Boston, MA -- (SBWIRE) -- 12/21/2012 -- BMI View: Saudi Arabia's transition to an increasingly privatised and comprehensive healthcare system will drive the demand for both patented and generic drugs. The country is investing heavily in healthcare infrastructure and we expect this will be borne out in double-digit growth forecasts across our three headline indicators.

Headline Expenditure Projections

- Pharmaceuticals: SAR16.70bn (US$4.46bn) in 2011 to SAR18.95bn (US$5.06bn) in 2012; +13.5% in local currency and US dollar terms. Forecast broadly unchanged from Q312.
- Healthcare: SAR78.63bn (US$21.00bn) in 2011 to SAR91.20bn (US$24.35bn) in 2012; +16.0% in local currency and US dollar terms. Forecast broadly unchanged from Q312.
- Medical devices: SAR5.54bn (US$1.48bn) in 2011 to SAR6.53bn (US$1.74bn) in 2012; +17.8% in local currency and US dollar terms. Forecast unchanged from Q312.

Risk/Reward Rating: Saudi Arabia's composite score remained steady in Q412 at 55.6. This places the country to firth place out of the 30 markets in the region. Its score is propped up by the country's wealth and a sizeable population (exceeding 28mn in 2011). Furthermore, its forecast growth rate is high due to favourable public and private healthcare investments. The government is also in the process of creating more public-private health partnerships and encouraging private health insurance uptake, which should provide momentum for drug sales.

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Key Trends And Developments

- In a quiet quarter for pharmaceutical industry developments, the government's crackdown on smoking was intensified with the announcement in July 2012 of a ban on smoking in public places that would come into force with immediate effect. The official decree bans smoking, including shisha pipes, from all government facilities and the majority of commercial areas, including restaurants, supermarkets and shopping malls. The decree also prohibits the sale of tobacco to citizens under 18.

BMI Economic View: Assuming the survival of the current form of government into the medium term, we see ongoing strong growth and asset accumulation via real expansion in investment and exports, amid relatively high oil prices. Inflation in Saudi Arabia is unlikely to pick up substantially in the near term. Although the economy is enjoying a cyclical boom - brought about in large part by supportive monetary and fiscal policy - the government has so far succeeded in keeping prices in check through an extensive system of subsidies, which have taken the sting out of the upside price pressure brought about by rising incomes.

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