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The Hindu
05-05-2025
- Business
- The Hindu
Tap into growth opportunities in Kuwait, Indian pharma told
A reliance on imports in the absence of significant manufacturing footprint coupled with a growing population make Kuwait a promising destination for Indian pharmaceutical firms to export or set up production facilities, a study report commissioned by the Indian Embassy in the West Asian country showed. Kuwait's pharma imports from India are the lowest among Gulf Cooperation Council member-countries, both in terms of value and share of total imports. It is a pointer to the untapped potential for lower cost options from India, which globally is a major generic drugs supplier, the Marmore MENA Intelligence report for the Embassy found. In 2023, of Kuwait's total pharma imports of $1,881 million, India accounted for 0.7%. A little over 2% of total GCC pharmaceutical imports were from India. Indian pharmaceutical forms 4.6% of Oman's total pharmaceutical imports, the highest amongst the GCC countries, while UAE imports of $173.3 million from India, represents the highest value of imports among the six countries. The Pharmaceuticals Export Promotion Council of India, with whom the Embassy shared the report, in a communication to its members said the government of Kuwait is actively working on a pharmaceutical manufacturing strategy to develop a competitive, export-oriented industry. High-quality drug formulations, excluding active pharmaceutical ingredients manufacturing for the present; JVs with global companies for localising biosimilar production for regional and global markets; localisation of packaging materials for medicines and medical supplies; expansion of supply contracts to support local manufacturers; as well as incentive and support programmes for local producers are likely to be some of the features of the strategy, Pharmexcil said. Kuwait's population has grown 12.3% from 4.47 million in 2019 to an estimated 5.01 million in 2024. At present, there is one local manufacturing company - the Kuwait Saudi Pharmaceutical Industries Company. The generic painkillers and antibiotics manufactured by it are used for domestic consumption as well as for exports to the GCC and MENA region. Key import sources for Kuwait are the U.S. and European countries of Germany, , Switzerland, France, Ireland and Italy. A government study in Kuwait in March outlined various government objectives to support development of medical industries sector, which present an opportunity for international players to work in tandem with the government to fast-track the localisation of pharma manufacturing, the Marmore report said. Marmore said the advantages for companies tapping Kuwait include stress on expansion of generic medicines availability in the country to improve affordability while also pointing to the benefits of early entry, by pharma firms, to take advantage of pricing rules. While early entry provides higher margins, later entry enables suppliers to advantage from a larger volume of sales. This is because late entrants are forced to be priced lower than their counterparts, making them more affordable for the public, it said.
Muscat Daily
05-02-2025
- Business
- Muscat Daily
GCC MACRO & MARKETS
By M.R. Raghu, CEO of Marmore MENA Intelligence January 2025 clearly belonged to Kuwait, as the Kuwait All Share Index rose by 5.7%, compared to the S&P GCC Composite Index, which increased by 3.0%. Several factors are driving Kuwait's markets, including optimism surrounding the new government and its focus on project spending. There has also been some movement at the stock-specific level, notably involving Gulf Bank's proposed merger with Boubyan Bank, which was subsequently cancelled. Kuwait's banking system, like those of Saudi Arabia or Qatar, hosts only a handful of banks, dominated by Kuwait Finance House (KFH) and the National Bank of Kuwait (NBK). Among the stocks listed in Kuwait, these two account for 46% of the total market capitalisation. This creates a highly fragmented structure, where other banks can achieve reasonable scale only through mergers. This trend is likely to be observed in the other markets mentioned above as businesses evolve. Merger considerations will also revolve around Islamic banking, which has proven to be more profitable with the increasing market size. When mid-sized and smaller banks merge, it will shrink the overall number of players to just a few (from a handful). Saudi Arabia has also made a strong start to 2025, with a month-to-date (MTD) and year-to-date (YTD) gain of 3.1%, followed by Abu Dhabi at 1.8% and Dubai at 0.4%. In my earlier report, I argued for better storytelling of the GCC to Emerging Market (EM) fund managers to attract active managers to the region. There are various ways to do this, and one approach is to showcase the metrics of GCC stocks present in the MSCI EM index and compare them to non-GCC stocks within the same index. For example, liquidity, as measured by the stock turnover ratio for non-GCC stocks in the EM index, was 1.26, compared to 0.61 for GCC stocks (present in the EM index). Some countries within the EM index, such as China, enjoy a turnover ratio of 4.5! It is true that liquidity improves once investor interest increases, but it can also play out counterintuitively, where investor interest can be contingent on liquidity being available in traded stocks. GCC stocks perform better from a dividend yield perspective, with GCC stocks in the EM index enjoying a dividend yield of 3.36%, while the same for non-GCC EM stocks stood at 2.69%. Interestingly, India has a dividend yield of only 1.14%, while Brazil tops the list with 5.17%. On the return parameter, the overall return-on-equity (RoE) of GCC stocks, at 16.42%, is marginally higher than 15.71% for non-GCC stocks. Trump has formally assumed office, and the Middle East is watching on many fronts, including geopolitics, investments, and oil prices. Trump is advocating for lower oil prices (currently trading at $76.8 per barrel) and higher inward investments from the GCC, especially Saudi Arabia. Both of these factors are negative for the region. Saudi Arabia has pledged $600bn of investment in the US over the next few years, while Trump is pushing for $1tn! Trump's lack of interest in climate change and renewables may benefit the fossil fuel industry, but he is also encouraging US oil producers to increase output in an effort to reduce oil prices. If this trajectory holds, the region may need to brace for more fiscal deficits, likely resulting in higher sovereign bond issuances. S&P Global expects global sukuk issuances to reach about $190bn to $200bn in 2025, with foreign currency-denominated issuances contributing roughly $70bn to $80bn. The GCC is projected to account for the lion's share of these issuances. Given Trump's trade rhetoric, which is likely to keep the US dollar strong, the yields offered by GCC issuances could be attractive to foreign investors looking to avoid emerging market currency risks. Most GCC countries' currencies are pegged to the US dollar. Finally, a word about the ongoing DeepSeek saga and its likely impact on energy demand. I have written a longer piece on DeepSeek in my other newsletter, which focuses on the global economy. However, in this newsletter, I would like to assess the impact of the DeepSeek saga from an energy demand perspective. Energy use by AI-based applications has become a significant driver of energy demand, as AI initiatives are highly energy-intensive (like Bitcoin mining). Data centres that employ thousands of computers with high-end chips must run models on a vast scale and 'train' the models to perform their intended tasks. In this process, the estimated energy consumption can be as large as the energy use of an entire city! Hence, we can see that energy consumption is a key assumption in this AI landscape. However, DeepSeek has questioned that assumption, claiming to have developed a foundational AI model that uses a fraction of the energy. If that is the case, the actual energy use for developing AI models may not be as high as previously assumed. This would affect a range of industries, including utilities, power plant operators, uranium producers, natural gas pipeline operators, cooling system operators, and nuclear power. It could also be argued that higher efficiency will lead to greater AI model usage, which may ultimately be energy accretive.
