Thursday 26 April 2018

Saudi health reforms to boost insurance sector

London , June 10, 2009

There will be unparalleled growth opportunities for insurers and healthcare providers in Saudi Arabia once the new healthcare reforms are implemented in the Kingdom, says a study by Datamonitor, a business intelligence firm.

'These reforms will not only increase the accessibility of healthcare services, but the expansion of private healthcare coverage will lead to significant growth of the healthcare and pharmaceutical sector, together with the emergence of new niches in the healthcare ecosystem,' it points out.

The study, which involved regulators, insurers, pharmaceutical companies and the Saudi Arabian General Investment Authority, showed that the reforms will lead to a tremendous increase in private healthcare expenditure.

According to Datamonitor Mena healthcare consulting analyst Ruch de Silva, the health insurance reforms will take a significant burden off the Saudi Government, since employers now finance healthcare for their employees in the private sector.

“This does not mean that these individuals will be deprived of the healthcare they need,” he says, “as the basic health insurance package stipulated by the Council of Co-operative Health Insurance (CCHI) is the best of its kind in the region.

'However, we remain concerned that the fragmented insurance market, uncertain capital reserves and reports of fraudulent issuance of certificates in order to fulfil iqama [visa] requirements pose a threat to residents’ health.'

'Co-operative health insurers are facing very stiff competition, as the primary differentiator between basic insurance packages is the price of the premium – disease and condition coverage is fairly homogenous.'

CCHI secretary general Dr Abdullah Al Sharif said it has plans to develop a comprehensive healthcare management system centred around health economics and pharmacoeconomics in tieup with the Saudi Food and Drug Authority.

Besides saving costs, the future healthcare management system will address the current problems faced by payers of healthcare: over-prescribing of pharmaceuticals by physicians, unauthorized dispensing of branded drugs over generics by pharmacists, and excessive treatment sought by consumers, he adds.

However the Datamonitor research throws up a few substantial questions. 'Has the piecemeal promulgation of legislative and regulatory devices compromised the effective creation of a new Saudi healthcare system? Will the reforms provide benefits across the equity, efficiency and efficacy of the system?'

The good news for pharmaceutical companies and investors in healthcare is that the Saudi healthcare market is set to grow tremendously as the CCHI begins the next phase of implementation – the extension of cooperative health insurance for all Saudi nationals.

The advent of health insurance will mean that private healthcare will become accessible to a large proportion of its poverty-stricken population. For private hospitals and pharmaceutical companies, the potential to maximize revenues is immense, de Silva adds.

The value of gross written premiums in Saudi Arabia will surge to SR25 billion ($6.7 billion) from SR3 billion ($801 million) once reforms are fully implemented, he says.

According to de Silva, the private retail pharmaceutical market will continue to see accelerated growth rates over the next five years.

The director-general of the Health & Life Sciences Sector of the Saudi Arabia General Investment Authority Dr Manar Al-Moneef, expects growing interest from global pharmaceutical players in the kingdom as a result of the world-class fiscal and regulatory incentive packages given for local manufacturing.

“One challenge that most certainly remains across the healthcare ecosystem, for both new market entrants and existing participants alike will be negotiating their way through healthcare strategy, financing a

Tags: Saudi | Insurance | health reforms | Datamonitor |

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