Sector Modernisation, US FTA to Drive Bahrain Pharma Sector

Recent pharmaceutical sector development in Bahrain has centred on two key areas, namely international trade agreements and the expansion of private sector healthcare provision. A free trade agreement signed with the US in September, as well as the government's increasing cost-consciousness, is expected to drive private sector development in the medium term. Bahrain's market environment is already one of the most advanced in the region and growth continues to be robust.

Critics of the US FTA, such as the Gulf Arab States, claim that it gives Bahrain certain advantages over fellow Gulf Cooperation Council (GCC) member states. A 2001 regional agreement apparently prohibits members from granting "preferential" treatment to non-member states. However, Bahrain's market is becoming increasingly open to companies outside the region, and any interruption in trade links with the GCC states may prove to be insignificant.

More importantly, Bahrain recently signed a Framework Agreement on Economic Cooperation with India, and generics imports from that country are widely expected to rise as the government seeks to contain costs. Generics currently account for just 3% of Bahrain's drug market. Notably, the expected introduction of India's new patent legislation will allow for such an expansion without risking friction between Bahrain and key global authorities.

Meanwhile, changes to healthcare provision will be a further driver of local sector development. Recently announced proposals include greater private management of health services, and the exclusion of expatriates from free healthcare. The move, mirroring that undertaken by the Kuwaiti government, will require expatriates to purchase health insurance or pay for services out of pocket. As pressure on the government's pressure on its healthcare resources decreases, private consumption is expected to help lift Bahrain's market value to some US$60mn by 2007.