Healthcare remains a top priority for the government in the Kingdom of Saudi Arabia (KSA), and there are enormous opportunities for growth in this high-potential business sector.
In line with the government’s Vision 2030 and the National Transformation Program (NTP), the Ministry of Health (MoH) is expected to spend close to US$71 billion over five-years ending in 2020. According to U.S.-based consultancy Aon Hewitt, the healthcare sector in KSA is expected to grow at a compound annual growth rate of 12.3 per cent by 2020. There is also a significant rise in population with an increase in those over the age of 60 years, as well as the adoption of mandatory health insurance in the country.
According to a report by Knight Frank, the main goal of the Vision 2030 is to diversify the economy away from hydrocarbons and achieve greater participation of the private sector by encouraging both local and international investments in several key industries such as healthcare. Privatisation of government services is expected to help meet the goals set out in Vision 2030. This is set to increase the private sector’s contribution to GDP from 40 per cent to 65 per cent in 2030.
To increase efficiencies and reduce costs, the government in KSA is exploring private sector involvement in the development of the healthcare infrastructure in the Kingdom. By introducing Public-Private Participation (PPP) models for healthcare, the government is working towards unlocking value in the health system and fast-tracking healthcare reform with plans to increase private sector contribution in total healthcare spending to 35 per cent by 2020.
In a review of KSA’s 2019 budget and recent economic developments, a report by KPMG highlighted that the healthcare sector holds the third largest share of 15.6 per cent in the budget expenditure of 2019. The budget allocation for the sector has grown by 8 per cent to reach SAR172 billion in 2019, as compared to SAR159 billion in 2018.
Furthermore, research from Knight Frank indicates that to keep pace with population growth, KSA would require an additional 5,000 beds by 2020 and 20,000 beds by 2035, based on the current density of beds. Based on the global average of bed density, KSA faced a gap of 14,000 beds in 2016, and this gap is expected to widen to 40,000 beds by 2035.
According to Export.gov, the KSA market for medical equipment is estimated at just under US$2 billion and is growing annually at roughly 10 per cent. With increasing awareness of health issues and a growing consumption of healthcare services in the country, there is a strong market for medical equipment.
Encouraged by recent regulatory changes, medical device manufacturers, service providers and dealers & distributors are now able to make significant inroads in the KSA market.
The recently introduced Medical Device Interim Regulations has made the Kingdom a regulated market for all types of medical devices and all manufacturers wishing to supply a medical device within KSA require Saudi Food & Drug Authority (SFDA) Market Authorisation.