Saudi pharma market to grow to SAR 36 bln by 2022

Saudi Arabia's pharmaceutical market will be worth SAR 36 billion in the next five years, growing at a compound annual growth rate (CAGR) of 4.9 percent, as stronger oil prices dynamics from 2018 onwards drive growth in healthcare, BMI Research said in a recent report.

The consultancy expects total healthcare spending to grow at a CAGR of 4.6 percent by 2022.

"Given that Saudi Arabia's government spending has tended to correlate with global oil prices over the last decade, we expect that healthcare market growth and thereby pharmaceutical market growth will be supported by stronger oil market dynamics from 2018 onwards," it said.

The Kingdom's state budget for 2018 includes a SAR 147 billion allocation for health and social affairs, which equates to about 15 percent of the overall spending allocation, budgeted at SAR 978 billion. The budget allocation for healthcare in 2016 and 2017 stood at SAR 101 billion and SAR 133 billion, respectively.

According to the Ministry of Finance, 36 new hospitals with a total capacity of 8,950 beds are under construction and two medical cities with a total capacity of 2,500 beds are due for completion after 2018.

BMI Research added that healthcare reforms will get government precedence given its importance in maintaining social stability and potential to be an important part in the country's economic diversification strategy.

However, the consultancy warned volatility in global oil prices remained an underlying risk for healthcare spending.

"The proposed plans and reforms bode well for the sector's outlook; however, the Kingdom's vulnerability to external shocks represents significant downside risks," it added.