US FREE TRADE DEAL, MODERNISATION TO DRIVE DEVELOPMENT IN UAE

Although much reform is still required, the United Arab Emirates has continued to bring domestic pharmaceutical legislation into line with international norms. The introduction of new WTO-compliant patent protection legislation from this month should also improve multinational interest in the UAE, already a lucrative market. Nevertheless, not all regulatory developments have been entirely welcomed by the multinational sector. A new health code, introduced in 2004, obliges companies to obtain approval from qualified medical authorities for marketing and promotional activities.

Meanwhile, the country's authorities are in "permanent negotiations" on a free trade accord with the US, another potentially significant boost for the local industry. However, the US government has previously insisted on the tightening of patent laws and the implementation of what it deems as a fair pricing infrastructure for its companies' products.

On a less positive note for the multinational sector, the UAE government appears to be increasingly warming to an increase in the use of generics, as the involvement of Sandoz and Ranbaxy in Abu Dhabi-based drugmaker Neopharma's out-licensing negotiations suggests. More substantially, the government has introduced regulation that stipulates applications to market generic drugs will be accepted 12 months before the expiry of the UAE protection of the innovator product. The new policy is widely understood to be symptomatic of the government's increasing focus on cost containment, with government attempts to cut profit margins on drugs in 2004 likely to continue in the coming years.