BMI View: Saudi Arabia is the largest regional market. While its potential is substantial – given its large population and the high prevalence of ‘civilization’ diseases – factors such as strict price controls and a deficient intellectual property (IP) regime will continue to deter foreign investors. In the meantime, massive investment into the expansion of healthcare infrastructure should stimulate sales of both pharmaceuticals and medical devices. The Kingdom will also continue to seek to increase local production capacity for the manufacturing of medicines, although the bulk of high-tech medicines will continue to be supplied through imports.
Headline Expenditure Projections
?? Pharmaceuticals: SAR12.66bn (US$3.38bn) in 2010 to SAR13.69bn (US$3.66bn) in 2011; +7.9% in both local currency and US dollar terms. Forecast unchanged from Q311.
?? Healthcare: SAR69.17bn (US$18.47bn) in 2010 to SAR77.71bn (US$20.75bn) in 2011; +12.4% in both local currency and US dollar terms. Forecast unchanged from Q311, although historical data increased slightly.
?? Medical devices: SAR5.68bn (US$1.52bn) in 2010 to SAR6.42bn (US$1.72bn) in 2011; +13.1% in both local currency and US dollar terms. Forecast down slightly from Q311 due to macroeconomic factors.
Business Environment Rating: Saudi Arabia's score remained the same in relation to the previous quarter. However, the score – 55.7 of out of the maximum 100 – has now placed Saudi Arabia seventh within the regional matrix, which assesses 19 regional markets, down from fifth previously, as the relative attractiveness of other countries improved.
Key Trends & Developments
• The formation of The Gulf Federation of Manufacturers of Pharmaceuticals and Medical Supplies (GFMPMS) in Doha in June 2011 is, potentially, a very significant move towards the regulatory consolidation of the industry in the Gulf Cooperation Council (GCC) and Yemen. There has already been some progress in unifying patent regulations, pricing and drug registrations in recent years, although it seems doubtful that the Arab Union of Pharmaceutical Manufacturers and Medical Appliance Manufacturers (AUPAM) made much of an impact in this regard. It is hoped that this new GCC-specific industrial union will have more success.
• Further improvements in the public healthcare sector can be expected in the short-to-medium term, as the executive council of the Saudi Arabian ministry of health recently gave the green light to the ministry's strategic primary healthcare plan, The Saudi Gazette reported in June 2011. The healthcare plan covers the introduction of international preventive, therapeutic and rehabilitative services, which will improve quality of life for all patients in the region, according to the ministry's spokesperson, Khalid Al-Marghalani.
• In July 2011, Mohsen Al-Hazmi, deputy chairman of the Health Committee of Saudi Arabia's Shoura Council, said that 60% of healthcare projects in the country were faltering. This is in spite of the government allocating an additional SAR16bn (US$4.3bn) in financial aid to healthcare to assuage concerns about political unrest. Although the reason for the problems in enacting the country's healthcare plans is neither stated nor explored, BMI believes the problem does not lie with the funding, but in a lack of local expertise and lack of transparency in the construction industry.
Economic View: Our outlook for Saudi Arabia's fiscal budget is relatively bright in the near term, but we expect the country to see a string of fiscal deficits beyond 2011. Elevated oil prices and export volumes will be able to support Riyadh's massive fiscal stimulus programme in the near term, but our outlook for depressed prices and volumes from 2012 and beyond indicate that the fiscal surplus will turn into deficit, which may require some repositioning of finances for healthcare and other social programmes. We have pencilled in a fiscal surplus of 2.2% of GDP in 2011 and a deficit of 0.3% of GDP in 2012.
BMI Political View: The Saudi royal family depends on steady oil revenues and Western support to maintain its tight grip on the population. The loss of either one of these could lead to substantial unrest and, potentially, regime change over the long term. We, therefore, expect the government to continue investing in a variety of stimulus measures, with this view supported by recent announcements regarding healthcare infrastructure expansion. We, however, caution that some of those programmes may have a destabilising effect in the longer term, as they further decrease incentives for the local population to work in the private sector.

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Executive Summary 5
SWOT Analysis 7
Saudi Arabia Pharmaceuticals And Healthcare SWOT 7
Saudi Arabia Political SWOT 8
Saudi Arabia Economic SWOT 9
Saudi Arabia Business Environment SWOT 10
Business Environment Overview 11
Table: Middle East and Africa Pharmaceutical Business Environment Ratings, Q411 11
Rewards 12
Risks 13
Market Overview – Saudi Arabia 14
Regulatory Regime 15
Recent Regulatory Developments 16
Regional Regulatory Developments 17
Free Trade Agreements 17
Intellectual Property Developments 19
IP Deficiencies 20
Counterfeit Drugs 21
OTC Drug Market 21
Pricing Regime 22
Reimbursement Regime 22
Pricing System Reform 23
Price Cuts 24
Tendering Procedures 24
Industry Trends And Developments 26
Epidemiology 26
Bird and Swine Influenza 28
HIV/AIDS 28
Recent Public Health Developments 29
Healthcare Sector 30
Healthcare Professionals 32
Primary Healthcare Provision 34
Secondary Healthcare Provision 35
Recent Healthcare Provision Developments 36
Health Insurance 36
Recent Health Insurance Developments 37
Research and Development 39
Medical Device Sector 39
Recent Medical Devices Developments 40
Industry Forecast Scenario 42
Overall Market Forecast 42
Table: Pharmaceutical Sales Indicators 2007-2015 44
Healthcare Expenditure Forecast 45
Table: Healthcare Expenditure Indicators 2007-2015 46
Table: Government Healthcare Expenditure Indicators 2007-2015 47
Table: Private Healthcare Expenditure Indicators 2007-2015 47
Macroeconomic Forecast 48
Table: Saudi Arabia – Economic Activity 51
Prescription Drug Market Forecast 52
Table: Prescription Drug Sales Indicators 2007-2015 53
Patented Drug Market Forecast 54
Table: Patented Drug Market Indicators 2007-2015 55
Generic Drug Market Forecast 56
Table: Generic Drug Sales Indicators 2007-2015 57
OTC Drug Market Forecast 58
Table: OTC Medicine Sales Indicators 2007-2015 59
Medical Device Market Forecast 60
Table: Medical Devices Sales Indicators 2007-2015 60
Pharmaceutical Trade Forecast 61
Table: Exports and Imports Indicators 2007-2015 62
Other Healthcare Data Forecasts 63
Key Risks to BMI Forecasts 64
Competitive Landscape 66
Pharmaceutical Industry 66
Foreign Industry 66
Domestic Industry 67
Regional Harmonisation 69
Recent Pharmaceutical Company Developments 71
Pharmaceutical Distribution Sector 72
Pharmaceutical Retail Sector 73
Company Profile 75
Saudi Pharmaceutical Industries & Medical Appliances Corp (SPIMACO) 75
Saudi Arabian Japanese Pharmaceutical (SAJA) 78
TABUK Pharmaceutical Manufacturing 80
Jamjoom Pharma 83
Al Jazeera Pharmaceutical Industries (JPI) 85
GlaxoSmithKline 87
Novartis 89
Merck & Co 91
Pfizer 93
Sanofi-Aventis 95
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