PIF launches new pharma investment vehicle

Unsplash/toon-lambrechts

• Saudi sovereign wealth fund establishes Lifera
• Company to manufacture life-saving products
• Kingdom’s pharmaceuticals industry to be worth $20bn in 10 years

Saudi Arabia’s sovereign wealth fund, PIF, launched a new pharmaceutical investment company on Monday, as experts predict the country’s market will grow to $20 billion over the next decade.

Lifera will make life-saving and essential products including insulins, vaccines and plasma therapeutics, PIF said in a statement. 

The company will create partnerships with leading local and international companies and attract investment to grow local capacity and drive the development of domestic manufacturing, it added.

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Analysts at BMI, formerly Fitch Solutions, said they expect pharmaceutical investment in Saudi Arabia to grow strongly, describing the market as an “attractive business landscape”.

The Saudi pharmaceutical industry was valued at SAR44 billion ($11.7 billion) last year, according to BMI, and is estimated to grow annually at over 5 percent to $15.1 billion in 2027 and $19.8 billion in 2032. 

“Pharmaceutical companies have been increasingly investing in Saudi Arabia in recent years, attracted by the country’s large and growing population, its strong healthcare infrastructure and the government’s commitment to developing the sector as part of its Vision 2030 plan,” analysts said in its latest research note. 

Several multinational companies have already established a presence in the country, either through direct investment or partnerships with local companies, including Novartis, Pfizer, Sanofi, Merck and GlaxoSmithKline. 

Many have regional headquarters or distribution centres in the kingdom, using it as a hub to serve other markets in the Middle East and North Africa (Mena) region.

The government has also implemented regulatory reforms to encourage investment and support the development of the local industry. 

“Biologics represents one of the most critical and fastest growing pharmaceutical segments, both in Saudi Arabia and globally,” Yazeed A Al-Humied, deputy governor and head of Mena investments at PIF, said.

“Lifera intends to partner with leading companies in the sector to localise manufacturing, attract investment and enable the private sector to scale up, ensuring easier access for patients, whilst securing supply of life-saving medicines that can meet local, regional and global demand.”

PIF, which has established 79 companies across its 13 strategic sectors since 2017, has also invested in the National Unified Procurement Company, a provider of medical procurement, storage and distribution services. 

BMI analysts said the initial public offering of drugmaker Jamjoom Pharma, which saw an eleven-fold demand from investors for plans to list 30 percent of its issued shared capital, is further evidence of the strength of the sector.

Yet they also said the “challenging regulatory environment” could present headwinds to innovative multinational drugmakers. 

“Some progress has been achieved to promote innovation in the pharmaceutical sector,” analysts said.

“But factors such as ineffective intellectual property protections, procurement systems favouring local drug manufacturers and flawed pricing policies will present downside risks to the investment climate in Saudi Arabia.”