What international companies need to know to distribute pharmaceuticals in the UAE

31 May 2018

The healthcare industry is a priority sector for the UAE government, which continues to increase its spending in the development of high standard healthcare services in the country, notwithstanding the bearish oil market.



Likewise, the UAE's pharmaceutical market is rapidly expanding. The prevalence of chronic lifestyle diseases in the region such as obesity and diabetes, and the development of medical tourism, contribute to this continuing growth, and the UAE currently imports between 85% and 90% of its pharmaceutical products. The value of the pharmaceutical market in the UAE is projected to reach around 3.7 billion USD by 2020 (i.e. an 8.2% growth per year).

The healthcare industry is strictly regulated at both the Federal and Emirate level. International (i.e. non-UAE) pharmaceutical companies seeking to import and distribute pharmaceutical products in the UAE require considered local advice to navigate the regulatory paths.

In this article, we examine what "medicines" fall under the auspice of the Pharmaceuticals Law, how to register medicinal products with the MoH, how and to whom a Pharmaceutical Import Licence and distribution registration may be awarded, and the key considerations regarding promotion (including packaging, labelling and advertising) of medicines that stakeholders should be aware of.

The key legislation

Federal Law No. 4/1983 on the Pharmaceutical Professions and Establishments and the Import, Manufacture and Distribution of Pharmaceutical Products (the Pharmaceuticals Law)[1] mandates that:

  • No medicine may be placed on the market in the UAE unless it has been registered with the Ministry of Health and Prevention (MoH)[2];
  • No medicine may be imported into and distributed in the UAE unless a Pharmaceutical Import Licence has been awarded by the MoH in respect of the relevant product;
  • No medicine may be sold or distributed in the UAE except by a distributor registered with the MoH.

In this respect, one should note that a distributor of medicines in the UAE must also be registered with the Ministry of Economy as a commercial agent[3].

In this article, we examine what "medicines" fall under the auspice of the Pharmaceuticals Law, how to register medicinal products with the MoH, how and to whom a Pharmaceutical Import Licence and distribution registration may be awarded, and the key considerations regarding promotion (including packaging, labelling and advertising) of medicines that stakeholders should be aware of.

What "medicines" fall under the auspice of the Pharmaceuticals Law?

The Pharmaceuticals Law regulates the import, storage, distribution, sale, marketing and export of all medicines for humans and animals, being understood as any chemical substance intended for use in medical diagnosis, cure, treatment, or prevention of disease (further detail available in the Dubai Health Authority's Community Pharmacy Licensure and Pharmaceutical Practices Guide of February 2013 (the Pharmacy Guide)). Its scope extends to antiseptics and disinfectants, medicated cosmetics, dietary supplements, and miscellaneous products which contain pharmaceutical ingredients and/or a medical claim and cannot be classified as medicines (MoH's Circular Number 20 of 2001).

How to successfully register medicinal products with the Ministry of Health?

The Committee of Drug Pricing of the Ministry of Health is responsible for overseeing the award of Medicines Registrations (and also for determining the pricing of medicines).

Who can submit an application for a Medicines Registration?

The application for registration of the product should be filed jointly by the product marketing authorisation holder from the home country and its local authorised representative in the UAE.

The local authorised representative is the local entity/person appointed by the marketing authorisation holder to be responsible for monitoring the safety and effectiveness of the product once launched on the UAE market, and for any product recall or complaint. It must be registered with the Ministry of Health and may be the local distributor of the products (see further details below).

What needs to be submitted in an application for a Medicines Registration?

Registration requirements vary depending upon the classification of the relevant product, as determined by the Classification Committee of the MoH (e.g. as General Sale[4], herbal, homeopathic, conventional or veterinary).

As a general rule, the application form must be accompanied by the following supporting documents:

  • the relevant Certificate of Pharmaceutical Product (CPP) as per the World Health Organization (WHO) Certification Scheme or a Free Sale Certificate (FSC) for the product issued by the Competent Authorities in the country of origin, and authenticated by the foreign affairs section of the UAE or any GCC Embassy in the country of origin;
  • three samples of the product in its final packaging;
  • a certificate of analysis of the given batch of the samples submitted for registration;
  • an audit plan and post-marketing pharmacovigilance plan;
  • a halal certificate issued by recognisable organisations and authorities (where applicable);
  • the details of the medical store licensed by the Ministry of Health;
  • a valid company registration certificate issued by the UAE MoH Drug Control Department;
  • details related to the intended use, precautions, and instructions for use of the product; and
  • a CD of the package (showing the related shelf life, batch number, outer, inner label and insert) of the product in JPEG format.

However, for those registered products to be imported into the UAE, the importing company first needs to get registered with the MoH as an authorised importer of pharmaceutical products.

How to obtain a Pharmaceutical Importation Licence?

Only a company registered with the MoH with a valid Pharmaceutical Importation License issued by the MoH is permitted to import pharmaceutical products into the UAE.

But, in order to be registered with the Ministry of Health as an authorised importer and distributor of pharmaceuticals in the UAE, the importing company must first obtain from the MoH a medical store license. A medical store is defined as an establishment within the UAE, the business purpose of which is the import, storage and wholesale distribution of medicine.

Only an entity incorporated in the UAE or a UAE national may apply for a medical store license

As a result, where a pharmaceutical company seeking to market its products in the UAE is based outside the country, it must choose one of the following approaches:

  1. Establish a local presence by incorporating a UAE structure[5] that will apply for a medical store license and a Pharmaceutical Importation Licence

    The UAE structure importing the products into the UAE may be a company incorporated onshore with a 49% foreign ownership[6]. If it is possible to incorporate a company in a free zone (offshore), whereby 100% foreign ownership is possible, the officials at the Ministry of Health has orally confirmed to us that a company with 100% foreign ownership cannot apply for a medical store license.

    But, if the UAE structure importing the products into the UAE market is also meant to be the entity that will be distributing the products in the territory, then it is important to note that such incorporated entity must be 100% owned by UAE nationals. This is because the UAE Ministry of Economy requires that any distributor of pharmaceutical products in the UAE be registered as a commercial agent with the Ministry of Economy[7]. In order to be registered with the Ministry of Economy as a commercial agent, a distributor needs to be a UAE national or a company 100% owned by UAE nationals, and to be appointed on an exclusive basis, pursuant to the UAE Commercial Agency Law.

    However, it is possible, provided that the local partner is amenable, to overcome such a requirement by entering into a Shareholders' Agreement and other side agreements with the UAE partner(s) owning 100% of the share capital which will effectively give control of the entity and the economic benefits deriving from the entity to the foreign company. Whilst the entry of such arrangements is common in the region, it should be noted that the enforceability of such arrangements is uncertain given that they could be seen as circumventing foreign ownership restrictions.
     
  2. Appoint a local distributor who is already licensed through the MoH, to import and distribute the pharmaceutical products on its behalf

    Such a distributor must be wholly owned by UAE nationals and appointed on an exclusive basis, for the same reasons as mentioned above. It should be noted that the registration of the distributor with the Ministry of Economy results in a number of statutory rights vesting in the distributor pursuant to the Commercial Agency Law. These rights place the distributor in a strong position, commercially, with respect to the principal company. For example, without mutual agreement, it is impossible for the principal to terminate or end the distribution agreement without a "justifiable cause", irrespective of contractual arrangements between the parties. This means that absent a mutual agreement, it will be up to the courts to decide whether or not there is a "justifiable cause" for terminating the agreement.
     
  3. Appoint an already existing local entity who is not yet licensed through the MoH, to import and distribute the products.

    In this situation, the local distributor will have to make the application for the medical store license and the Pharmaceutical Importation Licence.

As detailed below, the Pharmaceutical Law governs the requirements that must be met before a Pharmaceutical Importation Licence will be granted to an importing company, and include the establishment of a medical store meeting specified storage as detailed below.

Which approach is most suited to the requirements of any particular pharmaceutical company will depend upon the circumstances. It will of course, be paramount to obtain experienced local advice before a distribution strategy for the Middle East region is settled upon and executed.

For an entity to be licensed to open a medical store, the following conditions must be fulfilled:

  1. A licensed pharmacist should be or be part of the medical store's management.

    In this respect, to be licensed, a pharmacist must have a pharmacy certificate from a recognised high institute, college or university, have practiced pharmaceutical profession for a period not less than two years and speak Arabic fluently (Article 2 of the Pharmaceuticals Law).
     
  2. The medical store should fulfil the medical and technical conditions issued by the Minister of Health from time to time.

    Ministerial Resolution No. 60/2013 on the Health and Technical Conditions of Medical Stores lists the health and technical conditions to obtain a medical store license. In particular, the size of the medical store should be of 25sq.m minimum.

    The MoH would ordinarily conduct an inspection of the proposed space for the storage of the products before granting a medical store license.

    Interestingly, in practice, it is permissible for the importer/distributor to enter into a service and lease agreement with a logistics company pursuant to which the logistics company handles the storage of the pharmaceutical products on behalf of the importer/distributor and rents a storage space for this purpose.

Key considerations when promoting pharmaceutical products in the UAE

The Pharmaceuticals Law contains mandatory labelling requirements and regulates aspects of promotion of medicines and pharmaceutical products in the UAE.

Preliminary observations: medical representatives

Where the distributor is also in charge of the promotion of the products, its trade license shall expressly list promotion and marketing activities amongst the authorised commercial activities of the company.

Any medical representative(s) hired by the distributor to promote the products in the UAE will only be authorised to carry out promotional activities within the Emirate in which the distributing company is incorporated. In other words, a distributor incorporated in Dubai is only permitted to carry out the activities specified in its trade license in the Emirate of Dubai, so the scope of action of its medical representatives will also be restricted to Dubai.

As a result, if an international pharmaceutical company wishes to promote and distribute its products across the territory of the UAE, on a regular and continuous basis, it is recommended to establish branches of the local distributing company in each Emirates, to hold trade licenses in the relevant geographical areas.

Also, the promotion of pharmaceutical products in the UAE requires the establishment of a scientific office (which may be located onshore or in a free zone) composed of qualified pharmacologists.

Packaging and labelling

The Pharmaceuticals Law requires that leaflets and containers of medicines and pharmaceutical products feature the following information in both Arabic and English:

  1. Name of the medicine or pharmaceutical preparation;
  2. Registration number;
  3. Compounds of the medicine and their amounts;
  4. Date of expiry;
  5. Name of the factory manufacturing the medicine or pharmaceutical preparation, and
  6. Instructions for use and cautionary warnings.

Advertising

Under the Pharmaceuticals Law, the MoH shall approve the publication of any advertising material (printed or broadcast) for any medicine or pharmaceutical preparation.

Other regulations and legislations must be considered when it comes to the promotion of pharmaceutical products in the UAE, such as Regulation 430 of 2007 on Health Advertisement and the Federal Law no 15 of 1980 on printed matters and publications.

Gowling WLG has a wealth of life sciences experience, with 200 experts around the world available to advise on all legal matters affecting your business.

Footnotes:

[1] UAE Federal Law N°4 of 1983 on the pharmaceutical profession and industry should be updated by the end of this year to introduce new seizure procedures for suspicious shipments, and to strengthen penalties against individuals and companies dealing with counterfeit drugs, in accordance with international best practices. The amendments are currently under discussion at the Federal National Council.
[2] Although there is a limited number of exceptions under which the importation of unregistered drugs is permitted by hospitals – but we will not deal with such exceptions in this article.
[3] Under Federal Law Number 18 of 1981 concerning organising of trade agencies.
[4] The General Sale List lists all the registered pharmaceutical substances in the UAE.
[5] Foreign companies willing to incorporate a UAE structure must be aware that a company incorporated in Dubai is only permitted to carry out its activities as set forth in its trade licence in the Emirate of Dubai. If the UAE entity is incorporated in a free zone, its trade license would only permit activities within such free zone.
[6] The UAE Commercial Companies Law requires companies incorporated under such law to have at least 51% of its share capital to be owned by UAE nationals. As a result, any company established in the UAE onshore is required to have one or more UAE partners holding at least 51% of the share capital of the company.
[7] The officials of the UAE Ministry of Economy and the Ministry of Health have confirmed orally, when preparing this article, that this requirement is still in force.


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