RATIONAL

The Pharmaceuticals and Biopharma industries are expected to benefit from the ambitious healthcare transformation program and the government’s commitment to support local capabilities through local content policies. The Kingdom is the largest market in the region in 2020. The biopharma industry is still growing globally, and the majority of players are small sized highly specialized companies. The Kingdom has an opportunity to develop the Biopharma industry at early stages to cement its role and leadership in the region and leverage its current local capabilities in the conventional pharmaceuticals through vertical integration toward higher value-added segments. Finally, as ever-evolving global scenarios threaten supply chain integrity, essential medicine, and products of national importance (e.g., vaccines, blood) are critical to ensure sustainable supply for the Kingdom.

Value Proposition

• The Kingdom’s Pharmaceuticals market reached SAR 27.9 bn in 2020.

• KSA is expected to be the largest consumer of biologic drugs in the region, currently 75% of Pharmaceuticals are imported.

• The local market is expected to reach SAR 44.1 bn by 2030.

• Benefit from the ambitious healthcare transformation program and the government’s commitment to support local capabilities through local content policies.

• Biopharma are increasingly being adopted globally, while the MEA region is expected to remain reliant on Conventional Pharma.

• Biopharma is forecasted to increase its global market share from ~32% in 2020, to ~36% by 2028.

• Conventional Pharma growth rates are expected to decline in response to global pharmaceutical companies shift of focus towards Biopharma (e.g. 2.2% in Conv. Pharma vs. 4.4% growth in Biopharma).

• Currently, biosimilars constitute a limited share of the Biologics market with 7%, however, witnessing high growth rate due to continued introduction of off-patent large molecules.

• Biosimilars will continue to grow at a higher rate than patented Biologics, reaching ~16% of total Biopharma market in 2029 (USD 78.8 Bn) .

• Chronic disease: Increase of non-communicable disease due to aging population presents opportunity for biotechnology to improve on early diagnosis and treatment.

• Personalized medicine: Increase in gene and immuno-therapy to enhance a patient’s inherent ability to fight disease with improved outcomes and fewer side-effects.

• Value based payments: Healthcare reforms leading to decreasing reimbursements resulting in alternative outcome-based payment model being implemented with payers.

• Competitor partnerships: Increased prevalence of innovation through partnering, enabling organizations to focus on key strengths and minimize costs.

• Between 1998 and 2008, high Pharma productivity drove strong growth in global R&D spend.

• Between 2008 and 2018, portfolio rationalization by large Pharma companies limited R&D growth following patent cliff; however, Biotech remained strong.

• Following 2018, Pharma companies focused more on investments to improve future R&D efficiencies such as using real world big data combined with machine learning techniques to be purpose oriented.

• Regional market is highly dependent on Conv. Pharma, with lower adoption of Biopharma due to the higher cost sensitivity for related products.

• Generics is considered to be the next focus of interest for MEA region with higher adoption rates expected till 2028 (~5.6% CAGR).

Key insights:

• KSA is the biggest importer in GCC, with almost half of the imports.

• UAE imports constitute ~1/3 of regional imports although UAE’s population is less than one-fifth of total regional population.

Key insights:

• Despite being the biggest importer, KSA exports less than 2% of total imports of GCC; which highlights significant room for improvement.

• Imports of the region is mainly covered by European countries.

• Margins of API producers are being reduced by pressure from formulators.

• API market is very competitive, with over 2000 producers globally.

• In China and India, merchant APIs is forecasted to be growing between 12% and 13% annually (2016-2025), outpacing Europe and US at 6-7%, supporting the trend of outsourcing to Asia Pacific.

• On the global level, 63% of all APIs are synthetic, and 28% is biotech.

The overall CMO market will grow with CAGR of 8 percent until 2023 and reach USD 145 bn; FDF market will follow a similar growth rate.

KSA is expected to be the largest consumer of biologic drugs regionally, while local production is focused on generics F&F and secondary packaging.

Driven by government procurement, KSA’s local production has the potential to expand capabilities and enhance current localization levels.

• Majority of local production have limited capabilities with focus on packaging and conventional solid dosage forms mostly for generic drugs, with some CMO contracts for branded drugs.

• National shift of focus towards biotechnology is emphasized by national initiatives to build an enabling infrastructure.

Key insights:

• Generic drugs and patented drugs have each 50% share in KSA conventional market, and expected to retain even shares to reach an overall market size of USD 7.7 Bn by 2029.

• Global trend towards the development of biologics drugs will affect the growth rate of conventional pharma, which will decrease over the next decade.

Key insights:

• Biosimilars constitute a small share of Biologics market with ~5%; however, are expected to grow at a higher rate than patented biologics to reach ~7% of total market by 2025.

• Biosimilars are expected to grow more than patented biologics due to increasing acceptance within Pharmaceutical industry and expiry of patents.

• The market is expected to grow at a more stable and conservative rate after 2025; with biosimilars and patented biologics having similar growth rates.