Healthcare in the GCC continues to undergo major transformation with the introduction of government reforms, a shifting demographic and mandatory health insurance. These factors along with increased private sector participation and an ongoing infrastructure boom are poised to drive further growth in healthcare spending in the region – up to USD 135.5 billion by 2027 – with much of the growth centred in UAE and Saudi Arabia, according to a recent report from Alpen Capital.
An Evolving Sector
Beyond the COVID-19 pandemic, the healthcare sector in the Gulf Cooperation Council countries (GCC) has experienced significant growth and transformation in recent years. Regional governments have introduced major reforms, private sector participation has been on the rise, driven largely by Public-Private Partnerships (PPP), infrastructure construction has been booming and mandatory health insurance has been introduced. While digital transformation has surged through the region, other factors like the GCC’s higher life expectancy, an increase in lifestyle diseases and the expansion of medical tourism have led the charge for quality healthcare and increased spending.
We anticipate that the region will offer an array of investment opportunities on the back of privatization initiatives and increasing adoption of technology to create alternative healthcare models
Sameena Ahmad, Managing Director, Alpen Capital
According to Sameena Ahmad, Managing Director of the UAE-based investment banking advisory firm, Alpen Capital, creators of the new report: “The GCC healthcare industry is expected to grow at a healthy pace owing to a rise in ageing population, improving economic activity, increased focus on preventive care and mandatory health insurance. While digitization and public-private collaborations have made a progressive impact, the resurgence in demand for elective surgeries, a burgeoning medical tourism industry, and an intrinsic demand for treatment of non-communicable diseases (NCDs) are likely to support growth. We anticipate that the region will offer an array of investment opportunities on the back of privatization initiatives and increasing adoption of technology to create alternative healthcare models.”
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Front Runners: UAE and Saudi Arabia
According to the report, the current healthcare expenditure (CHE) in the region is set to reach USD 135.5 billion by 2027, which would imply an annual growth rate of 5.4 percent from USD 104.1 billion in 2022. CHE in the GCC countries is anticipated to increase at growth rates ranging from 4.4 percent to 7.4 percent.
Due to country-specific conditions, growth rates among GCC countries will vary, however the United Arab Emirates (UAE) is expected to see the highest growth rate in the region, 7.4 percent, thanks to it rapidly growing population and the increased coverage of its mandatory health insurance as well as a high medical inflation rate. At the same time, market rankings in the region are expected to remain the same, with Saudi Arabia and the UAE dominating the GCC’s CHE with a combined share of 79.6 percent in 2027.
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Infrastructure Boom and PPP Push Growth
A couple of the trends driving growth are the region’s infrastructure boom and the rise of PPPs. In recent years, the GCC countries have seen significant spending on healthcare infrastructure with the number of hospitals almost doubling between 2010 and 2020. At least 80 percent of these hospitals and primary care clinics were driven by government initiatives and expansion plans, according to Trade Arabia.
In the UAE some 700 healthcare projects are under development, making up a total investment of USD 60.9 billion, according to the UAE Ministry of Economy and UAE International Investors’ Council. In Saudi Arabia, under the Vision 2030 transformation plan, the Saudi government plans to invest over USD 65 billion to develop the country’s healthcare infrastructure. In addition, it aims to increase private sector contribution from 40 percent to 65 percent by 2030, targeting the privatization of 290 hospitals and 2,300 primary health centres.
The rise of private sector providers over the last decade also marks a significant trend in GCC healthcare and one that looks set to evolve further. “With population growth and the rise in non-communicable and lifestyle diseases coupled with a growing ageing population; the demand for quality healthcare surged, hence the need for a private sector to take on part of the demand. In the past ten years, we’ve seen a vibrant private sector gaining momentum and an increase in investment in tertiary and specialized centres,” said managing director of the MedServe Medical Investment consultancy, Maher Abouzeid in a 2022 PharmaBoardroom interview.
