The pharmaceutical market is thriving in Saudi Arabia, but it still remains an import-led industry, limited in the main to buying in branded medicines and repackaging them for the local market. The volume of imports is on such a vast scale that the major players also export to other Gulf countries. Moreover, the major pharmaceutical importers are now setting up pharmacies. Licensing regulations are fairly relaxed, and the outlets themselves can be very lucrative — which would explain why there are more and more of them, selling all the major medicine brands.
According to the Saudi Ministry of Health, there are now thousands of pharmacies in the Kingdom. It is hardly surprising — after the doctor’s surgery, the pharmacy is one of the basic components of health care, and investors are virtually assured of a return.
The biggest player is the Banaja International Group, which represents some of the best-known pharmaceutical and health-care multinationals in the Kingdom, and which owes its status as market leader to its unique Distribution Resource Planning (DRP) system, for which BIG was granted class-A certification, the only company in the Middle East to achieve such a high level of endorsement.
The other major Saudi pharmaceutical company is Al Nahdi Pharmaceutical, with around 300 stores nationwide, and some in Kuwait and in some North African cities. “We provide almost everything a patient needs, whether it is a prescription drugs or an over-the-counter medicine. All can be purchased at our pharmacy,” says Ahmed Bakery, an Al Nahdi pharmacist.
However, despite the Ministry of Health’s attempts to curb the practice, almost all the pharmacies in Saudi Arabia provide medications without a doctor’s prescription. The reason this happens is obvious. If you are not covered by medical insurance, hospital bills are prohibitively high. The ministry wants to make medical insurance mandatory for everyone, but until this happens, people still prefer DIY, over-the-counter treatment. “I think it is good for me to go and purchase a drug or medicine at a pharmacy without a doctor’s prescription as it costs more money to go to the doctor and get their permission for using a particular medicine,” a man, who wished to remain anonymous, spelled it out, as he stocked up with his drugs.
Others disagree. “I purchase my drugs only on prescription and that’s what others should do. Nobody knows how the drug would react. And only a doctor would know what drug is to be administered for a particular problem,” said another anonymous person. There is a regulatory body, the Saudi Food and Drug Authority (SFDA), which has been set up to counter the direct purchase of prescribed drugs. But in spite of the growing presence of counterfeit and mislabeled drugs, the SFDA has its work cut out, since its remit, as well as food and drugs for human and animal use, also embraces biological and chemical substances, as well as electronic products.
According to local figures Saudi Arabia represents 65 percent of GCC pharmaceutical market and is annually valued at around SR9 billion. The country’s drug imports account for 80 to 85 percent of all drugs sold. The remaining 15 percent are produced locally, although 80 to 90 percent of the raw materials used for them are also imported.
The majority of imports are from European and American pharmaceuticals, big names such as Pfizer, Johnson and Johnson and Bayer, and the product is imported to Saudi Arabia through local distribution networks, such as Banaja International Group and Tamar, with a significant amount of relabeling and repackaging, both for the domestic and Middle East markets.
Last year, in an attempt to regulate the cost of medicines, the Ministry of Health decided to impose a ceiling on some of the import prices. According to the MoH, of the 5,700 brands that are sold in Saudi Arabia, only 1,400 brands were affected. Understandably, the multinational manufacturers, who for years have enjoyed a relatively free hand in supplying the Saudi market, met the decision with concern and there were dark mutterings about the Saudis imposing restrictive practices.
However, it is very likely, and of course very desirable, that the Saudi pharmaceutical business will move away from mere distribution into manufacturing, either on its own or on the back of the multinationals. The drugs sector accounts for a staggering 15 percent of all Saudi workers; there is a growing number of highly educated people in the field. As the sector grows it is going to go some way to help meet Saudization goals.
The country is undergoing massive investments in hospital infrastructure, and this is attracting interest in the medical sector worldwide. In April 2008, the multinational instrument maker GE Healthcare expanded its joint venture with local distributor El Seif Development, demonstrating that, while direct foreign company presence still remains limited, the big boys are increasingly looking to go beyond an import-only presence.
