Saudi Arabia’s Pharmaceutical Industry: Localization, Innovation, and Market Growth

A domestic pharmaceutical manufacturer in Saudi Arabia looking to expand its production capacity and market share amid the Kingdom’s healthcare expansion.

The local market was large (spending ~SAR 40 billion in 2023) but ~70% of medicines were imported, a strategic vulnerability. The government prioritized local manufacturing to boost domestic supply. The client, a generic drug producer, had limited production capacity and technology. It faced strict regulations and strong foreign competitors. The challenge was to scale up production, diversify its products, and meet high quality standards to leverage market growth and government support for localization.

We crafted a strategic expansion plan to transform the client into a leading local pharma producer. Central to our solution was aligning the company’s growth with Vision 2030’s localization targets – for example, increasing domestic pharmaceutical supply toward 40% of national demand. The plan proposed scaling up manufacturing infrastructure with a new state-of-the-art production facility to boost output. We identified key therapeutic categories where local production was feasible and impactful (such as common chronic disease medications and select biologics) and outlined a product pipeline. To overcome technology gaps, we recommended strategic partnerships or joint ventures with established international pharma companies, enabling technology transfer and access to advanced drug formulas. The solution also included strengthening the company’s R&D and quality assurance capabilities. We laid out a roadmap for achieving stringent SFDA regulatory compliance to ensure the company’s new products could be approved quickly (leveraging SFDA’s accelerated review for locally made drugs). Additionally, we advised leveraging government incentives (tax breaks, preferential procurement) to support local manufacturing efforts.

Our approach began with a market analysis to pinpoint high-demand drug segments that were largely imported. We evaluated the client’s existing facilities and production lines, benchmarking their efficiency and output against industry standards to identify bottlenecks. Workshops with the client’s management and technical teams helped assess internal strengths and weaknesses. We then engaged with potential global partners – we facilitated discussions with several multinational pharmaceutical firms (without naming them) interested in local manufacturing, presenting a win-win collaboration model. In parallel, our regulatory experts mapped the pathway for new product approvals and identified compliance gaps in the client’s processes, guiding upgrades in quality control (GMP practices, documentation, etc.). The financial team developed an investment plan, including capital expenditure for the new facility and projected returns from substituting imports and capturing new market share. We phased the strategy: immediate steps to optimize current operations and increase output of existing products, followed by medium-term actions (building the new plant, launching joint-venture products) and long-term initiatives (establishing in-house R&D for generics and biosimilars).

We delivered a set of clear recommendations. First, expand production capacity immediately by investing in new production equipment and adding shifts to maximize output from current facilities, capturing unmet local demand. Second, diversify the product portfolio by securing licenses or technology to produce high-demand drugs domestically – for instance, cardiovascular and diabetes medications – to reduce dependence on imports. For more complex or patented drugs, we recommended pursuing joint ventures with global pharma leaders, facilitating local manufacturing through tech transfer and shared investment (an approach supported by government policy). We also emphasized building in-house capabilities: investing in an R&D unit to develop generic formulations and a robust quality assurance program to meet SFDA and international standards. To support these moves, we advised the client to fully utilize government support, such as fast-track regulatory approval for local manufacturers and favorable procurement from the national supplier (NUPCO) for locally made drugs. Finally, we recommended workforce development initiatives, like specialized training for lab and production staff, to ensure the company can sustain high-quality output as it grows.

The strategic engagement put the company on a high-growth trajectory. By following our roadmap, the client has entered a partnership with a reputable international pharmaceutical firm, which is transferring technology for the local production of several important medications. This enabled the launch of new product lines, capturing a larger share of the domestic market. Within a year, the company’s output and sales grew substantially, contributing to an increase in the locally produced portion of Saudi Arabia’s medicine supply (closing the gap on the 70% import reliance). The client also improved its regulatory standing – it implemented stricter quality controls and successfully obtained SFDA approvals for new drugs in shorter time frames, thanks to priority review for local manufacturing. Financially, the company is seeing cost savings by substituting imported drugs with its own products and enjoying revenue growth from newly added therapies. Intangibly, the company’s reputation has risen: it is now recognized as a key player in advancing Saudi Arabia’s pharmaceutical self-sufficiency initiative. This strengthened position is attracting further investments and partnerships, setting the stage for sustained long-term success.