Presentation by Saudi Pharmaceutical Committee

for SFDA Pricing Workshop

May 2008
Estimated size of healthcare market SR 49.0 billion

Source : Saudi healthcare service sector review infocus report Dec. 2007
Estimated size of healthcare market SR 49.0 billion

Kingdom’s expenditure on pharmaceuticals is SR 8 billion

Source : Saudi healthcare service sector review infocus report Dec. 2007
Estimated size of healthcare market SR 49.0 billion

Kingdom’s expenditure on pharmaceuticals is SR 8.0 billion

Saudi pharmaceutical market imports 85% of the total market demand

Only 15% satisfied by the local pharmaceutical production

Source : Saudi healthcare service sector review infocus report Dec. 2007
Estimated size of healthcare market SR 49.0 billion

Kingdom’s expenditure on pharmaceuticals is SR 8.0 billion

Saudi pharmaceutical market imports 85% of the total market demand

Only 15% satisfied by the local pharmaceutical production

Public sector accounts for 77% of total healthcare outlays.

And it’s not affected by pricing policy as it depends mainly on
tender business.
business Only 23% is affected by pricing policy.
policy

Source : Saudi healthcare service sector review infocus report Dec. 2007
Estimated size of healthcare market SR 49.0 billion

Kingdom’s expenditure on pharmaceuticals is SR 8.0 billion

Saudi pharmaceutical market imports 85% of the total market demand

Only 15% satisfied by the local pharmaceutical production

Public sector accounting for 77% of total healthcare outlays.

And it’s not affected by pricing policy as it’s depend mainly on tender.
Only very slim area is affected by pricing policy

Highly fragmented industry

Source : Saudi healthcare service sector review infocus report Dec. 2007
 Conclusion
z Local manufacturers competing in 15% of
the market,,
z Highly fragmented market.
z Impact of pricing on local products does not
have a large impact on the total healthcare
bill.
z Government tenders and insurance
companies
p have significantly
g y reduced the
cost of healthcare.
z Saudi Pharmaceutical product have a good
perception by the medical profession.
 Contents

z Current situation
z Needs,
N d and d suggestions
ti
 Current situation feedback
z The first generics coming to azithromycin generics

market obtain the highest 4500000

4000000

market share while others

AZI-ONCE
3500000
ZIMAX
3000000

registered after have 2500000

2000000
ZETRON
ZOCIN

insignificant market share. 1500000

AZOMAX
AZOMYCIN
1000000
000000

The patient and the

AZIMAC

z 500000
0

company do not benefit 2008

from the continuous p price

reduction. 14000000

12000000

First , and second Azithromycin 10000000

8000000
AMVASC
AMLOPINE

generic have the lions share 6000000

VASCO DIPINE
AMOPRESS
LOWVASC
4000000
First Amlodipine generic 2000000

Have lions share 0

2008
 Current situation feedback
Unclear pricing

z U bl to
Unable t forecast
f t eventual
t l pricing
i i off
generics, as ranking of product is
unknown and therefore price is
unknown.
z Unsure if company will recoup
investment in R&D,
R&D and bioequivalent
studies. ( investments that can reach
Sr. 1 million)
 Current situation feedback
Not competitive

z It’s unattractive for anyy p

pharmaceutical
manufactures to establish new generic plant in Saudi
Arabia:
z Massive reduction in the cost of their generics as they will
not be in the top three.
z Low prices given will limit their export to neighboring
countries.
z Strategy limited to new generics and me too strategy.
 Current situation feedback
Re-pricing
z Cost of production continues to increase, affected by
inflation. Government body requested to reduce the
prices further in 2007.
z Exchange rate increased from 45 to 60%. The
imported d materials,
l packaging
k materials
l increased
d at
the same level, while our prices were reduced.
z I
Imported
t d product
d t prices
i increased
i d due
d tot revaluation
l ti
of exchange rate. Local products were not revalued.
 Current situation feedback
Quality
z Pricing not linked to quality but linked
to who comes first
first.
z Resulting in a race to register first.
 Current situation feedback
Transparency
z No representatives from the local
pharmaceutical industry,
industry or end
customers in the pricing and
i t ti committee.
registration itt
z No communication or transparency
p y on
products under registration and their
status.
status
 Needs

z Needs regarding generics

¾ Suggestion
¾ Rationale behind suggestions.
z N d regarding
Needs di second
d brand
b d (under
( d
license)
¾ Suggestion
¾ Rationale behind suggestions
 Needs – generics

z To create a pricing policy based on

quality transparency and equal
quality,
benefits for both local manufactures as
wellll as the
th end
d user.

z how
 Suggestions
gg
Generics
z Start the registration process with the pricing committee.
z The first generic allowed to have a price 20% lower than the
g
originator. The second generic
g and thereafter free to choose
any price lower than the first generic.
z Pricing should be revised for all existing brands irrespective of
when they enter the market. Free pricing after reduction of
20% from
f originator.
i i t
z Apply price revision for the generic (local) every three years to
match the change in market dynamics and inflation.
z R
Representatives
t ti ffrom th
the iindustry
d t tto hhave a seatt iin th
the pricing
i i
committee.
z Transparency in registration of products. Easy and clear access
to all products under registration as well as their status
status. Post
on web site all products under registration, showing stages,
and already registered.
 The rationale
z Price in Saudi Arabia is considered for export market. Low
prices given, limit the potential for export. Free pricing will
enable local companies to export.
z Newly established local factories will have equal pricing
opportunities. Encouraging higher investment and quality.
z Local manufacturers can forecast sales strategy and
i
investment.
t t B
Better
tt strategies
t t i and d a clear
l vision.
i i
z Local manufacturers can focus on niches and quality.
z Create competition, allowing companies to have right price
positioning.
iti i
z Encourage focus on quality.
z Clear communication between government and industry.
T
Transparent t pricing
i i and d registration
i t ti process.
 Needs, and suggestions
gg
Under license
z Pricing of Under-licensed products should be
the first p
phase of registration.
g
z Co-marketing is an attractive tool to promote
under license agreements.
g However the
current regulations for second brand is not
encouraging as;
z It requires a 10% price reduction of second brand
from originator.
z Propose to have the second brand and
originator to have the same price and launch
at the same time
time.
Rationale behind suggestions
z Potential to shift imported products to local
formulation.
z Increasing availability of products
z Boosting local production
z Securing quality
z Transfer of know how
z Etc.
z The current 10 % difference is not significant
to the end user.
 Clear Transparent and Fair
Clear,

I
Increase E
Exports Increase local production Improve quality