New Investments And Technology Are Evolving Middle Eastern Healthcare
The coronavirus pandemic has forced the global healthcare sector to accelerate its digital transformation. This is radically changing the delivery of healthcare by speeding up telemedicine trends, converging artificial intelligence (AI) with clinical services, and developing a wide range of front-end technology.
The opportunity for growth in the healthcare industry in the Middle East is substantial. A recent report by Fitch Solutions suggests that MENA’s healthcare market is projected to grow from $185.5 billion in 2019 to $243.6 billion in 2023, with an 11.7% CAGR at a constant exchange rate.
However, according to a World Bank 2020 report, MENA has some of the lowest levels of hospital capacity, medical doctors, nurses, and midwives per capita. On average, MENA countries spend just 7% of their government budgets on health, with almost half of all health spending financed directly by households at the point of care. A typical MENA country also has 65% of its workforce in the informal sector, with little or no access to safety nets including health insurance.
The private sector plays an integral role, but these services are often inaccessible due to high costs and their concentration in urban areas. Investment in medical and protective equipment is essential to protect health workers in rural and hard-to-reach areas. The World Bank also suggests that MENA countries need more investment to improve healthcare services, contain the coronavirus pandemic, and ensure the continuity of essential services.
The Middle East has already kickstarted this transformation by pouring in investment, digitizing the industry, and moving towards preventative rather than curative healthcare.
Private investments
When it comes to the private sector, this past year was marked by a major boom in healthcare merger and acquisition activity. For example, Egypt has been a target for investment due to its large population and prevalence of chronic diseases such as high blood pressure and diabetes. The Egyptian government’s efforts towards the rollout of its Universal Healthcare Plan and the launch of other national initiatives and megaprojects have also made it an attractive market.
In the GCC, one of the biggest deals of the past 12 months was Abu Dhabi Holding Company’s (ADQ’s) announcement that it would buy Canadian drugmaker Bausch Health Companies Inc.’s entire equity interests in Egyptian drug developer Amoun Pharmaceutical for $740 million, including debt. The company also acquired Swiss-based Acino, a leading provider of highquality pharmaceuticals focused on growth-leading markets across the Middle East, Africa, Latin America, Russia, Ukraine and the CIS region.
Mubadala Health acquired a 60% controlling stake in United Eastern Medical Services (UEMedical) to raise its healthcare services in the U.A.E. and grow its operations in Saudi Arabia for the first time. And Dubai’s Foundation Holdings Co. acquired a 51% stake in Saudi-based primary health chain, Shifa Al Munthaza Polyclinic, which is its second investment into the kingdom’s fast-growing market for medical care. It said it plans to list the firm in the next two years. Dubai Foundation Holdings plans to invest about $67 million into Saudi Arabia’s primary healthcare sector, almost half of which was spent on the Shifa deal.
Other major private sector deals include Bahrain-based Investcorp’s acquisition of the Sanos Group, a global contract research organization (CRO) based in Denmark, as well as the restructuring of NMC Healthcare in the U.A.E.
Government expenditure and initiatives
On a government-level, a number of MENA countries have taken on various initiatives to improve their healthcare sectors.
Egypt is transforming its healthcare system through several initiatives. Most notably, the “100 million Seha” initiative aims to eliminate the virus C and detect non-communicable diseases. As of 2021, it had saved the lives of 2.2 million people. The Sovereign Fund of Egypt is set to establish a diversified healthcare fund, in collaboration with Concord International Investments.
Meanwhile, the U.A.E.’s healthcare expenditure is set to surpass $21 billion by 2021, as per projections by the U.S.U.A.E. Business Council. Sheikh Mohammed bin Rashid Al Maktoum launched the Vaccine Logistics Alliance as part of the emirates’ efforts to support the WHO’s COVAX initiative. The U.A.E.’s Frontline Heroes Office is also deploying a new initiative that will cover additional medical insurance expenses of the nation’s underprivileged frontline workers and their immediate families.
In Saudi Arabia, the Ministry of Investment and Roche Products Saudi Arabia signed an MoU to collaborate on multiple initiatives for developing the healthcare and life sciences sectors in the kingdom. Moreover, the Kingdom’s Projects Support Fund Initiative signed an agreement with the Saudi Stock Exchange Company (Tadawul) that aims to expand the lending capabilities of private companies functioning in the healthcare, education, and large real estate development sectors.
Digitization and connectivity
The digitization of the healthcare industry can help advance the sector in many ways. It improves the patient experience, enhances health outcomes, makes health information more accessible to patients, and could lower the cost of care.
Prior to COVID-19, Accenture Strategy had predicted that 50% of healthcare services would be provided virtually by 2030, and that in the next 10 years, four out of 10 healthcare jobs would have at least 30% of tasks completed by robots, such as chatbots, automation, and AI. During the pandemic, demand for telemedicine in the U.S. jumped from 11% to 46%. In China, Bain reports exponential growth in online healthcare platforms Ping An Good Doctor, which saw a 900% user increase due to COVID-19. In MENA, the pre-COVID telemedicine market was projected to increase by 50%, from $3.4 billion in 2019 to $5.2 billion in 2024. That figure is expected to be revised up by quite a few notches.