The Saudi pharmaceutical sector is expected to maintain its strong growth momentum. However, a gradual shift towards low-cost generics coupled with stronger market penetration of global pharma players could lead to a redefinition of the competitive landscape.

Currently, domestic pharmaceutical manufacturers account for a relatively small share of the market, currently 18%. While the government supports and encourages the build-up of local value chains, domestic players face two main challenges:

• Firstly, global pharma giants such as GlaxoSmithKline, Pfizer, Astellas and Sanofi Aventis are entering the market.
• Secondly, low cost generics are becoming more prevalent.

"Consequently, domestic players – manufacturers in particular – must redefine their strategic positioning in the market and assess how to best capitalize on their capabilities in a changing environment", says Morris Hosseini, Partner at Roland Berger.

Key strategic levers for sustaining a competitive value proposition include redesigning value creation architecture, reconfiguring the business model, building brand equity and recalibrating the scope/scale of the activity coverage.