Country: Saudi Arabia
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Industry: Healthcare Equipment
Maisa Al Tawil Commercial Assistant Summary & Overview
June 09
The market demand for Healthcare and medical equipment in Saudi Arabia is strong. Studies show Saudi Arabia is the largest and most developed market for healthcare, medical equipment and products in the Arab Gulf region, valued at $13.1 billion and this value is expected to grow to over $20 billion by 2016. The Saudi Ministry of Health is the largest buyer representing 64 percent of the market. Currently, there are 364 hospitals, both general and specialized, with a total capacity of 51,000 beds in Saudi Arabia. With an annual population growth rate of 2.5% to 3%, statistics show that the country would require an additional capacity of around 47,000 beds for a total population of over 37 million by 2020. Recent research confirmed a high budgetary allocation for health sector and new health projects, expansion and growth of existing hospitals and clinics, and privatization. Compulsory healthcare insurance, introduced in 2005, and favorable government policies provided more demand for advanced healthcare and medical equipment for both diagnostic and therapeutic applications and boosted investments in this sector. Market Demand
Research indicates $11.84 billion was allocated for the healthcare sector in 2008, 11% more than in 2007. Several healthcare resources mentioned that there is very little domestic production beyond basic healthcare and medical supplies, therefore the market is heavily reliant on imported products. Foreign investment in the expansion of the small private health sector and the production of healthcare and medical devices could boost the market. Massive investment in hospital infrastructure is driving interest in the healthcare and medical device market, which is almost entirely dependent on imports. In April 2008, multi-national device-maker GE Healthcare expanded its joint venture with local distributor El Seif Development, demonstrating that, while direct foreign company presence remains limited by historically strict rules on company ownership, multinationals are increasingly looking to go beyond an import-only presence.
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Market Data and Best Prospects
U.S. exports of healthcare and medical devices to Saudi Arabia, which totaled $1832.3 million in 2005, are expected to continue. Healthcare and medical device imports are strong for the following categories: syringes; needles and catheters; electro medical equipment; general medical and surgical equipment; medical X-ray equipment; Bandag, specified sterile products; medical, surgical or laboratory sterilizers; non-mechanical carriages for disabled persons; compound optical microscopes; parts & laser and optical devices; medical, surgical, dental or veterinary devices ;therapy appliance, oxygen devices; breathing devices, orthopedic appliances and artificial body parts. Healthcare projects have been so far unaffected by the global slowdown with about $13.1 billion being spent in Arabian Gulf countries on new hospital and healthcare facilities, says a study. With the regional governments committed to infrastructure growth, many of these projects are currently in various stages of construction in a series of major public, private and jointly financed initiatives, according to new research. The GCC countries are committed to growth in basic infrastructure, of which healthcare is one of the key elements in their long-term strategies, said Simon Page, director of Life Sciences Division, IIR Middle East, organizers of Arab Health expo. On January 20, 2009 a news article of a local Arabic newspaper based in the Eastern province in Saudi Arabia stated that the database of healthcare projects shows that Saudi Arabia is in the midst of a major construction program with a total of 83 projects ranging from the $400 million (King Saud University Medical City in Riyadh) to the $5 million (Qatif Central Hospital expansion in the Eastern Province). Saudi Arabia leads the way with total healthcare projects valued at more than $6.6 billion currently under construction. The current spending in the UAE and Qatar on new healthcare facilities is closely matched at $2.9 billion and $2.8 billion respectively. Another article mentioned that a huge medical tower, valued at more than $26 million, will be constructed to expand Al Mousa Hospital located in Al Ahsa at the Eastern Province of Saudi and will be completed by the beginning of 2011. Also, medical resources and a recent research reveal that 50% of the Saudi population above the age of 45 is diabetic and $1.1 billion spent annually on diabetes treatment; 22 % of the population are regular smokers (a major cause of respiratory diseases) ; high prevalence of hepatitis C and B (around 30% of the population is afflicted); heart diseases are increasing at an average 5.3% annually; over 11,000 Saudis are enduring kidney failure and 40 % of them are in urgent need of kidney transplantation. The research also states that the Saudi healthcare sector should grow an average of six new hospitals (average 200 beds per hospital) per year to keep pace with the population growth, while demand for hospital beds to increase by 3.4 % annually.
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One important development in the healthcare community is the lunching of the DRX-1 system in Saudi Arabia. Saed Al-Hindi, executive director of Samir Photographic Supplies Co. Ltd (SPS), said: “We have always strived to bring the latest innovations to the Saudi healthcare community as soon as they are released in the US or Europe”. DRX-1 System is an important breakthrough technology, which offers healthcare facilities the possibility of benefiting from the DR technology without any modifications to their existing analog equipment, which results in low installation costs. Moreover, the wireless functionality of the DRX-1 can improve efficiency by allowing a much more flexible workflow to meet the specialized needs of each individual facility. DRX-1 system is the industry’s first wireless DR detector that is the size of a standard cassette and can be used with existing wall stand. The DRX-1 system is expected to be available in Saudi Arabia during the second quarter of 2009. The DRX-1 system incorporates a console and a wireless 14 x 17 inch (35 x 43 cm) cassette-size digital radiography (DR) detector that provides a rapid, affordable conversion for users of radiographic film or computed radiography systems. It requires no modifications to existing analog equipment-which results in very low installation costs- and a healthcare facility can utilize one detector for nearly all types of exams where a traditional cassette would be used. This innovative wireless detector presents an extremely attractive option for facilities that want to improve productivity and image quality in existing film, but do not have the budget for equipment replacement. No modifications to existing x-ray systems are needed and facilities can continue to use the Bucky with CR or film-based cassettes if desired. Because this DR detector is a wireless cassette, it provides flexible positioning that enhances both efficiency and patient comfort. The detector can be used wherever it is needed in the wall stand with a weight of 8.5 pounds, the detector is up to 30 percent lighter and up to 50 percent smaller than other portable detectors. Its compact size and lightweight further enhance convenience and throughput for radiology professionals. The DRX-1 system-suitable for general radiology, trauma, orthopedics and virtually all other x-ray exams-incorporates the same innovative software and image processing and, therefore, will deliver image quality and workflow consistent with these systems. A console is included with the detector to assist with image capture, preparing preview images, image processing and full-resolution display. Images can be transmitted to a storage device. Key Suppliers
Domestic production of both health care and medical devices is very limited. Saudi Arabia has only few main manufacturers of medical and health care devices such as Alshifa Medical Syringes Manufacturing Co. Ltd, Samir Photographic Supplies Co. Ltd (SPS) and the Saudi Pharmaceutical Industries and Medical Appliances Corporation (SPIMACO).
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Research confirms that foreign suppliers are prominent; in 2005, United Sates of America captured 76.5% of the main export market share in Saudi Arabia, valued at $1832.3 million. The European Union captured 12.4% valued at $ 298.1 million; Germany captured 2.6% valued at $62.8 million, the United Kingdom captured 3.6% valued at $86.8 million and Japan captured 2.3% valued at $56.3 million. Prospective Buyers
Saudi Arabia has made significant progress toward expanding the range of potential customers for foreign healthcare and medical devices, says a study. With an annual budget of $4 billion, the Ministry of Health (MOH) provides nearly 64% of all hospital and health services throughout the Kingdom and is thus the most significant customer for healthcare and medical devices. In addition, universities (King Abdulaziz, King Khaled), the Ministry of Defence (Armed Forces, Royal Navy, National Guard, and Interior Ministry) and government corporations and organizations (Red Crescent, Saudi Aramco, and General Organization for Social Insurance) each operates their own hospital and has purchasing procedures independent from the Ministry of Health. Among the most prominent of the Kingdom’s healthcare and medical device distributors are Abdurrahman Algosaibi General Trading Bureau, Bassam Trading Establishment, Saudi Services & Health CARE .co. Ltd, Attieh Medico Ltd, Bashir Shakib Al Jabri & Company, advanced Systems Co. Ltd, NAFA Medical, House of Rays and SPIMACO. To obtain detailed contact information on the aforementioned prospective buyers, please contact Maisa Al Tawail at
[email protected]; Phone: 966 3 330 3200 X 3191. Market Entry
American exporters of healthcare and medical devices are no longer required to appoint a Saudi representative, agent or distributor, however it is advisable to do so to be able to do follow up on product orders by customers, obtain customers feedback as well as provide immediate after-sales services (technical) when required. It is also strongly recommended to have local legal counsel when drawing a contractual agreement in the Kingdom. Also, ensure any contracts are completed in English and Arabic by a trusted 3rd party translation service. For a list of Embassyrecommended lawyers and translation services see the following link: (http://riyadh.usembassy.gov/service/approved-translators.html) Saudi importers usually purchase from foreign companies and wholesale to retailers or direct to consumers like hospitals and clinics. Engaging a local agent/distributor suits the policy that all domestic distributive trade and commission agency are reserved exclusively for Saudi nationals and entities wholly owned (100 per cent) by Saudi nationals. As such, only Saudi companies
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can obtain an import license. Companies that import goods or practice as commercial agencies must be registered with the Ministry of Commerce (MOC) and one of the Saudi Chambers of Commerce and Industry. It is recommended that U.S. companies make regular visits to Saudi Arabia to access the market, promote their products professionally, identify serious agents to distribute their products, get a feel for the market and meet with local companies and possible agents. Visits also help them evaluate potential partners and conduct feasibility studies for any healthcare projects in Saudi Arabia. Saudi business people prefer personal, face- to face meetings as opposed to email, telephone calls and faxes. Good Saudi contacts are particularly essential in the market because foreigners are considered outsiders. Saudi contacts are necessary to keep abreast of local developments, government directives and upcoming projects. U.S. companies tying in with a Saudi company have found it beneficial to maintain a U.S. expert resident in country. Saudi companies appreciate receiving promotional literature from overseas. Saudis feel this information keeps them abreast of the latest technological developments, providing an advantage in increasingly competitive markets. U.S. companies interested in forming joint ventures or appointing agents/distributors in Saudi Arabia can contact the nearest U.S. Export Assistance Center in their area to get a first-hand appraisal. The U.S. Commercial Service (USCS) has more than 100 Export Assistance Centers conveniently located throughout the country. For information on the USCS and its programs please consult the USCS page at (http://www.export.gov). U.S. companies are strongly encouraged to seek competent local legal counsel when drawing their joint venture agreements. Local joint venture partners/appointed agents should have storage facilities, trained personnel and a distribution network serving the Eastern, Central and the Western provinces of Saudi Arabia. Placing advertisements in the local Arabic and English language newspapers and conducting technical sales seminars and presentations at the offices of end-users are the best means to introduce/promote sales of U.S. products/services, besides the regular visits by the salespeople of the local agent/representative to end-users that increase the potential of selling the products/services of a foreign principal. Government offices open from 7:30 a.m. until 2:30 p.m. Business hours in private sector companies vary. Overall, private businesses operate from 8:00 a.m. till 12:00 p.m., and from 3:00 p.m. to 6:00 p.m. Banks open from 8:30 a.m. till 4:30 p.m. Saturday through Wednesday, except for some branches operating on Thursdays from 8:00 a.m. till noon. Most private sector companies work half-a-day on Thursday. Shops and markets stay open till 10:00 p.m. The workweek in Saudi Arabia is Saturday through Wednesday; the weekend is Thursday and Friday. During the Islamic fasting month of Ramadan, work hours are reduced from eight to six hours. The official language in Saudi Arabia is Arabic. English is widely used in business circles. Saudi Arabia does not restrict foreign currency exchange or repatriation of foreign capital invested locally. U.S. manufacturers/suppliers of healthcare and medical equipment interested in exporting their products/services are advised to seek counsel from their nearest U.S. Export Assistance Center (http://www.export.gov).
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Market Issues & Obstacles
Health care and medical devices that meet international standards for compliance may not require registration or licensing from Ministry of Health (MOH). However, two exemptions should be noted: radioimmunoassay equipment requires a license from the Ministry of the Interior and distillation equipment requires a license from the Ministry of Health (MOH). Medical equipments is charged 5% customs duty, in some instances, imported equipment is exempted. Trade Events The following trade events in Saudi Arabia offer excellent opportunities for U.S. firms:
SAUDI HEALTH CARE & HOSPITAL 2009 Venue: Jeddah International Exhibition & Convention Centre Date: May 11-14, 2009 Website: www.acexpos.com SAUDI MEDICARE 2009 Venue: Riyadh Exhibition Centre Date: May 17-20, 2009 Website: www.recexpo.com For More Information
The U.S. Commercial Service in Dhahran Saudi Arabia can be contacted via e-mail at:
[email protected]; Phone: 966 3 330 3200 X 3191; Fax: 966 3 330 2190; or visit our website: www.buyusa.gov/saudiarabia/en The U.S. Commercial Service — Your Global Business Partner With its network of offices across the United States and in more than 80 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://www.export.gov/eac. Comments and Suggestions: We welcome your comments and suggestions regarding this market research. You can e-mail us your comments/suggestions to:
[email protected]. Please include the name of the applicable market research in your e-mail. We greatly appreciate your feedback. Disclaimer: The information provided in this report is intended to be of assistance to U.S. exporters. While we make every effort to ensure its accuracy, neither the United States government nor any of its employees make any representation as to the accuracy or completeness of information in this or any other United States government document. Readers are advised to
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independently verify any information prior to reliance thereon. The information provided in this report does not constitute legal advice.International copyright, U.S. Department of Commerce, 2007. All rights reserved outside of the United States.
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