What is Fuelling the Healthcare Market Space in the MENA?

Healthcare Industry in the MENA Region

Healthcare comes out as one of the most promising industries in the MENA region, owing to strong demand and supply considerations. The MENA healthcare sector’s potential for rapid development and relative stability has piqued the interest of several private equity (PE) firms. Therefore, healthcare spending has risen over the last few decades in the Middle East and North Africa (MENA) region, owing to the high cost of health technology, increased health awareness, and lifestyle changes. As a result, healthcare systems in the MENA region face a significant challenge in meeting the growing demand for healthcare due to rapid population growth, a steady increase in the elderly population, and a rise in chronic, non-communicable diseases. A thriving healthcare industry would aid the region’s economic diversification efforts by generating new job possibilities and reducing outbound medical tourism, which is now a substantial burden on the state. Furthermore, it would encourage investments in higher medical education and research and assist the region in making significant advances toward becoming a global hub for medical tourism.

The healthcare industry in MENA, particularly in UAE, is one of the fastest-growing industries. The UAE’s healthcare spending will reach USD 2.5 billion in 2025 and USD 3.6 billion by 2030. Increased investment in the country is due to various causes such as medical tourism, required insurance, growing aging population, increasing prevalence of lifestyle disease, etc., leading to a more integrated health system. Increases in healthcare spending from private and governmental sources are the most significant drivers, followed by fast market and infrastructure expansion. Considering recent development in the UAE’s healthcare sector, the market has arguably reached a certain degree of maturity in the supply of general healthcare services, with private sector growth in specialty healthcare provision (e.g., pediatrics or cardiology) likely to drive future growth.

Presence of local and global pharma producers

The MENA region’s pharma market has gradually developed, with more than 140 companies operating in the region. The MENA pharmaceutical market accounts for approximately 2% of the global market. The pharmaceutical sector in the MENA has increased in recent years, especially in Saudi. Saudi Arabia has the largest pharmaceutical market in the Middle East, accounting for 60% of the regional market, followed by the UAE. Saudi Arabia has the largest manufacturing sector in the Gulf, but the most domestic output is destined for export markets. Domestic production accounts for approximately 15% of the total pharmaceutical supply in the market. There are about 15-20 pharmaceutical manufacturers in the kingdom, including indigenous companies and subsidiaries of multinational pharmaceutical conglomerates. Spimaco, Jamjoom Pharma, Tabuk Pharmaceutical Manufacturing, Jazeera Pharmaceutical Industries, and Julphar are among the region’s leading indigenous players. Whereas top multinational companies such as GSK, Sanofi, Abbott Laboratories, Novartis, Pfizer, Hikma, Roche, and others have also established manufacturing facilities in the MENA region.

Drivers behind Healthcare in MENA

The MENA region has achieved tremendous advances in the healthcare sector in a relatively short period. With regional governments’ continuous focus on addressing difficulties, the outlook for this sector continues to look positive. The healthcare system, without question, plays a vital role in the growth of any country. The same is with the MENA region. Multiple factors have led to the MENA region’s remarkable growth in the healthcare sector over the previous decade. The region’s strong demand for healthcare in both public and private sector is due to:

• Increase in the use of mandatory health insurance.
• An increase in the geriatric population
• The rise in the income levels
• Improvement in life expectancy and decreasing newborn mortality rates
• The rising prevalence of lifestyle diseases (such as diabetes and obesity) and increased public awareness of preventative care (such as health checks and screenings)
• The region’s high government spending on healthcare and rules aimed at expanding insurance penetration have encouraged increased healthcare investment.

Future trends in the Healthcare in MENA

Some emerging developments in the MENA healthcare sector include increased public-private partnerships to attract private-sector investment, better IT deployment to streamline processes, and reduce costs. The increased demand for cosmetic and wellness centers, as well as the creation of specialist healthcare centers, all of which bodes well for the sector’s overall growth. The ongoing COVID-19 pandemic also puts a significant strain on the healthcare system. With hospitals at capacity and medical staff suffering from burnout, private and public healthcare seek solutions to health-related technological innovations. As a result, the electronic intensive care unit (eICU), also known as teleICU, is expected to grow in the MENA region to provide hospitals and emergency healthcare facilities with more efficient management. Forte Healthcare, a leading healthcare consulting firm based in the United Arab Emirates, provides services such as strategic business consulting, resource planning, operations management, and healthcare investment. Investments in the healthcare sector are crucial in this new era of growing virtual solutions. Virtual doctors can provide timely interventions for critically ill patients and proactive monitoring for high-acuity patients, support for emergency department staff, timely ICU discharges, and reduced ventilator delays.

There is a surge in the geriatric population, which is a crucial factor for the healthcare spending in the MENA; the governments of MENA are further trying to boost the healthcare spending. Recently, Dubai’s dedicated healthcare free zone, Dubai Healthcare City (DHCC), and VITA, a UAE-based healthcare investment company, had signed an agreement to establish the UAE’s first center specializing in elderly healthcare services. The VITA Elderly Care Complex, when completed, will be the center of excellence for senior care in Dubai and the UAE. It will have an Outpatient Geriatric Medical Centre, an Advanced Nursing Home (Long-term Care), an Alzheimer’s Centre, an Elderly Day Care Centre, a Rehabilitation Facility, a Ventilated Care Centre, a Home Care Centre, and Home Health Monitoring.

The private sector and governments of the MENA region are leveraging health tech and developing innovative approaches based on digital technologies to promote an integrated experience and improve patient outcomes.

MENA Healthcare Market: Opportunities and Challenges

The COVID-19 pandemic has rightfully captured the majority of the healthcare headlines in the past few months. Nonetheless, there is an emerging recognition of the need for longer-term structural reforms in the healthcare sector to increase the level of “extended care” services across all segments of the population, not just those in the older demographics. There are significant opportunities in MENA in the extended care sector for real estate investors and developers, but realizing these opportunities requires greater collaboration and integration of services among the various industry stakeholders, including healthcare providers, payers (insurance providers), and, most importantly, regulators. Extended care facilities have a lower built-up area (BUA) per bed than traditional healthcare facilities, resulting in a higher return on investment (ROI). Similarly, lower capital costs imply a shorter payback period when compared to typical hospital investments.

But with opportunities come challenges. One of the significant challenges for the investors is the lack of institutional-grade products in the extended care sector. Furthermore, the ability to deliver more products is contingent on regulatory system changes that promote the development of extended care. While there is a compelling economic and social case for long-term care facilities to become a critical component of community infrastructure, this potential is currently hampered by legal and regulatory constraints.

Way Ahead

The MENA region has undeniably made significant advances in the healthcare sector in a relatively short time. The Middle East healthcare market is gaining traction due to various factors such as government initiatives to encourage medical tourism, evolving health insurance policies, and a growing propensity among the local population to consume digital health services. Global healthcare enterprises are seeing this as a significant growth opportunity and are developing the best business model to expand their business in the Middle East and North Africa region.

Source: DelveInsight – www.delveinsight.com