No bittersweet pill for Saudi: Kingdom remains Gulf's largest pharma market
Saudi Arabia is expected to maintain its position as the largest pharmaceutical market in the Gulf, according to a report. The UAE is the second largest.
The GCC Pharmaceutical Industry report released by Alpen Capital said the GCC pharmaceutical market size was estimated at $ 8.5 billion in 2012, compared to $ 7.7 billion in the previous year. Saudi Arabia is the largest pharmaceutical market in the GCC totally valued at $ 5.1 billion, primarily on account of its large consumer base. The per capita sales in the year amounted to $ 175.
The total value of the UAE pharmaceutical industry was estimated at $ 1.6 billion in 2012, having grown by close to 3 percent from $ 1.5 billion in 2011.
The Saudi market thrives on provision of free medical and health care services by the government to its citizens. Around 35 percent of the pharmaceuticals available for sale are purchased by the government. However, compulsory health insurance for expatriates, who reside in the Kingdom in large numbers, and the healthy personal income of locals mean that the private sector’s contribution and out-of-pocket expenditure is also high.
Pharmaceutical expenses of expatriates are covered under insurance policies maintained by their employers, while locals are not reluctant to purchase expensive medication even if they have to directly bear the costs.
The GCC Pharmaceutical Industry report released by Alpen Capital says that the pharmaceutical sector has witnessed considerable progress over the years.
“The industry is expected to experience sustainable growth in the medium to long term. Increased domestic production, foreign investments, and consumption of generics are likely to support the market’s evolution,” said Sameena Ahmad, managing director of Alpen Capital.
According to the report, the sedentary lifestyles and increasing life expectancy have led to spread of chronic ailments thus resulting in increased drug consumption.
High levels of urbanization and a strong expatriate presence also support pharmaceutical sales growth in the region. Growing income levels and the resultant higher spending power of people have improved the quality of life and their overall ability to spend on medicines. General health awareness among the residents has also increased.
The report also says that the GCC population is anticipated to touch 50 million by 2017, which will again increase the sale of medicines.
Saudi Arabia has the largest manufacturing segment in the Gulf. However, most of the local production is destined for the export markets. Domestic production accounts for around 15 percent of the overall supply of pharmaceuticals in the market.
There are around 15-20 pharmaceutical manufacturers operating in the Kingdom, including indigenous companies and subsidiaries of multinational pharmaceutical giants.
Retail sales of pharmaceuticals through close to 4,000 pharmacies constitute 88 percent of the total market in Saudi Arabia.
- State of the Arab World Economy report 2016: diversify, tax, slash subsidies
- Arab investors won't dump the Trump despite anti-Muslim remarks
- UAE economy minister projects high growth despite oil prices
- UAE can set the pace for innovation in the Middle East: IBM vice president
- Business community welcomes UAE's deficit-free budget