Increasing demand for generic medicines, a challenge for the e-pharmacy industry in the Kingdom of Saudi Arabia: Ken Research

17-Apr-2023   Anonymous, Designation: Growth Marketing Manager KSA, of a leading Telehealth company   Author: Navya Dalakoti

In conversation with Business Development Director, at a leading online pharmacy company, we made an attempt to understand the Online Pharmacy Market in the Kingdom of Saudi Arabia.

1. We would like to understand the Saudi’s pharmacy market from you.

Saudi Arabia is one of the biggest markets in Gulf region. The population of Saudi is growing at the rate of about 2.3%, which is one of the highest in the gulf region plus there are a lot of projects coming in Saudi which is bringing lots of expert workers to the country. So, currently the population of Saudi is about 35 million and is expected to be around 40 million by 2030 hence there will be increase in population weather it is Saudi nationals or experts coming from other countries and this is expected to increase the overall retail pharma industry from current 9 billion USD to about 11.5 billion USD.

2. How has COVID impacted the online pharmacy market of Saudi Arabia? How the companies have evolved their growth strategy?

COVID has changed the pharma industry tremendously in gulf and more specifically in Saudi Arabia. Previously the pharma chains were relying on the traditional ways of selling & dispensing medicines. Due to the COVID, people started relying more on e-commerce and omnichannel ways of getting the essentials. COVID changed the way of purchasing pharma and non-pharma products like beauty care, baby care etc. from visiting stores to buying online. Though the market got bigger and still getting bigger, the regulations are in place to regulate the sales of controlled drugs.

3. What are the major factors fueling the growth of the Saudi Arabia Online Pharmacy Market?

It is becoming easy for people to navigate through the application. The Saudi population, majority of people are young generation who are used to the mobile interface and the internet so, it’s becoming a trend to buy everything online. So, online shopping is becoming more dominant.

4. What are the major challenges in the Saudi’s online pharmacy market?

The major challenges for the Saudi market are currently the medical insurance where the Saudi’s working in the public sectors is insured and they only go to the public sector hospitals. The government is also now promoting generic medications. Earlier the consumer asked for branded medications now, with the government pushing generic medicine consumers are getting aware about generics and asking for it and generics have very low margins as you know.

Also, the insurance companies are putting higher deductibles on brand medications and lower deductibles patient contribution on generic medications. So, we are seeing an increased demand for generic medicines in the coming years.

5. When we segment the market, which segment holds the highest percentage contribution to the total revenue being generated, Prescribed drugs VS OTC Products VS Non-Pharma Products?

Mom & baby products are the most sought-after products and prescribed drugs are sold the least via online channel, maybe 10-15%, due to the hassle in the process though the players are working to make the process as simple as possible.

6. Do customers in Saudi prefer ordering from website or mobile application?

Saudi has close to 100 percent smartphone penetration. People majorly order through smartphone applications are these are more convenient and the number is expected to increase even further in the future.

7. How do you predict the Saudi’s online pharmacy market to grow in the next 5 years?

There is a huge deviation on the behavior of patients form getting medicinal products from stores to buying it online. So, today we see that the pharmacy chains who used to open 100-150 of retail outlets on a yearly basis have now decreased it to less than 50 as they now know that patients can reach them via online channel to buy medications. Even the hospitals, clinics and polyclinics are now promoting the online purchase of pharma essentials for patients.

I would say it to be a higher single digit year on year growth and the competition would increase in the future.

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Ken Research
Ankur Gupta, Head Marketing & Communications