Latin America + MENA countries = opportunities, but with lots of challenges

BOGOTA, Colombia – The links between the biotech sectors in Latin America and the Middle East and North Africa (MENA) remain shallow, even if industry stakeholders in both sides believe in the potential the relationships represent. Though Israel is home to some of the most sophisticated biotech companies in the region, other countries are looking to Latin America to find export markets or manufacturing locations that may be easier to tap than the more competitive and developed markets in Europe or North America.

For example, Israel's Galmed Pharmaceuticals Ltd. announced that it started patient screenings for its Arrest Study in both the U.S. and Latin America. The study started in the second quarter of the year, CFO Josh Blacher said during an Aug. 14 webcast.

The company enrolled 120 patients for the phase IIb trial of aramchol, a drug that aims to treat fatty liver disorders, including nonalcoholic steatohepatitis (NASH), "a chronic disease that Galmed believes constitutes a large unmet medical need" and the Tel Aviv-based company recruited patients from Chile and Mexico for its study.

The United Arab Emirates (UAE) is increasingly looking to the region and offering up Dubai as a potential bridge. Organizers of Expo 2020 Dubai see the rising interest on both sides of this distant relationship as a potential goldmine: "Latin American 'multi-Latinas' see Dubai as a launch pad into South Asia. And, of course, Western multi-nationals use Dubai as a hub for the Middle East," the organizers stated.

The rising level of interest is one that companies in Latin America are keen to reciprocate as they also search for new markets.

A case in point is that of Brazil's Eurofarma Laboratórios, which is reaching out to market its biotech products in countries like Pakistan and Cape Verde. Eurofarma is also looking to market products in Angola.

In Latin America, as in MENA (outside Israel), there are very few companies with global reach. Brazil offers up some exceptions. Thanks to its large population and early focus in the pharma industry Brazil is among the countries with the most reach. Brazil's Portuguese-speaking environment has made it possible for it to reach out to countries in Africa that speak the same language. The World Trade Organization and the United Nations have both pointed the pattern within South-South cooperation agreements in the biotech space.

Cuba has also developed strong links with countries in Africa. The country's biotech industry punches well above its weight while a long-standing, but now-lifted U.S. embargo forced it to go far afield to more welcoming markets.

The links of both Brazil and Cuba in Africa showed their strength in 2007, when an outbreak of meningitis hit the continent. Both countries provided the African region with low-cost vaccines that made it possible to contain the outbreak.

TOO SMALL FOR EUROPE, U.S.

Companies across Latin America are often too small to compete effectively in Europe or the U.S., but they might find MENA markets more accessible. Investment and export promotion agencies across the region are also pushing in this regard. ProMexico, for example, is looking at MENA as a priority region for the country's pharma sector, said ProMexico's representative Luis Ampudia.

Ampudia and ProMexico are working on formalizing trade agreements with Jordan, Kuwait, Saudi Arabia and Qatar, to expand upon some basic tax-related agreements that are now in place. Mexico is also working on a reciprocal investment protection agreement with Bahrain.

Meanwhile, oil producer Venezuela is already benefitting from strong links to the Middle East, particularly with Iran.

In January, after Venezuelan president Nicolás Maduro visited President Hassan Rouhani in Tehran, the Latin American president announced technology transfer deals and high-level cooperation agreements for pharmaceutical production.

"We are reaching an agreement with the Iranian pharmaceutical industry that produces drugs of the highest world standards," said Maduro during a press conference in Iran's capital city. "We talked to some businessmen; a group of ministers was sent to visit some of these industries; and we are reaching a strategic alliance with the Iranian pharmaceutical industry and they are going to make investments and technology transfers to strengthen our pharmaceutical industry, which is very good as well."

Due to restricted access to foreign currency, Venezuela has faced serious drugs and medical devices shortages in the past few years. (See BioWorld Today, Aug. 19, 2014.)

"We are looking for partnerships in the world to bring knowledge, technology, new experiences and strengthen our industry and stabilize the entire production process and the whole process of market and satisfaction of needs in the case of medicines," said Maduro.

The agreements with Iran, announced in January, were signed in Caracas in June, although little is known about their actual content.

"We must make a big effort to make this cooperation in surgical, medical materials and supplies and medicines happen quickly," said Maduro right after signing a letter of intent to work with the Iranian government.

A MULTITUDE OF HURDLES

And yet, developing strong links between countries and industries in Latin America and MENA requires that some formidable challenges be overcome, including lengthy and complex import and export regulations on both sides, weak infrastructure and the high cost of moving products between the two far-away regions as well as language barriers. Immature regulatory systems, particularly visible in MENA, also pose a challenge.

Alberto Schlesinger, dean of economics at the Universidad Sergio Arboleda in Bogota, Colombia, said some of these new links may be opportunistic. He pointed to the case of Venezuela, a country that is increasingly sidelined from international commerce and one that is known for making a fair amount of noise.

"With the Cubans they talked long time ago about jointly developing drugs and there's nothing yet," Schlesinger told BioWorld Today.

"The matter of drugs was reactivated recently with Iran and Brazil, right when the crisis and vast shortage is present," Schlesinger said. The discussions have "mainly focused in the supply of generics, more as an emergency measure than a long-term project, which would be impossible because they would have to develop the whole chain, since any import of supplies would harm the availability of foreign exchange."

Schlesinger is also skeptical of Iran's ability to act as a reliable and efficient source of technology in the biotech space, "with the additional factor that the barter product that has facilitated such operations with countries like China is oil, which is not needed by Iran."

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