Country focus: Iraq’s pharma industry sees upward trajectory

After decades of turmoil, Iraq’s healthcare sector is growing fast – but the country still holds some unique challenges for companies looking to enter its market. We spoke to Ali Mosawi, founder of Al Hayat Scientific Office, to get his view on the past, present and future of healthcare in Iraq, and find out what it’s like to operate a pharma company in the region.

Today, Iraq’s pharmaceutical market is worth between $3.5-$4 billion, and is expanding rapidly – driven by an ambitious, well-educated population, a growing roster of international brands and high investment in clinical training. According to the latest figures, over 3,000 pharmacists graduate in Iraq each year.

But Ali Mosawi, founder of Iraqi pharma firm Al Hayat, notes that this is not often the view of observers from outside the country.

“Most people’s preconceptions have been shaped by decades of news reporting focused exclusively on unrest, war, and instability. Over the years, a damaging and misleading picture of Iraq’s business landscape has emerged, which masks both its opportunities and progress. It’s only recently that more international investors and pharma companies have begun to fully understand the true nature of the sector.”

Mosawi founded Al Hayat to ensure that people in Iraq had access to life-saving medical products – after seeing first-hand the difficulties in bringing medicines to the country in the aftermath of the First Gulf War. Now he hopes to help guide Iraq’s industry into a more regulated, compliant future, even as the country still struggles with issues of corruption and smuggling.

“People are often surprised to learn that, in 1989, Iraq had the largest healthcare budget in the Middle East and was the region’s leading pharmaceutical market, larger even than Saudi Arabia, Turkey and Egypt,” he says.

“Since then, Iraq has experienced a series of tragedies – from the occupation of ISIS and the Iraq War to the oil crash in 2014 – and the healthcare sector has not been insulated from these events. The market has fluctuated accordingly but in this period of recovery and relative stability, it is on the path to recovering its former strength.”

A pivotal moment came in 2003 when the Iraq market was opened to the private sector, allowing companies like Mosawi’s to grow their operations and bring new pharmaceutical products to market – and this is where Al Hayat has focused most of its efforts in recent years.

“The private sector is still young and continues to experience rapid expansion as it matures and welcomes growing international investment,” Mosawi says. “There are certainly clear opportunities for investment in a market which is not yet saturated with branded products and looking to increase product availability.

“Meanwhile, an emerging brand-aware middle class has heightened demand for quality products and there is significant scope for international companies to capitalise on this.”

Starting a pharma company in times of conflict

Al Hayat’s story, though, began in a time when healthcare in Iraq was suffering in the midst of conflict and instability.

After winning a scholarship to study in the UK in the 1960s, Mosawi returned to Iraq to work in IT, becoming a director at the Iraq Atomic Energy Commission in 1971. In 1974, however, he was forced to flee Iraq for the UK as a result of the Hussein regime.

In London, he worked as an IT consultant and later became a director at the Abu Dhabi National Oil Company from 1978 to 1983, when he left to start his own IT company, operating across the Middle East until the First Gulf War forced it to cease operations.

While visiting family in Baghdad after the war, Mosawi visited the offices of the Iraqi Red Crescent and learned of the urgent need for medical supplies in the aftermath of the conflict.

“I began to make small donations of medicines and, following conversations with the Ministry of Health, approached international pharma companies for contributions,” he explains.

“My first involvement with the pharma sector grew out of these donations and I became a consultant to SmithKline Beecham and the newly-formed Zeneca.”

The situation in the country deteriorated, however, between 1992 and 1996 when the Hussein regime refused to implement the UN Oil for Food programme, and Iraq suffered a chronic shortage of vaccines and essential medicines.

“International pharma companies were unable to contribute because the government owed them significant unpaid debts,” says Mosawi. “To rectify this, I worked with the Bank of England, DTI and Iraq’s Ministry of Health to settle the unpaid debt by releasing part of the £1 billion of frozen Iraqi assets in London. The debts were paid and enabled a significant set of vaccine donations.”

He says that founding Al Hayat was the natural progression from there – and when Iraq accepted the Oil for Food resolution in 1996, he set up the company to promote the medicines of Zeneca and SmithKline Beecham in the country. When Astra and Zeneca merged, Al Hayat became their exclusive agent and distributor in Iraq, a relationship which continues to this day.

At founding the company’s central goal was to provide medicine and vaccines to ensure the people of Iraq had access to life-saving products. Since then Al Hayat’s objectives have expanded to include helping international partners – like AstraZeneca, Pfizer and MSD – to share their experience with Iraqi medical institutions, bolster training and improve the standard of care, especially in chronic health issues.

Mosawi adds that a core focus now is on providing only the highest-quality medication.

“By this I do not only mean bringing premium products from international brands to market, but also for us to develop a reputation for leading on quality assurance, product safety and governance,” says Mosawi. “We remain the only pharmaceutical agent in Iraq to have a special label placed on our products to signify this commitment, enabling pharmacies and hospitals to have confidence that the medicine they receive has been stored and distributed in accordance with the highest international standards.”

A unique market

Much progress has been made, but Iraq still remains a challenging country for a pharma company to operate in – decades of damage to infrastructure, an inhospitable climate, and the recent outbreak of protests across the country have made for a difficult environment.

“High levels of investment in both insurance and modern smart technology have proven crucial in addressing these challenges,” says Mosawi. “Temperature sensors and advanced GPS tracking for all products, combined with a thorough understanding of the risk landscape, have allowed us to tackle these logistical issues, even in times of considerable instability.

“That said, it can be challenging to guarantee distribution and preserve supply when an area has been severely affected by unrest. Our solution to this has been to establish multiple storage and distribution hubs across Iraq, dividing our operations between Baghdad, Erbil and Basra.”

Meanwhile, the country’s legal system and the strict product registration process can be intimidating and difficult to navigate for companies coming into the market from outside Iraq.

“Those companies who place staff in the country and work with local agents fare better than those who manage their operations in Iraq at arm’s length from a different geography. Our experience is that external pharma companies who work with local agents are better able to capitalise on the sector’s opportunities, and do so in a compliant, efficient manner.”

Mosawi adds that the wider business environment in Iraq has traditionally been plagued with “unscrupulous actors” engaging in poor governance and corrupt practices, including smuggling medicines in from other countries – a situation Al Hayat is keen to see changed.

“Recent developments are encouraging – corruption is being scrutinised as never before and the pharmaceutical sector has benefited from increasingly strict compliance requirements. While issues with counterfeit medicine and smuggling present significant challenges to the market, we have found success working with large international partners, adopting their uncompromising standards, and benefiting from their expertise.

“It is only by holding ourselves to the same regulatory requirements as our partners that we have been able to navigate the market effectively and compliantly.”

But despite the challenges, Mosawi says he is optimistic about the future of Iraq’s healthcare sector.

“In 2019, the Iraqi healthcare sector grew by 30-35%, and we expect this trend to continue in the coming years. The Ministry of Health has been diligent and proactive in developing the sector’s regulatory framework, facilitating increased international investment and stronger governance practices.”