JEDDAH, 30 August 2007 — The newly formed National Company for Unified Purchase of Medicines and Medical Appliances will have a capital of SR2 billion and will sell 30 percent of its shares in an initial public offering (IPO) after three years, informed sources said.
The Council of Ministers announced last Monday the government’s plan to establish the firm, which will be the sole supplier of medicines and medical appliances to government health institutions. The new company will also re-export medicines and medical appliances.
According to sources, leading medical companies that dominate the market would not be invited to become founding members of the new firm. About 10 Saudi companies have captured 50 percent of the Kingdom’s medicine market estimated to be worth more than SR5 billion.
The average annual growth rate of the market is calculated at 10 percent. There are nine Saudi pharmaceutical companies that supply less than 20 percent of market requirements.
Some medicine importers in the Kingdom have expressed fears that the creation of the new firm would drive them out of business. Saudi medicine supply companies have made a combined investment of more than SR5 billion for building warehouses, establishing offices and purchasing cold storage vehicles.
However, Saudis and expatriates welcomed the move hoping that it will bring down the skyrocketing prices of medicines and medical appliances in the country. “This will certainly improve health services in the Kingdom,” they said.
Medicine importers in the Kingdom currently cater to the needs of 65 percent of private hospitals and polyclinics and 35 percent of government hospitals. There are 200 hospitals under the Health Ministry. Investments in the Kingdom’s private and public health sectors are estimated at SR500 billion with an annual expenditure of some SR50 billion.
