DEVELOPMENT OF THE HEALTHCARE sector has taken a center stage in the GCC countries with factors such as growing population and rising prevalence of lifestyle-related diseases. In order to ease the growing pressure on the healthcare system, the GCC governments are injecting huge funds as well as encouraging private sector participation to build hospitals and clinics, upgrade the existing infrastructure, and match the quality of services offered in developed countries. They are also investing heavily in technological advancements as well as rolling out mandatory health insurance schemes in all the countries to further accelerate the growth of the healthcare sector in the GCC. Industry Outlook According to the latest report on the GCC Healthcare industry by Alpen Capital, the healthcare market in the region is projected to grow at a 12.1% CAGR from an estimated US$ 40.3 billion in 2015 to US$ 71.3 billion in 2020 (Exhibit 1). From an estimated US$ 24.0 billion in 2015, the outpatient market is forecasted to reach US$ 42.4 billion in 2020. The inpatient market is anticipated to grow from US$ 16.4 billion to US$ 28.9 billion during the same period. The healthcare market in each GCC country is anticipated to expand by 11%-13% between 2015 and 2020 in terms of annual average growth rates. The demand for number of hospital beds in the GCC region is projected to grow at a 2.3% CAGR from an estimated 101,797 beds in 2015 to 113,925 beds in 2020 (Exhibit 2). The Saudi Arabian healthcare market is forecasted to reach US$ 27.4 billion in 2020, registering a CAGR of 11.0% from 2015.The healthcare market in the UAE is projected at US$ 19.5 billion in 2020, indicating an annual average growth of 12.7% from 2015. Growth drivers Rapidly growing population and a shift in agegroup distribution are among the key factors driving the GCC governments to improve the healthcare infrastructure. A rise in lifestyle-related diseases such as obesity, diabetes, cancer is likely to add to healthcare expenses as well as augment the need for specialized care centers and doctors. As the healthcare costs increase in line with growing population, most of the GCC governments are introducing mandatory health insurance. The gradual expansion of medical insurance coverage across the region is likely to boost the overall healthcare spending. Each country in the GCC has devised a longterm strategic plan or vision to expand and upgrade its healthcare system. The successful execution of the plans is expected to scale up the healthcare infrastructure and quality standards. Sensing the demand, the government as well as private players have injected multi-billion dollars into the healthcare sector to construct large and specialized healthcare facilities. There are several initiatives within the GCC healthcare sector that are focused on medical tourism which are likely to not only attract patients from across the world but also reduce the outbound visits of citizens for specialized treatment thereby aiding the growth of the healthcare sector in the region. Challenges Although the GCC Healthcare sector is on a growth path, it is not devoid of challenges. By Mahboob Murshed, Managing Director, Alpen Capital (ME) Limited FRANCE WILL BE SHOWCASING diagnostic imaging, prosthetics, orthotics and other solutions for the treatment of musculoskeletal disorders, as well as medical technical assistance, mini-invasive surgery (80 to 90% of such procedures are gynecological), in vitro diagnostics, physiotherapy and emergency care, at MEDLAB. In France, the firms that supply laboratories with in vitro diagnostic (IVD) devices form a market worth around €1.418 billion. Despite ferocious competition on the medical device market, France’s image and reputation remain strong on the Emirati market. Thanks to the country’s globally renowned scientific and technical expertise, French companies have a great opportunity to position themselves both in the mid-range market, by offering good value for money, and in the high-end market, where their rivals, notably in Germany and the US, have no equivalent offering or are tied to a reciprocal exclusivity agreement with a distributor. Marc Cagnard, Middle East Director at Business France, said, “France is known for its world-class healthcare system, and has played a leading role as a pioneer in the medical field. Highlighting the importance of France as a major contributor to the medical industry, pharmaceutical giants such as Sanofi, Bayer AG and AbbVie have chosen to make the country their home. The France pavilion at the Arab Health exhibition this year features a much larger number of companies, reflecting our keen desire to contribute to the development of the healthcare system in the region.” According to Thierry Van Twembeke, French exhibitor, exports are an essential component of the group’s development strategy. He said, “Our presence in the Middle East and attendance to MEDLAB 2017 gives us the opportunity to showcase our French know-how as a manufacturer and distributor of medical devices.” Business France is the national agency supporting the international development of the French economy, responsible for fostering export growth by French businesses, as well as promoting and facilitating international investment in France. It promotes France’s companies, business image and nationwide attractiveness as an investment location, and also runs the VIE international internship program. Business France has recently launched its first international campaign called: “CREATIVE FRANCE”, in order to promote France’s economic attractiveness, strengthen perceptions towards France image and create positive conditions for French economic development. French Know-how on Display at the Show The GCC governments’ budgets are increasingly coming under pressure amid falling oil prices. Accordingly, governments across the region have curtailed or deferred their expenditure, therefore, impacting healthcare spending. The cost of medical treatments in the GCC is high compared to the developed as well as emerging medical destinations leading several local patients in the GCC to travel abroad to seek treatment. The GCC faces a dearth of local talent to meet the requirement at healthcare centers and high turnover among expatriates in the profession is a big challenge facing the industry. In the GCC healthcare sector, the private players face entry barriers such as high cost of setting up a hospital and long payback periods. The current investment climate characterized by global economic uncertainty, low oil prices, and volatility in financial markets has made investors across the globe more cautious and risk-averse. The lack of homogeneous regulations and adherence to international standards, have led to inconsistencies in the quality of services in the member nations. Trends Rise of the PPP model: Government policies to increase insurance coverage and provide other infrastructure support as well as financial incentives are drawing investors to the region and leading to the rise in private sector involvement. Increasing use of Information Technology: The adoption of such technologies has the potential to improve the quality of care and reduce the cost substantially for both patients as well as providers. Rising focus on preventive care: Focus on the prevention of diseases will not only improve the public health profile but can also help reduce healthcare expenditure and enhance the quality of care. Long-term and post-acute care facilities (LTPAC): The rising prevalence of chronic diseases alongside an anticipated increase in the ageing population is prompting the need for long-term and post-acute care facilities (LTPAC) in the GCC region. Strengthening specialized care, medical education and research Improvement in the standard of living has increased the incidence of lifestyle-related diseases in the GCC region, creating demand for specialized centers and resources of care. As part of its efforts to boost investments into the healthcare sector, the GCC governments are focusing on providing more specialized care centers. The GCC nations are also engaging in research and strategic partnerships to strengthen their healthcare system In conclusion, favorable socio-economic factors coupled with the GCC governments’ focus on adopting a patient-centric model and improving the overall delivery system will continue to drive the growth of the GCC healthcare industry.
