The market for medical goods: Rules and regulations for health care equipment

With the health care and pharmaceuticals sectors worth $18.3bn and $5.1bn in 2012 and 2013, respectively, according to reports from Alpen Capital, Saudi Arabia is a key target market for international businesses operating in both spheres. Statistics from the European Commission (EC), demonstrate the rapid growth in pharmaceutical exports from the EU to the GCC.

STRONG MARKET: From 2006 to 2011, imports of EU pharmaceuticals by GCC countries doubled from €1.5bn in 2006 to €3bn in 2011, a compound annual growth rate of 14.6%. By 2013, GCC imports of EU pharmaceuticals had increased 40%, with EC figures showing the value of EU pharmaceutical exports to GCC countries reaching €4.2bn. Of this 2013 total, €2.3bn worth of pharmaceuticals were exported by EU countries to Saudi Arabia, accounting for 55% of EU pharmaceutical exports to the Gulf economic bloc.

While Saudi Arabia has the biggest domestic pharmaceutical manufacturing industry among Gulf states, it still imports 85% of its medicine and 90% of its medical equipment. However, companies planning to provide services or offer products for sale in the Kingdom must negotiate a strict regulatory environment. There are restrictions on business ownership in both the medical and pharmaceuticals fields and the latter is strictly regulated, with the Ministry of Health (MoH) and agencies such as the Saudi Food and Drug Authority (SFDA) enforcing state regulations and ensuring that international standards are upheld. All medicine and medical devices bought by Saudi government institutions are supplied by the National Unified Procurement Company for Medical Supplies (NUPCO), a firm that was established in 2007 to help reduce inefficiencies in procurement and to keep prices down.

SFDA: The SFDA was created in 2003 as an independent body reporting directly to the president of the Council of Ministers. Its remit is to oversee and ensure the safety of food, drugs and medical devices and to publicise and advise on any threats to public health posed by these. The SFDA has wide-ranging powers and duties. It carries out Customs checks on imported pharmaceuticals, medical supplies, cosmetics, agricultural items and foodstuffs, and also conduct hygiene inspections at slaughterhouses, restaurants, food outlets and pharmaceutical plants. SFDA staff can seize and destroy goods and ensure sanctions are imposed on individuals and businesses that contravene the Kingdom’s laws, standards and regulations.

In collaboration with the Saudi Arabian Standards Organisation (SASO), SFDA also ensures all foodstuffs and pharmaceuticals are clearly and accurately labelled according to SASO specifications. It works with SASO and the MoH to govern specifications, standards and special stipulations for the production, importation and registration of all drugs and medical devices, and oversees any clinical trials taking place in the Kingdom. It is also tasked with licensing the manufacture, import, export, distribution and advertising of drugs and medical devices and with testing the validity, safety and efficacy of medicines and the accuracy of diagnostic devices. SFDA regulations curtail the advertisement of over-the-counter medicines and prohibit their sale in supermarkets. The SFDA sets retail prices for all imported medicine, and although a World Health Organisation (WHO) study found drug prices in the region to be 13 times higher than the global average, they are cheaper in Saudi Arabia than in the UAE and Qatar.

WARNINGS: Part of the SFDA’s role is to promote best practice among professionals in the health care industry. In May 2014 it organised a workshop for more than 600 people to highlight the importance of ensuring medical devices have not passed their expiry dates. Saleh Al Tayyar, SFDA’s deputy president for the medical devices sector, told local media that his officers had recently seized and destroyed some SR620m ($165.3m) worth of unsafe medical equipment. “We have also seized expired equipment stored in warehouses under unhealthy conditions and high temperatures... Our engineers examine storage conditions and ensure products are valid and safe for consumption,” Al Tayyar said.

In the first six months of 2013, the SFDA targeted bottled water plants and shut down 15% of those operating in the Jeddah area because they did not meet storage requirements, according to local media reports. In January 2014 the SFDA reported that traces of a carcinogenic substance, bromate, had been discovered in samples of bottled water in the Makkah area. The SFDA also issues other product warnings and alerts. In February 2014 the SFDA warned consumers to be wary of social media promotion of products marketed as slimming aids, saying they could induce hyperactivity, hallucination and mood swings. There have also been recent warnings about teeth-whitening products and brands of home-use blood-glucose testing kits. In June 201, the SFDA issued an alert warning that the approved treatment VICTOZA for type-2 diabetes should only be administered by endocrine specialists in hospitals. Since March 2010 the SFDA has also released an online quarterly drugs bulletin in English giving a synopsis of its recent health warnings and licensing approvals for drugs and devices. The bulletin includes articles about international medical research on the potentially harmful side effects of a range of pharmaceutical products.

INTERNATIONAL STANDARDS: The SFDA applies the highest international standards to the medical devices it imports. All devices must be approved in the US, Europe, Canada, Japan or Australia, which are the founding member countries of the Global Harmonisation Task Force and its successor, the International Medical Device Regulators’ Forum. Any firm wishing to export a medical device that is already approved in one of these jurisdictions must first appoint a Saudi Arabian authorised representative (AR) and that AR must manage the application for product licensing as well as the medical device market authorisation through the Medical Device National Registry. Marketing of the device can begin, subject to approval, while the licensing process is taking place. Licences are typically granted for three years and have an annual renewal fee.

GOOD DISTRIBUTION PRACTICE: In February 2013, the Kingdom introduced its own strict good distribution practice guidelines. SFDA officials monitor the transport history of all medicine shipped to the Kingdom, reserving the right to reject consignments where temperature control measures have not been adequately recorded. “The new regulations instituted by the SFDA are helping upgrade the health sector. They are establishing high quality standards for products entering the Kingdom, which is raising the quality of care for patients,” Mohammed Al Hammad, the CEO of Al Hammad Medical Services, told OBG.

The growth in overall population and the increasing longevity of nationals are key drivers in the expansion of Saudi Arabia’s health care and pharmaceutical markets. According to figures from Alpen Capital, based on data from the International Monetary Fund, WHO and MoH, Saudi Arabia’s health care spend is set to reach a total of $31.5bn by 2018. The regulatory structure enforced and defined by the SFDA suggests that those wishing to supply this expanding market must adhere to some of the most robust regulations in the world.