As Middle Eastern countries strive to develop technology-based economies within impressively short timeframes, governments across the region are taking great strides towards creating modern patent systems that reflect international standards.
Nevertheless, significant areas for improvement remain in most, if not all, jurisdictions. As things stand, patent owners are still hesitant to participate in Middle Eastern patent systems which, though developing rapidly, are not yet able to deliver swift and consistent patent rights in full compliance with the TRIPs Agreement.
This article will shed some light on the prevailing patent situation in a number of major Middle Eastern markets and highlight the opportunities and challenges facing patentees looking to invest in the region.
Market opportunities
The Middle East stands out as a high growth market having achieved an estimated average growth rate of nearly 6% in the past two years. This is nearly double the rate in the United States and Europe and second only to the BRIC economies (Brazil, Russia, India and China). While the region is not immune to the effects of the current economic slowdown, so far it appears to be weathering the storm more effectively than the US and Europe.
The Middle East's conveniently central location, large population, inexpensive labour pool and low production costs all underpin the region's continuing growth. Recent initiatives to attract foreign investment in scientific and other knowledge-based industries have also led to an influx of overseas businesses, particularly from Europe and the US.
Incentives include the establishment of free trade zones entailing 100% foreign ownership and significant tax benefits. Numerous capital-based projects are also springing up such as:
- Saudi Arabia's $534 million King Fahd Medical City in Riyadh, the Middle East's largest medical complex specialising in the treatment of rare and chronic diseases.
- Dubiotech in the United Arab Emirates, a tax-free biotechnology research park spanning 30 million square feet and allowing full repatriation of profits.
- Dubai Silicon Oasis, a high-technology park for the microelectronics and semiconductor industries, which is aiming to become a world centre for electronic innovation, research, and development.
- Masdar City Project, Abu Dhabi, a futuristic zero-waste, carbon-neutral city designed by Norman Foster. It is intended to be a centre for the development of new ideas for sustainable energy production and will incorporate a university and research institute assisted by the Massachusetts Institute of Technology. The entire project will cost around $22 billion and should be completed in around seven years' time.
These projects have been successful in attracting investment in knowledge-based fields. Already, around 450 pharmaceutical manufacturers operate in the Middle East in a market valued at over $18 billion and growing at more than 10% per annum. The regional biotechnology market is smaller than pharmaceutical manufacturing (worth around $10 billion) but is growing even more swiftly at 15% to 18% per annum.
Increasing liberalisation of government policy on healthcare issues in some Middle Eastern countries has also contributed to the growth of the pharmaceutical and biotechnology industries. The introduction of affordable mass health insurance in Saudi Arabia and the relaxation of restrictions on over-the-counter medicines in Israel are but two examples.