To boost local production of pharmaceutical goods and medical devices, Oman unveiled plans in 2020 to establish new pharmaceutical factories that would help ease reliance on imports, increase national output, and diversify the economy and export revenue.

There were five local companies producing medicines and medical equipment when the plans were announced; Oman is seeking to develop five additional facilities. Prior to the opening of the new factories, domestic producers held an 8% share of the market in the pharmaceutical industry, where consumption has been growing by 10% per year. Oman’s strategic plan aims to meet 20% of the sector’s demand with local supply by the end of 2025 and as much as 50% by 2050.

Challenges & Opportunities

The health sector depends almost entirely on imported equipment and materials. Imports account for the majority of the estimated $500m spent annually on pharmaceutical products and medical equipment consumed in the sultanate, while in the Gulf region more than $3bn is spent annually on imported pharmaceutical materials.

Obstacles to achieving drug security have been identified, including the absence of an integrated supply and distribution system among health care institutions; the lack of domestic scientific research conducted in the field; skills gaps; a scarcity of pharmaceuticals factories; and insufficient planning and monitoring of projects. It is hoped that plans to establish five new factories will help address some of these challenges.

Flagship Project

Among the new projects, Philex Pharmaceuticals Industries opened its new facility in the Salalah Free Zone in January 2023. The development is an integrated pharmaceuticals complex and has the potential to develop into a value-added services cluster for the regional industry. The complex will extend across 110,000 sq metres, with the first phase, across 30,000 sq metres, opening in January 2023.

In addition to medicine, the factory will produce Oman’s first injectable solutions, as well as hard tablets and capsules. The first phase will have an annual production target of 1bn capsules and 1bn tablets. The second and third phases are expected to bring total investment to $150m. As well as strengthening the local supply of pharmaceuticals, the factory is expected to export to the GCC and the wider MENA region.

With the opening of the Philex complex, total investment in pharmaceutical and medical factories in the Salalah Free Zone and the adjacent Raysut Industrial Zone reached almost $200m. The aim is to establish Salalah as a regional centre for the pharmaceutical and bioscience industries (see Industry & Retail chapter).

“A key advantage of Salalah Free Zone is its connectivity, allowing companies that are established in the zone to source raw materials from global markets with little risk,” Waseem Hamad, CEO of Philex, told OBG. “Similarly, Salalah is a gateway to East Africa and it is cost efficient for companies to set up there. As such, the commercial opportunities are significant.”

Export Potential

Elsewhere, the Sohar Free Zone will host a plant for the manufacture of key pharmaceutical compounds for the most widely used group of antibiotics, penicillin and cephalosporins. The leasing agreement for the facility was signed in April 2022 between the Sohar Free Zone and Penicillin General Integrated Industrial Company (Pen-G), although no date had been specified for its completion as of February 2023. Pen-G should provide Oman with a foothold in the global value chain of antibiotic medicine manufacturing. Once fully operational, the plant has the potential to meet up to 10% of global demand for the key chemical compounds Penicillin-G and 6-APA.

Projects in free or industrial zones can leverage trade agreements with major economies, as well as multi-modal transport and supply chain infrastructure. In addition to benefitting from shorter transit times to key markets, the Salalah and Sohar free zones offer access to raw materials made by domestic petrochemical plants and temperature-controlled warehouses.