Solidiance Asia Pacific

The Role of In Vitro Diagnostics (IVD) in Saudi Arabia's Healthcare System

Press Release   •   Dec 14, 2015 18:56 +08

In vitro diagnostics, or commonly known as ‘laboratory tests’, plays a significant role in saving peoples’ lives by providing accurate diagnosis and prognosis, which enables improved monitoring and treatment. In Saudi Arabia, government funding in relied heavily; by which 65% of government spending is allocated towards the sector.

Solidiance co-developed this white paper titled “The role of In Vitro Diagnostics (IVD) in Saudi Arabia’s Healthcare System” with King Abdulaziz Medical City and Abbott Diagnostics, which analyses the contribution, value and future of in vitro diagnostics in Saudi Arabia’s healthcare system. The report discovered that trends in Saudi Arabia’s healthcare system leads to demand for more IVD, which will indeed offer significant opportunities for the country while also providing higher-quality healthcare to Saudi’s population in short to long term.

IVD overview

Diagnostics represent only ~2% of global healthcarespending, but are critical to medical decision-making; research has found that approximately 60% of all medical decisions are based on IVD tests, signifying a huge potential for relatively low cost tests and greatly reduce the burden of diseases that cost healthcareecosystems billions of dollars every year.

There is steady growth in IVD adoption and usage worldwide due to its perceived benefits. The global IVD market size was over USD 55 billion in 2014, and is expected to reach USD 75 billion by 2020. Increasing incidence rates of infectious diseases and the rising incidence of cancer are among some of the key external drivers of global IVD demands.

 Healthcare trends in Saudi Arabia

By 2018, Saudi Arabia’s population is forecasted to increase by 2 million, while the aging population (persons >60 years of age) will grow from 7% to 8%. The prevalence of diabetes is expected to continue to increase from its current 24%, and other lifestyle diseases such as cardiovascular diseases are expected to grow and add pressure to the current healthcareinfrastructure.

Expansion of overall healthcare services and laboratory facilities are required to meet the increasing demands on Saudi Arabia’s healthcare ecosystem. Unlike in many other developing nations, in Saudi Arabia, publicly-run hospitals are perceived to have higher quality healthcare than the private sector; therefore, the pressure for growth is greater on the private healthcare system in the country.

The Ministry of Health (MOH) and other government-affiliated hospitals make up 77% ofSaudi’s available healthcare infrastructure, with private healthcare only making up the remaining 23% whilst catering to the lion’s share of the population. Expatriates (~30% of the population) and private sector employees (~35% of the population) and their families, only have access to the private healthcare facilities.

To address this imbalance, the Saudi Government has increased its healthcare budget by 49% from USD 28.5 billion in 2014 to USD 42.7 billion in 2015, allocated for healthcarefacilities expansion, integrated e-healthcare system development, and enhancing primaryhealthcare centers and diagnostic laboratories.

The government plans to construct >100 new public and private hospitals to meet current demands in the coming years, and also expects a 21% increase in the number of primaryhealthcare centers from the 2,279 in 2013 to 2,750 centers by 2020. In order to bolster private-sector participation in the healthcare sector, the Saudi Government is also offering loans to build healthcare infrastructure at favorable rates, but despite these efforts, progress is slow – and challenges abound.

The government has also been working towards universal health insurance, and hopes to have all Saudi Nationals and expats covered by private health insurance by 2016. The Insurance market has shown significant growth from USD 800,000 in 2007 to USD 5.6 million in 2015.

The Future Role of IVD in Saudi Arabia

In Vitro Diagnostics (IVD) will play a critical role in the integrated healthcare system proposed by the Saudi Government, enabling operational efficiencies and cost-savings across the public and private healthcare ecosystems. The aforementioned challenges the Saudi Arabianhealthcare infrastructure is facing is significantly driving demand for quality IVD services in the country. Currently, only 1% of the overall healthcare expenditure in Saudi Arabia is spent on IVD, and is expected to grow to 1.5% by 2020; although this is still comparatively lower than the global average of 2%.

All things considered, the Saudi Arabia IVD market is growing at a CAGR of 6.5% and is projected to reach USD ~500 million by 2018, of which the greatest growth will be seen in the private sector, as private infrastructure growth will be emphasized over the course of the next 3-5 years. 

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Soldiance is a corporate strategy consulting firm with focus on Asia Pacific. We advise CEOs on make-or break deals, define new business models and accelerate Asia growth. Solidiance's expertise is focused on industrial applications, green technology, healthcare and technology sectors with offices in ten different Asian countries: China, India, Indonesia, Malaysia, Myanmar, Philippines, Singapore, Thailand, UAE, and Vietnam.