Modernisation Drives Saudi Arabia Drug Manufacturing Sector

Saudi Arabia continues to modernise its pharmaceuticals sector, mainly due to rising healthcare costs and an improved foreign direct investment regime. However, the government and manufacturers present in the US$1bn local market are increasingly examining opportunities in the generics sector, despite the country's traditionally strong preference for imported branded drugs.

Recently approved regulations on foreign investment now appear to have stimulated Indian drugmakers' interest in the country, with a new SRL600mn (US$160mn) joint venture drug manufacturing plant in Jeddah currently planned. The move is significant, as many Indian firms had previously complained that access to Gulf Cooperation Council states is limited, with only a few companies able to export basic products to the potentially lucrative region. While Saudi Arabia has eight drug manufacturing plants, and is home to small-scale manufacturers including Spimaco, Tabuk, Al-Jazeera, Dar Al-Dawa and Riyad Pharma, larger firms based elsewhere in the Middle East have traditionally been important players in Saudi manufacturing.

The ranks of the region's leading drug firms notably include the UAE's Julphar, which produces mainly generic drugs at three plants in the UAE, as well as units in Germany and Ecuador. Meanwhile, would-be rivals such as Oman's National Pharmaceutical Industries and Kuwait's Kepisco are already moving to boost production, noting Julphar's example. However, neither these firms nor any of the Middle East's estimated 200 other drug firms are likely to welcome competition from low-cost Indian drug companies, with the terms of the UAE's expected free trade accord with the US also keenly anticipated in the coming months.