Leading law firm Baker McKenzie hosted a seminar in Dubai to discuss the trends of managing commercial agency relationships in the healthcare sector in the Middle East and Africa (MEA), and how investments are structured, including the move away from traditional agency agreements and distribution models to direct presence structures.
The interactive discussion was moderated by Baker McKenzie Habib Al Mulla's Partner Jayshree Gupta and included panelists from the Firm’s UAE, Saudi Arabia and South Africa offices.
The event was attended by senior representatives from leading market players in the healthcare sector, including pharmaceutical companies and financial institutions, who participated in discussions and shared insights around a range of issues impacting their operations in the MEA region.
These included the issues around commercial agents and distributors with regards to registration and deregistration, parallel imports, pricing and data sharing. In addition, the drivers behind the trend towards a direct presence model, and the current challenges and opportunities presented by the different business models were considered.
Zahi Younes, Corporate & Securities Partner at Baker McKenzie's associated firm in Riyadh, commented “Some of the multinational players in the healthcare sector are re-thinking their business models in the Middle East by becoming more engaged in local operations and possibly shifting from a distribution model to a direct presence model. This mindset shift is mainly driven by constant pricing pressures and competition, an increasing desire to control their local operations, and legislative and regulatory changes relaxing foreign investment restrictions.
Ultimately, there is no right or wrong way to do business - you simply need to choose the option that best meets your business needs.
"We are certainly seeing more regulations coming into force in the Middle East to keep up with technology, globalisation and the pressures of the new economic reality,” added Els Janssens, senior associate at Baker McKenzie Habib Al Mulla in Dubai. "Regional governments diversifying their economies are keen to ensure that the framework is there to support the development of this very important sector, with issues such as innovation and digitalisation, competition, counterfeiting and managing healthcare costs at the top of their lists."
"Where South Africa, as the most mature pharmaceuticals market in Sub- Saharan Africa, has for some time seen several multinationals adopt a direct presence business model through local subsidiaries and manufacturing operations, other countries in the region have opted for the conventional distributor arrangement as initial route to market," said Mike van Rensburg, Corporate Partner at Baker McKenzie in Johannesburg. "As their market share and business confidence in the remaining jurisdictions grow, some of these companies are anticipated to likewise follow South Africa's direct presence example."