Hospitals in Saudi Arabia are among the best equipped in the GCC region, with some of the most up-to-date medical devices furnishing the country’s medical centres and clinics with advanced diagnostic and prosthetic equipment and medical appliances.
Maintaining the Kingdom’s hospitals and clinics in top running order is also a high priority for the government, as is expanding the number of facilities available, in order to keep pace with a growing population and rising demand for health care services.
Indeed, Saudis themselves are showing an increasing appreciation of health issues, further driving expectations of health care provision. Simultaneously, a shifting disease profile of non-communicable diseases (NCDs) and emergency-service requirements have also created a major new demand for medical devices of all kinds.
The government and state investment promotion services are thus prioritising this subsector in their key future development plans – Vision 2030 and the National Transformation Programme, which sets more immediate economic targets, up to 2020.
Funds & Facilities
For many years the government’s budget allocation has seen a rise in the Ministry of Health (MoH) line item, including provisions for the purchase of medical devices for state-owned facilities.
This particular subsector runs the full gamut from equipment used to monitor patients and diagnose medical conditions, to those for delivering medications, performing surgery and placing implants. Medical devices are required everywhere from surgical theatres to diagnostic imaging centres and dentists’ offices, and are heavily used in specialties such as neurology; ophthalmology; ear, nose and throat; nephrology; and urology; among other disciplines.
Between 2016 and 2021 the Saudi government is expected to spend an estimated total of $11bn on medical devices. The market for these devices is thus expected to expand at a compound annual growth rate (CAGR) of around 9.5% over this five-year period.
Market Size & Suppliers
In 2016 the market size for medical devices was $1.9bn, and is expected to grow to $2.4bn by 2021. Overall spending in the segment broke down into some $1.1bn on capital equipment, $600m on consumables and $200m on patient aids. This compares with a market value of $1.7bn in 2013 and 9% average annual growth in 2014, according to a study by the US Department of Commerce.
The report found that imports accounted for more than 92% of the Saudi medical devices market, or some $1.6bn, and that US companies had a 21% share of total imports of medical devices to the Kingdom. The department warned, however, that imports from Europe were closing in on US market share in the Kingdom, with European suppliers leveraging “their close proximity to the market and perceived better customer support”.
Suppliers continue to watch such trends carefully, because the Kingdom’s markets tend to reflect those of the wider region. At the same time, the Saudi market accounts for around 55% of total medical device expenditure in the GCC, and the regional market is expanding as well. Financial consultancy Alpen Capital projected that the GCC health care market overall will likely grow at a CAGR of approximately 12% between 2015-20, rising from some $40.3bn to $71.3bn. Alpen identified the increasing GCC population and rising cost of health care in the region as the main factors driving this growth, and said it expects each GCC country’s health care market to grow by 11-13% between 2015 and 2020, in terms of annual average growth rates.
Similar to other countries in the Gulf, changing lifestyle trends are contributing to Saudi Arabia’s morbidity profile. A combination of increasingly sedentary behaviour, high levels of tobacco use and dietary concerns have contributed to the rising number of NCDs, such as diabetes, heart disease and cancer. Data from the industry and the World Health Organisation shows that 20% of Saudis over the age of 20 have Type 2 diabetes, 35% of adults are obese and more than 6.5% of Saudis have high blood pressure. NCDs are now estimated to account for 78% of deaths.
In addition, Saudi Arabia witnesses some of the highest death rates in road accidents in the world, ranking second among Arab countries in these terms, according to the Friends of the Red Crescent Committee. Injuries from road accidents tend to generate a need for emergency rooms, diagnostic and rehabilitation equipment, as well as specialist equipment, such as prosthetics, orthopaedic and dental appliances. In addition, this situation creates demand for more hospital beds.
In the Saudi health care market, the major suppliers of medical devices are a mix of multinational corporations – such as Johnson & Johnson, Siemens, General Electric, Medtronic and Philips – and domestic suppliers such as the Saudi Pharmaceutical Industries & Medical Appliances Corporation, Al Amin Medical Instruments Company, Mediserve, Algosaibi, Tamer and Al Faisaliah Medical Systems.
The major purchasers in the health care sector include government ministries such as the MoH, and the Ministries of Interior, Higher Education, and Defence and Aviation; the National Guard; the General Organisation for Social Insurance; Royal Clinics and Johns Hopkins Aramco Healthcare. The private sector and the Executive Board of the Health Ministers’ Council for the GCC States are also major buyers.
The majority of the Kingdom’s domestic production consists of medical consumables, such as gloves, bandages and syringes. The local sector also manufactures medical furniture, such as non-electrical beds. In addition, local firms also act as the importers and distributors of foreign manufactured equipment.
The NTP aims to expand on this role, with increased local manufacture for the medical devices subsector. Opportunities in this area include the domestic manufacture of medical beds and hospital furniture, drug delivery systems, orthopaedic tools and fixation devices, disposable hospital supplies, chemical reagents, diabetes monitoring equipment, and wound care and dialysis consumables.
There are changes planned in several other areas that will affect the medical device subsector. These include expanding the control and supervisory services of the Saudi Food and Drug Authority (SFDA); enlarging the scope of medicines and medical appliances manufacturing; and establishing more primary health care centres and specialised curative services, in which the use of various medical devices will be necessary.
Alongside its remit to oversee the import and distribution of medical devices – as well as pharmaceuticals and food products – the SFDA is also tasked with the registration and authorisation of the marketing and sale of medical devices.
These activities must comply with both the SFDA’s Medical Devices Interim Regulation and the relevant regulatory requirements applicable in one or more of the countries of the International Medical Device Regulators Forum. This organisation, which builds on the foundational work of the Global Harmonisation Task Force on Medical Devices, is an international group of medical device regulators that aims to accelerate the harmonisation and convergence of international guidelines governing medical devices.
In addition, medical and in vitro diagnostic devices require medical device marketing authorisation from the SFDA. This system allows domestic and foreign manufacturers and authorised representatives to apply electronically for authorisation to market medical devices in the Kingdom. A 5% Customs duty applies to foreign-made medical equipment, with exceptions occasionally made for equipment imported for a government entity or government-sponsored project.
From a regulatory point of view, a supplier that has procured Saudi certification in the form of an SFDA licence is at a comparative advantage when entering into markets in the region. This is because some neighbouring countries have a fast-track process that allows SFDA-licensed medical device suppliers to market their devices there without getting an additional licence.
The member states of the GCC Customs Union are working to unify their standards and conformity assessment systems. Currently, each member state applies its own standard or a GCC standard in this sector. All consumer goods exported to Saudi Arabia require a certificate of conformity and as well as certain labelling and marking requirements.
Boom In Facilities
With Saudi Arabia currently engaged in the construction or upgrade of some 38 hospitals, along with the construction of two new medical cities, a major expansion in demand for medical devices is also under way. The Kingdom has some 389 health care projects currently in the pipeline – some 55% of the total number within the GCC.
Work is under way to group hospitals together, which will allow them to have more control over their own budgets and provide incentives to offer the most competitive services. When this is combined with plans for a greatly increased role for the private sector, the medical devices market’s future prospects appear encouraging.
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