In the wake of one of the worst recessions of our times and the consequent soaring unemployment rates, the world's hopes were pinned on US President Barack Obama to turn things around. The magic wand was waved, but instead of those little red triangles against world stocks turning green, one of the major legislative achievements of his presidency ended up being health care. A move that could very well cost him the election has sparked off a debate in the US, only further underlining the importance of a good health-care system.
While this drama plays out in a nation acknowledged to be a world leader, the UAE, in a move far ahead of its time, has gone ahead with a no-holds-barred approach to implementing a world-class health-care system. What more evidence is required to the importance of this industry than the fact that the Ministry of Economy has identified health care as a priority sector and that 2011 saw approximately 24 per cent of the overall federal budget allocated to expenditures on social development, which includes the health sector.
“The country boasts strong and high-quality health-care provision, with the government promising further investment in such resources.” Tweet this
Poised for growth
A report by the Dubai Chamber of Commerce and Industry has confirmed that the UAE health-care sector should experience strong growth over the next five years. This is likely to be driven by the country's plan to build multiple health-care facilities, with the view that demand > for health care will more than double by 2025. "The country boasts strong and high-quality health-care provision, with the government promising further investment in such resources," says George Morcos, General Manager —Gulf Countries, at the multinational pharmaceutical company Sanofi.
According to the Ministry of Economy, the health-care sector is expected to grow 16 per cent annually. Health-care expenditure is expected to rise to $11.9 billion (Dh43.7 billion) in 2015 from just $3.2 billion in 2005. Projects worth $14 billion are under way across the GCC, with the UAE alone accounting for $2.9 billion or roughly 20 per cent of those expenditure. Even more impressive is the fact that the country's health-care spending per capita, currently at $1,200 per person, puts it among the top 20 countries in the world in that category.
And according to a December report from Alpen Capital, the GCC health-care market is expected to expand considerably, with Saudi Arabia continuing to be the largest market, accounting for 58.5 per cent of the total in 2015, followed by the UAE taking up 18.2 per cent of the share.
But this increased emphasis on health is not new. We have already seen some of the Emirates' initiatives fructify in the shape of free zones such as the $3 billion Dubai Healthcare City and $400 million Dubai Biotechnology and Research Park (DuBiotech), which have succeeded in luring leading, medical research institutes, pharmaceutical companies and biotech companies to the UAE. Abu Dhabi Health Services Company, which owns and manages operations of the capital's public health-care facilities, has also played an active role over the years. Consequently, international names such as the Mayo Clinic, Cleveland Clinic, John Hopkins Medicine and Great Ormond Street Hospital, as well as leading pharmaceutical and technology suppliers such as Johnson and Johnson, Novartis and Novo Nordisk, now have a presence in the UAE.
Drug registration procedures in the UAE are also stringent, says Morcos. "It is difficult for companies without a US FDA or European manufacturing licence to gain entry into the market. As ways of optimising spending in the emerging markets, the UAE government announced last year that it will overhaul the country's health-care sector with the long-term aim of boosting spending and efficiency. The drug registration law will also be revised and will include new or amended policies for prescription drugs and the creation of the Emirates Health Authority."
Rise in demand
A number of factors have compelled the UAE to focus its attention on the sector, says Morcos, who points to a growing population, a conducive business environment and the expansion of wealth and life expectancies. "We expect a rapid rise in demand for health-care services," he says. "Recent estimates suggest there is a shortage of almost 2,000 hospital beds across the country, despite an increase of around 30 per cent in the number of beds in recent years. Also the country has limited experience in pharmaceutical R&D, leading to the government committing itself to the promotion of biotechnology and life science sectors to attract foreign direct investment and stimulate growth of the domestic industry."
David Hadley, CEO of EHL Management Services, a health-care management company that runs eight clinics and two hospitals in Dubai, offers another reason. "The Arab spring had a positive impact on the number of people moving to the UAE and that spilled over into health care as it did with other markets. We added four clinics to our portfolio in the last year, which also contributed to our figures," he says.
However, several issues must be addressed for the overall health of the industry. For instance, Hadley feels that a stronger focus needs to be placed on ethics. "Unfortunately there are still some rogue operators that overcharge, offer kickbacks and referral fees. This is something that we at EHL will never support," he says. "We would like to see the government and the Dubai Healthcare City Authority play a more active role in outlawing this." Hadley also believes there must be more consolidation of tertiary services and facilities, such as caterers and suppliers, and points to the need for improved health-care training.
That said, the fact remains that the UAE has weathered the global financial crisis, while continuing to attract major international players to the market.