Markaz recently published the executive summary of GCC Healthcare report. In this research note, Markaz analyses trends in GDP – a key growth driver of the healthcare sector, discusses prevalence of diseases in the Gulf Cooperation Council and highlights the improvement in health indicators which places the GCC nations on par with developed nations on several fronts.
GDP per capita in the GCC has grown at a CAGR of 6% between 2000 and 2009. The highest Adolescent Fertility Rate (AFR) in the GCC in 2010 (24.7 in UAE) happens to be lower than that of UK (30), US (33), Egypt (43) and India (79). While Saudi had the highest Crude Birthrate (CBR) at 21.6, Qatar had the lowest at 12.7. The Crude Death Rate (CDR) has been on the decline too with the UAE registering a maximum decline of 30% over the ten-year period. Qatar has the highest life expectancy at 78 years comparable to the United States (78) and the United Kingdom (80).
Over the ten-year period, health expenditure per capita has grown at an annualized rate of 7.9% for the GCC nations as a whole. Kuwait’s health expenditure per capita grew at 10.8% per annum. In absolute terms, Qatar’s health expenditure per capita was the highest, despite the fact that the amount as a proportion of GDP was the lowest in the GCC.
Source: World Bank, Markaz research
Public health expenditure in the GCC countries ranges between 63% and 80% of total health expenditure. The GCC Governments would like to reduce their contribution to the healthcare sector over time, given that the availability of petrodollars cannot be sustained forever. Country-level healthcare expenditure forecasts are made using a top-down approach with a break-up of public and private healthcare expenditure. Markaz forecasts total healthcare expenditure in GCC to be USD 79.02 bn in 2015, with public health expenditure amounting to 64% of the aggregate.
The Governments of the GCC countries have consistently endeavored to promote good health in the states. The UAE Government has undertaken several measures including the National Immunization Program against polio, the Malaria Control Program, Directly Observed Treatment Short course (DOTS) and the National Tobacco Control Program. Dubai has the distinction of being home to two free healthcare zones – the Dubai Health Care City and the Dubai Biotechnology and Research Park.
The Saudi Arabian Ministry of Health has made it mandatory for Haj pilgrims to be vaccinated against communicable diseases including yellow fever, cerebrospinal meningitis fever and polio. The MoH invites consultant physicians from Jordan, Pakistan, Egypt and USA to pay periodic visits to the Kingdom. The Kuwait Government has undertaken the extension of 9 medical towers that is expected to increase hospital capacity by 30%. Oman accords special importance to women’s and children’s health. The MoH reports that antenatal care coverage was more than 99.4% in 2010. Bahrain’s MoH has launched I-SEHA program to manage and streamline health information systems in the country.
The prevalence of lifestyle diseases and the lack of adequate infrastructure and trained workforce in the healthcare sector underline the need for Public Private Partnerships in the region. The GCC nations are heavily import-dependent for their surgical equipment needs. The manufacture of pharmaceuticals and surgical equipment are both limited and these allied sectors provide scope for private investment. Of the six GCC countries, Saudi Arabia and the UAE are most receptive to foreign investment in healthcare-related sectors. The two countries import bulk of their medical equipment from the US and Germany.
The report enumerates top-5 healthcare projects that are currently under execution in the six countries. Unlike emerging economies which have regulatory bodies that focus exclusively on the insurance industry, the GCC countries’ insurance markets are regulated by either the central bank or a public authority. In 2005, KSA took the pioneering step of requiring companies to provide health insurance for expatriate workers. Abu Dhabi chose to implement the measure in 2007. The insurance market is fragmented and penetration is low across the GCC. Deliberations are on to make health insurance compulsory in Oman although the country is yet to call for compulsory health insurance for expatriates. Qatar seeks to bring the entire population under a unified National Health Insurance Scheme. A World Bank paper highlights the fact that both assets and life & non-life premia are at very low levels, given the per capita income and demographic pattern of the GCC.
GCC nationals travel abroad for medical treatment and hence the countries are perceived more as a target for medical tourism than as a destination; however, Dubai is widely held as a medical tourism destination, thanks to urbane workforce and its positioning as a tourism hub. The GCC hosts a small fraction of global clinical trials and most are reported to be later stage trials. The region holds considerable potential for trials, given its large untapped market and a range of genetic disorders.
The key drivers of demand for healthcare in the GCC are population trends, high growth in GDP and the prevalence of lifestyle diseases that require life-long treatment. The distinguishing factor of the GCC markets as against other emerging markets is the massive role played by the Governments and its unsustainability over the long run. Given that medical inflation is steeper than food inflation, the need for lowering Government share in health expenditure cannot be overemphasized. Government’s willingness to promote the healthcare sector is seen as a positive sign for a surge in private investment in the region.
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Kuwait Financial Centre K.P.S.C “Markaz”, with total assets under management of over KD903 million (USD 3.2 billion) as of December 31, 2012, was established in 1974 has become one of the leading asset management and investment banking institutions in the Arabian Gulf Region. Markaz was listed on the Kuwait Stock Exchange (KSE) in 1997.