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19 March 2024

A sector in the pink of health

A sector in the pink of health. (SUPPLIED)

Published
By Karen Remo-Listana

The UAE's healthcare sector remains stable despite the financial chaos created by the downturn. The pipeline of projects has been affected but is now gradually opening up again and players are optimistic that the sector will soon return to growth.

However, one issue that has to be addressed is the lack of trust in medical practitioners. The good news is that industry leaders are aware of this. "Historically the facilities offered and the general practice as a whole have lacked sophistication and expertise," said Dubai Healthcare City (DHCC) Senior Vice-President Dr Ayesha Mohammed Abdullah.

"We've all heard the horror stories so the mindset has always been, if you're really sick you need to find an expert in your country of origin or look for healthcare experts somewhere else. DHCC is changing that perception, especially with the high quality of medical references we demand from our doctors and other medicine-related professionals. We conduct detailed background checks and ensure they have board certification."

Today more and more firms are focusing on the healthcare sector while the construction and property sectors remain weak.

Decision-makers say the non-cyclical nature of healthcare and the unmatched high demand for health-related services are encouraging service and financial firms to expand or create new businesses in this arena.

"No one is exempt from the economic crisis, but we have been less receptive to the recession than most Western countries," Abdullah said. "You also need to remember the healthcare industry is part of a country's basic infrastructure. People still need medical care and, crisis or not, they will walk through the door if they are sick."

"We are focusing on the healthcare market because this is the kind of industry that will sustain [us] through out the downturn," Steve Williams, CEO of Gulf Finance, a Shuaa subsidiary, said.

"Because we are responsible lenders we are looking at sectors with bit more predictability," he added. "For example, with more than 1.2 million people in Dubai alone and 4.5 people in the UAE as a whole, healthcare has to be a critical concern."

"So a clinic that is looking at an MRI scanner and has proven clients using that piece of equipment. That represents really good opportunity to support a growing business that is supporting the emirate," Williams said.

"The population of the region, and especially the UAE, will increase at faster rates than the global average," Ki Wan Kim, CEO, LG Middle East and Africa Regional Company, said. "With increases come the associated burden on the existing healthcare infrastructure and while governments are investing to develop the infrastructure, they are and will be for the foreseeable future, playing catch up," To this end, LG has begun beefing up its healthcare offerings in the region by inducing the sense of need to consumers.

"Our portfolio in healthcare is still not so big but this caters to health conscious consumers. Through innovation and communication we can convince the consumer, and we can create a market. There is already a hidden desire but how can we provoke this desire is our goal," Kim said. Industry estimates show the healthcare market in the UAE is expected to rise to $12 billion (Dh44bn) in 2015, from $3.2bn in 2005.

Yearly, the UAE is spending $1bn on sending patients abroad for speciality cases, Adil Ameer, Vice-President at Dubai Healthcare City, said. The total regional spending on healthcare is slated to have touched $137bn last year, he said.

Currently about $14bn worth of healthcare-related projects are underway in the Gulf, with Saudi Arabia alone spending more than $6.6bn on a total of 83 projects, and the UAE and Qatar spending $2.9bn and $2.8bn, respectively. While there are 100 hospitals in the planning stage, a number of them have been delayed due to the financial crisis.

Ameer admitted that while there is a big opportunity in capturing the healthcare, market access to capital has become a major obstacle in pursuing investments.

DHCC's Abdullah, however, said "everything is on track as planned".

"We have 87 clinics and two hospitals that have already opened their doors. Another orthopaedic hospital is under construction, along with several other clinics. The long-term goal is to accommodate 200 to 300 clinics in DHCC when the whole development is complete," she said.

Despite the capital lag, a handful of projects are still progressing well, thanks to government support and a long-term commitment to healthcare infrastructure growth.

But the government's pocket would not be enough to fill in the growing demand.

According to a report by Ithmar Capital and Dow Jones Private Equity, Gulf Co-operation Council countries (GCC), need 138,965 hospital beds; 140,334 physicians and 227,079 nurses by 2050 to maintain the current healthcare levels.

The UAE alone, it said, will need 15,698 new beds and physicians along with 31,396 additional nurses. The report thus called on policymakers to engage with the private sector to expand, consolidate and support healthcare in the GCC.

"The requirement for healthcare provision to meet the needs of population all over the world is undiminished in the face of unprecedented financial turmoil," said Faisal bin Juma Belhoul, Founder and Managing Partner, Ithmar Capital. 


 A weighty issue

The economic development has played a defining role in the proliferation of serious health problems associated with growing affluence, including diabetes and obesity.

According to the World Health Organization (WHO), the UAE is among the top five countries with the highest percentage of adult diabetes sufferers. Obesity has also become a major problem, with over 60 per cent of Emirati nationals overweight.

This has prompted the world's largest pharmaceutical companies to look closer to the region. Pfizer for one is banking on the region's growing income level, improving regulations as well as on the changing health conditions as the main drivers for its growth here.

In the UAE alone, Pfizer has established that diseases are on a rise. In a series of studies, it said cardiovascular disease amounts to 28 per cent of all deaths in UAE and that one in three Gulf residents suffer from Arthritis.

"Things are changing very fast creating new opportunities," said Jean-Michel Halfon, President and General Manager of the Emerging Markets Business Unit. Although the Middle East is not growing as fast as China, Halfon said the region is nevertheless growing in high single digit.

"Over the next five years we expect the Middle East growing by double digits," he said. "The growth will come from the increase of income and the fact access to healthcare is being reinforced so this will increase the market. Third is epidemiology itself, the frequency of disease such as chronic diseases."

According to a joint study by LG Electronics and research firm Synovate, respiratory and nutrition problems dominate the health concerns of residents across the Middle East with about 80 per cent of residents saying there are more health problems now than in the past, and on an average the same proportion of people are increasingly concerned by its implications.

In the UAE – where ozone levels in many areas are rising above guidelines set by the WHO – 88 per cent of people highlight respiratory problems as the highest concern and diagnosed cases have risen 8.2 per cent since 2005. Dust, pollution and bacteria in the air are identified by residents as the main cause of the problem.

The LG report, which interviewed 250 people, said nutrition issues are a major concern in the UAE, followed by skin concerns.


Insurance focus

Insurance providers are switching their focus from construction to consumer business, especially in the healthcare area, thanks to laws/bills making health cover compulsory for workers. "The fact is that health regulations mandate of health protection helps us a lot in Abu Dhabi," Walid Sidani, CEO of Abu Dhabi National Insurance Company said.

"We are optimistic that in Dubai a similar concept will also happen. The concept of HAD – Health Authority of Abu Dhabi – will also be established."

Abu Dhabi passed a law obliging companies to buy health insurance for their employees. The first phase, for companies with over a thousand employees, came into effect in July 2006 and the second phase covering all expatriates six months later. The law is set to be expanded more generally to include the rest of the UAE.

"There has been a mandate to make the coverage compulsory in Dubai but there has not been a full implementation," Sidani added. "We have been hearing for the past one year that it will be made compulsory but I believe that 2010 is the time that it's going to happen."

 

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