Key Trends Shaping Saudi Arabia’s Pharmaceuticals Market
Saudi Arabia is one of the rapidly growing economies in the world and its pharmaceuticals market is one of the most lucrative in the Middle East.
Accounting for over 60% of the GCC, the pharmaceuticals industry in Saudi Arabia records over 4000 patented and generic drugs.
The region hosts around 3000-3500 pharmacies and nearly 200 companies registered under the Health Ministry.
The Kingdom of Saudi Arabia, witnessing a strong upsurge in prosperity, presents a dynamically growing pharmaceuticals market on a global level; here are some of the key trends impacting the market.
CVDs, Diabetes, and Cancers Continue to Drive Market
Lifestyle diseases are an important driving force for the pharmaceutical market. In addition, a sizeable geriatric population highlights the prevalence of chronic diseases. Ageing, digestion-related disorders, cardiovascular diseases, diabetes, and cancers are some of the key conditions, fostering the maximum demand for antibiotics, vaccines, anti-inflammatories, pain relievers, and anti-tumours.
Non-communicable Diseases on the Rise
The economy of the KSA is flourishing, providing an impetus to various verticals, including healthcare. Rising sophistication in healthcare infrastructure is pushing the demand for high quality pharmaceuticals. In addition, the burden of non-communicable diseases on the growing population leads to higher demand for pharmaceuticals.
Growing Preference for Patented Drugs
Currently, the growing consumer preference for branded drugs is swaying the market. Around 80-85% of the total sales of pharmaceuticals in the KSA reflects the sales of branded products. The demand for branded drugs and allied pharmaceutical products is constantly on the rise, creating abundant opportunities for established market brands.
Favourable Regulatory Developments
Underpinned by KSA's robust healthcare budget and burgeoning demand for fundamental healthcare, the market for pharmaceuticals is foreseen to be a flourishing landscape in the near future. The GCC prioritises high-quality healthcare for each government, including Saudi Arabia, UAE, Qatar, Kuwait, Oman, and Bahrain. The KSA especially supports certain regulatory developments.
Furthermore, enactment of 100% FDI in Saudi Arabia’s pharmaceuticals sector and a strong foothold of insurance firms in the market also contribute to the growing market.
Promising Market Penetration by Generics
According to recent studies, the Saudi Arabia pharmaceuticals market currently accommodates the maximum number of generic brand manufacturers, compared to all others in the GCC. While this signifies the inclination of the market toward low-cost generic drugs, it also reflects a gradual shift of key market players to manufacturing generics, for retaining leading positions. However, the industry is also expected to witness dominance by patented drugs. The market thus may feature the dominance of generics on one side and patented drugs on the other side.
While the local pharmaceutical market concentrates on the manufacturing of generic drugs, a majority of the marketplace is dominated by European suppliers. Moreover, local companies tend to regularly import raw materials from established, licensed, or other international brands. The competitive landscape will possibly hit domestic companies, as they manufacture off-patent, branded generic drugs.
The Patent Cliff
Many blockbuster drugs are currently under the pending patent expiry within the next few years, resulting in a major risk for a millions of drug sales globally. This patent cliff is coupled with inadequate new drug patents, which in turn will affect drug manufacturers in the market, who rely mostly on innovator drugs.
KSA’s Medical/Hospital Cities Continue to Shape-up the Industry
The vision of Saudi Arabia for 2030 that was announced by the Deputy Crown Prince Mohammed bin Salman in April this year, includes a major part on the diversification of KSA’s healthcare sector. Recently in May 2016, the Ministry of Health, Saudi Arabia, launched a privatisation plan for around 300 hospitals in Saudi Arabia in addition to nearly 2,250 healthcare centres, by 2030 end.
The region, in addition to a number of hospitals, primary healthcare centres, and specialist medical facilities, already boasts of several cutting edge medical cities. These hospital cities efficiently cater to varied healthcare needs of Saudi Arabian patients as well as the tremendous influx of millions of Hajj pilgrims migrating to the KSA, from all over the globe.
King Faisal Medical City (KFMC), Southern Saudi and King Abdulaziz Medical City, Northern Saudi are among the top medical cities, whereas King Abdullah Medical City in the Makkah Province is also one of the most sought after ones for medical treatments. While King Fahad Medical City and the King Saud Medical City in Riyadh are currently being expanded in the Al Jouf city, King Khalid Medical City (KKMC) is being constructed to open in 2018, in Dammam.
Recent Activities in the Market
Mergers, acquisitions, and collaborations hold a strong impact on various facets of the industry. Following are a few of the important activities in the industry.
In 2013, Sanofi and Pfizer announced collective investments in quality manufacturing centres in Saudi Arabia. Another important activity involved NMC Healthcare and Al Noor Hospitals Group Plc, and Dallah Healthcare Holding Company, who announced the launch of IPOs (initial public offerings).
Glaxo Saudi Arabia Ltd., GSK’s (Glaxo Smith Kline) in collaboration with Banaja Holdings represents a healthcare facility as spacious as 75,000 square meter, offering the yearly capacity of about 15 million tablet packs, 12 million tubes, and 3.5-4 million tubes and inhalers.
Pfizer’s planned healthcare facility in King Abdullah Economic City, Rabigh supplies packaged solid dose medicines to the Saudi Arabian market.
The joint venture of Astellas and Tamer- SAJA produces drugs such as Yamanouchi and Sankyo for Japanese companies, in bulk.
Sonoki Aventis is another spacious facility in King Abdullah Economic City, Rabigh that supports research activities and produces around 20 pharmaceutical products under one roof.
Boehringer Ingelheim also lately announced an expansion plan in Saudi Arabia's pharmaceuticals industry, starting with medicines for diabetes.
Being the largest pharma marketplace in the Gulf, the KSA also indicates a gateway for other GCC markets. Moreover, the SFDA offers new growth opportunities for pharmaceutical players. Expected to reach a value of US$ 5.2 Bn by 2016 end, the Saudi Arabia’s pharmaceuticals market is projected to expand at a CAGR of 9.0% by 2026.
The information presented in this article is sourced from FMI’s new report on Saudi Arabia pharmaceutical market. A free sample of this report is available upon request at https://www.futuremarketinsights.com/reports/sample/rep-gc-1733