Two key entities have been central to the recalibration and fortification of the medical supply chain in Saudi Arabia. The National Unified Procurement Company (NUPCO) is responsible for medical supplies and equipment procurement, and supply chain regulation; and the Saudi Food and Drug Authority (SFDA) regulates and monitors foods, drugs, medicines, and diagnostic devices. The entities’ strategic focus on reinforcing the medical supply chain through competition and transparent, thorough operations and processes has resulted in higher quality and quantity of medicines available, and have boosted self-sufficiency. Such developments proved invaluable in light of the unprecedented demands brought by the Covid-19 pandemic.

Efficiency & Preparedness

NUPCO was established by royal decree in 2009 and is wholly owned by the Public Investment Fund, Saudi Arabia’s sovereign wealth fund. It operates as the centralised procurement, logistics and supply chain management company for government hospitals and health centres, and is the largest health care procurement entity in the Kingdom. By systemising demand, NUPCO has boosted efficiency across the public health care sector – implementing a standardised procurement model through digital, automated systems, while establishing extensive logistics infrastructure.

In 2018 NUPCO released a new strategy under which it pledged increased support for local partners, prioritising local content in the medical supply chain. In 2021 some 89% of supply chain contracts were awarded to local partners. This reduction in dependence on imported supplies was of great benefit during the pandemic. Since the new strategy launched, NUPCO has reached multiple milestones relating to expenditure efficiency – achievements made all the more timely by the extreme pressures the pandemic placed on government finances.

Prominent Regulator

The SFDA’s mandate has considerable scope, encompassing food, drugs, medical devices, agricultural products and cosmetics. Saudi Arabia is the largest pharmaceuticals and medical device market in MENA, and, at a value of $8.5bn, accounts for 80% of the total GCC market. The Kingdom’s diabetes prevalence of around 18% is notably higher than the 8-10% seen in Europe, and high prevalence of other non-communicable diseases (NCDs) adds considerable diversity to local demand.

At the time of its formation in 2003, the SFDA set out to establish itself as the most influential entity of its kind in the region. Indeed, it is now seen as a high-standard regulator within MENA. Along with local partners like vaccine and biologics producer SaudiVax, it has identified significant opportunity in developing regulatory standards on a par with those of the US and Europe to establish the Kingdom as the primary supplier of high-quality, affordable medicines. Furthermore, the creation of regulations relating to the domestic manufacturing of halal medicines and vaccines is part of the SFDA’s strategy to produce medical products tailored to its population, and to extend the reach of export operations beyond MENA and throughout the entire Islamic world.

Significant moves made by the SFDA throughout implementation of its 2018-22 strategy included the introduction of rapid licensing and registration processes, and reinforced quality assurance regulations. These have encouraged multiple international pharmaceutical and biotechnology companies such as French multinational Sanofi to establish research and manufacturing operations within Saudi Arabia, and to adopt the Kingdom as an early launch market. Meanwhile, the reputation of domestic medicine manufacturing companies for producing safe, high-quality products has been enhanced. Broad-based market expansion has seen competition in the field of pharmaceuticals distribution increase markedly, and a recent trend of consolidation has seen the top-10 distributors assume a combined 85% market share.

Pandemic Response

Within 24 hours of the onset of the pandemic, NUPCO had formed a committee to coordinate with government and health sector entities to maintain the supply of vital medical supplies, equipment and pharmaceuticals to health facilities at a time of unprecedented demand.

The government also issued special budgets to entities and sectors vital to an effective pandemic response. Local and international partnerships forged by NUPCO in the years before 2020 were leveraged with 846 medical items secured through 158 suppliers across 37 countries, at SR5.8bn ($1.6bn). The need for Covid-19 tests, test centres and laboratories presented a sizeable challenge, to which the response constituted a national mega-project.

NUPCO partnered with a prominent Chinese company for the supply of Covid-19 detection tests, with the initial contract seeing 9m units secured and delivered to the Kingdom. The contract has been extended multiple times since. The agreement included the establishment of test centres and test laboratories throughout the Kingdom. Staffing of those facilities was integral to the contract, as was knowledge and skill transfer. Multiple international health organisations, such as the World Health Organisation and PhRMA, a US-based trade representative for biopharmaceuticals research companies, have praised the Kingdom’s resourcefulness in the face of the crisis. Indeed, NUPCO was swift to sign deals with multinational biopharmaceuticals companies working on Covid-19 vaccines, resulting in Saudi Arabia being the fourth nation worldwide to receive the new drugs and the first Arab nation to receive the Pfizer-BioNTech vaccine. By March 2021 some 4m doses had been administered to the Saudi population.


Some major gaps were exposed in health care systems around the world while supply chains were strained by the extreme demands of the pandemic (see overview). NUPCO maintains that challenges encountered in its own supply chains were no different to those experienced by other countries due to unprecedented demand and increased costs. This led to a need to work closely with partners to ensure the health sector remained stable and efficient, and test centres and labs had to be constantly restocked with equipment and consumables.

The strategy released by NUPCO in 2018 included an initiative to construct eight new logistics centres, with the first of those opening in July 2022. This was a reassuring development in light of the pandemic, which illustrated how quickly an emergency can strike and the need for additional capacity. In 2020 NUPCO entered into a strategic partnership with Blue Yonder, a prominent global player in the digital supply chain and omni-channel sales fulfilment, to revamp its operating systems. Now installed, Blue Yonder’s planning solutions and warehouse management system provides end-to-end digital capabilities on a single platform. This offers NUPCO’s customers visibility into inventory, allowing them to better plan for anticipated demand, in turn affording NUPCO more control of its supply chain and boosting logistical efficiency. The systems will be implemented across all planned new logistics centres. NUPCO also aims to establish its own digital command centre to further enhance endto-end supply chain visibility. An additional initiative saw the introduction of Wasfaty (My Prescription), a service that enables hospitals, primary health centres and community pharmacies to connect, allowing patients convenient access to required medicines.

Pros Outweigh Cons 

Moving forwards, NUPCO plans continued investment in the construction of logistics centres, the localisation of pharmaceutical and medical supplies production, international supply networks and the further digitisation of its operations. Meanwhile, the company is working on an initiative to further engage the private sector.

While NUPCO’s dominant position in the supply chain gives it robust purchasing power, diminishing the negotiating strength of suppliers in relation to pricing and contract bidding processes, there appears clear concurrence between industry executives that the added efficiency and transparency brought by NUPCO’s centralised role outweighs any downsides.

NUPCO has played a key role in strengthening and establishing local and international partnerships, fortifying national supply chains both internally and externally. The company increasingly awards contracts based on the weight of supporting data, somewhat reducing the relevance of suppliers having long-established relationships within the Saudi health care market. This change in dynamic may cause certain companies to feel alienated, but the level playing field it has established, along with the fact that winning a tender means a company’s product is very quickly dispersed throughout Saudi Arabia’s health care system, should continue to drive competition within the domestic market, further fortifying the supply chains of a sector whose continued development is essential to the Kingdom’s realisation of its Vision 2030 goals.