Saudi deal ‘unlikely to cure Iraq’s pharma problems’

Reuters/Ahmed Saad

• Intellectual property law weak
• Corruption ‘deep and wide’
• Iraq imports 90% of medicine

Iraq has turned to Saudi Arabia to help it improve its healthcare industry and increase pharmaceutical manufacturing.

The ministries of health for both countries are collaborating to boost private healthcare in Iraq and foster partnerships to speed up the establishment of local pharmaceutical factories.

However analysts say the impact of the partnership will be limited by Iraq’s weak intellectual property protections and the lack of a transparent tendering process, which fuels corruption and the counterfeit drug market.

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The collaboration is also expected to channel Saudi foreign direct investment into improving Iraq’s network of healthcare centres. 

The plan builds on discussions between Baghdad’s National Investment Commission and Riyadh’s Ministry of Industry and Minerals over the development of industrial investment zones throughout Iraq, including a specialised pharmaceutical zone in Yusufiyah. 

Neil Quilliam, associate fellow in the Mena programme at the think tank Chatham House, told AGBI that corrupt practices in Iraq’s pharma sector “run deep and wide” and serve the interests of too many embedded groups to be disrupted by Saudi-Iraqi co-operation. 

“Their collaboration will do little to encourage international businesses to invest in Iraq’s pharma sector,” he said.

Iraq’s high dependence on oil, alongside heightened security risks related to the conflict in the region, will also deter investments in the pharmaceutical market, according to analysts at BMI.

“Despite the positive initiative, Iraq’s pharmaceutical sector remains heavily underdeveloped, with medicine imports accounting for 90 percent of the market share,” BMI said. 

The non-import section of the market is monopolised by the state-owned SDI Samarra. Only a few private companies supply over-the-counter medicines and generic high-volume drugs such as paracetamol. 

“Iraq lacks both the infrastructure and trained workforce necessary to establish a self-sufficient pharmaceutical industry in the near to medium term,” BMI said. 

The pharma market in Iraq is projected to grow at a much slower rate than other economies in the Middle East and North Africa. 

By 2028, BMI forecasts that Iraq’s pharmaceutical industry will reach $2.6 billion, equal to an annual growth rate of 2.6 percent. The Mena average is 4.4 percent a year.

In Iraq, IP infringement cases are typically heard in commercial courts, which do not have the specialised resources to deal with the nuances of the law. This creates a “complex and challenging system” for domestic and multinational drugmakers, BMI said.

Last April, the US Trade Representative issued a report highlighting Iraq’s “burdensome” formalities for IP filing and extreme delays in processing.

BMI added: “Weak IP protection and a monopolised tendering process have led to a high level of corruption and informal payments to healthcare providers.”

As a result, it said, the price of a drug supplied by the same company can “fluctuate by 1,500 percent across Iraq”.

The counterfeit market has grown rapidly to “exploit pricing inconsistencies and maintain profitability, at the expense of drug quality and efficacy”.