Alpen Capital announced the publication of its GCC Healthcare Industry report. The report presents the current state of the healthcare industry across the GCC countries. The report also covers the recent trends, growth drivers, and challenges in the industry, along with Alpen Capital’s outlook until 2020. It profiles some of the prominent healthcare companies in the region, while highlighting their financial and valuation metrics.

“Development of the healthcare sector has taken a center stage in the GCC countries, as they witness an era of demographic transition accompanied by 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”, says Sameena Ahmad, Managing Director, Alpen Capital (ME) Limited.

“The GCC governments’ emphasis on the development of the healthcare sector has resulted in several investment opportunities for the private sector. Over the last year, we have seen a steady flow of private equity funds into the sector and the region has witnessed several successful M&A transactions. The GCC governments’ budgets are increasingly coming under pressure amid falling oil prices thereby opening up investment arenas for regional and international private sector players to make their entry into the healthcare market. We see this trend strengthening as governments and private companies work with each other to benefit from the opportunities presented by the GCC Healthcare sector”, says Sanjay Vig, Managing Director, Alpen Capital (ME) Limited

Industry Outlook

TA sedentary lifestyle coupled with a penchant for packaged and fast food have led to an increase in the occurrence of lifestyle-related diseases such as obesity, diabetes, hypertension, cancer, and heart ailments in the GCC nations. A rise in lifestyle-related diseases is likely to add to healthcare expenses as well as augment the need for specialized care centers and doctors.

As the healthcare costs in line with increasing 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 long-term strategic plan or vision to expand and upgrade its healthcare system. The successful execution of the plans is expected to scale up the health care 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. The GCC region has nearly 350 hospital projects under various stages of development. 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

The GCC governments’ budgets are increasingly coming under pressure amid falling oil prices. Accordingly, governments across the region are likely to curtail or defer their expenditure. A prolonged low oil price environment may influence the budgets of the GCC governments and, therefore, the 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. In addition to the cost disadvantage, another factor driving outbound medical tourism is limited super-specialized care in areas such as oncology and cardiology.

The GCC faces a dearth of local talent to meet the requirement at healthcare centers. Another challenging factor is the high dependence on expatriates, who consider the GCC healthcare facilities as a stepping-stone to gain experience and then seek careers in the West. The GCC Healthcare sector is likely to experience a dearth of healthcare professionals in the near term.

The GCC faces a dearth of local talent to meet the requirement at healthcare centers. Another challenging factor is the high dependence on expatriates, who consider the GCC healthcare facilities as a stepping-stone to gain experience and then seek careers in the West. The GCC Healthcare sector is likely to experience a dearth of healthcare professionals in the near term.

Despite a remarkable improvement in the condition of the GCC healthcare system over the last two decades, 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: Private sector involvement is becoming imperative to meet the rising demand for healthcare as well as to reduce the burden of costs on the government finances. Government policies to increase insurance coverage and provide other infrastructure support as well as financial incentives are drawing investors to the region.

Increasing use of Information Technology: The present tech-savvy generation has encouraged the use of innovative healthcare information technology such as eVisits, digitization of electronic medical records (EMR), data analytics, and mobile applications for patient engagement. 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: Growing health awareness among the residents along with the GCC governments’ effort to improve the basic health indicators is leading to a shift from curative care to 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 in the GCC region. LTPAC facilities offer medical as well as non-medical services to patients with prolonged illness or disability that renders them incapable of taking care of themselves for a long period.

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.

Please click here to access the GCC Healthcare Industry report online.