Saudi Arabia’s health care sector is in the midst of a period of rapid change, as regulatory efforts are made to enhance the participation of the private sector and create a more dynamic market that can better meet patients’ needs. One of the national health system’s four objectives is to invest in private sector integration to create effective strategic partnerships. This is outlined in the Health Sector Transformation Programme, one of the key Vision Realisation Programmes designed to guide the delivery of Vision 2030, the Kingdom’s blueprint for socio-economic transformation.

In line with this strategy, the Ministry of Health (MoH) established the Health Holding Company (HHC) in 2022. This move will allow the MoH to focus on overseeing the sector, while the HHC will work to provide medical services through the development specialist health clusters and digital health services. The private sector is set to play a key partnership role in both areas. Ultimately, the creation of the HHC aims to foster healthy competition, streamline decision-making processes, attract private investment, unlock operational efficiencies, expand access to quality health care and enable hospitals to adapt to their local context.

Digital Opportunities

Technology has played an increasingly important role in health care management and provision since the onset of the Covid-19 pandemic in 2020, which accelerated the shift to online services. New digital applications are expected to be launched following the success of Sehhaty, the MoH’s unified health services app for individuals, and Mawid, the Kingdom’s health diagnostic and appointments app. As of October 2022 Saudi Arabia’s government and the private sector combined had launched 19 digital apps and platforms that serve public health functions or provide health care services.

There is scope to expand private sector involvement in the health care system further through the rollout of business-to-business (B2B) solutions that can connect companies directly to opportunities. One such example is the National Unified Procurement Company (NUPCO) Marketplace. Fully owned by the Public Investment Fund, NUPCO was established in 2009 to fulfil the procurement needs of health care entities by facilitating the acquisition of medical supplies, pharmaceuticals and equipment while optimising logistics and supply chains. In the past, hospitals predominantly relied on direct purchase methods for urgent procurement needs, which differed from the traditional approach involving competitive bids. Direct purchase was especially common in hospitals due to the occasional necessity for swift acquisition of supplies precipitated by medical emergencies. However, for non-urgent requirements, government health care entities followed the classic procurement process by conveying their needs to NUPCO directly for pharmaceuticals, medical equipment and supplies. In situations where hospitals urgently needed to obtain items, they had to turn to the private sector, often incurring higher costs than necessary, which translated into increased expenses for the government.


In 2018 NUPCO took a significant step towards transforming procurement practices by introducing the B2B platform known as Marketplace, which specifically targeted all government hospitals. Through this e-commerce platform, tender results from previous procurement processes were readily available, enabling hospitals to acquire urgently required items at pre-set prices.

Consequently, this approach eliminated the need for newly negotiated direct purchases from private sector suppliers and substantially reduced the costs associated with procurement. While direct purchase is now rare, hospitals are granted the right, by decree, to allocate a portion of their budget for direct procurement without involving NUPCO.

Upon the platform’s launch, NUPCO invested considerable effort in persuading both private sector suppliers and government entities to adopt its usage. In the five years since its launch NUPCO has made efforts to enhance the Marketplace platform, introducing features such as Sharek, a sharing programme that facilitates the redistribution of excess items among different entities on the platform at no additional cost. This capability is designed to enhance cost efficiency and reduce urgent demand for pharmaceuticals and supplies as more government hospitals and health care facilities utilise the platform. Additionally, the platform allows hospitals to request specific products that may not be readily available in the market, which are then accessible if there is any future demand.

Another example of leveraging digital innovation to enhance efficiency is Wasfaty, an e-prescription service launched in 2019 by NUPCO to ensure patients can access the necessary pharmaceuticals at nearby pharmacies, including private pharmacies. By applying a reimbursement mechanism utilising the private sector, Wasfaty is designed to enhance access to medication while ensuring quality and patient safety.

Market Expansion Strategy

With the establishment of the HHC and ongoing momentum in private sector participation in heath care, government-owned health institutions have the opportunity to leverage this strategic shift to venture further into the private health care sphere. NUPCO has devised two scenarios for its private sector market expansion strategy. Through a conservative soft entry approach, the company envisions annual revenue of approximately SR52m ($13.9m) from this emerging side of the business, with a primary focus on small and medium-sized hospitals and pharmacies in remote areas. This approach would allow NUPCO to establish a firm foothold in the private health care sector while maintaining a risk-averse stance.

However, there is also recognition of the potential for higher returns by adopting a more commercial approach. In this alternative scenario, the company could expand its services to encompass large hospitals, hospital chains and pharmacy chains, projecting annual revenue potential growth for these new activities of 10-12% compared to 2022 revenue. In preparation for tapping new private sector business, NUPCO has planned three commercial channels to cater to different market needs. The first is leveraging the Marketplace platform to strengthen its market presence and foster enhanced engagement with stakeholders. The second is rolling out a specialised logistics service to target small, remotely located market participants, such as hospitals, pharmacies and local manufacturing units. Moreover, NUPCO is aiming to roll out new value-added services that focus on addressing customer challenges in their supply chain such as last-mile delivery and value-based procurement.

Catalytic Effect

Collaboration between public and private health care entities has the potential to improve market dynamics and performance. For example, the introduction of NUPCO on the supply side has served as a catalyst in elevating the efficiency of the market. Through the reduction of barriers to entry, a broader spectrum of stakeholders, including local manufacturers, have gained enhanced access to market opportunities and previously untapped segments.

By placing an emphasis on promoting visibility and transparency, NUPCO’s presence has facilitated a more streamlined marketplace. This added clarity and accessibility have enhanced the dynamism and competitive environment of the sector, wherein businesses – both established and emerging – can take advantage of their inherent strengths and capabilities. In the broader economic landscape, this translates into increased market efficiency, creating an environment where each participant can compete and contribute to the overall growth and development of the industry.

Engagement with private health care entities has contributed to elevating the sector’s overall security and responsiveness to emergencies. The government can now respond to critical situations with greater efficiency, helping to safeguard the welfare of the population during times of crisis.

Changes in the market signal significant opportunities for private players. By leveraging NUPCO’s centralised procurement system and supply chain management, businesses can achieve economies of scale and cost savings. This, in turn, provides them with enhanced market access and expansion opportunities, particularly for local manufacturers that are seeking to tap into new segments. Furthermore, private players benefit from NUPCO’s established crisis-management mechanisms, ensuring operational continuity and risk mitigation during emergencies. Lastly, data insights provided by the Marketplace allow businesses to optimise operations as well as resource allocation.

Ultimately, such collaborations serve not only to enhance corporate planning, efficiency and operational capabilities, but also to position private companies favourably in the evolving landscape. As private participation in health care continues to deepen, it is envisioned that public entities can capitalise on opportunities to inject further dynamism into the system while generating cost savings for the government.