CHAPTER 1 EXECUTIVE SUMMARY 4
Scope of the analysis 4
Datamonitor insight into P&R in Saudi Arabia 5
Key opinion leaders interviewed 8
Related reports 8

CHAPTER 2 OVERVIEW OF THE HEALTHCARE CHALLENGES IN SAUDI ARABIA 12
Key findings 12
Future challenges facing healthcare in Saudi Arabia 13
The growing demographics of Saudi Arabia 15
Chronic illnesses are a major concern for authorities in Saudi Arabia 16

CHAPTER 3 HEALTHCARE FINANCING IN SAUDI ARABIA 17
Key findings 17
Access to healthcare in Saudi Arabia is currently patchy 18
Private healthcare expenditure is set to grow 19
Healthcare in Saudi Arabia is primarily delivered through public channels 20
Controlling costs in the public sector 24
Change in distribution among private funding 25
Demand for private sector care is growing rapidly 26
Healthcare reforms in Saudi Arabia aim to allow access to healthcare to all individuals 28
Healthcare reforms transfer the burden of financing private sector employee healthcare from the Ministry of Health to employers 29
Structural reforms seek to privatize hospitals 32

CHAPTER 4 HEALTH INSURANCE IN SAUDI ARABIA 34
Key findings 34
Private versus public healthcare in Saudi Arabia 35
The basic private health insurance coverage stipulated for Saudi Arabia is the best in the region 36
The Saudi insurance market will be a strategic growth area as nationals are included 38
The cooperative health insurance sector is a strategic growth area in Saudi Arabia 42
The Saudi healthcare insurance sector is well-regulated 42
Key factors affecting growth in the burgeoning Saudi healthcare insurance market 43
Underwriting is hampered by a lack of historical data 43
Pricing of policies will be critical in the uptake of insurance 44
Quality of care delivered to members will impact the renewal of premiums 44
Cost containment strategies will help to improve profit margins in the competitive cooperative health insurance market 45
Inorganic growth is a viable growth strategy for insurers 46
Insurers should foster relationships with pharmaceutical manufacturers to improve efficiencies in pharmaceutical expenditure 46

CHAPTER 5 THE SAUDI ARABIAN PHARMACEUTICAL MARKET 48
Key findings 48
Pharmaceutical market dynamics in Saudi Arabia 49
Pharmaceutical market dynamics in Saudi Arabia 49
European drugs dominate the imports in Saudi Arabia 50
Saudi generics manufacturers face a number of barriers to growth 52
Generic drugs are widely used in the public sector, but not in the private sector 52
Pricing of generics and strong competition limits revenues 54
Misleading information on generic medicine inserts impacts uptake 54
Pharmacists play a significant and often unregulated role in dispensing of brands over generics 55
Patients are pressurizing physicians to prescribe generics 56
Physicians in Saudi Arabia tend to overprescribe, use trade names and are highly influenced by medical representatives 57
Medical reps have a powerful influence on Saudi physicians 58
Drug sales growth experienced across all therapy areas in Saudi Arabia 60
An increasingly westernized lifestyle has increased the prevalence of chronic diseases and the dependence on drugs 60
Lifestyle products dominate the Saudi retail market 61
Saudi Arabia is dominated by Big Pharma and regional generics manufacturers 62
Domestic generics player are a key threat to international pharma companies operating in Saudi Arabia 63
Inorganic growth has been a successful growth strategy to date 65
Saudi Arabia incentivizes local manufacturing 67
Opportunities for clinical trials to generate region-specific pharmacoeconomic data in the kingdom 68
Companies should establish direct relationships with payers to ensure formulary inclusion and maximum reimbursement 69
Saudi Arabia offers generous endowments for research partnerships 69

CHAPTER 6 HEALTHCARE REGULATORY AND GOVERNMENTAL ORGANIZATIONS 71
Key findings 71
The healthcare sector in Saudi Arabia consists of a complex network of regulators 72
Gulf Co-operative Council Health Ministers' Council has been a platform for developing healthcare in the region 74
Gulf Central Committee for Drug Registration 74
Bulk purchasing of drugs has been a powerful cost-saving mechanism for Gulf Cooperation Council governments 75
The Ministry of Health is currently undergoing a transition towards a more regulatory role 77
Ministry of Health vaccination programs present opportunities for vaccine manufacturers 78
Combating diabetes will be one of the Ministry of Health's key regulatory roles 78
Improving primary healthcare through family physicians 79
The Saudi Food and Drug Authority's role is to improve regulatory and approval processes 80
Drug approval is relatively straightforward in Saudi Arabia 81
Concerns over intellectual property protection has placed Saudi Arabia on the PhRMA Priority Watch List for 2009 84
Retroactive application of patent law has undermined intellectual property protection necessary for innovative products 85
Exclusive marketing rights would give innovative products some protection, however Saudi Arabia has yet to formalize such a procedure 85
Data exclusivity laws are not honored in Saudi Arabia despite the need to do so upon accession to the World Trade Organization 85
The Saudi national drug code is the first step in the development of a unified healthcare management system in the kingdom 86
The formation of the Council of Cooperative Health Insurance has strengthened development of the insurance industry 88
Future roles of the Council of Cooperative Health Insurance 89

CHAPTER 7 PRICING AND REIMBURSEMENT IN SAUDI ARABIA 90
Key findings 90
Evolving pricing and reimbursement strategies in Saudi Arabia are required to control healthcare expenditure 91
The Ministry of Health controls drug prices in Saudi Arabia 92
Price adjustments were enacted by the Ministry of Health in 2008 92
New SFDA recommendations for drug pricing guidelines proposed 95
Newly proposed changes to the common pricing criteria 96
Pricing guidelines for innovative drugs before and after patent expiry 98
Pricing guidelines for generic drugs 99
Proposed changes to the pricing of locally manufactured second branded drugs encourage contract manufacturing agreements 101
Pricing guidelines for drugs with more than one active ingredient 103
Saudi Food and Drug Authority recommends maximum price discounts on drugs with larger packaging size or dose strength 104
Additional new proposals submitted by the SFDA 104
The use of pharmacoeconomic evaluations will change the face of Saudi drug reimbursement 106
Pharmacoeconomic evaluations are used globally 107
Pharmacoeconomics is sporadically used in Saudi Arabia presently 107
Saudi Arabia plans to integrate healthcare management centered around pharmacoeconomics 108

CHAPTER 8 BIBLIOGRAPHY 110
Journals and online articles 110
APPENDIX 116

List of Tables
Table 1: Saudi Arabia: health economics indicators, 2009 20
Table 2: Saudi hospital statistics, 2005-06 23
Table 3: Forecast of Saudi private sector hospital market revenues, 2006-2015 33
Table 4: Comparison of Saudi Arabia's basic insurance plan (CCHI) with Abu Dhabi's basic insurance plan (HAAD) 37
Table 5: Top 10 pharmaceutical products in the retail market in Saudi Arabia, 2008 61
Table 6: Detailed procedures in applications for marketing authorization from the Saudi Food and Drug Authority 82
Table 7: Performance targets for Marketing Authorization Applications by the Saudi Food and Drug Authority 84
Table 8: Proposed price reductions for package sizes and doses 104
Table 9: List of 30 reference countries used by Saudi Arabia to price drugs 116
Table 10: Exchange rates, 2009 116

List of Figures
Figure 1: Projected population growth in Saudi Arabia, 2000-2015 15
Figure 2: Deaths in Saudi Arabia by cause, all age groups, 2002 16
Figure 3: Distribution of health service provision by region in Saudi Arabia, 2009 18
Figure 4: Division of public and private expenditure on healthcare in Saudi Arabia, 2006 19
Figure 5: The Saudi health system in comparison with selected pharmaceutical markets, 2009 21
Figure 6: Healthcare service provision, by hospital beds, Saudi Arabia, 2005 22
Figure 7: Shortcomings of the Ministry of Health in Saudi Arabia, 2009 25
Figure 8: Private pre-paid plans and out-of-pocket expenditure as a percentage of private expenditure on healthcare in Saudi Arabia, 2002-06 26
Figure 9: Implementation of mandatory health insurance in Saudi Arabia, 2009 31
Figure 10: Comparison of the effect of the cooperative health insurance reforms on Saudi residents seeking treatment at public and private providers 35
Figure 11: Number of insured individuals since the implementation of cooperative health insurance in Saudi Arabia, Q3 2006-Q2 2008 38
Figure 12: Saudi health insurance market growth, 2005-07 39
Figure 13: Proposed direct relationship between insurers and pharmaceuticals in Saudi Arabia, 2009 47
Figure 14: Growth of the Saudi Arabian pharmaceutical market, 2000-06 49
Figure 15: Top 8 pharmaceutical exporting countries to Saudi Arabia, 2006 50
Figure 16: Drug sales in the public and private pharmaceutical market in Saudi Arabia, 2007 53
Figure 17: Proportion of physicians who feel pressured by patients to prescribe generic or branded drugs, 2008 56
Figure 18: Physicians' source of information about generic alternatives versus branded drugs 58
Figure 19: Proportion of physicians who support generic drug substitution, 2008 59
Figure 20: Saudi retail pharmacy sales by ATC class, 2007-08 60
Figure 21: Retail sales and growth of top 10 pharmaceutical companies in Saudi Arabia, 2007-08 63
Figure 22: Leading domestic retail pharmaceutical manufacturers in Saudi Arabia, 2008 64
Figure 23: Relationship between regulators, payers, providers, users, and suppliers, Saudi Arabia, 2009 73
Figure 24: Six main components of Balsam project in Saudi Arabia 77
Figure 25: Marketing Authorization process for generics, New Chemical Entities, biologics and orphan drugs 83
Figure 26: The 11-digit Saudi National Drug Code 86
Figure 27: Future challenges and strategy of the Council of Cooperative Health Insurance 89
Figure 28: Global pricing and reimbursement strategies, 2009 91
Figure 29: Profit margins for drugs in Saudi Arabia, 2004 92
Figure 30: Comparison of retail drug prices in Saudi Arabia versus the United Arab Emirates, 2009 94
Figure 31: Revised common pricing criteria proposed by the Saudi Food and Drug Authority, 2009 97
Figure 32: Revised pricing guidelines for innovative drugs in Saudi Arabia 98
Figure 33: Current and proposed new pricing guidelines for generic drugs in Saudi Arabia 99
Figure 34: Suggestions and rationale for the pricing of generics in Saudi Arabia 100
Figure 35: Suggestions and rationale for the pricing of drugs under license in Saudi Arabia 102
Figure 36: Pricing guidelines for drugs with more than one active ingredient in Saudi Arabia 103
Figure 37: Proposed healthcare management system in Saudi Arabia, 2009 109