The pharmaceutical market in Saudi Arabia is projected to grow at a compound annual growth rate (CAGR) of 7.4% to reach $6bn by 2020, an increase from $4.5bn in 2015, according to a report by GlobalData.

Titled ‘CountryFocus: Healthcare, Regulatory and Reimbursement Landscape – Saudi Arabia’, the report analyses the country’s healthcare market and the existing regulatory and reimbursement practices prevalent in the condition.

Saudi Arabia’s pharmaceutical market is an important market in the region as it is one of the biggest in the Middle East and the biggest of the Gulf Co-operation Council (GCC) members.

The substantial growth in the market is a result of multiple factors including an expanding population, rising wealth levels, and demand for patented pharmaceutical products, which have created a lucrative opportunity for major companies to establish manufacturing plants in the country either in partnership or independently.

"Saudi Arabia’s pharmaceutical market is an important market in the region as it is one of the biggest in the Middle East and the biggest of the Gulf Co-operation Council (GCC) members."

Perceived as a key industry in the country’s progress, the pharmaceutical market is expected to receive $18.5bn a year over the next ten years for one of the world’s largest healthcare expansions.

The Ministry of Health plans to invest in the domestic manufacturing of medical devices and pharmaceuticals to generate employment, as well as develop a strong knowledge base.

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According to the GlobalData report, domestic pharmaceutical manufacturers in the country face stiff competition from global pharma giants such as GlaxoSmithKline, Pfizer, Astellas, and Sanofi. The availability of low-cost generics is also a matter of concern for the domestic sector, which constitutes just 18% of the country’s pharmaceutical market.

GlobalData’s senior analyst covering industry dynamics Adam Dion explains: “Domestic manufacturing companies need to focus more on their marketing and sales, and create beneficial partnerships with multi-national companies through joint ventures, acquisitions and license agreements.”

The government’s efforts to enhance and expand its healthcare services will create more opportunities for small and medium enterprises and will also lead to the development of related infrastructure, adds the report.

An increase of 10.1% was witnessed in the expenditure on health services and social development in 2015, which was spent on the construction of hospitals, labs and polyclinics.