17.03.2016

GCC Healthcare Forecast: 2016 and Beyond

GCC-ForecastWe can all be fairly confident predicting the weather here in the Gulf. Beach days are easy to plan due to regular sunshine and blue skies. Business strategies, however, can be a little more difficult to plan without expert insight. In this post, we’ve summarised information from recently released reports, which we hope can help to guide you throughout the rest of 2016.

 

GCC governments are taking big steps towards improving the quality and access of healthcare. Various super-projects are popping up across the region, including the construction of multiple world-class speciality hospitals, which includes the staggering US$6.7 billion King Abdullah Bin Abdul Aziz Security Forces Medical Complex in Saudi, the Sultan Qaboos Medical City in Oman and Burjeel Medical City in Abu Dhabi.

 

The healthcare market in the region has already made huge gains over the last few decades. However, with the rest of the developed world, the region is experiencing a surge in population (which can be partly attributed to the huge expatriate community), a shifting demographic and an increase in non-communicable diseases. So, it’s easy to see why government spending on healthcare has become a high priority in the GCC.

 

The GCC Healthcare Industry Report, by Alpen Capital, shed some light on the upcoming trends and challenges for the year:

  • The GCC healthcare market is projected to grow at 12.1% compound annual growth rate (CAGR) from an estimated US$ 40.3 billion to US$ 71.3 billion in 2020.
  • From US$ 24.0 billion in 2015, the outpatient market is expected to reach US$ 42.4 billion in 2020, while the inpatient market is forecasted to grow from US$16.4 billion to US$ 28.9 billion in the same period.
  • In each of the GCC countries, the healthcare markets are expected to grow annually at an average rate of 11-13% from now until 2020.
  • The UAE alone accounts for 26% of the total healthcare spend by GCC governments, and the UAE healthcare market is projected at US$19.5 billion in 2020, which indicated an annual growth of 12.7% between now and then.
  • The Saudi Arabian healthcare market is set to reach US$ 27.4 billion in 2020, suggesting a CAGR of 11% from 2015.

 

The UAE has traditionally imported the majority of medical care and pharmaceuticals. Recently however, there has been a concerted effort to increase clinical trials, localise the manufacture of drugs, and attract talented medical professionals. Up to 90% of drugs are imported to the UAE, which has detrimental effects on the pharmaceutical sector and wider economy, due to the high costs involved. Over recent years, there has been an influx of international firms seeking local UAE partners to manufacture medicines on their behalf. DuBiotech is a free zone dedicated to life-sciences related industries, providing laboratories, manufacturing, storage facilities and office spaces, encouraging local business partnerships to prosper. This will allow international pharma companies to reduce their operating costs without compromising their products’ quality. The number of pharmaceutical manufacturing plants in the UAE is set to more than double in the next five years to 34, from 16.

 

All in all, the future looks positive for the healthcare and pharmaceutical sector in the GCC region.

 

 

 

References

1. Alpen Capital. GCC Healthcare Industry. February 2016.