Jordan’s surging pharma industry may hit US tariff speedbump

• US among Jordan’s top 5 importers
• 10% tax on growing sector
• Boost from Saudi Arabia and UAE

Growing Gulf spending on health is boosting Jordan’s pharmaceutical industry, but new US tariffs pose a risk to its future, according to analysts.

Pharmaceutical exports from Jordan grew by 15 percent last year to $862 million. Another 11 percent growth was projected for this year and further expansion to $1.4 billion in 2029, according to market analysts BMI.

“The prevalent focus on generic prescriptions within Mena – coupled with initiatives like mandatory health insurance in the GCC – drives further demand for Jordanian pharmaceutical products,” Lavni Varyani, founder of Dubai-based consulting company Pharma BP, tells AGBI.

However, Jordan – which technically has a free-trade agreement with the US – is now subject to a blanket 10 percent tax on exports to the US, which may impact Jordanian pharmaceutical companies that sell there. 

For the moment, medicines are exempt from US customs duties but President Donald Trump has signalled that he may announce a “major tariff on pharmaceuticals”.

Some Jordanian companies are more reliant on the US market than others. Jordanian-founded Hikma Pharmaceuticals, for example, relies on the US and North America for more than 60 percent of its revenue. Generic medicine producer Hayat, by contrast, focuses exclusively on the Middle East, and is thus better insulated from the threat of tariffs.

US tariffs could therefore impact domestic employment in the sector, with exporters now facing “strategic decisions regarding pricing competitiveness versus margin absorption,” Varyani says. “The tariff is anticipated to have a considerable adverse impact.”

That said, surging public health spending in countries like Saudi Arabia and the UAE, and moves towards mandatory health insurance there, are driving the medicine-manufacturing industry in Jordan, according to BMI.

The push towards mandatory health insurance is particularly beneficial to Jordan, because of the country’s emphasis on generic medicines – identical, non-branded copies of branded drugs.

“Mandatory health insurance also covers blue collar workers in the GCC, for which generic medications are always favoured,” says Varyani.

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Mena accounts for 40 percent of Jordan’s pharmaceutical exports. The top five destinations are Saudi Arabia, Iraq, the US, the UAE and Algeria. The rest of the world – including the US – account for 60 percent.

While Jordan is primarily known for producing generic medicines, the industry is also increasingly making advanced drugs for export, according to Hanan Sboul, secretary general of the Jordanian Association of Pharmaceutical Manufacturers. 

This is a strength as regional competitors such as Saudi Arabia and the UAE attempt to bolster their own domestic medicine producers.

“The industry’s expansion into unconventional, complex and value-added products, along with the expansion into non-traditional markets, continues to drive its success and profitability,” says Sboul.