Pharmaceutical sector - Saudi Arabia

Outlook and current trends:

Increased consumer sophistication & proactive treatment:
Saudi Arabia is a market that is experiencing rapid population growth. We are also witnessing a more proactive
approach on part of consumers towards healthcare.
We have also witnessed a shift in attitude of the general population towards health and wellness. People are
becoming more aware of issues pertaining to being overweight, smoking and also certain lifestyle diseases like
diabetes.
They are becoming more sophisticated regarding symptoms, causes and treatment. Hence there is an increased
willingness to self-medicate, boosting the utilization of OTC drugs.
Some consumers are now willing to stave off potential future ailments by opting for calcium or vitamin
supplements.
Hajj:
For the local populace, Hajj (Annual pilgrimage for Muslims) is also a season where people fear the influx of disease
from various countries. There have been a few inoculation campaigns targeting Saudis and expat residents for
certain diseases near Hajj. There is no formidable data to back up such concerns but it remains a genuine concern
for locals especially for people residing in the Western province of Saudi Arabia.
Distribution mix:
Chemists/ Pharmacists remain on top among distribution channels; however, post 2010 with increased awareness
on fitness and alternative medicine consumers are opting for health-food shops which have demonstrated strong
performance in weight management and allergy care. Internet retail is yet to kick off in KSA and based on data
from 2010 represents only 0.1 % contribution to the distribution mix.
Government initiatives and Economic growth:
The Saudi Government through the Ministry of Health runs many initiatives for a number of diseases on an yearly
or bi-annual basis. Nowadays, there is special emphasis on healthcare awareness and prevention of various
diseases like STDs & Hepatitis etc.
The ministry also regularly organizes seminars for local practitioners and invests a substantial amount in training
doctors and nurses as well as pharmacists.
It is quite evident that government spending in healthcare is on a constant rise with high investments in medical
education and infrastructure.
For example, development of public healthcare facilities is on the rise which is in line with the Governments plans
to establish 5 entirely new cities in previously under-developed areas. Such cities will also be provided with
neighborhood clinics, hospitals and medical universities.
The Saudi government also runs a scholarship program where students who obtain admission in reputable foreign
universities are fully funded by the government to pursue their academic requirements which includes a fixed
monthly stipend as well.
Overall, in terms of Pharmaceutical sector growth, we predict stronger sales as economic growth and population
figures of KSA are on the rise compounded by the emergence of five new cities in the long term.

Pharmaceutical industry overview:
Market Share:
Consumers are constantly opting for leading brands and at the moment Novartis (11.3 %) and Saudi
Pharmaceutical Industries and Medical Appliances Co. (10.8 %) rank on top in terms of Retail value RSP and are the
only companies with a share in double digits in the Kingdom for the year 2011. They are followed by GSK (9.1%),
Reckitt-Benckiser (7.3 %), Tabuk Pharmaceutical Manufacturing Co. (3.7 %) and Merck & Co. (3.4 %).
Sanofis market share has remained relevantly marginal at around 0.9% over the period 2006-2011.
If we look at brands by various firms, GSKs Panadol is on top with a 7.1% share of Retail Value Rsp. Dettol 3.9%
(Reckitt-Benckiser), Voltaren 2.8% (Ciba-Geigy), Otrivin 2.2% (Novartis), Rofenac 2.0 % (SPIMACO) round off the
top five in particular order. (Based on data for Year 2010)
(For a more detailed look at media spends within the Pharmaceutical industry, please refer to attached document titled Consumer Health Market shares.xls)
Media Spends:
Based on estimates of aggregate media spends within KSA for the period 2010-2011, Riyadh Pharma was the
highest spender. Pfizer, SPIMACO, Al Haya were at par with significantly lower but yet substantial investment in
media. Sanofi is also close-by in terms of magnitude of investment in advertising their products.
(For a more detailed look at media spends within the Pharmaceutical industry, please refer to attached document Consumer Health Media Spends estimates.xls)
Local Regulations:
The Saudi ministry of Health divides pharmaceuticals into three groups:
Medicines and Pharmaceuticals
o Rx (Require Prescriptions)
o OTC
Herbal Medicines
Cosmeceuticals
Pricing is also regulated by the Ministry of Health with an aim to ensure lowest prices possible. For imports the
ministry assesses the prices in several countries and selects the lowest available price.
Advertising of Pharmaceutical and medicinal products is prohibited on non-medical media, including TV and radio.
Hence, firms invest in promotion via seminars, medical magazines and also target healthcare workers.
Pharma firms also utilize sales pushes to chemists/pharmacists like bulk-buy bonuses as they cannot target
consumers with price promotions. Sales reps also visit doctors and pharmacists on a regular basis offering free
samples, leaflets and gifts as well.
Exceptions: Some Pharma firms have obtained permission from the Ministry of Health to advertise their brands
locally. For example: Panadol (GSK), Sedergine (UPSA), Fevadol (SPIMACO) etc. Such brands are mostly analgesics,
cough, cold and allergy remedies. Drapolene (by Wellcome for diaper rashes) and Gaviscon (Antacid by GSK)