Pharmaceutical industry growth proving just the pill for Saudi Arabia’s healthcare goals

A key factor in fueling this increase is the increasing localization of the pharmaceutical industry – a strategy which plays into the Kingdom’s economic diversification strategy Vision 2030. (File/Shutterstock)
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Updated 01 September 2024
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Pharmaceutical industry growth proving just the pill for Saudi Arabia’s healthcare goals

  • According to Statista, the pharmaceuticals market in the Kingdom is anticipated to achieve a revenue of $5.53 billion by 2024
  • Saudi Arabia is set to see a compound annual growth rate of 4.62 percent, resulting in a market volume of $6.93 billion by 2029

RIYADH: As the Saudi government makes substantial investments in healthcare infrastructure, there is a notable increase in the demand for pharmaceuticals in the country.

According to Statista, a German online platform that specializes in data gathering and visualization, the pharmaceuticals market in the Kingdom is anticipated to achieve a revenue of $5.53 billion by 2024.

While significantly lower than the global leader the US – poised to generate $630.3 billion in revenue in 2024 – Saudi Arabia is set to see a compound annual growth rate of 4.62 percent, resulting in a market volume of $6.93 billion by 2029.

A key factor in fueling this increase is the increasing localization of the pharmaceutical industry – a strategy which plays into the Kingdom’s economic diversification strategy Vision 2030.

“While we will have to ascertain the quantified impact of localization on the pharmaceutical industry in Saudi Arabia, we definitely expect it to increase access, reduce cost and make the local pharmaceutical industry more resilient and innovative,” Partha Basumatary, principal in Oliver Wyman’s India, Middle East and Africa Healthcare and Life Sciences Practice told Arab News.

“Localization initiatives have laid the foundation for the Kingdom to become a regional hub of manufacturing for biotech products for the entire Middle East region,” Basumatary added, noting that the Kingdom’s focus on localization for NCD drugs, particularly those targeting type-2 diabetes, is a strong start.    

“To truly maximize its impact, however, the Kingdom needs to expand these initiatives beyond NCDs and encompass other critical areas like cancer, infectious diseases, and auto-immune disorders,” Basumatary said.

According to Matthew Lawrence, director of Pharma and Life Sciences, Operations Transformation Lead at PwC Middle East, the Kingdom’s access to, cost of, and standard of healthcare services have all significantly improved thanks to Saudi Arabia’s transformation of the industry.

As a result of these current localization actions, the pharmaceutical industry in Saudi Arabia will continue to see significant change towards accessibility, quality, and economic impact, Lawrence disclosed.

In terms of accessibility, he told Arab News: “Local production ensures a sustainable economy, reducing reliance on imports, therefore, a stable supply of medications, and faster response time during health crises.”

As for quality, he explained that the Saudi Food and Drug Authority ensures that locally manufactured pharmaceuticals meet high quality standards, which leads to improved healthcare services.

With regard to economic impact, Lawrence noted that the industry’s growth has spurred job creation and attracted investments, aiding in economic diversification.

“According to the Kingdom’s National Biotechnology Strategy, there will be 11,000 job opportunities by 2030, and contribute $34.6 billion to the non-oil GDP, by 2040 - potentially positioning Saudi Arabia as one of the leading global hubs for pharmaceutical manufacturing, research, and innovation,” he said.

“This is a clear testament to the major impact Vision 2030 has created in order to improve the healthcare sector across the Kingdom,” the PwC partner added.

Key steps taken by Saudi Arabia to localize the pharmaceutical industry

In keeping with the Kingdom’s Vision 2030 drive, Saudi Arabia has taken important steps to incentivize local manufacturing.

“First and foremost, it (Saudi Arabia) has offered various incentives to the pharma companies to drive localization, including lower minimum capital requirement, tax incentives, customs duties exemptions etc,” Basumatary said.

“It has also taken steps to improve regulatory approvals for drugs in the country with the introduction of abridged verification and registration processes,” he added, before going on to explain how the Kingdom has also developed a framework to favor locally manufactured products for tenders.

The Oliver Wyman principal highlighted successful examples of localization, such as Boehringer Ingelheim’s partnership with Alpha Pharma for localization of a Type-2 diabetes product in Saudi Arabia.

“Other notable examples include MSD’s partnership with Jamjoom Pharma to localize another Type-2 diabetes drug sitagliptin phosphate. Such initiatives will help the industry to become more resilient when it comes to future outbreaks such as COVID-19,” Basumatary said, adding: “It would also sow the seeds for future innovation and growth of the domestic pharma industry, including potentially giving a positive push to the Kingdom’s aspirations of becoming a regional biotech hub.”

Government support

As expected, the Saudi government plays a pivotal role in accelerating the localisation of the pharmaceutical industry and is already investing in driving strategic programs to advance the healthcare system:

From Oliver Wyman’s perspective, Basumatary said: “As observed in other geographies, Singapore government’s stable policy framework, favorable incentives, and access to knowledge/talent motivated BionTech to establish a state-of-the-art mRNA manufacturing facility in the country.”

The principal further noted that the pharmaceutical industry expects enhanced market accessibility, support for localization, and strong IP protection when it comes to making localization decisions.

“Saudi Arabia’s involvement and support has delivered an impact as we have seen from the recent pharma localization initiatives. It will, however, be critical to continue innovating on that front, as the competition for such localization initiatives continues to increase globally and regionally,” he underlined.

PwC Middle East’s Lawrence revealed that some of the notable government efforts include favorable policies like tax incentives and labor laws to incentivize research and development as well as manufacturing.

They also entail enabling regulatory frameworks to drive life science sector growth, with measures around strong intellectual property laws, patent protection, mutual recognition agreements to facilitate market access, and competition laws.

Other initiatives include not-for-profit funding, such as targeted grants, to incentivize research, as well as public financing such as subsidies or incentives to enable long-term growth of the healthcare ecosystem.   

“The government's ongoing commitment to localization is a clear long-term strategic plan, building on Vision 2030. The alignment of government policies with Vision 2030 goals underscores their influence in driving the progress of pharmaceutical localization across the Kingdom,” Lawrence said.

“These policies and initiatives will not only attract future investment but also foster innovation, build local capabilities, and ultimately contribute to the sustainable growth of the healthcare sector,” he added.

Looking to the future

In recent years, Saudi Arabia has intensified its focus on life sciences and has made substantial advancements to align with the objectives of Vision 2030.

This has involved endeavors to enhance the overall health and well-being of individuals, promote economic expansion and diversity, reinforce the Kingdom's global leadership in the sector, stimulate innovation, and enhance patient outcomes and quality of life.

According to Lawrence, one of the key initiatives contributing to the advancements of the life science industry is national biotechnology strategy.

“This helps to develop end-to-end vaccine manufacturing, establish biotechnology platform for biologics and biosimilars, and expands genomics programs for preventative medicine,” Lawrence told Arab News.

The PwC partner also shed light on the Healthcare Sector Transformation Program, explaining that it is responsible for strategizing the Kingdom’s resilient supply chain through different initiatives that help in enabling the localization of the pharmaceutical industry.

Other key players include the Local Content and Government Procurement Authority, which works on enhancing awareness and participation in local content and provides knowledge-based policies and tools, as well as the National Industrial Development and Logistics Program which focuses on expanding the pharmaceutical manufacturing sector.

It also includes incentives for local and international companies to establish production facilities in Saudi Arabia.

The Saudi Food Drug Administration is also playing a pivotal role as it enhances regulatory frameworks to help speed up the approval process for new drugs and encourage innovation in local pharmaceutical production.

Pharmaceuticals and Vision 2030

The strategic initiatives of the pharmaceutical industry are closely aligned with the Kingdom’s Vision 2030 goals, echoing ambitions in economic diversification, job creation, and innovation, as well as technology transfer and self-sufficiency.

“Life science sector expansion is expected to create thousands of jobs, helping to reduce unemployment rates among Saudis, particularly in high-skilled areas. Encouraging partnerships and collaboration leads to technology transfer and innovation,” Lawrence said.

With regards to self-sufficiency, the PwC partner noted that localizing pharmaceutical production ensures a stable supply of essential medicines and reduces the health sector's vulnerability to global supply chain disruptions.

“These initiatives are aligned with Vision 2030 goals as they contribute to the Kingdom’s economic growth, job creation and localization initiatives for Saudi nationals, as well as the enhancement of healthcare services across the country,” he said.

“By localizing the pharmaceutical industry and expanding these initiatives, Saudi Arabia can further improve healthcare accessibility, reduce healthcare costs, and ensure sustainability in the healthcare demands of its growing population,” Lawrence said.


Global economy to grow steadily in 2025 despite market shifts, say experts at Saudi forum 

Updated 18 February 2025
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Global economy to grow steadily in 2025 despite market shifts, say experts at Saudi forum 

RIYADH: The world economy is set to maintain steady growth in 2025, buoyed by resilient fundamentals despite market volatility and structural shifts, according to Citigroup’s Global Chief Economist Nathan Sheets. 

Speaking at the Capital Markets Forum in Riyadh, Sheets outlined key themes shaping the year ahead, focusing on global economic resilience, normalization of inflation and interest rates, and exceptionalism in market performance. 

“During the year ahead, the relatively solid fundamentals of the global economy are likely to transcend any kinds of uncertainties that we face,” Sheets said during the event, which runs from Feb. 18 to 20. 

Emerging markets also took center stage, with Raman Subramanian, managing director and global head of index research and development at MSCI, emphasizing the growing role of the Gulf Cooperation Council in global indices. 

“Digging deeper into the MSCI Emerging Market Index, you see the weight of the GCC has gone from about 1.5 percent to about 7 percent today,” he said. 

Subramanian also noted technology’s rising prominence in global benchmarks, with AI-adjacent sectors now accounting for over 30 percent of industry weight. 

Meanwhile, Ahmed Shams El-Din, managing director and head of global research at EFG Hermes, described the Middle East as a promising region for growth and value creation but noted its uneven development. 

“Countries are very different in terms of economic fundamentals, in terms of the opportunities for growth and the challenges each country is facing on a standalone basis,” he explained. 

Economic diversification and non-oil growth remain central themes, with Saudi Arabia and the UAE leading the way. Shams El-Din cautioned, however, that population growth and capacity constraints could moderate the pace of expansion. 

“Capacity constraint and funding challenges are going to play out parallel to the real developments that we are seeing on the ground,” Shams El-Din said. 

Subramanian also highlighted major trends shaping global markets, including technology transformation, health care, environmental resource management, and evolving societal and lifestyle shifts. 

“The move toward renewables has really impacted the way investors are allocating to the energy sector,” he added. 

The forum, held at the KAFD Conference Center, is set to explore deeper macroeconomic trends and capital market shifts. Key sessions include discussions on the Middle East’s growing role as a financial hub and the future landscape of global markets.


Oil Updates — prices edge higher on Kazakhstan supply disruption

Updated 18 February 2025
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Oil Updates — prices edge higher on Kazakhstan supply disruption

RIYADH: Brent crude oil prices advanced on Tuesday, adding to gains in the previous session after a drone attack on an oil pipeline pumping station in Russia reduced flows from Kazakhstan, but gains were capped on the prospects of supply rising soon, according to Reuters.

Brent crude futures gained 15 cents, or 0.2 percent, to $75.37 per barrel at 07:54 a.m. Saudi time. US West Texas Intermediate crude futures were up 67 cents from Friday’s close at $71.41 a barrel. There was no settlement for WTI on Monday due to the US Presidents’ Day holiday.

“The overriding theme driving oil prices lately has been around supply expectations. With the weakness in prices over the past weeks, news of a drone strike on Kazakhstan’s export pipeline in Russia has provided the catalyst for some bearish sentiment to unwind,” IG market strategist Yeap Jun Rong said in an email.

The drone strike on the Kropotkinskaya station in Russia’s southern Krasnodar region reduced shipments from Kazakhstan to world markets by Western firms including Chevron and Exxon Mobil, operator Caspian Pipeline Consortium said on Monday.

The Black Sea CPC Blend oil loading plan for February would remain unchanged, two sources familiar with the plan told Reuters.

“However, longer-term gains are likely to remain capped as the market may anticipate higher supplies from OPEC+ and Russia further down the road, while improvement in demand outlook particularly from China still remains uncertain, going by recent economic data,” IG's Yeap said.

BMI analysts said in a note that they see Brent prices averaging $76 a barrel in 2025, down 5 percent from the 2024 average, because of market oversupply, tariffs and trade tensions.

OPEC+ producers are not considering delaying a series of monthly oil supply increases scheduled to begin in April, according to a Russian state media report.

In December, OPEC had pushed back a plan to begin raising output to April, due to weak demand and rising supply outside the group.

Markets were also waiting to see if Russia-Ukraine peace talks will bear fruit, as US and Russian officials meet for talks in Saudi Arabia later on Tuesday.

“There is seemingly plenty to be bearish about in the crude market, the biggest factor now being the outcome of Ukraine negotiations. Russian oil may partially come back to the legitimate market, though there are of course many permutations as to the end result here,” said Sparta Commodities analyst Neil Crosby.


Saudi minister highlights strong ties as Kingdom and Egypt sign energy efficiency deal

Updated 18 February 2025
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Saudi minister highlights strong ties as Kingdom and Egypt sign energy efficiency deal

  • Prince Abdulaziz bin Salman says joint initiatives will enhance regional energy security, sustainability
  • Saudi companies to launch 5 new solar and wind energy projects in Egypt as part of collaboration

CAIRO: Saudi Arabia’s Minister of Energy, Prince Abdulaziz bin Salman, reaffirmed the Kingdom’s commitment to strengthening energy cooperation with Egypt during his address at the Egypt Energy Show on Monday.

The minister was speaking after the signing of an executive plan between Saudi Arabia and Egypt aimed at enhancing cooperation in the field of energy efficiency.

Under the executive plan, both countries will work together to establish a national energy efficiency program in Egypt, which will include drafting regulations and technical standards, capacity building, raising awareness, and fostering the development of energy service companies.

Prince Abdulaziz emphasized the brotherly relationship between Saudi Arabia and Egypt, saying that both nations share a responsibility to lead the transformation of the energy sector and adding that the collaboration aligned with Saudi Vision 2030 and Egypt’s strategic energy transformation goals.

In his address, the minister thanked Egypt’s leadership and its role in fostering robust relations between the two nations, and he highlighted the several major joint energy initiatives announced on Monday as ways of enhancing regional energy security and sustainability.

As part of the collaboration, five new solar and wind energy projects will be launched in Egypt by Saudi companies, boasting a combined capacity of 1.696 gigawatts and an investment of about SR6.2 billion ($1.65 billion). 

The projects will be developed by ACWA Power, Alfanar, FAS, and MOWAH.

Additionally, ACWA Power has signed a power purchase agreement with the Egyptian Electricity Transmission Company for a 2GW wind energy project in South Hurghada.

With an investment of SR8.6 billion, the initiative is set to become the largest wind energy project in Egypt, further advancing the country’s renewable energy ambitions.

The Saudi-Egypt Electricity Interconnection Project was also highlighted as a significant step toward regional cooperation, with a SR6.7 billion investment and the ability to exchange 3,000 MW of electricity between the two nations once completed.


Saudi wealth fund’s SURJ Sports Investment acquires minority stake in DAZN

Updated 17 February 2025
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Saudi wealth fund’s SURJ Sports Investment acquires minority stake in DAZN

RIYADH: SURJ Sports Investment, the sports arm of the Public Investment Fund, has acquired a minority stake in DAZN to broaden broadcasting opportunities and enhance access to both live and on-demand sports content.

This strategic investment aims to support the growth of Saudi Arabia’s sports sector while bolstering DAZN’s presence in the Middle East and other key markets, according to an official statement released on Monday.

As part of the deal, SURJ and DAZN will launch DAZN MENA, a joint venture designed to elevate sports broadcasting capabilities across Saudi Arabia and surrounding markets.

“This investment is in line with SURJ’s mission to drive fan engagement, boost sports participation, and unlock transformative opportunities, all while positioning the region as a hub for world-class sports,” said Danny Townsend, CEO of SURJ Sports Investment.

The collaboration is set to accelerate the growth of the broader sports sector by enhancing fan engagement and supporting initiatives that encourage sports participation.

“As part of the DAZN MENA joint venture with SURJ, DAZN is committed to expanding sports access and delivering an unparalleled entertainment experience to a global community of passionate fans,” added Shay Segev, CEO of DAZN.

Earlier in January, SURJ entered into a strategic partnership with US-based Enfield Investment Partners. This collaboration is focused on co-investing in global sports properties, including teams, leagues, media rights, and infrastructure. Enfield launched a $4 billion global sports asset fund and will establish a presence in SURJ’s Riyadh offices to support mutual growth and objectives.

Founded in 2023, SURJ Sports Investment is dedicated to international sports investments and advancing Saudi Arabia’s sports ecosystem. Its strategy encompasses investments in broadcasting, digital platforms, grassroots initiatives, and fan engagement.

Through this partnership, DAZN will serve as a key streaming and broadcasting partner for Saudi sports, significantly expanding their reach to a global audience. Operating in over 200 markets, DAZN has built a platform that integrates live sports streaming with interactive digital experiences.

The agreement with SURJ is expected to usher in new broadcasting technologies and further expand the accessibility of sports media in the region.


Saudi Arabia unveils $7.7bn mining investments in Wa’ad Al-Shamal

Updated 17 February 2025
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Saudi Arabia unveils $7.7bn mining investments in Wa’ad Al-Shamal

RIYADH: Saudi Arabia’s mining sector is poised for a major boost with nearly SR29 billion ($7.7 billion) in investments being directed toward the city of Wa’ad Al-Shamal.

Prince Faisal bin Abdulaziz, governor of the Northern Borders region, inaugurated a series of industrial, developmental, and hospitality projects aimed at solidifying the city’s role as a major hub for the Kingdom’s mining industry.

A major highlight of the announcement was the launch of Ma’aden’s Phosphate 3 project, backed by the Shareek program and an investment of SR28 billion.

This initiative is set to increase Saudi Arabia’s phosphate production capacity to 9 million tonnes annually, building upon the existing Phosphate 1 and Phosphate 2 projects, each producing 3 million tonnes. This expansion is expected to bolster the country’s industrial supply chain, generate new investment opportunities, and create employment within the sector.

The governor emphasized that these projects align with Saudi Vision 2030, which aims to expand the mining sector’s contribution to the national economy.

He highlighted that Wa’ad Al-Shamal has transformed into a model for integrated industrial cities, combining major industries, logistics services, and modern residential communities, which enhance its appeal to both local and international investors.

The event was attended by Minister of Industry and Mineral Resources Bandar Alkhorayef, Deputy Minister for Mining Affairs Khalid Al-Mudaifer, and other key officials from both the public and private sectors.

Additionally, the Saudi Authority for Industrial Cities and Technology Zones launched several new industrial, logistical, and service projects, with investments exceeding SR550 million. These projects include infrastructure development in the industrial zone, which spans 4.3 million sq. meters. As part of this initiative, 32 ready-built units have been established, consisting of 20 pre-built factories and 12 support units covering a combined area of 45,000 sq. meters.

Further key developments include a 132 kilovolt, 200 megavolt-amperes power substation, overhead transmission lines, and a 7-km bridge connecting the industrial zone to the international highway. These projects aim to improve logistics and energy reliability, creating an attractive environment for investments, particularly in the phosphate industry.

In addition, the governor inaugurated the expansion of Ma’aden’s residential city in Wa’ad Al-Shamal, adding 96 new residential units. This brings the total number of housing units to 579, supporting industrial and mining sector employees and their families.

To complement the region's infrastructure improvements, the Movenpick Wa’ad Al-Shamal Hotel, developed with an investment exceeding SR500 million, was officially opened. The five-star hotel is designed to cater to the growing accommodation demand from workers, investors, and visitors to the industrial city and Northern Borders region, further enhancing Wa’ad Al-Shamal’s position as an integrated industrial and investment hub.

As part of broader efforts to advance the mining sector, Alkhorayef, along with the deputy minister for mining affairs and other officials, visited several industrial and developmental projects in Wa’ad Al-Shamal and the Northern Borders region.

The tour included a visit to the Scientific Excellence School in Arar, where the minister reviewed modern training laboratories and met with students and faculty. Established through a partnership between Ma’aden and the Ministry of Education with an investment of approximately SR180 million, the initiative seeks to promote scientific education and develop expertise in STEM fields.

The minister also toured the Saudi Technical Institute for Mining in Arar, which has trained over 1,081 students, including 52 female graduates, in a range of specializations such as underground and surface mining, mining operations, and mechanical and electrical maintenance. Equipped with advanced mining simulation and training facilities, the institute plays a pivotal role in workforce localization and preparing Saudi talent for the mining industry.

The tour also included a visit to the Hazm Al-Jalamid mine, one of the Kingdom’s key phosphate mining sites, producing more than 11 million tonnes of phosphate ore annually.

The Northern Borders region is home to extensive mineral resources valued at approximately SR4.669 trillion.

It is a major source of phosphate, a critical element in global food security due to its role in agricultural fertilizer production. The region also contains high-quality deposits of coal, dolomite, limestone, and silica sand. It currently holds five phosphate ore reserve sites and 29 active mining licenses, including 15 for building materials and 14 for mineral extraction.