Navigating Biologics Localization in Saudi Arabia: Unveiling the Policy Landscape

August 28, 2023

In the ever-evolving realm of pharmaceuticals and biotechnology, the concept of biologics localization has gained remarkable prominence. This strategic approach involves concentrating various stages of the biologics supply chain within a specific geographical area. The Kingdom of Saudi Arabia, driven by its Vision 2030 framework, aspires to establish itself as a global biologics manufacturing hub. For pharmaceutical and biotech enterprises, understanding the policy landscape shaping biologics localization in Saudi Arabia is pivotal to seizing the immense potential of this burgeoning opportunity.

Vision 2030: Fostering Biologics Localization

Saudi Arabia’s Vision 2030 is a comprehensive roadmap aimed at diversifying the economy and reducing reliance on oil. In the health care sector, Vision 2030 envisions transforming the Kingdom into a regional life sciences and biotechnology hub. The benefits of biologics localization extend beyond economic gains, encompassing incentives like foreign direct investment, streamlined labor utilization, reduced import costs, and augmented exports. Moreover, localization nurtures skilled workforces, propels knowledge- and technology-driven sectors, and ignites research and development endeavors.

Overcoming Challenges: Navigating Financial Considerations

Cost considerations are pivotal in the localization journey. To induce technology transfer for fill and finish processes—the final step in biopharmaceutical manufacturing which requires special processes and equipment to ensure product integrity during storage, transportation and delivery to patients—alluring incentives become essential to sway companies towards technology transfer rather than merely exporting finished products. As active pharmaceutical ingredient production dominates the cost structure, fill and finish expenses appear secondary. Nonetheless, the process of technology transfer for fill and finish entails substantial technical expertise, time and resources. Thus, compelling incentives such as access to public tenders and tax reductions are vital to counterbalance potential losses and incentivize technology transfer.

Overcoming Challenges: Strengthening Intellectual Property Protection

An additional obstacle is the concern over intellectual property (IP) protection. Foreign companies often hesitate to share technology due to apprehensions about IP compromise and competitive leakage. Robust IP protection is vital to reassure foreign entities that their proprietary technology will remain secure, thereby fostering collaboration through technology transfer. The establishment of the Saudi Authority for Intellectual Property (SAIP) in 2017 aimed to enhance various aspects of IP including strategies, regulations, and laws. This involves making IP rights more accessible and usable, as well as encouraging proper recognition of these rights. Additionally, building stronger global collaborations related to IP and protecting the Kingdom’s interests worldwide, all of which collectively work towards boosting the national economy’s competitiveness. Although Saudi Arabia’s removal from the Priority Watch List of the Special 301 Report—an annual review of the global state of IP protection and enforcement conducted by the Office of the United States Trade Representative to identify trade barriers to U.S. companies and products due to IP laws—in April 2022 signifies progress, historical perceptions could still present localization challenges, especially for innovators. Balancing the control of innovators and local manufacturers is paramount, ensuring both technology transfer willingness and safeguarding local investments.

Overcoming Challenges: Addressing Regulatory Hurdles

Stringent regulatory requirements often impede progress. Adjusting approval processes for biosimilar drugs, akin to international practices, can alleviate this challenge. Reducing trials for lower risk biosimilars would not only lower financial barriers for local manufacturers but also foster diverse partnerships and facilitate technology transfer. However, as domestic research capabilities grow stronger, revisiting regulations becomes imperative for effective global competition.

Policy Framework: Incentives Enroute to Success

Central to successful biologics localization in Saudi Arabia are the policies and incentives that create an environment conducive to growth in the sector. Streamlined regulatory processes, expedited approvals and facilitated licensing for biologics manufacturing are some of the advantages Saudi Arabia offers. These incentives expedite the market entry process, empowering companies to gain a competitive edge. Government agencies driving localization in Saudi Arabia include the Ministry of Investment Saudi Arabia (MISA), the Saudi Food and Drug Authority (SFDA) and the National Unified Procurement Company (NUPCO).

MISA provides a range of incentives to pharmaceutical companies venturing into the Saudi market, including reduced minimum capital requirements, 100% foreign ownership of property, tax advantages and exemption from import/export duties. The National Transformation Program, aligned with Vision 2030, encourages domestic and foreign investments to diversify the Saudi economy. MISA oversees health care localization initiatives, ensuring strategic alignment. The SFDA plays a critical role in the localization journey, overseeing medicine supply chain regulation, registration, pricing and more. Their expedited verification and registration system shortens review times for generic and locally produced products, enhancing efficiency. NUPCO manages the health care supply chain, using a scoring mechanism to evaluate multinational corporations, offering tendering advantages. This approach incentivizes improving localization scores, augmenting competitiveness.

Partnerships and Collaborations: A Vital Strategy

Collaborations between foreign companies and local Saudi companies have emerged as a cornerstone of the localization drive. Encouraged by the Saudi government, these alliances are instrumental in advancing the biologics industry. Partnerships grant access to local expertise, infrastructure and resources while aligning with the Kingdom’s objectives. These alliances also foster the transfer of knowledge, technology and skills, nurturing a skilled local workforce.

Noteworthy partnerships in KSA include Hankook Korus Pharm and G L Rapha Co’s local manufacturing engagement of 30 biotech products, Roche and SPIMACO’s oncology product collaboration with expected annual sales of US$27 million, and Amgen and SPIMACO’s technology transfer partnership for addressing auto-immune diseases. Moreover, the Riyadh Global Medical Biotechnology Summit in January concluded with eleven agreements involving the medical biotech sector, government agencies, and international and national companies, underscoring the commitment to fostering the sector’s growth through collaboration.

The Path Forward: Seizing Opportunities

One of the most significant advantages of biologics localization lies in its potential to expedite innovation and widen access to groundbreaking treatments, reducing dependence on imports. Saudi Arabia’s ambitious Vision 2030 lays the groundwork for an inspiring journey in biologics localization. By fostering a thriving biotech ecosystem through policy incentives, partnerships and collaborations, the Kingdom creates fertile ground for innovation and growth. Pharmaceutical and biotech enterprises can capitalize on this momentum by aligning their strategies with Saudi goals, exploring partnership opportunities, and deftly navigating the regulatory landscape. In doing so, they contribute to Saudi Arabia’s health care transformation and reap the rewards of a burgeoning market.

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