PFizer

PFizer

Prescription for progress

 

Leveraging a longstanding relationship

 

Driven by a growing population, increasing per capita GDP and the rising incidence of non-communicable diseases, Saudi Arabia has in recent decades grown to become the largest pharmaceuticals market in the GCC.

 

More recently, the Kingdom has evolved further from being a profitable market for global companies to a competitive location for the manufacturing of pharmaceutical products. With the launch of Vision 2030, the Kingdom’s blueprint for economic development and diversification, the local pharmaceutical sector is expected to receive an even greater boost, having been identified by the government as a major prospective contributor to non-oil GDP.

 

Pfizer, the global pharmaceutical giant, has a longstanding relationship with Saudi Arabia dating back to 1960. The country is one of the main markets in Africa and the Middle East for the company. Over the last half century, Pfizer has brought a range of services and products to patients in the Kingdom. This includes a diverse portfolio of pharmaceuticals covering treatment areas including oncology, cardiovascular disease, pain, pediatric vaccinations, anti-fungal and antibacterial products, anesthesia, and critical care. The company also maintains a unique position in the market in offering a range of biological products such as vaccines.

 

However, over the course of its long relationship with Saudi Arabia, Pfizer has not simply confined itself to distributing products in the market. It has furthered and deepened commitment to Saudi patients, and its impact through a number of initiatives including promoting health, raising awareness of various disease and therapeutic areas, and supporting prevention solutions in partnership with the local government and private healthcare institutions. This has included partnerships with government bodies and NGOs to implement smoking cessation programs and to address early stages of heart disease, as well as the establishment of programs to offer healthcare providers ongoing medical education.

 

Pfizer has complemented its work in the Kingdom with a number of research projects designed to better understand the prevalence and impact of diseases in the country and potential innovative treatment options. The company had several clinical trials ongoing in Saudi Arabia, involving more than 700 patients. The research is focused on eight clinical areas: cardiovascular disease, infectious disease, inflammation, oncology, ophthalmology, respiratory disease, transplantation, and vaccination.

 

Current investment and localization

 

As this suggests, Pfizer has become an integral part of the Saudi healthcare sector over the last five decades. The company currently has more than 400 employees in Saudi Arabia. While its presence has long been successful and notable, Pfizer took its relationship with the country to a new level in 2017. In January of that year, the company formally opened its first manufacturing facility in the Kingdom. This localization effort was the fruit of productive discussions held with the government and SAGIA since 2011.  Pfizer is recognized by the government as a committed partner. In June 2016 SAGIA issued a trading license to allow Pfizer to obtain full ownership of its legal entity in the kingdom.  As a result, the pharmaceutical company is now able to, among other things, import, export and trade in through Pfizer Saudi Limited, thus ensuring an uninterrupted supply of its innovative and essential medicines into Saudi Arabia.

 

The initial investment in the new Pfizer manufacturing facility reached approximately $70m. Pfizer made the decision to focus initially on its main product lines with a view to the long-term sustainability of these products in the market. The uniqueness of these products and their important therapeutic capabilities were key concerns. The manufacturing facility covers seven clinical areas, including cardiovascular disease, antibiotics, antidepressants, non-steroidal painkillers, and neurological products. More than 60% of the volume of medicines that the company supplies are fully manufactured in Saudi Arabia. The medicines that the company produces in these key areas have stable demand and thus offer predictable business volume. Furthermore, the company believes that demand for these important treatments will be sufficient from a scale perspective.

 

 

Local impact

 

The new facility will undoubtedly help Pfizer in terms of managing its supply chain and delivery capabilities in one of its most important Middle Eastern markets. The investment will also have significant benefits for the Kingdom as well. When Pfizer launched its manufacturing facility, it had about 120 employees working there, of whom more than 50% are Saudi. As such, the company is committed to cultivating and employing local talent. This is achieved through a combination of recourse to the labor market and in-house training and internship programs that develop local talent..

 

Pfizer has hired Saudis for many of its main and lead jobs, including the technical head of the new manufacturing facility. In each and every department, the company has employed a Saudi head or senior manager. Pfizer’s training program is also expanding. For example, the number of summer trainees trebled in the last year. Under this program, pharmacy students are given the requisite training so that they will have the capability to join Pfizer when they finish their studies.

 

Pfizer’s investment in both local manufacturing and human resources illustrates the importance the company places in aligning itself with the government’s ambition for the sector under its Vision 2030 development strategy. By 2020, the government has set a target for local pharmaceuticals manufacturing to account for 40% of the total market value, starting from a base of around 20% in 2016. At the same time, the government hopes to push the pharmaceutical industry’s contribution to non-oil GDP from 0.98% in 2016 to 1.97%. These goals should boost local value in terms of employment and the local supply chain.

 

 

Distribution hub potential

 

Pfizer has made new investments and expanded in the market in no small part because its goals align with those of the government as outlined in Vision 2030 and because the government has placed a renewed emphasis on supporting the development of the local pharmaceutical industry.

Currently, the company is focusing exclusively on manufacturing for the local market. However, in the medium to long term, it envisages a situation in which Saudi Arabia could serve as a hub for distribution throughout the region. Pfizer is keenly aware that it needs to keep pushing forward, aligning its work with SAGIA to maintain its prominent position in the local market.

 

Having acquired an industrial land area more than double the size of the current manufacturing space the company already has ample potential to expand. Its initial experience provides evidence of the speed of progress – though the company had planned to build capacity steadily through secondary and primary manufacturing, it has jumped straight to full manufacturing in a short time. This serves as a useful illustration of Pfizer’s potential for growth and expansion. While the company has a long and distinguished history in the market, it continues to look to the future.

 

CEO Interview

Dr Alaa Abd El Ghany Gamal, Country Manager, Pfizer Essential Health Saudi Arabia Lead

 

How has Pfizer’s relationship with the Saudi market changed in recent years?

Pfizer has a diverse portfolio and is one of the premier biopharmaceutical companies globally and in Saudi Arabia. To do this, we work closely with the government and strive to ensure that we have the best service in place. Our relationship with the country has been evolving over time as we have increased the size of our business and service in the Kingdom. The scaling up of the scope of our local operations was initiated in 2011, when discussions with the government and SAGIA started to focus on expanding our presence and adding manufacturing facilities in the country. Localization was initiated in 2013 and we opened the facility formally in January 2017.

 

This is part of Pfizer’s long-term vision to stay in the market and expand in the market. For some time now, Saudi Arabia is one of the few countries in which we decided to launch a new manufacturing facility. This reflects the extent to which Pfizer is interested in and cares about the country, but is also a testament to how competitive Saudi Arabia is becoming regionally.

 

We were awarded a trading license from SAGIA in 2016. We were one of only three companies to get a license at the time and the first pharmaceutical company. This is very encouraging and motivating for us. The manufacturing facility and the trading license highlight the government’s efforts in attracting leading healthcare companies like Pfizer.

 

 

Why did Pfizer decide to open a manufacturing facility in Saudi Arabia?

As mentioned earlier, this is part of our commitment to the country and to patients in the Kingdom. Added to that, the Saudi government offered an attractive proposition by providing the right supporting infrastructure for our manufacturing facility. The encouragement that we have received from SAGIA and the government has facilitated our decision to be here. We also see this as a long-term investment. Although there are some ups and downs, Saudi Arabia is our anchor in the Africa and Middle East region. We needed to complement our existence here with a manufacturing facility, and Vision 2030 helped a lot in this respect. The alignment of Pfizer’s goals with the country’s objectives, combined with the impetus of Vision 2030, represents a perfect match and is among the main factors that will drive us and other companies to invest more.

 

What are the conditions that make the local healthcare and pharmaceutical market attractive for investors?

The size of the therapeutic area and the size of the market are critical. You need to have scale to run a pharmaceutical manufacturing plant sustainably in any market – and Saudi Arabia has that. In addition, you need stability. In this respect, Saudi Arabia is not a market that is changing every year. The Kingdom has stable market dynamics, which are very important in order to make a big investment like the one we made in our local facility. Stability also involves pricing and transparency of tendering and investment laws. These are things we are expecting and these are things we are seeing from the government. The clarity on governance was really important for us and has encouraged us to take the investment decision.

 

What specific steps has the government taken in recent years to increase stability and predictability?

Many aspects of the government’s working practices are encouraging. We have seen a true partnership mindset with SAGIA. This is critical. Then, on the regulatory side, the Saudi Food and Drug Authority (SFDA) has greatly improved clarity for market participants. It has accelerated the registration process, which allows products to get to market faster. The SFDA has also expedited the bridging process for products with prior FDA approval in the US or European Union to 60 working days or 30 working days. This is amazing both for Saudi Arabia and the region. When you change policies in Saudi Arabia, it affects the whole region, as other countries will follow this process.

 

How challenging was the process of getting a SAGIA trading license?

To have a local entity, we had to work both internally and with the government. When we went to the government to make the case for having a trading license, we had already developed the rationale internally. It is about building trust and a partnership mindset. To be the first pharmaceutical company to get such a license was the result of all parties having the right mindset: the government, SAGIA, and Pfizer itself. We worked together with full transparency and clarity. We have set a precedent that will make the process easier for other international companies.

 

For Pfizer, the objective was to have a sustainable model for the Saudi market by ensuring a consistent supply of our medication, something we could not necessarily ensure under the old model. The license allows us to have control over our own supply chain. There is, as always, a reputational risk and we wanted to ensure that we have the right tools in place. We feel satisfied that we do.

Revenues
49$Billion in revenue in 2015
PFizer
  • More Than 97,000 around the world as of April 1, 2016
    Employees Worldwide
  • 476 current Headcount employees
    Employees in Saudi Arabia
  • New York, USA
    Country of Origin
For some time now, Saudi Arabia is one of the few countries in which we decided to launch a new manufacturing facility. This reflects the extent to which Pfizer is interested in and cares about the country, but is also a testament to how competitive Saudi Arabia is becoming regionally.
Although there are some ups and downs, Saudi Arabia is our anchor in the Africa and Middle East region. We needed to complement our existence here with a manufacturing facility, and Vision 2030 helped a lot in this respect.
Dr Alaa Abd El Ghany Gamal
Country Manager
Pfizer Essential Health Saudi Arabia Lead
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