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Insight into Egypt’s healthcare sector

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Based on Colliers research, by 2030, Egypt will require approximately 38,000 new beds with an estimated investment of US$8 to 13 billion.

Egypt’s healthcare sector is changing. It may lag behind its neighbours in the MENA region, but it is starting to catch up fast and that presents opportunities for investors. Based on Colliers research, by 2030, Egypt will require approximately 38,000 new beds (based on Egypt’s ratio 1.3 beds / 1,000 population) with an estimated investment of US$8 to 13 billion and up to 120,000 new beds (based on the MENA ratio of 1.9 beds/1,000 population) with an estimated investment of US$25 to 40 billion, with half of these investments coming from the public sector.

Colliers also calculated the investment required to fill this gap based on the current cost of construction with fitouts for a Grade A hospital, which is in the range of US$ 1,500/sqm to US$ 2,000/sqm (average US$1,750/sqm), while the gross area per bed ranges from 90 sqm to 120 sqm (average 115 sqm) with investment in medical fitouts ranging between US$80,000 to US$100,000 per bed (average US$90,000).

Moreover, one of the popular products in Egypt is “Doctor’s Clinics”. Also, based on Colliers research, by 2030, Egypt will require approximately two million sqm of medical clinics space with an estimated cost of US$1 billion, providing opportunities for developers to develop and sell the clinics to doctors/investors.

Introduction

Egypt is one of the most populous Arab countries in the world with over 100 million people living within its borders and another 10 million living abroad. With population growth running at a rate of 2.5 per cent per annum, demand for physical and social infrastructure, including healthcare and education services is growing.

Egypt’s healthcare sector lags MENA both quantitatively and qualitatively, but that needs to change. Rapid reforms are underway. COVID-19 may have put huge pressure on Egypt’s healthcare system, but the pandemic also provided an opportunity to strengthen it with reforms such as the implementation of a Universal Health Insurance (UHI) plan. Nonetheless, the longer-term success of Egypt’s healthcare sector depends on how quickly the market embraces new technologies and innovations, founded on global research and development (R&D) and adopts a data-driven, patient-centric and results-oriented approach to the industry.

The changing population profile:

Based on Colliers estimate, Egypt’s population is expected to grow from its current 101.6 million level to 130 million by 2030 and 175 million by 2050, with the increase set to fuel demand for healthcare services. Total population numbers will drive up overall levels of demand for healthcare, but it will be its composition that determines the type of services provided. Around 75 million (74 per cent) of the population is under the age of 40 and the cohort is expected to increase to 86 million by 2030 and 115 million by 2050.

Concurrently, only 8 per cent of the population is over the age of 60 (approximately 7.7 million), but this age group is expected to increase to 18 million by 2030 and reach 13.8 per cent of the population (around 24 million) by 2050.

Key demand factors

Mother & childcare: Between 2021-2030, approximately 26 million babies will be born in Egypt, creating a huge demand for mother and childcare facilities and services, such as obstetrics, gynaecology, and paediatrics.

Lifestyle diseases: Globally, Egypt has one of the highest prevalences of lifestyle diseases with approximately 15 per cent of the population over the age of 20 with diabetes, 32 per cent with obesity and over 25 per cent suffering from hypertension.

Geriatric care: Population growth in the over 60s will drive demand for geriatric services such as long-term care, rehabilitation, and home care. Presently there are 5.5 million over the age of 65, but this number is expected to increase to 7.7 million by 2030.

Rejuvenation and anti-ageing: Globally, regionally, and domestically, there is increasing demand for services focused on rejuvenation and anti-ageing services such as stem cell therapy and hyperbaric oxygen therapy (HBOT).

Key causes of death in Egypt

Non-communicable diseases, including cardiovascular disease, diabetes, cancer, and chronic respiratory disease, are currently the leading national cause of death in Egypt.

Non-communicable diseases account for approximately 82 per cent of all deaths and 67 per cent of premature deaths.

Lifestyle Diseases

In recent years, the rate of diabetes-related illness has increased dramatically in the MENA region. International Diabetes Federation (IDF) data shows that of the 463 million people with diabetes globally in 2019, MENA contributed 55 million. Estimates suggest that by 2045 diabetic patients in MENA will rise to 108 million. Egypt’s age-adjusted diabetes prevalence rate, at 17.2 per cent among the 20–79-year-olds totalling over 11.9 million, is one of the highest amongst MENA countries and other developed countries.

Another widespread lifestyle disease is obesity. Egypt’s obesity prevalence rate among adults is 32 per cent, which is higher than some developed countries, as well as other countries in MENA.

These trends indicate that the demand for specialities such as endocrinology, nutrition consulting and bariatric surgeries will be on the rise. Research suggests that the demand for Centre of Excellence facilities providing these specialities has been increasing in the region and this trend will be reflected in Egypt.

Implementation of Universal Health Insurance law

The Universal Health Insurance (UHI) plan was launched in 2018 to reform the fragmented healthcare system in Egypt. The comprehensive healthcare insurance scheme will cover all governorates by 2032, with implementation taking place over six phases, each phase focusing on a different geographic area.

In 2018, around 55.6 million of the population was insured. A historical CAGR of 2.7 per cent, suggests that numbers insured by 2020 should reach 58.6 million, but this target is likely to be exceeded given the introduction of the universal health insurance law in 2018.

The emergence of the insurance market will have a significant impact on private healthcare and may also drive, as seen in many other markets, the need for more cost-effective practices and greater efficiencies.

Market Opportunities

A focus on daycare surgery

Constantly developing technology has resulted in improved diagnostics, advancements in new surgical techniques, anaesthesia administration and enhanced postoperative care. These advances have resulted in a significant increase in daycare surgeries across the globe and particularly in the developed world. In Egypt, their prevalence is likely to grow in line with regional benchmarks, such as 32 per cent in the KSA and around 42 per cent in the UAE, offering tremendous opportunities for expansion. A move towards daycare surgeries not only reduces the need for significant capital outlay due to fewer hospital beds required but will improve cost efficiency. Based on a UK study, average daycare costs were £698, compared to the average elective inpatient cost of £3,375. Ongoing growth in the insurance market will also add impetus to the preference for daycare treatment.

A focus on centres of excellence

As a result of urbanisation, and rising life expectancy and disposable income, there has been an increase in chronic/lifestyle diseases such as diabetes, coronary problems, and other obesity-related illnesses. Six specialties now account for over 80 per cent of all surgery. Colliers expects that, like in many other developed nations, Egypt will experience a realignment of treatment through the establishment of specialised Centres of Excellence (CoE), away from family clinics and general hospitals.

Long Term Care/Rehabilitation

One of the biggest changes in Egypt’s population profile is an increase in life expectancy. This has increased from 46.8 years for males and 49.3 years for females in 1960 to 69.8 years and 72.6 years for males and females respectively in 2020. Life expectancy is predicted to continue rising and could reach 75 years for males and 79.3 years for females by 2050.

Egypt’s over-65s in 1960 totalled just a tad more than 1 million, but by 2020 there were roughly 5 million in that age bracket and by 2050 there could be almost 16 million.

Egypt currently requires around 19,000 dedicated Long-Term Care (LTC) beds to cope with elderly patients. By 2050, it is likely to need almost 62,000.

Primary Care

Owing to Egypt’s large population and high hospital occupancy rates, the country will require more primary care clinics and medical centres to meet the demands of a rising population.

Laboratory and Diagnostic Centres

There is a need for more standalone laboratories and diagnostic centres in Egypt to support the increasing volume of outpatient facilities.

Increasing demand for qualified and specialised Human Resources

Key, yet often ignored, a prerequisite for the provision of quality healthcare services is the availability of human capital. Without qualified, specialised human resources, even the best medical facilities using the most advanced medical equipment are not efficient. By 2030, an additional 88,000 doctors will be required, 73,000 extra nurses and 18,000 pharmacists.

Furthermore, to improve healthcare service provision in Egypt, the country needs to adopt new medical technologies, and that will need advanced medical education for specialised doctors, registered nurses and AHPs in the fields of artificial intelligence, data analytics, robotic medical sciences, and genome sequencing.

Medical Tourism

Egypt has earned a strong regional reputation for having quality doctors and infrastructure at a competitive price. Easier visa access than some of its regional competitors also supports business.

These factors have helped Egypt become a regional medical tourism hub, attracting tourists mainly from North, East, and West Africa & GCC. This traffic helps increase the utilisation rates of existing healthcare facilities.

Beauty & Cosmetic

Higher-income levels and aesthetical awareness have resulted in increased demand for beauty and cosmetic treatments, such as body contouring, anti-ageing, lipoplasty (liposuction), eyelid surgery, breast implants, rhinoplasty, facelifts, botox, medical spas, and hair transplants. In response to demand, a large number of beauty and cosmetic centres have emerged in upscale areas of Cairo and elsewhere.

Health driven wellness resorts/second home developments

One attraction of Egyptian property is as a hedge against inflation. The recent devaluation and currency fluctuations have seen residential prices rise by approximately 20 per cent (in EGP terms) year-on-year; a trend supported by a lack of supply in the residential market.

Alongside primary accommodation, the second tier of property interest has emerged over the last decade with holiday or vacation homes becoming a popular investment and lifestyle choice. Demand in this sector will remain underpinned by the volume of products and choices available to consumers, both in terms of location and price points.

Sustaining high occupancy levels all year round in second homes can be challenging. Colliers has seen these challenges being addressed through the introduction of healthcare and wellness-driven resorts, long-term care, and rehabilitation facilities.

These facilities have a positive impact on occupancy rates by attracting not only vacationers but retired households and those seeking longer holidays within proximity to healthcare facilities.

Seasonality is one factor behind demand levels but ‘pull factors’, such as proximity of hospitals, clinics, long-term rehabilitation centres, wellness retreats, fitness/skill retreats and retirement homes, also contribute to the equation.

Healthcare/medical cities and parks

Regionally, and in Egypt specifically, there is a new trend in developing healthcare/medical-driven mixed-use developments, known as “Healthcare Cities/Parks” or “Medical Cities/Parks”. These are a combination of retail, residential, commercial and hospitality developments working together to form a desirable destination.

Conclusion

Egypt’s healthcare sector, particularly the private healthcare sector, offers several lucrative opportunities for developers, investors and operators. However, it also possesses several challenges, such as high costs of capital and a brain-drain of qualified doctors and paramedical staff, typical to the GCC countries.

One of the key drivers is the increase in population. As a result of the increased population, Egypt will require approximately 38,000 new beds (based on Egypt’s ratio of 1.3 beds / 1,000 population) with an estimated investment of US$8 – 13 billion and up to 120,000 new beds (based on MENA ratio of 1.9 beds / 1,000 population) with an estimated investment of US$25-40 billion dollars, with half of these investments coming from the public sector.

One of the key challenges to establishing and operating additional beds will be qualified staff. Our analysis identified an additional 88,000 doctors, 73,000 nurses and 18,000 pharmacists will be needed to serve the additional demand by 2030, suggesting an increase in demand for medical education institutions.

In addition, Egypt and the African region is expected to follow the footsteps of Dubai and other established healthcare centres to promote and attract medical and wellness tourism by offering high-quality, patient-centred healthcare services at affordable prices. Greater Cairo is expected to establish itself as a medical tourism hub focusing on developing centres of excellence for cardiovascular, cancer, neurology, liver, pancreas, pulmonology, urology, nephrology, gastroenterology, obstetrics and gynaecology, paediatric care, and other complex treatments.

North Coast and other coastal developments can be established as health and wellness hubs by offering beauty and cosmetic, health farms and rehabilitation services.

Egypt is also expected to develop integrated health cities providing a wide range of services relating to healthcare, pharmaceuticals, medical education and research, medical equipment, wellness and allied services, which is expected to contribute to Egypt’s GDP and create jobs.

As many emerging markets face uncertain prospects and economic pressures as a result of the global pandemic, Egypt which requires a large investment in the healthcare sector will have to focus on PPPs and privatisation to raise the funds required to fulfil the demand gap.

PPP and privatisation are expected to bring in much needed new technologies, an improvement in operational efficiencies and international linkages with key healthcare providers from Europe, U.S., and Asia.

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Mansoor Ahmed

This article appears in the latest issue of Omnia Health Magazine. Read the full issue online today.

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