Article 12 of the Saudi Pharmaceutical Establishments Law
المادة 12 من نظام المنشآت والمستحضرات الصيدلانية والعشبية
This article sets the profit percentages for a trading warehouse, a pharmacy and an herbal products sales establishment on a product's price, according to factory or export price brackets.
Official text (Arabic)
This article has not been amended since the law was issued.
تحسب نسبة ربح على سعر المستحضر الصيدلاني أو العشبي لكل مستودع اتجار بالمستحضرات الصيدلانية والعشبية، وصيدلية، ومنشأة بيع المستحضرات العشبية، على النحو الآتي:
سعر المصنع أو التصدير نسبة الربح للمستودع (محسوبةً على سعر المصنع أو التصدير) نسبة الربح للصيدلية أو منشأة بيع المستحضرات العشبية (محسوبةً على سعر بيع المستحضر المحدد للمستودع)
خمسون ريالاً فأقل 15% 20%
أكثر من خمسين ريالاً إلى مائتي ريال 10% 15%
أكثر من مائتي ريال 10% 10%
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 12 explained in plain English
This article sets the profit percentage allowed for each of the trading warehouse, the pharmacy and the herbal products sales establishment, according to factory or export price brackets:
- SAR 50 or less: warehouse profit 15%, and pharmacy or herbal establishment profit 20%.
- More than SAR 50 up to SAR 200: warehouse profit 10%, and pharmacy or herbal establishment profit 15%.
- More than SAR 200: warehouse profit 10%, and pharmacy or herbal establishment profit 10%.
What matters is understanding the basis for calculating each percentage:
- The warehouse's profit percentage is calculated on the factory or export price.
- The pharmacy's or herbal establishment's profit percentage is calculated on the product's selling price set for the warehouse, meaning the price after adding the warehouse's profit.
The two profits are therefore sequential: the warehouse profit is added first, then the pharmacy profit is calculated on the result. This article relies on Article 11, which makes the factory or export price the basis of pricing. The higher the medicine's price, the lower the profit percentage, until both parties are equal at 10% for what exceeds SAR 200.
Practical example
A medicine has a factory price of SAR 40, so it falls in the first bracket. The warehouse adds 15% of 40, which is SAR 6, so the warehouse's selling price becomes SAR 46. The pharmacy then adds 20% of 46, which is SAR 9.20, bringing the price to SAR 55.20.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 12 of the Saudi Pharmaceutical Establishments Law
What is the pharmacy's profit percentage on a medicine?
20% if the factory or export price is SAR 50 or less, 15% if it is above SAR 50 up to SAR 200, and 10% if it is above SAR 200.
On what price is the pharmacy's profit percentage calculated?
On the product's selling price set for the warehouse, not on the factory price.
What is the medicine warehouse's profit percentage?
15% for the first bracket (SAR 50 or less) and 10% for anything above that, calculated on the factory or export price.
Do the percentages cover herbal shops?
Yes. An herbal products sales establishment gets the same percentages as the pharmacy.
More articles on Drug Pricing and Profit Margins
- Article 11
This article bases the price of a pharmaceutical or herbal product on the factory price or the export price to the Kingdom, and requires the Authority to review prices periodically.
يحسب سعر المستحضر الصيدلاني أو العشبي بناءً على سعر المصنع أو سعر التصدير إلى المملكة بعملة بلد المنشأ أو العملة التي تقررها الهيئة. وتقوم الهيئة بمراجعة أسعار
- Article 19
This article bars selling registered pharmaceutical and herbal products except after the Authority prices them and in the packages it specifies.
لا يجوز بيع المستحضرات الصيدلانية والعشبية المسجلة إلا بعد تسعيرها من الهيئة، ووفقاً للعبوات التي تحددها.
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.