BMI View: A prolonged period of subdued oil prices may see Saudi Arabia cut back on high value drug spending. While public spending on healthcare will remain high as a result of the sensitive nature of the sector and its political importance, governments will enforce cost-containment measures, including price cuts on medicines and private sector engagement, to limit healthcare spending.
Headline Expenditure Projections
Pharmaceuticals: SAR28.4bn (USD7.6bn) in 2014 to SAR31.8bn (USD8.5bn) in 2015; +11.9% in both local currency and US dollar terms. Forecast unchanged from Q 4 15.
Healthcare: SAR103.7bn (USD27.7bn) in 2014 to SAR119.8bn (USD31.9bn) in 2015; +15.5% in both local currency and US dollar terms. Forecast in line with Q 4 15.
|f = BMI forecast. Source: National Sources, BMI|
|Pharmaceutical sales, USDbn||6.582||7.562||8.462||9.419||10.419||11.461||12.540|
|Pharmaceutical sales, % of GDP||0.88||1.01||1.23||1.29||1.33||1.34||1.34|
|Pharmaceutical sales, % of health expenditure||27.8||27.3||26.5||27.1||27.6||27.9||28.3|
|Health spending, USDbn||23.685||27.652||31.941||34.798||37.817||41.047||44.370|
In our Q116 Risk/Reward Index matrix, Saudi Arabia maintains second position out of 31 markets analysed in the Middle East and African region, scoring 59.8. Its high composite score is due to its wealth and a sizeable population, which will support the longer-term development of the pharmaceutical market. Furthermore, its forecast growth rate is high due to favourable public and private healthcare investments. The government is also in the process of creating more public-private health partnerships and encouraging private health insurance uptake, which should provide momentum for drug sales. However, Saudi Arabia's commitment to intellectual property protection remains a major issue for foreign research-based pharmaceutical players.
In October 2015, UK-based Martindale Pharma opened a scientific office in Saudi Arabia. The office forms part of the company's strategy to commercialise its portfolio in international markets with high growth potential. The office will be responsible for obtaining marketing authorisation approvals of its products with the Saudi FDA. The company is planning for 20 product approvals in the next three years.
In collaboration with the Saudi Ministry of Health, Sanofi launched a campaign to raise the level of awareness towards common ailments among Hajj pilgrims in September 2015.
It was announced in August 2015 that the health ministry intends to increase the number of beds in private hospitals in the country, in line with new regulations adopted in 2015.
BMI Economic View
Growth in Saudi Arabia will slow sharply over the next couple of years as the government embarks on fiscal consolidation and oil production flattens. This, combined with statistical effects linked to the rebasing of the national accounts, has led us to revise our forecasts downward. We now project real economic growth of just 1.9% in 2016 and 2.3% in 2017.
BMI Political View
The series of setbacks suffered by Saudi Arabia's King Salman risks undermining the legitimacy of the current ruling triumvirate. While Salman's woes are still a long way away from constituting an existential threat to his grip on power, any further erosion in his standing will both complicate the government's economic reform efforts and renew uncertainty over the line of succession.
The Saudi Arabia Pharmaceuticals & Healthcare Report features BMI Research's forecasts for drugs and healthcare expenditure and imports and exports, focusing on the growth outlook for the prescription, OTC, patented drugs and generics market segments.
BMI's Saudi Arabia Pharmaceuticals & Healthcare Report provides industry professionals, strategists, company executives, investors, analysts and sales/marketing heads with independent forecasts and competitive intelligence on the Saudi Arabia pharmaceutical and healthcare industry.
- Benchmark BMI's pharmaceutical and healthcare market forecasts for Saudi Arabia, to test other views - a key input for successful budgeting and strategic business planning in the Saudi pharmaceutical and healthcare market.
- Target business opportunities and risks in the Saudi pharmaceutical and healthcare sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Saudi Arabia.
- Assess the activities, strategy and market position of your competitors using our company profiles (including SWOTs, KPIs and latest activity) and competitive landscape tables.
BMI Industry View
An at-a-glance perspective on the latest regulatory developments, key forecast indicators and major corporate developments, covering the prescription, OTC and generics markets. The pharmaceuticals and healthcare SWOT outlines strategic factors that affect the basic assumptions underpinning BMI’s forecast analysis, and taken together with BMI’s political, economic and business environment SWOTs, it gives a complete overview of market climate.
BMI Industry Forecast Scenario
Industry forecasts to end-2019 for all key indicators, supported by explicit assumptions, plus analysis of key downside risks to the main forecasts:
- Healthcare: Total healthcare expenditure (USDbn), healthcare expenditure (% of GDP), healthcare expenditure per capita (USD), hospital beds, doctors, and birth & mortality rates (all per ‘000 population).
- Pharmaceutical Market: Drug expenditure in USDbn, % of GDP and per capita (USD).
- Patented Drug Market: Prescription drug sales (USDbn & % of total sales).
- Generic Drug Market: Generic product sales (USDbn), generic sales (% of total sales).
- OTC Drug Market: OTC sales (USDbn & % of total sales).
- Macroeconomic Forecasts: Nominal and real GDP, % real GDP growth, % private consumption growth, % industrial output growth, % consumer price index, % GDP price deflator, exports, imports, trade balance, current account balance, foreign direct investment, exchange rate against USD, government expenditure and external debt.
BMI’s Pharmaceuticals and Healthcare Risk Reward Index
BMI’s Risk Reward Index provides investors (both national and multinational) looking for opportunities in the region with a clear country-comparative assessment of the market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
A snapshot of key market characteristics, including total size of the pharmaceuticals and healthcare segments, growth drivers, leading therapeutic areas and the competitive landscape
A focus on government healthcare reforms, epidemiological trends, mergers and acquisitions, product launches, market entries, FDI activity, R&D, biotechnology, clinical trials and supply chain issues.
Details of the industry regulatory framework and key legislation covering the licensing of new products/services, pricing and reimbursements, intellectual property, taxation and advertising, as well as analysis of the overall regulatory burden.
The competitive landscape section provides comparative company analyses and index by USD sales and % share of total sales – for the total pharmaceutical sector, as well as the OTC, generics and distribution sub-sectors.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate Company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.