INTERVIEWS

55east

55east
Claudia Palme
Managing Director
" Claudia Palme is a partner at consulting firm 55east and senior advisor in the global Life Sciences and Health Care industry, based in Dubai, UAE. Her engagements focus on new business models, MEA emerging markets’ expansion, growth and restructuring strategy and investment advisory. Claudia has spent 20 years in senior management in the pharmaceutical industry at Amgen and Novartis and in consulting at The Boston Consulting Group and booz & company across Europe, the Middle East, Africa and Latin America. Before setting up 55east in 2014, she led Strategic Planning and Operations for the Middle East and Africa region at Amgen. "

Given your expertise in the MENA region, how would you assess the present state of the market?

Claudia: It’s an interesting time, but then again it is all over the world! I think it is the nature of emerging markets, and also the nature of evolution - that players across the region are coming from, or starting at, different levels but are all heading in a similar direction, in a dynamic we have seen across the rest of the world.

What exactly do I mean by that? When I speak about the region at events, I often talk about governments and companies in MENA ‘leap frogging’ in their development - basically, learning from other players’ and geographic regions’ experiences as well as health care system development, and taking fast steps forward as a result. MENA will not experience the same incremental learning path that developed markets have taken over decades. Rather, it will move to the next levels of maturity in leaps and bounds, be it in terms of health care management and cost containment or setting up large scale capital investments in R&D and advanced manufacturing.

This dynamic reflects the paramount need to provide better healthcare to more people in all these countries, with both quality and quantity being equally important. Specifically, across the Gulf and Sub-Saharan Africa, diabetes and cardiovascular disease are a prevalent issue, but the region poses specific challenges for some governments given their geography and the state of care in remote locations. For example, Saudi Arabia is in a very involved reform process on how to improve healthcare and how they can do more to bring healthcare to all locations, even the most remote, without deploying additional funds. At any given stage, all are looking to improve their infrastructure; from diagnosis to drug access, and in digital technology (cell phone applications) which might come into its own in a large way.

Across the region, business is constantly moving; the region is experimental in nature and thus open to undertake something not always fully thought through, and, if necessary, to make corrections. From healthcare infrastructure to setting up facilities, the first try is not necessarily what will persist, but those in the region will adapt quickly. If you’re operating in the region, this is something you must get used to: the constant flux. The region undertakes the spirit of experimentation, so if your business model is based on a more structured ecosystem, developed over hundreds of years, then this approach can be a challenge for your business. You need to be adaptable.

What opportunities does the market present for both companies across the wider region and abroad?

Claudia: MEA is nothing if not a region of opportunities, and you want to consider and maybe revise your parameters and pathways in leveraging them. There has been very clear movement in the local market towards a deeper engagement with foreign partners and integration of value chains - a lot of manufacturers across the region need products, expertise and technological knowhow, as many have the manufacturing facilities but few are being used to the full extent.

This offers great opportunities in developing new models of cooperation - it might give you a unique platform to expand your production with a partner or public investment agency providing capital; it might allow you to conduct clinical research in a region with many naïve patients – there really is freedom to explore innovative ideas and projects which might be impossible anywhere else in the world. Therefore, you need to have to be clear about your interests and ideas, be it opportunities for localisation and tech transfer or something else, as stakeholders within the region will ask you what you can achieve locally.

As for products, across the region, the biggest opportunities in the last years have been in specialised areas and these will remain the biggest opportunities moving forward. We have moved well beyond standard generics and the region is actively looking for more advanced development and manufacturing such as injectables, hormones or similar.

The need to be adaptable and ‘go with the flow’ can be the biggest challenge here. Not sticking with plans (anticipating that those plans may not hold up), managing time, precision and negotiations takes longer than expected across the region.

Another important aspect of the region to be aware of is: one will not get very far with email. People prefer verbal communication if a face to face meeting is not possible. It helps to understand the context for this and realise that business relationships are built fundamentally differently here than in Europe or the US. Western countries use a formalised rating when dealing with fellow professionals – what schools did they attend? which disciplines did they major in? how did they graduate? which companies have they worked for? etc. These benchmarks did not exist in the Middle East or Africa, or China for that matter, for a long time. Here people rate based on personal relationships; they have to get to know you themselves, or you should at least be referred by a trusted source. The time you spend with them, so they can get a feel for who you are - which can take place over 4 hours of tea and non-business talk – is wellinvested. This approach might seem inefficient to us, but in the end, it amounts to the same thing.

What are the obstacles in the region that market entrants should be aware of?

Claudia: The main obstacle in the Middle East (and to a lesser extent in Africa) is that it’s a region perceived as a ‘free for all’, some form of bonanza where you can come in and just sell whatever you have. In fact, it is a highly regulated market. You must go through an approval process, you must have your papers in order and you must source a decent agent. While there is quite some flexibility when you have value to offer, there are no short cuts. In Iraq, Syria and Libya the situation is naturally different due to the circumstances, but the rest of the Middle East is not a market for short-term opportunists. The difficulty is managing your own expectations and if you’ve not done your homework and have unrealistic expectations and plans, you can find the timeline and requirements challenging.

The most important issue is knowing whom you want to deal with and making the decision of choosing your business partner is the first and the biggest one to make. In the Middle East it can be difficult to get out of a contract and many countries have a single agent rule whereby upon signing you’ll be heavily bound. The agent can be a big factor in the markets you can be active in, and whom you can do future business with. If you get it right, it’s a great asset, but get it wrong, and it can cause you significant difficulties.

Is there any one area where you would anticipate growth?

Claudia: The great thing about MEA is that the entire region will be growing and as the demographics of each country grow, so too will the need for additional healthcare, upgrading in quality and quantity.

For the Middle East, anything outside of standard generics will experience growth. Areas that are a bit more specialised or technically advanced will be in demand. For example, we have very limited, if any, local capacities to produce injectables, biosimilars or vaccines.

Specific branches of medicine, like oncology, where there are a lot of dedicated medicines in the EU and the US, with a multitude of specialised indications, have huge potential locally as they do not currently exist in the region.

In Africa, we also see demand move away from infectious diseases and toward cardiovascular and diabetes. The next wave hereafter will be oncology in a few years’ time. Basically, the growth in the region will mirror that which we’ve seen across the rest of the world.

How do you see the region developing in the coming years?

Claudia: Hopefully, it will be a fast increase in quality and quantity and not a 50-year process of evolution, as we’ve seen over the last century in the western world. Here, learnings can be taken from the developed world in order to make healthcare much more available.

I believe we’ll also see developments in telemedicine and how digital tools can support healthcare in farflung countries and remote locations – relevant in Africa, but also across Saudi Arabia – where there might be a need for a new model of care. Across the region, there is a general movement away from the traditional physician model and the question will be how Pharma fits into that, in order to enable and support this wave.

We could see the answer emerge from Africa, which has actually led innovation by necessity. A great recent example of this was mobile apps developed to support payment and bank transactions. Now something we take for granted but it was born out of Africa’s need gap for an alternative to traditional banking transactions. We could potentially see the same happen in healthcare – new solutions that the West can learn from!

How do you think the launch of the CPhI MEA event will impact businesses across the region?

Claudia: We’ve talked a lot about the ecosystem and when a big-name trade fair puts an industry on the map, it’s an integral part of growing that ecosystem. It is one more piece in the puzzle: local manufactures can gain exposure and evolve through upgrading products and technology, as well as strategically integrating local and multinational efforts across the region. Smaller to medium sized companies can be seen by multinationals with ‘fresh eyes’ by getting that exposure in one single location.

CPhI coming to the region reflects on the maturity of the local ecosystem. It is a signal that the region has moved beyond a critical point of inflection and is heading in a new direction and growth trajectory.

Other Interviews