RIYADH, Saudi Arabia – Saudi Arabia, a country best known as one of the largest oil producers in the world, is looking to develop a stronger domestic biotech and pharmaceutical industry, partly to diversify its economy and partly to address its domestic health care needs.
To take its pharma and biotech sector beyond relatively simple manufacturing and distribution of generics, in 2018, construction started of the KAUST Research and Technology Park, which will include the Saudi Vaccine and Biomanufacturing Centre (SVBC).
The goal of the SVBC is to rapidly grow Saudi Arabia's pharmaceutical technology base and create opportunities in biomedicine and other fields of advanced medicine. SVBC will follow good manufacturing practice for its biopharmaceutical production, and is intended to become a national platform for translating new discoveries from innovative research into pharmaceutical product lines. Construction of the center should be completed next year.
The technology park and the SVBC are part of Saudi Arabia's Vision 2030 program, which aims to shore up the biotech and pharma industries while working to create a skilled workforce. That is all part of an effort to diversify Saudi Arabia's economy away from fossil fuel extraction.
The project does not aim to set up the capacity to provide all the drug requirements for the country. Rather, Saudi Arabia has encouraged mergers and partnerships between local and international companies as the country's health care needs grow.
The Kingdom of Saudi Arabia has a population of roughly 34 million and is home to two of the most sacred sites of Islam, which create an annual influx of 2.3 million pilgrims. To meet the needs of both its growing population and the expected increase in the rise in pilgrim numbers, Saudi Arabia is pushing to develop its domestic capacity to manufacture and distribute pharmaceuticals.
According to the Ministry of Health, Saudi Arabia produces around 40% of the pharma products it needs. The remainder is sourced from multinational companies with a local presence. That 60% portion is imported via a number of different routes, including foreign-local partnerships, local distribution rights and direct market access. All told, Saudi Arabia accounts for 60.4% of total pharmaceutical purchases in the Gulf region thanks to a market that is valued at $7 billion and could grow to $8.5 billion by 2023.
Domestically produced generics have proved attractive. Ali Filali, a pharmacist in the Saudi Arabia city of Medina, said, "Saudi medicines and multinational corporation products are like comparing a Huawei phone to an iPhone... There is a huge difference in price, but they both perform equally well."
For example, imported omeprazole capsules are priced at $5 per tablet but the local generic version is sold for less than $2 per tablet. That push to develop a local industry has caused imports to fall drastically.
"Now people prefer buying local medicines. They're cheaper and perform equally well," Filali said.
Fast and growing market
The emergence of a domestic generics industry is relatively new.
In 2003, Saudi Arabia established an independent authority, the Saudi Food and Drug Authority (SFDA), under the Council of Ministers, to promote the marketing, monitoring and capacity of local pharmaceutical industries. The SFDA is also responsible for the oversight of food safety, drug quality and efficacy, and the performance of medical devices.
According to a spokesman, the SFDA is "working very strictly to improve the health care and pharmaceutical sector of the country" through the range of activities that regulatory agencies engage in, including licensing, assessing efficacy and granting marketing authorizations, inspecting manufacturers and importers, monitoring quality and safety, tracking adverse reactions, and more.
The SFDA is also encouraging all drug manufacturers, both local Saudi and international manufacturers exporting to Saudi Arabia, to adopt the GS1 supply chain standard, which is one of the most widely used trade item identification systems worldwide. As well as GS1, the SFDA has introduced the Drug Track & Trace System and Barcode System. The system is intended to track all locally produced and imported human registered drugs, in line with KSA's Vision 2030 project. Companies are also required to electronically register all local and imported cosmetics, based on product category.
Ali Mansor, head of marketing at Riyadh-headquartered generics maker Tabuk Pharmaceuticals, said the "major factors affecting the pharmaceutical market are the Kingdom's growing population and the increase in per capita spending on health care services."
"Since the establishment of the SFDA, the efforts towards pharmaceutical expenditure and the promotion of local manufacturing are increasing, which has resulted in a fast and growing generics market. Local companies are producing antibiotics, diabetic treatments, cardiovascular drugs, cancer drugs, respiratory medications and anticoagulants.
"The [Saudi Arabia] medicine industry is divided into two sectors: pharmaceutical manufacturing and pharmaceutical distribution. Currently, local pharmaceutical companies are producing generic medicines, and they are also bound to provide 50 percent of their jobs to Saudi citizens," Mansor said. "The government also helps and facilitates the export of local products."
The SIDF industrial development bank provides interest-free loans to the industry. There is no tax on industry, only product registration fees and annual government fees (In Islam, the annual fee is called zakat). After registration and certification, products can be exported or sold locally.