By Paul Sandle
LONDON (Reuters) - Jordan's Hikma Pharmaceuticals has formed a joint venture with Sheikh Mohammed Hussein Al Amoudi's MIDROC Group to enter the Ethiopian healthcare market, where health spending is likely to more than double in the next few years.
London-listed Hikma said the joint venture, HikmaCure, would create an Ethiopian operating company, build a local manufacturing facility and would begin marketing and distributing pharmaceutical products in Ethiopia.
"Ethiopia is still very underdeveloped in terms of the pharmaceutical market," Mazen Darwazah, executive vice chairman and chief executive of Hikma's Middle East and North Africa business, said in an interview.
"It's a market that has huge potential for growth. We are expecting an increase in expenditure on healthcare: today is $400 million but we are expecting it in the next couple of years to go up to $1 billion."
Ethiopia, Africa's second most populous nation, has seen a decade of double-digit growth, and it has leapfrogged neighbouring Kenya to become sub-Saharan Africa's fifth biggest economy.
The country's population of 91 million people is served by just 5,000 doctors, compared with 40,000 doctors in Egypt for 85 million people, Hikma said.
Hikma and MIDROC will provide up to $22.3 million each to the joint venture, Hikma said.
Hikma manufactures and sells branded pharmaceuticals in Middle Eastern and North African markets including Algeria, Saudi Arabia and Sudan. It also has a U.S. focused generics business and an injectables unit.
Jeddah-based MEDROC, which has operations in sectors including petroleum, agriculture, engineering and construction, is a major investor in Ethiopia, where it has based its African operations. The group's chairman, Sheikh Mohammed Al-Amoudi, is of Ethiopian-Yemeni heritage, according to his website, and he is the largest foreign investor in Ethiopia.
Analyst James Vane-Tempest at Jefferies said the joint venture was a positive for the company and it added further credibility to its expansion strategy.
"Ethiopia is one of the largest markets in the region and in our view offers strong long-term growth potential," he said.
Shares in the group were up 0.9 percent at 1,036 pence by 1016 GMT.