GSK seeks to increase footprint in GCC as it expands manufacturing hubs

GlaxoSmithKline (GSK) plans to open a manufacturing facility in the UAE next year and expand an existing one in Saudi Arabia as the UK's biggest drug-maker seeks to boost its sales in the region, said the company's GCC head.

GSK, behind medicines such as Panadol and Augmentin, plans to manufacture three as yet undetermined drugs at the new facility in the UAE, said Andrew Miles, the general manager for GSK in the Arabian Gulf region.

"We believe the UAE still could be a very important strategic hub not only for the GCC but also for the broader region," said Mr Miles. 

"For every manufacturing facility that you set up and you are serious about the investment for each one, you have to be thinking of anything north of or around US$100 million," he said when asked to specify the size of  GSK's investment in the UAE's manufacturing facility.

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Overall, the pharmaceutical market in the wider Middle East and North Africa (Mena) region is forecast to grow to $33.4 billion this year from $32.2bn last year, according to BMI Research, a unit of the Fitch Group. However, low oil prices are impacting the Gulf region, where governments are curtailing public spending on health care. 

GSK aims to expand its manufacturing capacity within the region as the GCC governments localise the production of medicines.

The drug maker wants to increase its Jeddah-based facility, which currently  accounts for about 80 per cent of the company's supply of medicines to Saudi Arabia.

"It is quite a strategic manufacturing facility for us and we believe it will only increase in importance, particularly given the focus of Vision 2030 and how the government is seeking to localise more medicines in order to provide more access, jobs et cetera in the market place," said Mr Miles.

The kingdom unveiled Vision 2030 last year as a road map to wean the world's biggest oil exporter off energy income by trimming expenditure and creating new revenue streams, including privatisation in the healthcare sector.

Under the 2020 National Transformation Programme, the percentage of private sector contribution in total health care spend is forecast to rise to 35 per cent of the total from the current 25 per cent, which is expected to lead to privatisation of healthcare facilities in the kingdom.

"As oil prices hover where they are today and will likely to continue to be where they are today that is going to mean that the public sector business is going to need to review how it will deploy its own investments in healthcare," said Mr Miles.

GSK's Jeddah facility manufactures both medicines and vaccines. GSK also has a joint venture with the Saudi pharmaceutical company Arabio, which the company would also like to expand over the next few years, he added.

GSK expects its GCC sales, which account for 35 per cent of revenue for Mena and CIS countries, to jump between 9 to 10 per cent a year, above the market rate of growth. He declined to give a revenue figure for the GCC.

"Within GSK, the GCC is also quite an important region in that we represent about 25 per cent of the growth of emerging markets in terms of new product launches," said Mr Miles."That is quite important because it continues to reflect the belief and the receptivity of this part of the world to innovation and to research and development."