2013-02-25 10:13:02 - Fast Market Research recommends "Saudi Arabia Pharmaceuticals & Healthcare Report Q1 2013" from Business Monitor International, now available
BMI View: King Abdullah's initiative to launch US$3.2bn worth of health projects in Saudi Arabia adds to the flurry of activity already occurring in the country's healthcare sector. It confirms our view that healthcare spending would be greatly boosted by government initiatives in 2012. This was primarily driven by the Arab Spring, which BMI believed would encourage the government to prioritise healthcare promote social stability. The new health projects will increase access to healthcare and provide revenueearning opportunities for multinational medical device and pharmaceutical manufacturers, though drugmakers will need to remain wary of the country's low-pricing system for medicines.
Headline Expenditure Projections
Full Report Details at
- www.fastmr.com/prod/541273_saudi_arabia_pharmaceuticals_healthca ..
* Pharmaceuticals: SAR16.69bn (US$4.46bn) in 2011 to SAR18.93bn (US$5.05bn) in 2012;
+13.4% in both local currency and US dollar terms. Forecast broadly unchanged from Q412.
* Healthcare: SAR78.98bn (US$21.09bn) in 2011 to SAR91.53bn (US$24.44bn) in 2012; +15.9% in both local currency and US dollar terms. Forecast broadly unchanged from Q412.
* Medical devices: SAR5.54bn (US$1.48bn) in 2011 to SAR6.52bn (US$1.74bn) in 2012; +17.7% in both local currency and US dollar terms. Forecast broadly unchanged from Q412.
Risk/Reward Rating: Saudi Arabia's composite score remained unchanged in Q113, at 55.6 out of the maximum 100 points. This places the country again at fifth out of the 30 markets in the region. Its score is propped up by the country's wealth and a sizeable population (exceeding 28mn in 2011). Furthermore, its forecast growth rate is high due to favourable public and private healthcare investments. The government is also in the process of creating more public-private health partnerships and encouraging private health insurance uptake, which should provide momentum for drug sales.
Key Trends And Developments
* A report has found that the Saudi Arabian government is trying to take back control of the country's healthcare industry, which is mostly controlled by expatriates. The report by GlobalData, published in November 2012, showed that the government is trying to revise patent regulation, drug approvals and employment law. Through the changes, the government is aiming to encourage domestic pharmaceutical and medical devices companies.
* Targeting the growing telecare market in relation to diabetes in particular, in October 2012, mobile operator Mobily and drugmaker Sanofi developed a partnership to expand the reach of mobile telecare services in Saudi Arabia. BMI believes targeting a growing chronic disease while capturing the increasing use of high-end mobile devices will give the companies a strong product on the Saudi market.
BMI Economic View: In extending our forecast period to 10 years, BMI is assuming the long-term survival of the current political system. This is essential for the sake of forecasting, but not necessarily our core view. We expect oil production to continue to expand, albeit slowly, fuelling growth and ongoing asset accumulation. This would mean the government could afford to maintain both high levels of security spending and keeping the population in the luxury to which it has become accustomed through public sector jobs, subsidies and benefits in the near to medium term. That said, the government's financial commitments have risen substantially since the outbreak of the Arab Spring, and could pose questions about the long-term sustainability of such policies.
BMI Political View: The Saudi royal family depends on steady oil revenues to maintain its tight grip on the population. As a result, a sustained downturn in global oil demand could lead to substantial unrest and, potentially, regime change. Strict shari'a law and very limited democratic freedoms continue to exist in tension with a large expatriate community and friendly relations with the West.
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