Boston, MA -- (SBWIRE) -- 08/17/2012 -- BMI View: The Saudi Arabian government said it will increase its healthcare budget for 2012 by 26%. Though BMI remains slightly more conservative in our growth forecasts, we think the government's investment in the sector is very positive for the healthcare industry. Furthermore, the announcement and allocation of various tenders and contracts for health facility construction and fitting helps to dispel our fear that real public healthcare expenditure would not live up to the political rhetoric.

Headline Expenditure Projections

- Pharmaceuticals: SAR16.70bn (US$4.46bn) in 2011 to SAR18.96bn (US$5.06bn) in 2012; +13.6% in local currency and US dollar terms. Forecast up significantly from Q212 based on new historic data.
- Healthcare: SAR78.63bn (US$21.00bn) in 2011 to SAR91.23bn (US$24.36bn) in 2012; +16.0% in local currency and US dollar terms. Historic data down slightly from Q212 but forecast up slightly due to high public healthcare budget.
- Medical devices: SAR5.54bn (US$1.48bn) in 2011 to SAR6.53bn (US$1.74bn) in 2012; +17.9% in local currency and US dollar terms. Forecast up from Q212.

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Risk/Reward Rating: Saudi Arabia's composite score remains almost steady in Q312 at 55.6 out of 100, down from 55.7 the previous quarter. This takes the country to fifth place out of the 30 markets in the Middle East and Africa (MEA) in BMI's proprietary Pharmaceutical Risk/Reward Ratings (RRRs). Its score is propped up by the country's wealth and a sizeable population (exceeding 28mn in 2011). Furthermore, its forecast growth rate has been increased due to favourable public and private healthcare investments.

Key Trends And Developments

- In May 2012, a high-level parliamentary delegation from Saudi Arabia visited India to discuss trade collaborations, highlighting pharmaceuticals as an area of particular interest. The delegates were seeking Indian companies to establish manufacturing bases in Saudi Arabia to increase the availability of affordable medicines.
- The Ministry of Health plans to establish a pharmacoeconomic and outcome research centre. Deputy minister of health for logistics support Salah al-Mazrou said the ministry aims to help medical personnel and patients get an idea of the drugs they prescribe and use.
- The government has allocated SAR800mn (US$213.33mn) for the improvement of state-run hospital critical care facilities.
- This trend of high government and private expenditure on healthcare has led BMI to subjectively increase the forecast for medical device expenditure in the short-to-medium term. However, we do not envisage government fiscal expenditure remaining high indefinitely, which will cause a slower long-term growth rate.

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