Spending in the Saudi healthcare sector was $22.4 billion in 2016. Indeed, healthcare and education remain fundamental to the government’s 2017 budget, receiving a combined 36 percent budget allocation. The budget envisions the completion of 38 new hospitals, two medical cities and refurbishing of various healthcare facilities. The Saudi private healthcare sector is experiencing dramatic growth, but private spending still only accounts for 21 percent of total healthcare expenditures.
The healthcare sector contributed $20.8 billion to the Kingdom’s GDP in 2015. The sector is projected to grow by 13.7 percent by 2025. This growth is fueled by urban expansion, especially in Makkah, Riyadh and the Eastern province. Saudi Arabia, like other countries in the Arabian Gulf, continues to exhibit negative lifestyle trends which are affecting morbidity statistics. Non-communicable diseases such as diabetes, cardiovascular disease and cancer have become the main causes of death among Saudis; their incidence is rising due to a sedentary lifestyle, obesity, high tobacco use, and poor dietary choices. Type-2 diabetes has a 14.4 percent prevalence rate and 2.5 million people are expected to be diabetic by 2030. The latest World Health Organization (WHO) figures indicate that 33.7 percent of Saudi adults are obese and 68.2 percent are overweight.
The market for healthcare and medical equipment in Saudi Arabia is driven by government initiatives and lifestyle trends. While the government currently accounts for almost 80 percent of healthcare expenditures, privatization is creating opportunities for medical service delivery in the areas of dialysis, radiology, oncology, cardiovascular care and other outpatient services. The Saudi Ministry of Health plans to privatize 295 hospitals and 2,259 health centers by 2030. Among the first assets to be offered will be one of Saudi Arabia’s top hospitals, King Faisal Specialist Hospital and Research Center in Riyadh. As a consequence of risky driving habits and weak enforcement, the Kingdom has one of the world’s highest rates of traffic accidents, which generates demand for emergency room equipment and specializations like reconstructive surgery.
The Saudi market for medical devices is estimated at just under $2 billion and is growing annually at roughly 10 percent. Greater awareness of health issues and a growing consumption of healthcare services sustain a strong market for medical equipment. Saudi Arabia is encouraging a domestic manufacturing base for these devices and instruments but currently manufactures low value commodities such as bandages, gloves, syringes and furniture. Imports represent approximately 90 percent of the market, with American products accounting for 21 percent of total imports.
Sub-Sector Best Prospects
Best Prospects include:
- Education and training services for physicians, nurses and technical staff;
- Information technology and big data management services related to the digitization of patient records and billing information;
- Hospital management and joint ventures with Saudi partners;
- Investment in pharmaceutical manufacturing facilities for vaccines, sterile injectables, plasma, generics and other pharmaceuticals;
- Provision of support services and investments to establish local capabilities in bioequivalence centers, cold chain logistics, outpatient imaging and contract research organization (CROs);
- Provision of health insurance; and
- Home healthcare and rehabilitation.
In addition, medical equipment related to traffic accidents such as emergency room equipment, rehabilitation equipment, diagnostic equipment, electro-medical equipment, orthopedic and dental appliances and prosthesis are in demand. Moreover, the GCC releases an annual tender for billions of dollars for the following products and services: renal dialysis supplies; oral and dental care; laboratory supplies; orthopedic and spinal surgery supplies; rehabilitation equipment; cardiovascular devices; linens and medical uniforms; ophthalmology supplies; ENT supplies; medicines; vaccines; chemicals; insecticides; and radio-pharmaceuticals.
New projects in the 2015 Ministry of Health budget included the construction of three hospitals, three blood bank centers, 11 primary health care centers, and 10 comprehensive care clinics. Hospital beds currently number around 64,000 for all hospitals in Saudi Arabia and are expected to grow to 119,000 beds by 2020. In addition, a private group of investors is developing a 250,000 square meter medical village in Riyadh, consisting of eight 130 bed hospitals and 60 outpatient clinics.
The NTP also highlights the following initiatives it intends to carry out in this sector over the next five years:
- Expand privatization of government services;
- Incorporate health IT and digital records and increase percentage of patients with a digital health record from 0 to 70 percent by 2020;
- Double the number of qualified Saudi nurses by 2020;
- Increase the number of licensed medical facilities from 40 to 100 by 2020; doubling the percentage of local pharmaceutical manufacturing from 20 percent to 40 percent; and
- Invest in academic programs related to nursing, medicine, surgery, dentistry, oncology, organ transplant, cardiovascular disease, neuroscience and genetic disorders.
In addition, a private group of investors is developing a 250,000 square meter medical village in Riyadh, consisting of eight 130 bed hospitals and 60 outpatient clinics.