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Kuwait Financial Centre “Markaz” recently published the executive summary of its report on Saudi Healthcare. In this report, Markaz examines the status of Saudi Arabia’s Healthcare sector and highlights the growth drivers, opportunities and key challenges for the sector. The report also presents an overview of the key players in the industry and a comparison of the Healthcare sector in other GCC countries.
Healthcare sector in Saudi Arabia is driven by government spending. 60% of the hospitals in the country are run by the Ministry of Health and treatment to citizens are offered at free of cost. Close to 70% of the population enjoy the privilege of free healthcare while the expatriates are covered by mandatory health insurance.
Health insurance was made mandatory in 2005 for expatriates working in the Kingdom. This step helped in creating huge awareness about insurance in the region. Saudi Arabia’s insurance move had a spillover effect on other countries in the GCC region. UAE introduced mandatory health insurance for its expatriate workforce taking a cue out from Saudi Arabia’s strategy. Saudi has also planned to implement a similar scheme to its citizens in the near future. Moving away from a government subsidized healthcare model to a private insurance model would help in reducing the subsidy burden. Saudi has close to 30% of the population who are diabetic making them vulnerable to this life crippling disease. To combat this menace Saudi Arabia’s government has launched awareness campaigns that educate their citizens on maintaining an active lifestyle and consuming a healthy diet.
Saudi Arabia entirely depends on imports for pharmaceuticals, a major portion of the drug sold in the kingdom are patented ones making them more expensive compared to generic alternatives. Owing to its huge population Saudi Arabia remains the largest market for pharmaceuticals in the GCC region with a 60% market share. Saudi Arabia lacks the R&D facilities required and the domestic market is focused on making basic formulations and off patent generic versions of drugs. The lack of R&D is compounded by an unpredictable Intellectual Property Rights (IPR) regulatory system and, recently a vague pricing structure, which is affecting the introduction of many new research-based products into the market. Domestic production in 2012 accounted for 9% of the total pharmaceutical market at US $ 430 Mn.
According to the latest data available from the MOH, there are over 25,000 doctors working in the Kingdom, however only 5,800 odd doctors are Saudi nationals (roughly 22%), which highlights the fact that Saudi Arabia predominantly depends on expatriate medical professionals. Cultural and religion specific restrictions also result in heavy turnover of expatriate healthcare professionals making the healthcare industry susceptible to exit of personnel. Non- availability of local talent coupled with increasing nationalization requirements has increased the pressure on the existing healthcare workforce. Saudi Arabia is planning on increasing its current healthcare workforce from 250,000 to 420,000 over the period of five years to keep up with the demand.
Saudi Arabia has invested in building medical colleges and research centers to address the issue of shortage of skilled local talent. Some of top projects include - King Abdullah Center for Tumors and Liver Disease, - King Faisal Medical City in Asir: Phase 1, King Faisal University: University Hospital, Najran University Hospital. Building medical universities that also house world class hospitals serves the dual purpose of providing knowledge for local talent as well as exposing them to worldly knowledge.Saudi Arabia has allocated 6.5% of its state budget towards MoH in 2013, it plans to build 19 new hospitals and upgrade 102 facilities during 2013. In order to keep up with the population growth Saudi aims to increase the number of hospital beds to reach 97, 535 by 2014, from 58,126 in 2009. Saudi Arabia has also promoted itself as a destination for clinical trials, with its genetic disposition to develop Type-II diabetes; such trials would help in improving the medicines for the disease.