Companies entering the Middle East caught in the crossfire

due to the Israeli conflict

Pharmaceutical companies directly exporting to the Middle East "receive advance payment... no immediate damage expected"

Companies are watching closely, although there is no significant impact as it is in the early stages of entry

On the 7th (local time), the Palestinian armed political faction Hamas attacked Israel (CNN photo)

On the 7th (local time), the Palestinian armed political faction Hamas attacked Israel (CNN photo).

 

As the situation in Israel and nearby regions has deteriorated rapidly due to large-scale airstrikes by the Palestinian armed political faction Hamas, domestic pharmaceutical and bio companies that have entered or are seeking to enter the Middle East appear to be paying close attention.

 

The prevailing view is that the immediate damage will not be significant, but there is also the view that if the conflict spreads throughout the Middle East region, disruption to each company's long-term plans will be inevitable.

 

Middle East pharmaceutical export companies, “Israel’s share is small… the damage will not be significant.” According to the pharmaceutical industry on the 11th, companies that export pharmaceuticals directly to Middle Eastern countries expect that the immediate damage from this dispute will be minimal.

 

This is because Israel, where the conflict occurred, does not have a large export volume, and in the case of neighboring Middle Eastern countries, the terms of pharmaceutical export contracts are structured so that it is difficult to cause immediate damage.

 

An official from a pharmaceutical company that exports medicines to Saudi Arabia and the United Arab Emirates (UAE) said, "Domestic pharmaceutical companies trading with Middle Eastern countries are generally not very shaken." “Because it’s not big,” he said.

 

In fact, according to the Korea Customs Service, medicines exported from Korea to Israel last year amounted to $7.74 million.

 

Compared to major export countries such as the UAE ($30.29 million), Saudi Arabia ($26.04 million), Egypt ($22.85 million), and Iraq ($18.88 million), it is around 25-40%.

 

This year is also similar.

 

As of last August, pharmaceutical exports to Israel amounted to $3.79 million, less than half of those to Saudi Arabia ($24.31 million), the UAE ($17.05 million), Iraq ($12.4 million), and Egypt ($9.77 million).

 

The terms of contracts with Middle Eastern countries are also cited as a reason why immediate damage is not expected.

 

It is said that usually, pharmaceutical export contracts with countries where there is a risk of conflict are concluded with the supply of medicines after receiving an advance payment.

 

An official from another pharmaceutical company that exports medicines to Middle Eastern countries said, “In the case of major Middle Eastern countries where there is a possibility of conflict, contracts are written by exchanging cash instead of a letter of credit transaction.” He added, “Usually, 100% is received in advance or 50% is paid first.

 

“We receive the remainder after supplying medicine,” he explained.

 

He added, “Generally if a contract cannot be fulfilled due to war or other reasons, the contract period is automatically extended unless there are special circumstances.” However, it was also predicted that damage would be inevitable if this conflict spreads to nearby countries and is prolonged.

 

He said, “The key export countries are Saudi Arabia, Egypt, and the UAE.

 

We are closely watching the possibility of conflict spreading to these countries.” SK Bioscience, SK Biopharmaceuticals, Daewoong, etc.

 

seeking to enter the Middle East “There will be no significant impact as it is in the early stages” Large pharmaceutical companies seeking to enter the Middle East region are in a similar mood.

 

As expansion into the Middle East region has not yet been confirmed, the prevailing view is that the damage will be minimal.

 

An official from SK Bioscience said, “We are just beginning to explore expansion into the Middle East,” and added, “This dispute will not have a significant impact on business discussions.” SK Bioscience proposed a partnership to build a base vaccine hub in the Middle East early this year.

 

SK Bioscience's plan is to enter the Middle East market based on its successful experience in developing a COVID-19 vaccine.

 

Officials from SK Biopharmaceuticals and Daewoong Pharmaceutical also agreed, saying, “We are closely monitoring the local situation, but we do not expect there to be a significant impact on the existing plan.” Last August, SK Biopharmaceuticals signed a technology export contract for the epilepsy treatment drug 'Cenobamate' with Middle Eastern pharmaceutical company Hikma.

 

In addition, it was decided to grant priority negotiating rights to Hikma when products are launched in 16 Middle Eastern countries, including Saudi Arabia, the UAE, and Egypt.

 

Daewoong Pharmaceutical applied for product approval for Fexuclue, a P-CAB-based gastroesophageal reflux disease treatment, to the Saudi Arabian health authorities at the beginning of the year.

 

In May last year, product approval for botulinum toxin ‘Nabota’ was received in Saudi Arabia.

 

Daewoong Pharmaceutical plans to target the Middle East region, including Saudi Arabia, focusing on Nabota and Fexuclue.

 

In the case of Samsung BioLogics, it signed a CDMO contract with the Israeli pharmaceutical company KAHR Medical in 2021 for an immunotherapy drug (substance name: DSP502).

 

It provides a one-stop service from cell line development of DSP502 to clinical raw drug production, finished product production service, and IND approval.

 

Regarding this, a Samsung BioLogics official said, “CDO contracts usually do not have a long supply period.” He said, “It has been two and a half years since the contract was signed, and the contractual supply is now almost complete.”