Own it or outsource it? New whitepaper urges medical device firms to rethink Saudi distribution models
International medical device companies operating in Saudi Arabia may need to rethink how much of their business they hand to local distributors, according to a new whitepaper from Eurogroup Consulting, a Middle East and Asia-focused strategy and management consultancy.
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 moved beyond simple product distribution and is becoming what the authors term an “operating market” – one that demands a dedicated Saudi-specific strategy rather than management from a regional hub.
“Saudi Arabia is no longer just a distribution market for medical device companies. It is becoming an operating-model market,” the firm noted.
A more structured, more demanding market
According to the whitepaper, the shift is driven less by market growth than by structural change. Purchasing decisions in Saudi healthcare now routinely involve clinicians, biomedical engineering teams, procurement and finance functions, hospital clusters, and centralised channels such as NUPCO (Saudi Arabia’s National Unified Procurement Company – a centralised body for procuring medical supplies, devices and pharmaceuticals on behalf of the public healthcare sector), alongside local-content considerations overseen by the Local Content and Government Procurement Authority (LCGPA).
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. Local partners remain essential, but without direct visibility into strategic accounts, service standards and market data, manufacturers risk losing influence where growth is decided.”
The whitepaper also describes a shift from product-centric selling towards what it calls solution-centric value creation, with hospitals increasingly evaluating suppliers on workflow improvement, staff training, digital integration, service reliability and measurable clinical or economic outcomes.
Why the distributor-only model is under strain
The traditional route to market – appointing a distributor to handle registration, tenders, logistics and account support – still works for some categories, the report says, particularly where portfolios are broad but not strategically critical, margins do not justify a dedicated local team, or the customer base is fragmented.
However, for higher-value or strategically important product lines, the authors identify recurring limitations in the pure distributor-led approach, including:
- Limited direct access to end users
- Weak transparency on pricing and margins
- Inconsistent service quality
- Limited ability to defend strategic accounts
- Slow response to market changes
- Distributor instability or competing portfolio priorities
The case for a hybrid model
Rather than framing the choice as “direct versus indirect,” the whitepaper proposes that manufacturers identify which commercial levers must be retained in-house and which can remain with a partner. Areas manufacturers should typically control directly include strategic accounts, tender strategy and pricing governance, clinical education, regulatory strategy, distributor governance, service standards, local-content strategy, and market and tender-pipeline intelligence. Distributors, meanwhile, continue to play a role in regulatory administration, importation and warehousing, routine tender administration, regional account coverage, training logistics, first-line maintenance and collections.
The report sets out a five-model spectrum of distributor arrangements, ranging from a Traditional Distributor-Led Model through to a Strategic Localization Partner Model, with the appropriate structure depending on scale, portfolio breadth and localisation ambitions. It notes that some global manufacturers – among them Siemens Healthcare, Philips Healthcare, Medtronic and Boston Scientific – are already shifting from indirect towards hybrid arrangements in the Kingdom, while a smaller number are moving further towards fully direct models.
Local content without a rush into manufacturing
On localisation, the whitepaper is explicit that LCGPA expectations do not require every company to manufacture in-country. Instead, it sets out a five-phase roadmap: local commercial and tender presence; local service, maintenance and training capability; local warehousing and spare-parts availability; repackaging, relabelling or light assembly; and, only where justified, selective manufacturing or technology transfer.
Similarly, the report treats a Regional Headquarters (RHQ) as a strategic option rather than a default requirement, relevant mainly for companies with established cross-country management functions or major public-sector exposure – not as a substitute for local service quality or distributor governance.
A five-dimension assessment framework
To help companies structure these decisions, Eurogroup Consulting proposes reviewing the Saudi go-to-market approach across five dimensions: market attractiveness, commercial control, partner model, local-content readiness, and organisation and investment. The firm frames this as moving from the broad question “How should we operate in Saudi Arabia?” towards a structured decision on where to retain control, where to partner, and how far to localise.
The whitepaper’s authors are Damien Duhamel, Managing Partner at Eurogroup Consulting Middle East; Jack Fowler, Principal; and Josephina Mallah, Senior Consultant. Eurogroup Consulting, founded in 1982, describes itself as an independent strategy and management consulting firm operating within a global network of 3,000 consultants, with offices across the Middle East and Asia.
- Download the white paper “Own It or Outsource It? Finding a Smarter Way to Distribute Medical Devices in KSA” here: https://eurogroupconsultingmea.com/insights/whitepapers/saudi-arabia-s-medical-device-market-is-your-operating-model-ready
