International medical device companies operating in Saudi Arabia may need to rethink their reliance on local distributors, according to a new whitepaper from Eurogroup Consulting. The report, titled “Own It or Outsource It? Finding a Smarter Way to Distribute Medical Devices in KSA”, argues that the Kingdom’s healthcare market has evolved beyond simple product distribution.
The authors describe this shift as a move toward an “operating market” that demands a dedicated Saudi-specific strategy. Jack Fowler, Principal at Eurogroup Consulting Middle East, said, “Saudi healthcare decisions are no longer won through one relationship or one tender. They are shaped across clinical, technical, procurement and financial priorities.” This complexity shows the need for manufacturers to engage more directly with the market, ensuring they understand and address the complex needs of Saudi healthcare providers. The Kingdom’s healthcare system is no longer just about selling products but about delivering full solutions that align with national health objectives.
A more structured, demanding market
According to the whitepaper, this change is driven less by market growth than by structural factors. Purchasing decisions now involve multiple stakeholders, including clinicians, biomedical engineering teams, and centralized bodies like NUPCO (Saudi Arabia’s National Unified Procurement Company). Additionally, the Local Content and Government Procurement Authority (LCGPA) plays a key role in ensuring that procurement aligns with Saudi Arabia’s localization goals. This multi-stakeholder environment requires manufacturers to adopt a more subtle approach, balancing technical, clinical, and financial considerations while adhering to local regulations and preferences.
The report highlights a shift from product-centric selling to what it calls solution-centric value creation. Hospitals are increasingly evaluating suppliers based on workflow improvement, staff training, digital integration, and measurable outcomes.
The strain on traditional models
While the traditional distributor-led model still works for some categories, the report identifies limitations for higher-value or strategically important product lines. These include limited direct access to end users, weak transparency on pricing, and slow response to market changes. Distributors often prioritize broader portfolios, which can dilute their focus on specific high-value products. Moreover, the lack of direct engagement with end-users can result in missed opportunities to gather critical market feedback and tailor solutions to specific needs.
For those most impacted by these changes, the shift could mean a reevaluation of long-standing partnerships and a need to develop new capabilities to maintain influence in a market where growth is increasingly tied to local engagement and strategic alignment. Companies may need to invest in local teams, build stronger relationships with key stakeholders, and adopt more agile strategies to respond to market trends. This reevaluation is not just about maintaining market share but about positioning for long-term growth in a rapidly evolving healthcare ecosystem.
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The case for a hybrid approach
Instead of a binary choice between direct and indirect models, the whitepaper proposes a hybrid approach. Manufacturers should retain control over strategic accounts, tender strategy, and market intelligence, while distributors handle regulatory administration and logistics. This hybrid model allows companies to leverage the strengths of both approaches, ensuring they maintain direct influence over critical aspects of their business while benefiting from the local expertise and infrastructure of distributors. For example, manufacturers can focus on building relationships with key hospitals and clinics, while distributors manage the complexities of regulatory compliance and supply chain logistics.
The report outlines a five-model spectrum of distributor arrangements, with the appropriate structure depending on factors like scale and localization ambitions. It notes that companies like Siemens Healthcare and Philips Healthcare are already moving toward hybrid models in the Kingdom.
Localization without manufacturing
On localization, the whitepaper clarifies that LCGPA (Local Content and Government Procurement Authority) expectations do not require in-country manufacturing. Instead, it suggests a five-phase roadmap that includes local commercial presence, service capability, and light assembly, with manufacturing considered only where justified.
The report also treats a Regional Headquarters as a strategic option rather than a default requirement, emphasizing the importance of local service quality over administrative centralization.
To guide decision-making, Eurogroup Consulting proposes a five-dimension assessment framework covering market attractiveness, commercial control, and local-content readiness. This framework aims to help companies structure their Saudi go-to-market approach.
The whitepaper’s authors are Damien Duhamel, Managing Partner; Jack Fowler, Principal; and Josephina Mallah, Senior Consultant. Eurogroup Consulting, founded in 1982, operates within a global network of 3,000 consultants across the Middle East and Asia.
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