Yes you will need to replace the tire. Damage to the thin side wall can be very dangerous.
It's hard to tell from the picture but it might be just the rim protector that's taken the hit given there's no obvious sign of a bulge or similar.
Even though the rim protector itself isn't structural to the tire I certainly wouldn't be taking any chances with it - if there were to be any further impacts or stresses on that area then it would most likely fail.
Get it changed ASAP and as blacksmith37 and Paulster2 state you'll need to make sure the rim is OK as well. Vibrations through the steering wheel and/or pressure loss could be indications of dents to the rim.
From the photo it looks like you may have dented the rim; the scratches can be ground and sanded easily enough but a dent is more serious. I would replace the tire and not wonder about it. When I had this problem , the tire shop had trouble balancing the wheel because there was a dent that was not apparent to the eye.