New Market Research Report: Saudi Arabia Pharmaceuticals & Healthcare Report Q2 2016

High per capita spending on pharmaceuticals and a rising burden of chronic diseases will support long-term pharmaceutical growth in Saudi Arabia. However, a prolonged period of subdued oil prices may see Saudi Arabia cut back on high value drug spending - posing a risk to innovative drugmakers. Our outlook for the country's healthcare sector is a positive one. As such, the government's focus on healthcare will remain a priority, owing to the sensitive nature of the sector and its political importance. However, cost-containment measures will be encouraged, and over the long-term, the private sector will play an increasingly important role in the provision of healthcare in Saudi Arabia.

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Headline Expenditure Projections

Pharmaceuticals: SAR31.75bn (USD8.46bn) in 2015 to SAR35.32bn (USD9.42bn) in 2016; +11.3% in both local currency and US dollar terms. Forecast unchanged from Q 116 .
Healthcare: SAR113.11bn (USD30.16bn) in 2015 to SAR123.31bn (USD32.88bn) in 2016; +9.0% in both local currency and US dollar terms. Forecast in line with Q 116 .

Risk/Reward Index

In our Q216 Pharmaceutical Risk/Reward Index (RRI) Saudi Arabia's score of 59.7 out of 100 is marginally lower than its score last quarter of 59.8, but maintains its position in 2nd place out of 31 countries analysed in the whole Middle East and Africa (MEA) region. Regionally, Saudi Arabia ranks relatively well compared to the other Gulf States - only UAE is positioned higher. Its high composite score is due to its wealth and a sizeable population, which will support the longer-term development of the pharmaceutical market. To add to this, the country boasts the largest market size and per-capita expenditure on pharmaceuticals in the region. However, issues relating to patent approvals and the regulatory system remain a major issue for foreign research-based pharmaceutical players.

Latest Updates

Saudi Arabia's state budget for 2016 includes a SAR105bn (USD28bn) allocation for health and social affairs. This equates to about 12.5% of the overall spending allocation, budgeted at SAR840bn (USD224bn).

In January 2016, Indian pharmaceuticals manufacturer Aurobindo announced plans to build its first manufacturing facility in the King Abdullah's Economic City (KAEC), in which it will manufacture generic drugs in the form of oral tablets and capsules.

In December 2015, Pharmaline Saudi Arabia, a new joint venture between Al Rashed and the Malia Group, entered a land lease agreement with KAEC, with plans to build and operate its first Saudi Arabian pharmaceutical facility in KAEC's industrial valley.

BMI Economic View

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