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Saudi Arabia Pharmaceuticals and Healthcare Report Q1 2008
Business Monitor International, Jan 2008, Pages: 67
The Saudi Arabia Pharmaceuticals and Healthcare Report provides independent forecasts and competitive intelligence on Saudi Arabias pharmaceuticals and healthcare industry.
Saudi Arabia’s pharmaceutical market was estimated to be worth US$1.48bn in 2007, making it the largest of the Arab drug markets. We forecast market growth to beat the rise in GDP and reach US$2.34bn by 2012. Key drivers of growth will be a rapidly expanding population and changes to the healthcare sector that should lead to rising demand for pharmaceuticals.
The market remains heavily reliant on imports, particularly for high-tech patented drugs. Local manufacturers remain focused on the production of basic medicines. However, this may change as they gain access to greater funding as a result of a loosening of the laws on foreign ownership, which now allow for 100% foreign equity investment in local companies. The government is becoming increasingly concerned over spiralling drug costs that are some of the highest in the world, largely as a result of high demand for imported patented drugs. The government made a recent move aimed at controlling costs. A new medical supply company, set to be publicly listed in the next few months, with an exclusive licence to supply government health facilities - a significant source of demand for pharmaceuticals. While unified purchasing may go some way to reducing costs in the short-term, a reduced reliance on imported high tech drugs will be needed for long-term price control.
There are encouraging signs for Saudi Arabia’s intellectual property (IP) environment, all be it from a low base. While the country remained on the USTR Watch List for 2007, Saudi Arabia was commended for its progress on regulation and enforcement of IP issues since being admitted to the World Trade Organisation (WTO) in 2005. Consequently we expect Saudi Arabia’s days on the list to be numbered. In the all new Business Environment Rankings, Saudi Arabia is placed 7th out of 14 Middle East and Africa (MEA) markets surveyed. Under the new rating system, our estimation of Saudi Arabia’s potential is lowered, largely due to the high market risks perceived to be present for the pharmaceutical industry. The regulatory system remains weighted against foreign drugmakers, which, as a result, continue to
operate largely through imports or contract manufacturing with local companies. Despite the risks, the country scores well in terms of its potential for growth with a favourable country structure and large market size by regional standards.
As the largest member of the increasingly integrationist Gulf Co-operation Council (GCC), Saudi Arabia could present a growing attraction to foreign drug makers over the coming years if authorities can convince the world that it has turned the corner in terms of its regulatory regime. In addition to GCC membership, oil wealth and commitments to health insurance should drive demand.
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