Localising the production of medicines has become a core priority for the Saudi government over the past decade as it attempts to increase national health security, create highly skilled jobs, and grow the non-oil economy. Multinational innovators now have a wide range of incentives (as well as enforcement tactics) to manufacture in-country, while generics players are also capitalising on the abundant opportunities, although there is still a long road to travel towards a truly di- verse and self-sustaining in-country manufacturing base.
Incentives & Enforcement
While piecemeal manufacturing localisation efforts in Saudi existed before the launch of Vision 2030 in 2016, there has been a steady ramping up since then. Indeed, domestic pharmaceutical manufacturing’s share of the total Saudi pharma market value soared from 20 percent in 2016 to 40 percent in 2020, ac- cording to IQVIA, with some stakeholders expecting local production to account for over half the total market by 2030.
To achieve this, the Saudi state has utilised a wide-ranging toolbox of incentives. For example, the Saudi Industrial Development Fund (SIDF) offers up to 75 percent project financing, long-term loans, and tax holidays for qualified manufacturers; centralised procurement agency NUPCO gives preferential ten- der treatment to companies manufacturing locally or with local partners; and the Saudi Food and Drug Authority (SFDA) accelerates the approval of local- ly manufactured products versus imported ones.
At the same time, a rejuvenated Public Investment Fund (PIF) has been pumping capital into the coun- try’s manufacturing ecosystem. This led to the cre- ation of a government-backed CDMO, Lifera, in 2023 to fill capability gaps and attract international partners in complex fields like biologics, insulin, vaccines, and plasma therapies.
It is not all ‘carrots’ though, with manufacturing localisation efforts also bolstered by enforcement tactics. Through the ‘Regional Headquarters’ (RHQ) policy of 2024, foreign companies have been pres- sured to establish a regional HQ in the country in order to contract with the government, while authorities also often require tech transfer agree- ments in exchange for market access.
Increasingly Unignorable for MNCs
Given the costs and complexity involved, global pharma cannot manufacture all of its portfolio in-country in every market it operates in. Additionally, in developing markets, including Saudi Arabia, doubts often remain over issues such as intellec- tual property protection, skilled labour shortages, and a lack of capacity among local partners to handle complex tech transfers.
Nevertheless, with Saudi Arabia’s at- tempts to address many of these chal- lenges on a structural level, its increas- ing market size, and its positioning as an early-launch market for innovative products, the global industry is displaying an increased willingness to collaborate on localised manufacturing projects.
This has both a short-term boost to their bottom line and favourability in front of the Saudi state and helps build up skills, capacity, and the long-term viability of manufacturing in the country. Some of the multinationals to strike up manufacturing partnerships in Saudi in recent years include (in alphabetical order) AbbVie, Amgen, Boehringer Ingelheim, GSK, Lilly, MSD, Pfizer, and Sanofi.
Strikingly, in October 2024, Danish giant Novo Nordisk signed a seven-year deal with Lifera to produce the first (formulate, fill and finish) localised insu- lin manufacture in Saudi Arabia. Novo Nordisk briefly became the largest company in Europe by market capitalisation last year on the back of surging demand for its diabetes and obesity medicines.
AstraZeneca, for its part, has partnered with SPIMACO for the production of four of its products. “We began with secondary packaging but quickly advanced, ahead of schedule, to full manufacturing for about 50 percent of our small molecule portfolio, covering nine stock-keep- ing units, entirely within Saudi Arabia,” says Sameh ElFangary, country president for the GCC & Pakistan.
MEA Champions & the Access & Affordability Push
As the Saudi market matures and begins to pay more attention to access and affordability, actors beyond the household MNC names are also getting involved in local manufacturing. This includes a kaleidoscope of leading players from other coun- tries in the Middle East and Africa, able to produce lower-cost generic products and meet soaring market demand in Saudi.
Cooper Pharma, for example, moved to acquire a former Sanofi manufacturing site in Saudi in 2023 and now produces more than 15 million units annually across four sites in the country, covering both its proprietary generic portfolio as well as other companies’ specialty medicines. Despite the relatively high costs com- pared to its native Morocco, CEO Ayman Cheikh Lahlou is convinced of the bene- fits of Saudi production for his firm and for Saudi nation as a whole.
“We are deepening collaborations with multinational pharmaceutical companies, providing them with a strong local manufacturing and distribution partner as they refine their strategies in the region,” ex- plains Lahlou. “Many global players lack dedicated production sites in Saudi Arabia, and we play a crucial role in filling this gap through contract manufacturing, licensing agreements, and co-development initiatives.”
For its part, fellow North African firm EVA Pharma – headquartered in Egypt – is investing around USD 150 million to construct a manufacturing and research complex in Saudi, covering solid dosage forms, high-potency drugs, sterile products, vaccines, and personal care/ cosmetics. Amgad Talaat, EVA’s Saudi regional cluster head and global strategic alliances lead, says that this investment “underscores EVA Pharma’s alignment with Saudi Arabia’s localisation goals, aiming to enhance local production ca- pacity, address healthcare supply chain resilience, and expand access to affordable, high-quality medicines.”
Mid-sized companies from elsewhere in Africa are also taking note, although with some caveats. “Given that Aspen specialises in complex-to-manufacture pharmaceuticals, our approach to localisation is unique,” explains Daniel Vella Friggieri, regional CEO for Europe and the Middle East at South African outfit Aspen Pharmacare. “Technology transfer in Saudi Arabia is challenging, and due to the diverse nature of our product lines, a single manufacturing partner would not be sufficient. Instead, we are developing a network of CMOs to support the localization of our portfolio.”
New Breed of CMOs
A further consequence of the Kingdom’s ongoing push for greater localization has been the spawning of new styles in local contract manufacturing. DEEF Pharma, a homegrown entity founded in Al-Badayea within Saudi Arabia’s Al-Qassim region, serves as a case in point. “Recognizing a significant market gap — whereby many regional and international pharmaceutical companies seek to enter Saudi Arabia but remain hesitant to invest directly in infra- structure — we set out to position DEEF as a uniquely specialized platform for contract manufacturing and licensing. Unlike local manufacturers that often engage in these partnerships on an ad hoc basis, our model is deliberately structured, focused, and built to scale,” explains the company’s CEO, Ashraf Abu Arrah.
“While established players like SPIMACO, Tabuk Pharmaceuticals, and Jamjoom Pharma often dom- inate regional recognition, our goal has been in- stead to differentiate ourselves through a focused, purpose-built B2B model, and to formalize this di- rection, we launched in October 2024, DVenture, a wholly owned subsidiary, dedicated exclusively to B2B collaborations,” he elaborates.
DVenture thus enables partners to localize manufacturing without capital expenditure, offering not only a holistic production platform – encompassing four production lines and nine dosage forms – but also comprehensive regulatory, pricing, and localization support. “Our technical infrastructure, combined with deep local expertise, positions us as an integrated and strategic partner rather than a transactional supplier,” Arrah emphasizes.
Export Hub Status?
Some MNCs are, meanwhile, looking beyond Saudi’s borders, with an increasing number of projects aimed towards making the country an ex- port hub for the wider region. For AstraZeneca’s ElFangary, this will be a necessary part of any ex- pansion into more complex fields. “Saudi Arabia is interested in advancing into biologics, vaccines, and oncology products,” he says. “These areas present challenges due to scale and efficiency, particularly because the domestic volume alone may not justify the investment. However, if Saudi Arabia can posi- tion itself as an export hub for the broader region, these plans could become viable.”
“Beyond meeting domestic demand, Saudi Arabia’s dominant position in the GCC pharma- ceutical sector makes it a natural hub for exports,” adds Cooper Pharma’s Cheikh Lahlou. “The country accounts for 60 percent of the GCC market, and when we manufacture under license, multinational companies often extend regional export rights to us, further strengthening our reach. Additionally, Saudi Arabia’s growing trade relationships with Southeast Asia and other global markets are creating further opportunities for expansion.”
The Next Step: True Innovation
However, if Saudi is to continue to expand its local production – both in terms of scale and complexity – then it will need to build out an innovation ecosys- tem around it. As discussed elsewhere in this report, this project is already well underway under the aus- pices of the National Biotech Strategy and goes hand in hand with manufacturing goals.
“Building a strong local infrastructure is an essen- tial first step,” says Khaled Elrefae of Recordati Rare Diseases. “Establishing a sustainable operational framework will enable companies like ours to fur- ther advance into localised research collaborations and manufacturing partnerships.”
AstraZeneca’s ElFangary agrees, noting that “while manufacturing remains critical to meeting self-sufficiency goals, we believe our true value lies in areas like technology transfer for R&D, clinical trials, and future-focused innovations such as drug discovery.”
“Biotech localisation is only one part of the equa- tion,” adds Pfizer Country President Mohamed Fawzy. “Many people tend to focus on the brick- and-mortar aspect of biotech: manufacturing facilities and tech transfer. But there is another critical component that must go hand in hand with localisa- tion: knowledge-based innovation.”
Fawzy continues, “If the production of new biotech assets is going to be localised, it is essential to create an environment where they can also be tested, refined, and expanded through clinical research.”
