Summary
The Saudi Arabian pharmaceutical market is the largest in the Arabian Gulf region and was worth an estimated US$1.14bn in 2005. However, BMI cautions that growth will be sluggish despite favourable economic conditions in the country. This is primarily due to tight price controls. Products can be sold in the country only after the Ministry of Health (MoH) has approved their prices. US drug industry association PhRMA says that these controls act as a considerable barrier to investment. The body also alleges that the MoH discriminates in favour of local drug firms, which have their prices reviewed every five years, compared to four years for foreign companies.
Imports dominate the market, accounting for around 90% of drug consumption, because of the traditional wealth of the country. However, the government is looking to curb health spending -
recently introducing mandatory insurance for expatriates - and is encouraging generic substitution. This should provide a boost to domestic manufacturers, with Saudi Pharmaceutical Industries and Medical Appliances Corporation (SPIMACO) the most likely beneficiary. SPIMACO is the leading domestic drugmaker and has recently recorded strong results. In Q306, company profits grew 15.1%, on the back of rising sales. Projects include investing in a number of production areas and developing commercial trademarks. This strategy could be aided by plans to establish a regional trademark office for the GCC. Such a development would be a positive step for the trade bloc and represent a milestone for the protection of intellectual property rights in the region. It is hoped that a regional patent office will also soon be established.
BMI's adjusted Business Environment Rankings for the Middle East and Africa region reveal that Saudi Arabia is in seventh place. This is primarily due to forecasts of average market growth coupled with the country's intellectual property (IP) regime. Despite new provisions to move the IP regime into line with the World Trade Organisation (WTO)'s Trade-Related Aspects of Intellectual Property Rights (TRIPS) pact, the regime remains below international requirements. However, on a positive note, the size of the market is enticing, and the Saudi government is providing incentives such as interest-free capital and subsidised utility costs to encourage local and foreign players to establish manufacturing facilities. Download a PDF or order a print copy and get three quarterly updates.
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