VZCZCXYZ0000
RR RUEHWEB

DE RUEHAM #4962/01 3520558
ZNR UUUUU ZZH
R 180558Z DEC 07
FM AMEMBASSY AMMAN
TO RUEHC/SECSTATE WASHDC 1243
INFO RUEHEG/AMEMBASSY CAIRO 3448
RUEHRH/AMEMBASSY RIYADH 1871
RUEHAS/AMEMBASSY ALGIERS 0195
RUEHGB/AMEMBASSY BAGHDAD 5631
RUEHLO/AMEMBASSY LONDON 1198
RUEHRL/AMEMBASSY BERLIN 0336
RUEHSM/AMEMBASSY STOCKHOLM 0058
RUEHTV/AMEMBASSY TEL AVIV 0910
RUEHJM/AMCONSUL JERUSALEM 4752
RUEHDM/AMEMBASSY DAMASCUS 3760
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS AMMAN 004962 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR NEA/ELA, EB/TPP 
 
E.O. 12958: N/A 
TAGS: ECON ETRD BTIO EINV KIPR JO
SUBJECT: Jordan's Pharmaceutical Industry Increasing Exports 50 
Percent in 2007 
 
Refs: A) Amman 4074 
      B) 06 Amman 2468 
 
¶1.  Summary:  Pharmaceuticals continue to play a key role in 
bolstering Jordan's economy, particularly exports.  During the first 
ten months of 2007, pharmaceutical exports increased almost 50 
percent, reaching JD 253 million ($358 million).  With over 40 years 
experience in the region and growing sophistication, this industry 
is ripe for more linkages with U.S. manufacturers.  End Summary. 
 
Sector Overview 
--------------- 
 
¶2.  Jordan has 17 registered pharmaceutical companies that mainly 
produce branded generic drugs in various dosage forms, including 
solids, liquids, aerosols, and injectables.  All Jordanian 
pharmaceutical companies are privately-owned and operated.  Many 
produce licensed products from multi-national companies, and a 
number have secured approvals for some of their products from health 
authorities in the U.S., UK, Germany, and Sweden. 
 
¶3.  The largest drug company in Jordan, Hikma Pharmaceuticals, 
reported revenues of $225 million during the first half of 2007, up 
45 percent from the first half of 2006 (Ref B).  The company 
attributed the growth to strong performances in branded and 
injectable products and acquisitions in the region and Europe, 
including Alkan Pharmaceuticals in Egypt.  On December 10, Hikma 
continued its expansion plans by acquiring Arab Pharmaceutical 
Manufacturing Company (APM), the third largest pharmaceutical 
company in Jordan, for JD 116 million ($160 million).  Hikma expects 
to assume control of APM by the end of 2007, which will increase its 
market share in Jordan to approximately 12 percent. 
 
¶4.  Although the Jordanian pharmaceutical industry comprises only 
0.05 percent of the world pharmaceutical market, according to Awraq 
Investments, it is a key contributor to Jordan's economy.  The total 
value of domestic pharmaceutical production reached JD 255 million 
($360 million) in 2005.  The industry directly employs 4,000 people 
and indirectly employs another 4,000 across pharmaceutical firms and 
institutions, including manufacturing, research and wholesale.  The 
Jordanian Association of Pharmaceutical Manufacturers (JAPM) also 
reports that employees in this sector earn the highest average 
monthly wages; JAPM is currently doing a cross-sectoral survey and 
comparing the average salary with that in other countries. 
 
Export-Driven Industry 
---------------------- 
 
¶5.  Jordan's pharmaceutical industry is primarily export-driven, as 
the country's third largest export earner after apparel and 
fertilizer.  Sixty to seventy percent of Jordan's pharmaceutical 
production is exported to over 60 countries worldwide, with the 
largest market being Saudi Arabia, followed by Algeria. 
 
¶6.  In 2001 and 2002, Iraq was actually Jordan's second top export 
destination for its pharmaceutical products, but Jordan lost the 
market in 2003 due to the war.  Exports to Iraq fell sharply from JD 
28 million ($40 million) in 2002 to JD 7 million ($10 million) in 
¶2003.  Although Jordan increased exports to Iraq slightly in 2004 
and 2005, they slipped back down again to JD 7 million in 2006. 
 
¶7.  To make up for the lost Iraqi market, Jordan began to look for 
and enter new markets, particularly in the EU and the U.S., in part 
due to the adoption of stronger intellectual property protection 
laws.  In 2006, pharmaceutical exports increased 23 percent to JD 
210 million ($297 million), including JD 3.2 million ($4.5 million) 
in exports to the U.S., according to the Department of Statistics 
(DOS). 
 
¶8.  During the first ten months of 2007, DOS reported that Jordan 
exported JD 253 million ($358 million), representing a 48.9 percent 
increase over the same period last year.  According to USITC, 
Jordanian pharmaceutical exports to the U.S. increased 34.7 percent 
to $3.3 million from January to October 2007.  JAPM expects total 
pharmaceutical exports from Jordan to reach $500 million by the end 
of the 2007. 
 
¶9.  Despite export expansion, Awraq notes that the local market is 
still reliant on imports.  Locally manufactured pharmaceuticals 
 
cover just 30 percent of the local market's demand, as they are 
unable to compete with the greater variety offered by international 
drug makers.  According to DOS, Jordan imported pharmaceuticals 
valued at JD 170 million ($240 million) in 2006, including JD 13.3 
million ($18.8 million) from the U.S.  The EU and Switzerland have 
been leading suppliers. 
 
Abiding by International IPR Standards 
-------------------------------------- 
 
¶10.  Jordan put more stringent patent requirements on its local 
companies by acceding to the Trade Related Aspects of the 
Intellectual Property Rights (TRIPS) patent law and signing onto IPR 
provisions in the U.S.-Jordan Free Trade Agreement.  Although some 
continue to argue that tough IPR laws hurt the domestic industry, 
the growth of the sector and the number of Jordanian companies 
applying for patents suggest otherwise.  For example, Jordan 
Pharmaceutical Manufacturing, a limited private company valued at 
$17 million, now owns over 52 new patents.  Adherence to IPR 
regulations has also facilitated licensing agreements for Jordanian 
companies like Hikma and Dar al-Dawa to produce products under 
license for multinational innovator companies.  The local market has 
also attracted more research and clinical trial companies, such as 
International Pharmaceutical Research Organization and Triumpharma 
Drug Delivery Innovations. 
 
Potential for Growth 
-------------------- 
 
¶11.  Jordan's pharmaceutical industry now has a competitive 
advantage of having developed a reputation for delivering high 
quality products.  Its health care sector is also considered one of 
the best in the region, attracting many Gulf visitors (Ref A).  As 
the health field grows, so will the pharmaceutical sector. 
 
¶12.  Hikma is often regarded as the example of how to successfully 
export to the U.S., as it boasts of U.S. FDA approval for virtually 
all of its manufacturing plants - from Saudi Arabia to the United 
States, where it owns West-Ward Pharmaceuticals based in Eatontown, 
New Jersey.  Hikma Vice-Chairman Mazen Darwazah told Econoff 
December 10 that Jordan's pharmaceutical companies are ripe for 
expanding further into the American market, but they need to be 
better linked with distributors in the U.S.  JAPM agreed on the 
importance of such matchmaking, but also noted that the smaller 
Jordanian pharmaceutical manufacturers are not willing to invest the 
$300,000 upfront to file for U.S. FDA approval.  Darwazah commented 
that such business attitudes are short-sighted. 
 
¶13.  Darwazah added that marketing, which is not in the Jordanian 
business culture, is another weak area that needs to be addressed in 
order for the industry to grow.  Given the focus on generics, Jordan 
also has not heavily invested in research and development, which has 
generally hovered around 5 percent of total sales (Ref B). 
Consolidation among the pharmaceutical companies could further help 
this sector by growing economies of scale and maintaining a strong 
position in the region. 
 
Visit Amman's Classified Website at: 
http://www.state.gov.sgov.gov/p/nea/amman/ 
 
Hale