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Lebanon Report
Marcopolis presents the Lebanon Report focused on the investments, doing business, economy and other topics featuring interviews with key executives and government officials. The sectors under review are industry, telecom, banking sector, ICT, investments and more.
InterviewsJuly 11, 2014
Arwan Pharmaceutical Industries: Saving Lives One Injectable at a Time
Abdul Razzaq Yousef, President of Arwan Pharmaceutical Industries Lebanon s.a.l
- Written by Isslam Moubarak
- Published: July 11, 2014
Interview with Abdul Razzaq Yousef, President of Arwan Pharmaceutical Industries Lebanon s.a.l
Can you tell us a little bit about Arwan Pharmaceutical Industries Lebanon s.a.l.?
Arwan Pharmaceutical Industries Lebanon s.a.l. is a Lebanese company with an international investment map. I am from UAE and I am a major shareholder along with my other partners, who are of Lebanese origin but they are living outside the country. The name Arwan is an acronym for our motto "Assured Reliability When Absolutely Needed", because we are a company that manufactures reliable products that are mainly injectables and they are life-saving drugs. So, in this case, we are giving assurance of our quality.
More than 300 pharmaceutical companies in the Arab world produce only 56% of the region's needs. Part of your vision is to broaden the horizon of the pharmaceutical industry in the Arab world. How do you intend to go about it?
The Arab world's potential for pharmaceutical products is about 27 billion US dollars. 312 companies now exist in the Middle East. And they produce, as you said, about 56% of the market needs as local production. Besides that, the remaining 44% are imported. Now if we look at individual countries, some of the countries like Egypt, Syria, Iraq and Morocco are producing about 80% to 85% of their needs. But the 15% that they do not produce are mainly something called biosimilars. When we established Arwan in Lebanon, we dedicated ourselves to the production of biosimilars. Biosimilars are life-saving drugs. They are niche products that are still not available in the Middle East pharmaceutical manufacturing companies. We are specialized in exporting those products to the MENA Region and Africa and we are going to focus mainly on the biosimilar products that are required there.
It's no secret that there are some challenges in the Lebanese region.
All countries have positive and negative sides. Lebanon has a lot of advantages for the pharmaceutical industry. That is why we selected Lebanon. Lebanon lies between the West and the East and has a lot of potential in Africa because there is a big Lebanese Diaspora in Africa and they have big businesses there. Lebanon has a huge potential of educated people in the pharmacy and chemistry fields that we need for our industry. Lebanon also supports the industry through the Central Bank of Lebanon and encourages investors to invest in Lebanon. IDAL, the Industrial Development Authority of Lebanon is offering 10 years tax waivers on investments and on dividends. There is a potential here. Lebanon also has very good doctors and hospitals. Thus, when you are producing medicine and selling it in Lebanon, it will be a benchmark for other countries. These are reasons why we picked Lebanon and started this plant here.
Could you share us some key figures—the growth of the sector, number of competitors, etc.?
The Lebanese market is worth about 1.25 billion US dollars. 5% of this market is produced locally through five or six companies, we are one of them. Our objective is not to produce products for Lebanon only, but to produce products and export from Lebanon. Lebanon has a potential for export. Our goal is a turnover of about 100 million US dollars in the next three to five years. We have a potential to reach 280 million US dollars. Our plant can produce about 22 million units per year. Our average price is about 14 US dollars, so we can reach 280 million US dollars within the next five years. There is a big market need or demand as explained in the earlier question. In my opinion, there is a space for other manufacturers to come and invest in Lebanon and establish more companies. I explained to the Minister of Health that if in place of 50 companies, there are only 10 companies acting as one company, and if they produce and export about 100 million US dollar each, we can export products worth about 1 billion US dollars from Lebanon. There is a market potential in all countries, especially the Gulf countries. The Gulf countries produce about 20% of their needs locally and they import about 80%, which is a high price market and it is a high profit margin. So, I believe this industry has the space to grow here and the future of the pharmaceutical company is growing here already. There is a 7% growth of the market every year. Although the prices are dropping due to the introduction of generics, but still the demand for medicine is always growing.
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The name Arwan is an acronym for our motto "Assured Reliability When Absolutely Needed," because we are a company that manufactures reliable products that are mainly injectables, and they are life-saving drugs. |
Speaking of generics, how big is the generics market in Lebanon?
Lebanon is not any different from the other countries. If you look at France or other European countries or the United States, generics occupy almost 70 to 80% of the market space. By generics I mean good quality generics, not just any generic product. If the product is registered in the Ministry of Health this means that they are of good quality. In Lebanon there is a need for good generics, because when the economy goes down, people want products that can be trusted and are cheap. We, in Lebanon, have to reduce our price by 25% from the originator. That will increase the demand for our products in the market. And when we export from Lebanon as well, we are also competing in terms of price and quality. We guarantee quality through a lot of aspects such as our tests, our machinery, our plant, our personnel, our standard project procedures and so on. But definitely good generics would grow and the market for generics will be in demand.
What are the advantages of the pharmaceutical industry in Lebanon?
Lebanon has a lot of advantages, especially for the industry. Pharmaceuticals has advantages due to good hospitals, good doctors, a lot of educated pharmacists, it receives a lot of support from the government, central bank, Ministry of Health. There are a lot of advantages for the industry. And I think any company that invests in Lebanon will benefit from all those advantages that we have.
How are pharmaceutical companies approaching innovation, research and development and what should be done to improve this area?
Research and development in the third world is still very immature and cannot be supported, because we are divided countries. Small countries do not have enough patience for research and development. Plus we don't have a strong law for patent protection. If you are going to develop a new molecule and you invest a lot of money, you don't get protection. Because mostly in the third world, they are registering patents that are coming from Europe and the United States, but they cannot give you the patent for an innovative idea, especially in the pharmaceutical industry and medicine. There is a lack of laws for the patients and the institutes during clinical studies. Then you don't know who is going to be protected and how to be protected and what is the sequence of events when something goes wrong. That's is why I think research and development for new drugs in the third world, especially the Middle East, is still in the early stages. It will come once the whole country is bound by an economic agreement or pharmaceutical or health care industry, then we might have a future, but not now.
In your opinion, what is the key to success?
The key to success, of course, in our business is mainly quality. If we have quality, then everybody will trust you. It takes time, but the trust will be built through this image, because nobody wants to sacrifice their health. If your products are of good quality and you can compete with the originators and the good products available in the market, then the doctors and patients have a choice – the choice of selection. If you have a good quality and a competitive price, then you are successful.
What is the key message you would like to convey to our audience, viewers and readers?
Arwan has a quality that you can rely on. Arwan stands for "Assured Reliability When Absolutely Needed", and we do have the quality that people can trust.
Is there anything else you would like to discuss that we haven't mentioned?
Lebanon has a huge potential in its environment, its people and their vision. The government intends to implement a lot of initiatives through IDAL and they are encouraging investors to come to Lebanon. I'm fully convinced that Lebanon is a good place for people to invest.
