DOHA—Qatar wants to mature from a pharmaceutical novice into an Arab Goliath for drug development. It is willing to spend the money to achieve this, but industry analysts say big spending alone may not be enough to make the peninsula a true global pharmaceutical player at the level of Switzerland.
Qatar University’s College of Pharmacy is a fairly new department; it opened just nine years ago. But it has grown at an exceptional rate.
“We are now ranked number one at the university in terms of research productivity,” says Ayman El-Kadi, professor and dean of the pharmacy college. “We have the largest number of research papers per capita.”
The college is set up and designed to act as a one-stop shop for the drug-making process. It has medicinal chemistry and pharmaceutical labs where chemicals are synthesized and then made into tablets, capsules, injectable substances or other formats. The college also has facilities to test drugs on animals, humans or cell cultures.
“We have a complete research program,” explains El-Kadi with a hint of pride. He won’t say how much money all this cost to build and run, but most of the funding comes from the public purse—just 10 percent of the college’s spending comes from private funds.
El-Kadi says the reasoning behind the state’s investment is the result of a combination of factors.
One of them is a desire to support Qatar’s budding pharma industry. “They are approaching us for help, which is the point,” he says, “We do the quality control testing and consult with them.”
Throughout the Gulf and Arabian Peninsula, there is an effort to diversify economies so there is money to spend when the oil eventually runs dry, or when the price drops, as it is right now.
El-Kadi says Qatar’s investment in pharmaceutical research can be seen in this context. “It’s part of the drive for a knowledge economy,” he says.
According to a recent report on the status of Qatar’s pharma and healthcare industries by the consultancy firm BMI Research, the outlook for 2016 remains positive.
The report highlights the Qatari willingness to spend on pharmaceutical investments, despite falling oil prices. BMI Research projects an 11.5 percent growth in government expenditure on pharmaceuticals in 2016, to reach $548 million. This led the consulting firm to conclude that the Qatari pharma market is low risk.
But that doesn’t mean clear sailing for Qatar. Kaushal Shah, BMI Research’s head pharmaceuticals and healthcare analyst, says Qatar’s pharma research industry is still in its infancy. “It’s going to be decades before they can compete with Switzerland and Germany,” she says. “They’re not going to get there anytime soon.”
When it comes to foreign investment, Qatar may not be risky, but it’s unlikely to draw external venture capital. “Multinationals are not keen to set up manufacturing or research and development there,” explains Shah, “because it’s not a large market and there aren’t huge incentives.”
Qatar’s population is just 2.2 million, according to the World Bank, compared to Saudi Arabia’s population, which nears 29 million. In the absence of meaningful financial incentives and given Qatar’s existing export duties, it is unlikely that big-name drug companies will favor Qatar over its neighbors, says Shah.
“The fact that it’s surrounded by the Emirates and Saudi Arabia means there’s competition from bigger markets,” says Shah’s colleague, BMI research analyst Craig Smith.
This situation is made worse by a drive to unify drug pricing in the six-member Gulf Cooperation Council, which will also lower the price of drugs in Qatar. “That’s good in terms of making drugs more affordable, but it means there will be lower revenues for pharmaceutical companies,” explains Smith.
These challenges don’t mean Qatar will never be a drug-discovery hub, says Shah. It just means the government has to find ways around the challenges while maintaining investment. “I don’t think their efforts are in vain,” she says. “Qatar has the money and the drive to gain the skilled workforce it needs through higher education.”
But El-Kadi trusts the potential of research to deliver. To attract big pharma, he says, you have to show that the country’s workforce is capable of inventing new and innovative drugs. Essentially, the hope is that outside corporation will come for the local brains. The risk is that those companies could just raid Qatar’s talent pool without moving operations there.
“You have to develop your own molecules through your own research,” he says, “That’s the first step. By bringing the right people here and investing in research, which is what the Qatar Foundation is doing, it’s only a matter of time.”
Patience will prove a virtue: “Research and drug development in Qatar is a long-term goal,” says Smith.
Shah agrees. “There are other things Qatar could do to improve foreign investment. They could lower export duties, to make it a hub producer of medicines,” she said.
For Qatar to grow from its humble pharmaceutical beginnings and create a thriving section of the knowledge economy, it’s going to require more than publically funded research. It’s going to require inventive tax breaks and initiatives to entice foreign drug giants to the small peninsula. But some analysts say a booming drug industry in the young nation is possible.
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