Investing in the pharmaceutical industry
Encouraging investment in the pharmaceutical industry and developing and supporting the healthcare sector are key components of government strategies and efforts to secure essential needs for populations—just like education, security, and quality of life. The pharmaceutical industry is one of the largest and most profitable industries globally, competing with sectors such as weapons manufacturing and oil and gas products, with annual global sales exceeding $300 billion.
Many countries have made notable progress in healthcare, medical tourism, and the production of high-quality medicines and pharmaceuticals. For example, India—often referred to as the “pharmacy of the poor”—is the third-largest global player in this industry by production volume and a major destination for medical treatment, with a market exceeding $23 billion. Indian pharmaceutical products rival the quality of major European and American companies, while offering significantly lower costs to patients—sometimes more than 90% cheaper for certain medicines.
India’s ability to develop and manufacture patented drugs, along with the availability of skilled technicians, supervisors, chemists, and labor at low cost, as well as advanced equipment, animal testing laboratories, and abundant raw materials, has driven a major investment boom in its pharmaceutical sector. This growth has been further supported by increased government healthcare spending, rising incomes among India’s middle class (which exceeds 300 million people), improved education standards in universities and institutes, and growing public awareness of healthcare. Together, these factors have enabled India to attract substantial investment in this industry and export nearly 30% of its production worldwide, particularly to the United States.
Some Arab countries have also succeeded in localizing key pharmaceutical industries. Morocco, for instance, has achieved a significant transformation in pharmaceutical production and now ranks as the second-largest pharmaceutical exporter in Africa, with annual sales of approximately $1.5 billion. It meets around 70% of its domestic pharmaceutical needs through 48 manufacturing facilities and exports about 8% of its production to neighboring countries. As a middle-income country, Morocco benefits from certain privileges, such as exemptions from licenses granted by multinational pharmaceutical companies to produce generic drugs.
At the local level, Qatar’s pharmaceutical market is valued at around $700 million annually. Qatar ranks first globally in healthcare spending per capita, exceeding $2,023. The healthcare sector is one of the government’s top priorities, as reflected in its allocation of approximately 25 billion Qatari riyals (12.3% of total expenditures) in the 2017 state budget—an amount expected to increase in the coming years. This aligns with efforts to open the Qatari economy to initiatives and investments that contribute to diversifying income sources and advancing various economic sectors.
The state is moving in the right direction by removing obstacles to investment across all economic sectors. This includes providing essential infrastructure, developing supportive legislation and regulations, promoting industry and investment, supporting and protecting national products (in line with free trade agreements), ensuring access to financing, and encouraging scientific research. These efforts emphasize sustainability in industries based on technology, innovation, and research—particularly the pharmaceutical industry—so that such investments become a key pillar of the Qatari economy.
Additionally, the Qatar Investment Authority is expected to play a central role in localizing strategic industries such as pharmaceuticals by directing part of its future investments toward available industrial opportunities locally and globally—especially those beyond the capacity of the private sector. This would help achieve national goals of diversifying the economy while encouraging both public and private sector participation and future programs in the pharmaceutical field. It would also support diversification of drug import sources, transfer of industrial technologies, and their localization within the country.
Undoubtedly, having a domestic pharmaceutical industry represents an economic strength that complements the healthcare sector. To develop it, successful international experiences should be leveraged so that Qatar can become a promising market for this industry—capable of meeting its local needs while enhancing its capacity to export and compete globally.
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Published in Lusail Economic Newspaper 23 Oct 2017
