exactly when any patent is due to run out in any country worldwide.
With the world market in generic drugs worth $14-15 billion annually and due to soar to $32 billion by 2004 when 35 of the leading molecules will be out of patent, getting in fast could be the key to long-term success for the entire industry. And Jordan could be just the place to get started.