The healthcare sector is on the rise across the Gulf region, particularly in Saudi Arabia and the UAE, where plans to boost the industry to help diversify the economy away from oil and gas are continuing apace. Technology, digitalisation, and healthcare consumers with greater awareness of healthcare trends have driven a large organic improvement in the industry’s fortunes, backed by government and private investments.
In addition, the last few years have seen more states impose mandatory health insurance rules, driving demand for insurance from individuals and private companies. Populations have become older, richer, and less healthy, as sedentary lifestyles increase obesity rates – and therefore the rate of lifestyle-related diseases such as diabetes.
Indeed, across the entire MENA region, the healthcare market is forecast to grow from US$185.5 billion to US$243.6 billion in 2023, representing not just the incredible strides the sector has made in recent years, but also its enormous potential to continue growing as investors move in and consumers become aware of its opportunities.
Digital healthcare on the rise
Digital health is one of the major trends shaping healthcare in the Middle East. Throughout the region, healthcare providers and consumers alike are rapidly waking up to the opportunities posed by digital healthcare in the post-pandemic world, particularly in countries with already high digital penetration such as Saudi Arabia and the UAE. Among the most common digital healthcare products are:
- Online pharmacies, allowing consumers order pharmaceutical products and manage electronic prescriptions.
- Teleconsulting – remote interactions between doctors and patients
- Home diagnostics – online portals scheduling appointments
- Wellness apps for helping consumers make healthier life choices
According to McKinsey, the market for digital healthcare products in Saudi Arabia and the UAE is set to reach US$4 billion by 2026, driven by greater consumer awareness and the increasing convenience offered by these services.
McKinsey surveyed around 1,400 consumers in Saudi Arabia and the UAE, drawing some key conclusions about the development of digital healthcare services in those countries, which may also apply to the wider GCC region.
The survey found that awareness of digital health solutions is already high, particularly in online pharmacies and teleconsulting. It found that these have relatively high adoption rates, with high user retention rates. Between 64 per cent and 87 per cent of consumers who have used digital-health apps continue to use them – this is chiefly because of the convenience, time efficiency, and affordability they offer.
Digital health is particularly important for competitiveness within the healthcare sector, as agile tech startups and e-commerce companies face a relatively low barrier to entry compared to traditional healthcare solutions.
Health insurance continues to grow
According to Businesswire, the health and medical insurance market in the Middle East is expected to boast a CAGR of more than six per cent over the next few years.
Insurers have had a good time during the COVID-19 pandemic; unsurprisingly, claims increased, and many companies managed to leverage those opportunities to introduce pandemic-specific policies.
Health and medical insurance have particularly high market penetration in Saudi Arabia and the UAE – indeed, in the latter, residents are compelled by law to have health insurance, typically provided by employers.
The UAE has also witnessed an increase in individual insurance policies. This is partly driven by an increase in health conditions related to obesity. In the UAE, more than 68 per cent of adults are overweight, leading to chronic diseases such as cardiovascular diseases, cancer, and diabetes.
The market is extremely competitive. In Dubai alone, there are more than 75 insurance firms currently licensed by the Dubai Health Insurance Corporation. The market’s major player is the National Health Insurance Company, which provides health insurance programmes on behalf of the government. Other major private providers include Cigna, which has targeted expatriates; it has found a niche in providing family health cover to expats in international small- or medium-sized enterprises.
Challenges and opportunities ahead
COVID-19 increased demand for more insurance and innovative healthcare solutions. Major insurance brokers and disruptive new firms alike have risen to the challenge across the Gulf region. As regional governments pour more investment into the sector and cultivate more public-private partnerships, the space for international firms to enter the healthcare market can only widen.
One of the major opportunities for new market entrants is in long-term care, something to which the COVID-19 pandemic has drawn more attention. Long-term care facilities require less real estate than traditional healthcare facilities, resulting in a lower barrier to entry and higher potential returns for potential investors. This will make it an attractive prospect, although regulatory constraints in some states still present a challenge.
Nevertheless, the Gulf region’s healthcare sector has made enormous strides over the last few years. Emerging technologies and health trends will only add to its potential.
This article appears in the latest issue of Omnia Health Magazine. Read the full issue online today.