Saudi Arabia – by many measures the cultural, social, and economic epicentre of the Arab and Islamic worlds – is currently undergoing a once-in-a-lifetime transfiguration. The country’s ‘Vision 2030’ transformation plan has not only been radically reshaping the national economy and reducing its dependence on petroleum revenues but has also unleashed sweeping societal changes and created a wealth of opportunity for savvy international investors.
Perhaps nowhere are these opportunities more greatly apparent than in the Saudi healthcare and life sciences domain, where multinational firms and local players alike have been frantically adapting to a new reality. “Whichever metrics you use, the tempo of progress is deeply impressive. In the past couple of years alone, we have manged to expand healthcare coverage to around 94 percent of the population, and average life expectancy has now surpassed 77 years,” proudly affirms Dr Mohammed Alabdulaali, Assistant Minister of Health.
“We are frankly in the midst of a unique moment in this country’s development cycle. The Kingdom’s commitment to advancing societal progress – from raising health span and deepening care coverage to increasing female participation in the workforce and empowering youth – resonates deeply. Moreover, the level of sheer optimism and positivity in Saudi Arabia is palpable,” confides Dimitri Livadas, CEO Pharma of the Saudi Chemical Holding Company. Livadas likens contemporary Saudi Arabia to “a giant high-tech startup, with a clear bias for action, and profound willingness to take risks and innovate.”
Certainly, the Kingdom’s life science sector appears to be surging from strength to strength. Backed by a 34-million strong population and burgeoning demand for ever more sophisticated public and private health services, Saudi Arabia’s pharmaceuticals market now ranks 15th globally and has consistently been registering robust compound annual growth rates of above 5.2 percent (according to the Riyadh-based business formation consultancy, Al Taasis). So much so, that the market is now projected to touch USD 11 billion by 2026, which would be almost as valuable as Egypt’s and the UAE’s combined.
And much the same can be said for the medtech space. “In recent years we’ve been witnessing a highly positive trajectory in healthcare growth in Saudi Arabia, with increasing patient volumes and a focus on preventive and treatment measures,” observes Trad Alkhelaiwi, senior director and general manager at J&J Medical. “This growth is driven both by bottom-up factors such as heightened patient awareness and top-down initiatives by the government to incentivize a healthy population, which makes it especially interesting from an international investor perspective,” he reflects.
Indeed, for many life science multinationals, the Saudi marketplace is already considered too big to ignore. “Within Sanofi, we’ve identified ten critical markets globally which we feel worthy of special attention such as increased investment, resources, and earmarked for prioritization for new product launches due to their exceptional strategic importance. All of them are G20 economies, and I’m glad to say KSA is one of them,” confides Jean-Paul Scheuer, the company’s MCO lead and general manager for specialty Care in the Greater Gulf.
“In comparison to most other emerging markets, Saudi Arabia stands out for its stable economy, currency, and clear long-term vision, making it a highly attractive destination for investment and development initiatives,” agrees Diederik Kok, head of GCC at Biogen. “In fact, it is a delight to be actively engaged in what is the centrepiece of what is nowadays becoming an exceptionally dynamic region.”
REGULATORY MATURITY
Underpinning all this abundant investor optimism, has been the sheer pace and depth of reforms to the local pharma sector’s governance structures, regulatory regime, and organizational makeup. “Saudi Arabia has been implementing pilot programs to streamline registration procedures, allowing for parallel filings with the Saudi Food & Drug Authority (SFDA). This initiative has accelerated the approval timeline for innovative products, a stark contrast to the previous lengthy registration periods. Today, we are seeing instances where products can be registered within a remarkably short span, sometimes as quickly as two months,” perceives Khaled Sary, general manager for the West Gulf cluster at Takeda.
Sanofi’s Jean-Paul Scheuer agrees. “We’ve noticed that the Saudi state has been steadily revamping how it conducts drug purchasing, reimbursement, pricing and market authorization decisions with many of these functions becoming more independent, ensuring thorough evaluations while expediting approvals where appropriate. This tilt towards efficiency is probably most evident in Saudi Arabia’s willingness to accept submissions prior to formal registration, allowing for considerably quicker launches,” he observes.
Recent certification, meanwhile, attained by the SFDA from the World Health Organization (WHO) has empowered the regulator to conduct more full reviews and approvals of new molecules independently. “This milestone presents a significant opportunity to be more flexible, especially when addressing unmet needs. The removal of the requirement for FDA or EMA approval prior to submission to SFDA streamlines the process, potentially hastening access to innovative therapies,” muses Karim Smaira, Founder and CEO of Genpharm.
A case in point has been the step change in how new orphan drugs and rare disease therapies are now typically handled. “These days the SFDA is much more discerning and more inclined to recognize the unique nature and value of these medications which the consequence that they can be granted a more expedited approval pathway vis-à-vis standard therapies,” recounts Mohamed Abu Shawish, general manager for the GCC Cluster at Japanese rare disease specialty outfit, Kyowa Kirin.
“Health Technology Assessment (HTA) is also being increasingly adopted and integrated into the access pathways reflecting Saudi policymakers desire to shift a towards a value-based healthcare system where pharmaco-economics and societal considerations impact the reimbursement decision-making process, including the development of the first National Multi-Criteria Decision Analysis Framework,” he elaborates.
Indeed, many originator drug developers have already expressed their satisfaction with the relative ease in which they have managed to bring state-of-the-art, innovative therapies to market. “Saudi Arabia hosts one of the largest portfolios of Lundbeck products globally, including all our strategic brands. We recently introduced our brand new innovative preventive treatment for migraine in October 2023, which speaks volumes about the Kingdom’s willingness and ability to be an early adopter of novel medicines,” says the Danish specialty drug developer’s country manager, Mostafa Nagib.
Meanwhile British drugmaker GSK’s experience is not dissimilar. “This is a market that is clearly open to and enthusiastic about accepting the latest scientific innovations. We’re gearing up to introduce our oncology portfolio in Fall 2024, with Saudi Arabia also earmarked as one of the initial launch markets for some of our breakthrough adult vaccines such as those for shingles, and RSV,” confirms Farrukh Rehan, the company’s vice president and general manager.
Not only do these reforms lay the foundations for improved speed, accuracy, and efficacy in embracing next-generation life science solutions, but “they signal a profound shift in regulatory philosophy in that access now encompasses much more than just pricing; and instead extends to the quality of services provided alongside the products,” thinks Khaled Sary.
This is important as it opens the door to much more creative market access strategies ranging from risk sharing arrangements to outcome-focused managed entry agreements. “We are witnessing a great willingness on the part of the Ministry of Health and other actors to enter into these kinds of collaborations based on real-world data and insights,” insists Biogen’s Diederik Kok. “Moving forward, we are convinced that these models shall play a pivotal role in our operations in Saudi Arabia and become increasingly prevalent in driving positive health outcomes, patient satisfaction, and health system sustainability.”
HOMEGROWN CHAMPIONS COMING OF AGE
Hitherto largely unknown outside of the Kingdom, Saudi Arabia’s homegrown drugmakers are now, for the first time, starting to punch above their weight. For a start, many have been making strenuous efforts to scale the value chain and develop their own proprietary formulations. “We’ve been busy investing in high-potent manufacturing, amassing a biosimilar manufacturing portfolio, and building a biological manufacturing facility,” reveals Ahmed Aljedai, chairman of the Saudi Pharmaceutical Industries & Medical Appliances Company (SPIMACO), which enjoys the distinction of being the largest pharmaceutical manufacturer in the GCC, boasting the highest market share among national companies. “Furthermore, we have plans and ambitions to enhance our capabilities as a contract development and manufacturing organization (CDMO) by venturing even into emerging space of cell and gene therapies,” he confides.
Meanwhile the Saudi Chemical Company, already a heavyweight actor in pharma distribution with five logistics centres from Riyadh to Jeddah to Dammam, has simultaneously been steadily augmenting its manufacturing capabilities. “Recently, we completed the certification process of our newest sterile line with the Saudi FDA. Looking ahead, we are contemplating entry into the burgeoning field of cell and gene therapy which we are convinced presents immense potential,” outlines the Group’s CEO for Pharma, Dimitri Livadas.
Moreover, there is an explicit focus on capturing more value. “While it represents a profitable business line for us, contract manufacturing is not our real strategic focus. We regard it much more as an enabler. Our mid-range plan has a clear shift towards in-house manufacturing of our own portfolio of products, driving enhanced profitability of the business,” he affirms.
Tabuk mirrors this spirit of ambition. “The expansion of our manufacturing capabilities has become a top strategic priority for us in the light of our growth aspirations and the prevailing market dynamics,” recounts the company’s CEO, Ismail Shehada. “Currently, we offer over 350 different SKUs and our manufacturing capabilities extend across a wide range of dosage forms including solid, liquid, semi-solid, and injectables, giving us a certain competitive advantage in the marketplace. Nonetheless, given the scale of opportunity both nationally and regionally, expansion of our capacity and capabilities becomes imperative if we are to sustain this positioning and keep pace,” he admits.
Another local firm shaking up its business model is Saudivax, which has historically focused on developing halal vaccines suitable for use in Muslim populations. The company, led by Co-Founder and Managing Director Mazen M. Hassanain retains this focus, but is increasingly looking towards distribution deals with small to medium-sized biotech firms to bolster its coffers. “Developing halal products is a time-intensive and resource-intensive endeavour,” explains Hassanain. “To balance our focus on halal products with the need for revenue generation, we established a new department dedicated to marketing, sales, distribution, and manufacturing. This diversification strategy allows us to generate cash flow while continuing to pursue our long-term goals in the halal product space. Additionally, we sought to differentiate ourselves from the regional market, which predominantly focuses on generics or partnerships with multinational companies; we instead work with smaller and medium-sized international companies that do not currently have a presence in our market.”
The Kingdom’s most high-performance local players have also been demonstrating an increasingly clear ambition to expand internationally. One such rapidly growing Saudi drugmaker, Avalon Pharmaceuticals, for instance, plans to increase its total exports from 10 percent to 30 percent by 2030. Tabuk’s expansion plans, meanwhile, encompass over 17 countries, primarily straddling Africa and the Middle East.
“Each expansion is meticulously planned, considering strategic viability, distribution models, and localization opportunities. For example, we’ve undertaken localization efforts in the UAE and Egypt to enhance market access and competitiveness. Our strategy is tailored to each country’s unique dynamics, accounting for factors like currency fluctuations and governmental incentives, ensuring a nuanced approach to regional growth and market penetration,” says Shehada.
After all, thanks to its strategic location straddling the crossroads of Asia, Europe, and North Africa, and well-developed infrastructure, many domestic players view the Kingdom as a promising future production platform with strong export potential to simultaneously serve both the MENA and the Organization of Islamic Countries, a combined marketplace valued at up to USD 130 billion.
“Our Kingdom’s growing manufacturing maturity and strong connectivity can serve as a bridge to regional markets, facilitating efficient distribution and expansion,” observes Mohammed Khalil, CEO of SAJA, a pioneering joint venture between Japanese pharma outfits Daiichi Sankyo and Astellas Pharma, and historic Saudi healthcare group, Tamer Industries. “The partnering companies’ calculation is that Saudi Arabia provides an effective vantage point for expanding into neighbouring regions including the GCC, Levant and Northern Africa,” he explains.
SPIMACO, for its part, is looking even further afield. “Our new strategy involves expanding into global markets such as Europe in tandem with our existing focus on North Africa and French speaking African countries. As part of this initiative, we recently acquired a Swiss company, known for its products approved by the European Medicines Agency and unique technologies that complement our manufacturing capabilities. Such an acquisition should help give us greater international recognition and help bolster our reputation in new markets that are unfamiliar with our brand,” Aljedai reasons.
Meanwhile, the company is actively on the hunt for other opportunities for inorganic growth with a view to cementing a regional presence. “We’re open to a variety of different collaboration models to raise SPIMACO’s profile beyond Saudi borders. And while we may still be relatively new to the global market, we are committed to offering unique products that few can match,” says company CEO, Jérôme Cabannes.
At the same time, another iconic homegrown Saudi entity, Abdul Latif Jameel Health, recently raised eyebrows with its acquisition of the much-acclaimed Dubai-based gene therapy and rare disease specialty outfit, Genpharm. “The takeover, aligned neatly with our dual growth strategy of organic and inorganic expansion. We had been seeking out companies with a multi-country presence, stringent quality standards, and differentiated assets addressing unmet medical needs and Genpharm ticked all the boxes,” explains CEO, Akram Bouchenaki.
“This acquisition not only strengthens our portfolio but also provides a platform for further growth and expansion into new markets. We envision ourselves as a global player, particularly in the Global South. While there are many outstanding national players in various markets, we see an opportunity to go beyond that serve as a multi-country representative,” he concludes.
‘DIRIGISME’ SAUDI-STYLE
In the eyes of many, the country’s ability to strike mutually advantageous, quid pro quo deals with multinational drugmakers constitutes not only one of the most eye-catching elements of the Kingdom’s playbook for swiftly developing its domestic life science sector, but also one of its most effective mechanisms wielded to date in pursuit of that ambition.
“Saudi Arabia’s thriving and rapidly evolving pharmaceutical and medtech spaces undoubtedly present a multitude of opportunities for a sharp-eyed investor, but the key to making a success out of this market is about aligning closely with government priorities and following the rules of the game when it comes to local content, technology and knowledge transfer and Saudization. For this is how the real opportunities get unlocked, especially for anyone aspiring to participate in state tenders,” counsels SAJA’s Mohammed Khalil.
Saudi Arabia enjoys the distinction of being one of the first countries to adopt a concept of promoting ‘in-Kingdom total value added,’ as Ashraf Al Grain, pharma director at the Local Content & Government Procurement Authority (LCGPA), explains. “We see many opportunities in local content that are currently underutilized, particularly in the high government procurement expenses across various sectors. The role of local content is to increase the value of these expenses within the kingdom – why spend outside when we can invest locally?”
Al Grain continues, “Our aim is to simplify the local content process, increasing expenditure within Saudi Arabia by improving government procurement and directing national purchasing power towards local implementation. This includes purchasing direct goods locally whenever possible, which adds value to our economy. Our approach ensures that we maximize the economic value of our expenses within the kingdom.”
“Thanks to its oil wealth, Saudi Arabia has long been a keen and reliable importer of originator pharmaceuticals and innovative medtech, but the local sector has historically concentrated only upon secondary manufacturing, which limited local ownership of intellectual property as multinational companies primarily controlled final-stage processes,” recalls Walid Tohme, partner for the Middle East at Strategy&, the consultancy arm of PwC.
“To address this shortcoming head on, the Kingdom’s administrators are now proactively attempting to steer the domestic life science sector in a direction whereby it can capture a greater portion of high value-add functions and gain competitiveness,” he explains. “By harnessing state power to cultivate homegrown capabilities in R&D, commercialization, and local biomanufacturing, Saudi Arabia strives to retain more intellectual property within its borders, fostering a sustainable ecosystem where innovation and economic growth go hand in hand.”
Ashraf Al Grain is at pains to point out, however, that the state has been careful to design well-thought out, intelligent localization and Saudization policies that shall delivery triple wins in which all parties – foreign investors, domestic industry and state – stand to gain handsomely. “One of our core values is ensuring that any business established in Saudi Arabia is sustainable. We don’t just want to attract investors temporarily, but instead aim to build incentives and mechanisms that ensure long-term profitability and stability. Our mechanisms are specifically designed with this in mind. We have supportive, protective, and attractive policies to reward foreign investors that contribute to the advancement of the sector and help them thrive in the Kingdom,” he insists.
“Moreover, we are completely agnostic about the origins or nationality of the companies investing. Our target is rather the product and the technology transfer. If a company, regardless of its nationality, comes and transfers quality knowledge and capabilities into Saudi Arabia, this process is considered localization and such companies will be rewarded,” he emphasizes.
CARROTS & STICKS
What then does localization look like in practice, and which incentive structures are being deployed to bring this about? For a start there are juicy incentives for both multinationals and local firms alike to localize manufacturing and cultivate domestic capabilities that sustain know-how.
One way the government is managing to shift pharmaceutical importing to domestic manufacturing – either through wholly owned sites or through contract manufacturing organizations (CMOs) – is by providing guaranteed offtake agreements through the Saudi National Unified Procurement Company (NUPCO). “A contract with NUPCO is significant, as we purchase medicines and medical devices on behalf of the roughly 31 million Saudi citizens and public sector workers,” explains the agency’s CEO, Fahad Al Shebel. And in addition to the prize of a national guaranteed contract, foreign entities that increase local production will be able to negotiate higher drug prices and to distribute and sell pharmaceuticals within the country themselves, whereas imported pharmaceuticals can only be distributed through a Saudi company.
“In return for our expansion of our manufacturing capabilities, particularly for oncology and immunology products through a new facility in Jeddah, we were granted agreements of up to seven years for locally manufactured biologics, which was a big milestone for a drug developer like us facing significant price reductions globally,” confirms SAJA’s Mohammed Khalil.
French biopharma Sanofi, and Danish specialty diabetes player Novo Nordisk have also for their part each benefited from seven-year offtake agreements for their decisions to localize insulin manufacturing, while Baxter has gained directly from its status as owner of the sole in-country manufacturing site for peritoneal dialysis products. “NUPCO has served to be a real boost to our business by facilitating the seamless collaboration and distribution of our products, primarily to government healthcare facilities,” confides Faisal BinDail, general manager of the American renal-focused bioscience and medical outfit.
Then there is an assortment of other advantages for companies willing to engage in local fabrication such as inclusion on the mandatory list or tendering privileges. “According to the procurement law, we apply a 10 percent price preference which means that if a local product is within 10 percent of the lowest price offered, it is considered the lowest price. This encourages purchasing from local manufacturers. Another helpful mechanism is the mandatory list which is a list of medicines considered to be strategically important for supply chain security that must be sourced locally,” outlines Al Grain.
Meanwhile a plethora of support structures exist ready to help assist the localization endeavours. For instance, the Saudi sovereign wealth fund has launched Lifera, a commercial-scale contract development and manufacturing organization designed to boost the local biopharmaceutical industry by facilitating the local production of essential biologics such as vaccines, plasma therapeutics, monoclonal antibodies, as well as cell and gene therapies.
“We have been assigned the challenging yet pivotal task of leading a brand-new organization, backed by considerable governmental resources, designed help localize around 200 priority molecules deemed essential for the national biopharma security agenda. Our mandate extends well beyond backwardly integrating the production line; and also encompasses being a catalyst of growth of the local biologics sector by partnering with leading biotech companies and facilitating speedy scale-up,” details Ibrahim Aljuffali, chairman of the Board. The Saudi Authority for Industrial Cities and Technology Zones (MODON), for its part, has also signed numerous agreements to establish joint venture factories for vaccine manufacturing and research.
Away from manufacturing, considerable privileges are also conferred on those companies willing to put down other kinds of roots and establish an enduring local footprint such as by relocating their regional headquarters to the Kingdom, investing heavily in local clinical research, or employing a high proportion of Saudi nationals for their in-country workforces.
“While greater levels of Saudization is clearly the right direction for the country to be heading in over the long run, it emphatically does not mean that there is no place for non-Saudis; on the contrary, there will always be a place for the best and brightest foreign talent, and the regional headquartering stipulation is an excellent practical illustration of that,” argues Saudi Chemical’s Dimitri Livadas.
Conversely, failure to play ball clearly comes with considerable disincentives. For instance, since the start of 2024, only life science companies with regional headquarters in Saudi Arabia, save for those that have been awarded ‘exception’ status, are deemed eligible to submit proposals for NUPCO tenders meaning that failure to put down an in-country footprint and embrace local content effectively equates to being locked out of a significant chunk of the marketplace.
PRAGMATISM & PARTNERSHIP
Be that as it may, localization efforts by international entities have generally tended to be assessed on a case-by-case basis with the Saudi state apparatus proving more than willing to grant exemptions in specific areas such as manufacturing so long as an investor can demonstrate delivering some societal benefit to the country and the furtherance of national strategic objectives.
“Localization initiatives can, at first glance, appear pretty challenging for medium-sized, midcap, European entities like us especially compared to some of our competitors that comprise larger publicly traded corporations,” admits Fadi Ghanayem, managing director for Saudi Arabia and CCAIM at the French, family-owned outfit, BioMérieux. “However, when we engaged with the Saudi authorities, they actually turned out to be very accommodating of our situation and understanding of our concerns around staffing quotas. They appreciated our desire to commit only to what we could feasibly deliver, without overpromising, and the Ministry of Investment (MISA) was ultimately willing to grant exemptions in certain areas and engage with us directly to identify the areas where we could best contribute,” he recounts.
Biogen’s Diederik Kok very much concurs. “While establishing traditional manufacturing sites in every country may not be feasible for smaller biotechs like ours, we were able to demonstrate our willingness to contribute positively in other ways such as conducting clinical trials within the region and on scientific collaboration initiatives and this was very positively received,” he recalls.
“Rest assured that the LCGPA is conscious of the fact that many companies engage in activities that add significant value beyond just monetary terms, such as healthcare advancements or knowledge transfer. And although these activities may not result in direct profit for us, they are nonetheless valuable in other ways,” reassures Al Grain. “Therefore, we evaluate these contributions and ensure that entities engaging in such beneficial activities are not treated the same as those only providing products. On the contrary we guarantee that their diverse activities are well recognized and rewarded,” he affirms.
For the most part, however, Big Pharma has been more than happy to oblige. Gilead and Johnson & Johnson and are two iconic brands that have been very pleased with the outcomes from deepening their investments in the Kingdom. “This year marked a significant shift of gears for us as we heeded the call to align with governmental priorities and took the plunge in establishing a fully-fledged commercial entity as opposed to relying on distributors. With hindsight the benefits have been plentiful: It allows us to remain closer to stakeholders, better understand the market dynamics, gain visibility and respond more effectively to evolving needs,” enthuses Eid Mansour, Gilead’s general manager
Trad Alkhelaiwi, senior director & general manager at Johnson & Johnson relates a similar experience. “Our recent transition over to a direct go-to-market model has already yielded a whole host of benefits: affording us greater control over end-to-end processes, from inventory management to customer service, accelerating our reaction speeds, and transforming the experiences of our clients,” he says.
Lilly meanwhile has been quick off the mark to relocate its regional headquarters to Saudi Arabia, which are already fully operational. “We are incredibly proud of our longstanding heritage in the country, which spans over 40 years. In 2019, we enjoyed the distinction of being one of the first big biopharma players to establish a legal entity in the country, and this time around, we had little hesitation in implanting regional functions because we anticipate the Kingdom’s future role as a bona fide innovation hub, and understand it to be a place where it is possible to have an oversized impact,” explains Felipe Borges dos Reis, the company’s general manager.
Others have been highly impressed by the collaborative ethos that such a joined-up approach to sectoral development has engendered. “Cooperation between industry and the state has flourished, facilitated by a mutual understanding of shared objectives. Indeed, the level of access we have to government officials here is unparalleled, enabling productive discussions and swift resolution of issues whenever they arise,” reflects Sanofi’s Jean-Paul Scheuer.
“Ultimately, it’s this spirit of partnership and trust that sets this region apart. There’s a genuine commitment to finding common ground for the benefit of patients, and unlike in Europe or the US, where there’s often a perception of inherent tension between industry interests and public health objectives, here there’s a recognition that both parties must benefit for sustainable collaboration,” he concludes.
NURTURING INNOVATION CAPABILITIES
Alongside Saudi Arabia’s plans to engineer a scaling of the manufacturing value chain by encouraging locally implanted entities to embark on in-country production of biologics, the Kingdom also looks determined to cultivate a flourishing homegrown biotech scene with the unveiling of a highly ambitious National Biotechnology Strategy.
“Traditionally, our region has not been especially involved in clinical research and the development of innovative medicines, with the Gulf countries predominantly focused more on importing originator drugs rather than actually developing them, but that situation is now starting to turn around thanks to sustained levels of investment on the part of state actors,” explains Walid Abbas Zaher, CEO and co-founder of Carexso, a site management organisation boasting exclusive and non-exclusive partnerships with elite hospitals across the UAE and Saudi Arabia. Indeed, the Kingdom’s fledgling biotechnology and genomics sector is now projected to record double-digit growth after the government declared its intent to invest in excess of 2.5 percent of its GDP in life science research and development by 2040.
All of this is music to the ears of R&D-driven innovators such as Moderna, a pioneer of mRNA vaccines. “The National Biotechnology Strategy explicitly commits to positioning Saudi Arabia as a biotech leader in the Middle East and North Africa region by 2030 and a major global biotech hub by 2040 so this should translate to substantial partnership opportunities for high innovation intensity entities like us with proven expertise in target areas like bio-manufacturing, genomics and next generation vaccines,” predicts Dan Staner, general manager for Germany and Switzerland and head of the Middle East Region.
Certainly, tangible progress seems to be being made in building up clinical research capabilities. Currently, Saudi Arabia produces 64 percent of the research output of 17 Arab countries in the fields of chemistry, earth and environmental sciences, life sciences, and physical sciences and has already started carving out niche areas of expertise in the medical science domain.
Khaled Al-Kattan, dean of the College of Medicine at Alfaisal University, for his part, detects the winds of change. “While, as a nation, we have long maintained the propensity to adopt the latest advancements from leading institutions worldwide, it’s finally time to start fostering our very own innovations, research, and outcomes,” he believes.
“We must absolutely break free from merely following the latest technology of others to creating our own and the establishment of the Research, Development, and Innovation Authority (RADIA) can be a significant catalyst in enabling this. RADIA is already doing a great deal to foster the creation of innovative healthcare labs, and we recently had several of our own labs supported by them,” argues Al-Kattan.
Moreover, “the country presents an increasingly attractive hub for research because it can already lay claim to a nicely fleshed out infrastructure comprising well-resourced universities engaged in clinical trials and real world evidence generation, and beginning to offer biotech-related degrees,” notes Gilead’s Eid Mansour, pointing to institutions such as the King Faisal Specialist Hospital and Research Centre (KFSH&RC), King Abdulaziz City for Science and Technology (KACST), King Abdullah University of Science and Technology (KAUST) and King Abdullah International Medical Research Center (KAIMRC).
Importantly, Saudi Arabia has concurrently been cleaning up its act when it comes to intellectual property protection. While emerging markets often fall short on safeguarding IP, the Kingdom has gone as far as to establish a dedicated national Authority for Intellectual Property mandated with preventing IP infringement. As such, the Saudi Arabia was duly removed in 2022 from the US Trade Representative’s Priority Watch List for IP protections, to which it had been infamously added only a few years prior. “Establishing robust IP frameworks in this manner can potentially have a significant impact in assuaging fears around in-country R&D and in stoking investor confidence,” opines PwC’s Walid Tohme.
TOWARDS CLINICAL RESEARCH EXCELLENCE
At the same time, Saudi Arabia looks set to consolidate its reputation as an appealing clinical trials destination especially with regard to niche areas such as oncology, genetic disorders, and metabolic diseases like obesity and diabetes.
“The country’s prominence and participation in clinical trials has grown considerably over the past decade, surpassing other nations like Egypt and Algeria. The Kingdom’s overall size and commercial power render it a prime location for this kind of activity and globally renowned drug developers such as Novartis, MSD, and Pfizer, have clearly recognized this and shifted their focus accordingly,” notes Mohamed Mostafa, CEO of the Middle East and Africa-focused full-service contract research organization, PDC-CRO.
Furthermore, the establishment of the Saudi National Institute for Health NIH has further solidified the country’s commitment to enabling high-level clinical trials and biotech Incubation. Crucially, unlike the NIH in the US, the Saudi NIH not only provides funding but also facilitates communication among stakeholders, including sponsors, CROs, hospitals, and regulators. This comprehensive approach has helped to streamline processes such as site activation and documentation, and thus served to reduce some of the steep barriers to entry traditionally encountered when conducting clinical trials in the country.
“The Saudi NIH is guided by four primary goals: improving the health of our population, funding high impact research, enhancing the alignment to build more integrated model, and finally, translating these discoveries into meaningful impacts, whether financial, health-related, or societal,” explains Professor Fars Alanazi, the institute’s CEO. “I firmly believe that we are currently standing on a mountain of unprecedented opportunity, not merely constructing it. So, I see our role as extracting the gold from this mountain of potential,” he adds.
Moreover, in the past few years, there has been an apparent maturing of the clinical trial landscape in Saudi Arabia, with the establishment of dedicated clinical trial units within hospitals and the introduction of site management organizations to streamline trial operations. “The emergence of SMOs has been particularly instrumental in enhancing logistical support for clinical trials. These organizations handle various aspects of trial management, including patient recruitment, logistics coordination, and budget management, allowing investigators to focus solely on medical aspects of patient care. This delegation of logistical responsibilities has significantly reduced the time and effort required from investigators, making clinical trial participation more feasible and appealing,” reasons Carexso’s Walid Abbas Zaher.
“The belated establishment of a network of clinical trial units and SMOs has undoubtedly served to bridge many of the traditional communication gaps between pharmaceutical companies and investigators. With many biotech firms lacking a physical presence in Saudi Arabia, SMOs serve as critical intermediaries, facilitating collaboration and trial implementation between sponsors and investigators,” agrees Mohamed Mostafa. “This enhanced connectivity has done much to enhance the accessibility of clinical trials to investigators, further incentivizing participation,” he believes.
Nonetheless many untapped opportunities still remain.” Our focus now is to engage in phase one clinical trials in Saudi Arabia, bringing full clinical development from the outset. Our hope is to receive support from regulatory authorities in Kingdom by issuing guidance on adapting regulatory processes based on local data generation. This would streamline the process for biotechs to conduct trials in Saudi Arabia, providing clear incentives for them to do so,” argues Mostafa.
“As of now, we still perceive various differences across the Gulf region: In the UAE, there is a notable concentration of phase 1 and phase 2 trials whereas, in contrast, Saudi Arabia predominantly engages in more advanced trials, typically phase 2B and phase 3 studies. There is therefore ample opportunity still to capture greater value, by getting in on the cycle earlier,” agrees Abbas Zaher.
PRIVATE SECTOR EXTENSION
Saudi Arabia’s healthcare reform agenda includes the restructuring of how care is to be delivered, organized, and managed with the specific roles and responsibilities of the providers, payers and regulator much more delineated (described at the beginning of this report). It also includes a commitment to invest more than USD 65 billion in modernizing and reorganizing healthcare infrastructure, training local healthcare professionals, and integrating 4th industrial revolution technologies and e-health services. Interestingly, it also presupposes a vastly expanded role for the private sector.
Indeed, not only has the government created a National Centre for Privatization (NCP) to manage its privatization ambitions and introduced legislation to permit foreign ownership of the country’s healthcare infrastructures, but in 2023, Minister of Health Fahad bin Abdulrahman Al-Jalajel, announced that Saudi Arabia would be offering out more than 100 large-scale healthcare projects over the next five years through Public Private Partnerships (PPPs) including the development from scratch and ultimate operation of 2 new medical cities.
Despite the private sector currently contributing only around 12 percent to healthcare delivery, the government’s vision 2030 target is to significantly increase this to above 40 percent. This necessitates redefining the role of the private sector in public health programs, traditionally deemed financially unsustainable due to their preventive nature.
One entity working to facilitate this is Fakeeh Care Group. “We have been exploring innovative models to demonstrate the long-term cost-effectiveness of preventive initiatives, such as screenings and preventive programs, working in partnership with insurance companies and payers. This entails convincing them of the substantial cost savings and health benefits that can be achieved in the long run and establishing a basis with which the private sector can contribute and realize a profit,” says Ayman Abdo, the group’s SVP.
“Furthermore, we are actively supporting healthcare clusters by identifying and addressing gaps in services that may be financially unfeasible for them to provide independently. By acting as a shadow cluster, the private sector can step in to deliver services that are vital for community health but may not be economically viable for public healthcare institutions,” he adds.
Medtech players like Johnson & Johnson Medical are already perceiving a significant upswing in new market opportunities. “We’ve witnessed significant advancements in the private sector’s capacity, including the construction of more hospitals and increased bed capacity, largely due to expanding insurance coverage,” reports Trad Alkhelaiwi.
Meanwhile, medical device firms specialising in diagnostics are also encountering a lot of new business as the country seeks to embrace the principles of rationalized care pathways and preventative healthcare. “We are finding that Saudi stakeholders are not only readily appreciate the importance of diagnostics as a critical component in patient management in ensuring accurate treatment and in realizing broader healthcare objectives, but often are actively seeking out innovations to integrate into patient care,” reflects BioMérieux’s Fadi Ghanayem.
“Right now, in the Kingdom, there is a tremendously keen interest in being at the forefront of adopting pioneering technologies and conducting research to validate their efficacy, which makes it a very strategically important market for us to be involved in at this time,” he muses.
According to Abdo, the envisioned convergence of private and public healthcare systems in Saudi Arabia represents a pivotal step towards enhancing healthcare accessibility, improving service quality, and fostering sustainable healthcare delivery models. “By leveraging the strengths of both sectors and promoting mutually beneficial collaboration, a forward-looking, modern style of healthcare can be born,” he thinks.
However, he also acknowledges there is still much work to do to change public perceptions of the private sector. “All too often, our sector is typecast as boutique hospitals catering to the elite and offering expensive services, but Saudi Arabia is well on the way to pioneering a new style of public-private sector ecosystem with truly transformative public healthcare outcomes,” he insists.
Makarem Sobhi Batterjee of Saudi German Health – part of the sprawling Batterjee Group and now the largest private hospital network in the Middle East – is similarly keen to emphasise that his organisation is looking beyond profit alone. “We operate not just in cure but also in prevention, promotion through education, and early diagnosis,” says Batterjee. “This holistic approach stems from our ethos of “caring like family,” inspired by a Quranic verse emphasizing the sanctity of saving lives.
“This paradigm shift in our mindset since 2005 reflects a deeper commitment beyond profit. For us, it is about making a meaningful impact and addressing societal healthcare needs comprehensively. Our motto changed from “we care” to “caring like family” underscores our dedication to compassionate and sustainable healthcare practices. Our evolution into healthcare industrialists encompasses diverse initiatives like medical education and innovative healthcare solutions. These endeavours aim not just to treat but to prevent, educate, and enhance overall wellness, echoing our commitment to holistic healthcare for our communities and beyond.”
The future expression of the novel approach to synergistic public-private collaboration an already be found in plans for the futuristic development of NEOM, the first phase of which is due to be inaugurated in 2030. “My team has been busy reconceptualising public sector-private sector interactions in a way that aspires to integrate the best practices from both commercial and public healthcare systems while addressing their inherent inefficiencies and drawbacks,” declares Dr Mahmoud Alyamani, NEOM’s health & well-being sector head.
“In commercial healthcare systems, significant money is lost in the tussle between providers and payers over healthcare dollars. Providers charge more, and payers decline charges, resulting in a waste of resources. In public systems, waste often comes from redundancies. Therefore, we are seeking to avoid these issues by designing a commercial system where entities are accountable to their profit and loss sheets, but eliminate the fight over payments,” he reasons.
To achieve this NEOM’s healthcare structures will share a digital core generating real-time data-driven insights. “Our innovative approach relies upon, among other elements, creating a seamless process where payers and providers use the same digital platform. This ensures that every intervention is pre-approved and part of an agreed plan, eliminating delays and disputes,” he claims.
BEACON OF PROGRESS
How, then, should the international life science community best go about making the most of a Saudi marketplace brimming with countless opportunities? Many market insiders emphasize that contemporary Saudia Arabia offers a unique and rare chance to be part of something truly transformational, and that this is an opportunity that should not be missed or overlooked.
“I would like to stress that Saudi Arabia’s Vision 2030 is not just a vision; it’s a tangible reality unfolding before our very own eyes,” opines Saudi Chemical’s Dimitri Livadas. “Rather than dwelling on the challenges, I urge everyone to engage, be pro-active, and become part of the solution. This is a watershed moment in Saudi’s history, and those who join now will play a crucial role in shaping its future,” he predicts.
Accenture’s Samar Nassar very much mirrors those sentiments. “I view this moment in Saudi Arabia and the broader region as an absolute renaissance — a coming together of great minds, immense ambition, and the resources to actually make it happen. We seek the best talent, expertise, and knowledge to contribute to our collective progress, so I call upon you to consider being part of this journey, bringing your skills and passion to our thriving community,” he appeals.
“If you believe in the potential of this region, then there is little time to lose, for now is the window of opportunity become an integral part of the Gulf’s growth story” agrees Khaled Sary of Takeda, though he warns that newcomers and the uninitiated might be surprised at the pace of change coursing through the country. “To perform well here, you really need to be very agile so as to be able to keep pace. This can, at times, pose challenges for larger pharmaceutical companies more accustomed to slower decision-making processes,” he remarks.
“While many other regions or countries may grapple with challenges, Saudi Arabia stands out as a beacon of progress and advancement, where new ideas can be taken to the limit and disruptive or paradigm shifting solutions are enthusiastically embraced,” concludes AbdulGhani El-Ajou, CEO of Aljeel Healthcare. “The next decade to 15 years is poised to become a golden age for the Kingdom, so this is a fine place to realize your dreams.”
