Background:
Considering the importance of the Pharmaceutical sector and the crucial performance of such this industry within the Palestinian economy, Paltrade has realized the essential need for further in-depth research directed at studying the opportunities and needs imbedded within the sector's environment. The ultimate objective is to assist and support pharmaceutical firms coordinated efforts in promoting their products in the specialized target markets.

Introduction:
Pharmaceutical Industry in Palestine could be considered as a unique industry if compared with other sectors in terms of its innovation and development. The industry was born just after the 1967 war as a result of the isolation of the West Bank from the rest of the Arab World. Before the 1967 war, all pharmaceutical products were imported from foreign companies via importers in Amman, Jordan. After the war, the borders were closed, thus preventing the import of any products from Jordan. The only products available were either Israeli medicine products or products imported through Israeli agents.

This difficult situation led nine pharmacists in the West Bank to establish small laboratories to manufacture simple syrups and anti-diahrreal products in 1969. Political and economic instability threatened the viability of capital investment in all industries during this period. In 1970 these nine small laboratories merged to become three larger companies: Jordan Chemicals in Beit Jala; Palestine Medical Company in Ramallah; and, Jerusalem Pharmaceuticals in El-Bireh.

After 1970 the pharmaceutical industry started to grow and new companies entered the field: Balsam Co. in El-Bireh in 1972 and Birzeit Co. in Birzeit in 1973; Eastern Medical Co. and Gama in 1978, both in Ramallah; and Pharmacare in 1985 in Beitunia, and MASCO in Gaza in 1984.

The Industry employed more than 630 persons, with total sales of about 28 Million USD during the year 2001. Recent statistics indicated that more than 50% of pharmaceuticals consumed in Palestine are Palestinian made. Although Palestinian manufacturers focus on generic products, they cover more than 80% of the needed product categories essential to combat diseases and relief sickness.

The pharmaceutical industry in Palestine plays an important role in providing the local market with its pharmaceutical needs. The overwhelming majority of sales are directed toward the Palestinian market. Currently, there are six major Palestinian companies predominantly located in the Ramallah area, where 70% of local producers are located, all of which are members of the UPPM. Local production is relatively unfocused, with manufacturers tending to produce homogeneous product lines. This has created strong inter-industry competition and has weakened the sector in its attempt to develop and improve into a distinctive sector that invests in real research and development and benefits from economies of scale. Most locally produced pharmaceuticals are generic and may not have a significant effect upon satisfy the market in terms of disease and sickness relief.

As a trade promotion organization Paltrade can easily develop improve and promote such an industry all over the world, because of its uniqueness, importance for Palestinian economy, and high production performance it have.

In 1993 Birzeit Pharmaceuticals Company merged with Palestine Medical Company and in early 1995 Jerusalem Pharmaceuticals Company merged with Balsam Pharmaceuticals Company, and in 1997 Birzeit Palestine merged with Eastern chemical Company. The aim of these mergers was to raise the standards of the Pharmaceutical industry by separating the production of antibiotics from the production of other therapeutics. Such separation would help to meet international standards in manufacturing of pharmaceuticals.

Currently active members of the Union of Palestinian Pharmaceutical Manufacturers include:

The industry is growing rapidly targeting local as well as international markets. The introduction of automated production lines, improved management and production processes, continuous training of management and line workers and the institution of quality control practices have led to significant increases in production capacities. All six companies are currently participating in a program of training and technical assistance aimed at complying with all GMP requirements before the end of 1998. These programs have been reflected in the continually improving range and quality of products and increased the market share of the local manufacturers to nearly 40 percent of the estimated total market of $65 million with the balance being provided by Israeli and other international suppliers. Piece wise their market share exceeds 5%.

The limited market in Palestine forces manufacturers to seek out export markets. This will require modernization of facilities, equipment and procedures to comply with the “Good Manufacturing Practices” (GMP). Several Palestinian companies are already investing millions of dollars in upgrading their facilities and equipment. Second, increasing competition because of increased imports of new products coming from neighboring Arab countries. Finally, increasing awareness and sophistication among Palestinian consumers, which require improved quality and higher standards.

The Pharmaceutical Industry in Palestine is represented by the Union of Palestinian Pharmaceutical Manufacturers (UPPM), the umbrella organization in which all pharmaceutical companies are members. The UPPM was founded to represent the common business interests of all members, coordinate the industry's position on key legislative and regulatory issues, and to promote the Palestinian pharmaceutical industry and its quality products worldwide.

The UPPM and its members have achieved in the few past years several accomplishments and successes such as:

• Get the whole Pharmaceutical sector ISO 9000 certified, and recently launched a program to get them all ISO 14000 certified.
• Seven employees from different pharmaceutical companies become certified GMP auditors upon finishing the requirements of the training program with International Society for Pharmaceutical Engineering (ISPE).
• Participated in several trade missions and exhibitions to perform market research and open new markets in the region.
• Delivered a position paper that addresses the issues of our interest towards the
• accession of Palestine to the World Trade Organization (WTO), and its impact on the Palestinian Pharmaceutical Industry.
• Organized the local market operations to eliminate the unfair competition and encourage cooperation between members.

The five members of the UPPM work together to address the following objectives

• Representation of the industry to the public and private sector;
• Address the common challenges and problems facing the sector in terms of government policy, taxation, marketing, etc.;
• Coordinating activities especially in technical assistance and training where the members have common needs; and,
• Cooperation with local and international organizations to develop the sector in terms of production, management, marketing and export marketing.