A healthy approach: A growing population has highlighted the need for investment in health care

In 2012 the Saudi government allocated SR86.2bn ($23bn) to health and social affairs, the largest amount in its history. Upgrading the health sector has become part of the country’s social strategy as it strives to accommodate the needs of a growing population expected to reach 32.8m by 2016.

When the Ministry of Health announced its budget for 2012 of SR7.2bn ($1.92bn), this included allocations for the construction of 12 new hospitals with a total capacity of 3100 beds. Such initiatives fit with the government’s objectives laid out in its Ninth Development Plan, which include expanding health facilities to cope with population growth, as well as improving performance, quality of service and user satisfaction.

In Need Of Care

Saudi Arabia has its share of challenges in terms of addressing illnesses among the population. Statistics show that asthma affects 10-17% of children in the Kingdom; that 50% of the population is overweight; and that diabetes currently affects 30% of the population, placing Saudi Arabia in the top 10 countries worldwide for cases of diabetes as a proportion of the population.

At the same time, the increasing life expectancy in the Kingdom is bringing with it an ageing population in need of specific and costly health services. There is a need for investment across the board in primary, secondary and tertiary health care services, while the lack of specialised facilities points to opportunities in this area.

Calling On The Private Sector

In addition to the above, there are many factors that make Saudi Arabia an attractive health care investment destination. The government is keen to increase private sector participation in the sector, including through public-private partnerships, and offers incentives for private sector investment. To its credit, Saudi Arabia’s health care system represents one of the most reformed and organised structures among GCC countries, and the Saudi Arabia General Investment Authority (SAGIA) is committed to facilitating foreign direct investment (FDI) to the sector.

Focus On Education

While efforts are under way to improve health care services directly, the Ministry of Higher Education is also taking effective measures to enhance education in the health care field in order to meet the sector’s expected future needs. Initiatives include the establishment of four new universities across the Kingdom, which will offer several specialties, with an extensive range of disciplines in applied medical and health sciences.

The establishment of a new university by the Saudi Arabian National Guard health services, meanwhile, will offer specialised programmes in areas such as clinical chemistry, genetics, health informatics and clinical laboratory sciences. A memorandum of understanding signed with the Royal College of Physicians and Surgeons of Canada paved the way for the establishment of a centre to promote excellence in medical education at the undergraduate and postgraduate levels, as well as in professional practice. The centre will also serve as a network for medical educators, trainers and faculty.

Industry Giant

The pharmaceuticals industry also presents a number of opportunities for growth, with 100% FDI allowed for drug manufacturing companies. Saudi Arabia commands the largest share (51% in 2010) of the GCC pharmaceuticals market and leads the region with 27 local production facilities. The government would like to attract multinational firms to operate in the country and create a platform for research and development as well as a production serving the region. A number of Japanese players have been positioning their business in the Kingdom, establishing joint ventures in pharmaceuticals manufacturing with Saudi partners.

Certainly the high domestic demand driven by a large population base and high health insurance penetration offer a firm foundation for increases in industry growth across the board in coming years.