“There are plenty of opportunities here, but also a natural affinity for American products and services and the American manner of doing business. But there’s also stiff competition. The GCC is among the fastest growing, richest markets in the world.”-U.S. Consul General Justin Siberell
Facing the demands of a growing population and increasing healthcare costs, the U.A.E. is focused on improving the coordination and delivery of healthcare services to its native and expatriate populations. While U.A.E. nationals’ life expectancy has reached 77.7 years according to the latest Human Development Index report, the country’s key health demographics show a troubling trend toward increasing rates of heart disease, diabetes and other lifestyle-induced ailments. Without proper management and prevention, these figures could reach epidemic proportions, a costly and dangerous outcome that the U.A.E. government is determined to avoid.
Against this backdrop, the U.A.E. has reinforced its commitment to improving healthcare access and service and is investing in all levels of the country’s healthcare system, from technology and pharmaceuticals to hospitals and insurance.
According to the U.A.E. Ministry of Economy, the government has “identified healthcare as one of the priority sectors,” and is committed to developing healthcare infrastructure and services, allocating some 24 percent of the overall federal budget for 2011 to expenditures on “social development,” which includes health.
Pictured: Trade Mission delegates meet with H.H. Sheikh Saud bin Saqr Al Qasimi, Ruler of Ras Al Khaimah
The U.S.-U.A.E. Business Council led a delegation of top U.S. healthcare and pharmaceuticals companies to the U.A.E. in January of 2011 to gather more information about the U.A.E.’s approach to meeting its healthcare needs and explore opportunities for partnership and investment. The trade mission spanned Dubai, Abu Dhabi and Ras Al Khaimah, and provided participants with an in-depth understanding of each region’s priorities. The following analysis examines the key drivers of the U.A.E.’s growing healthcare industry and looks at opportunities for increased investment and partnership between U.S. and U.A.E. companies.
Economic Outlook
“Healthcare is also among the most dynamic areas of the U.A.E. economy…The government of the U.A.E. is focusing on how this projected growth and its key drivers can be effectively monitored to ensure best-in-class medical care to our people and promote overall economic growth.” –H.E. Eng. Mohammed Bin Abdul Aziz Al Shihhi, Undersecretary of the U.A.E. Ministry of Economy
According to the U.A.E. Ministry of Economy, the healthcare sector is expected to grow 16 percent annually and is on a “high growth curve.” Healthcare expenditure is expected to rise to $11.9 billion in 2015 from just $3.2 billion in 2005. Currently, almost $14 billion in healthcare-related projects are underway across the Gulf Cooperation Council (GCC), with the U.A.E. alone accounting for $2.9 billion or roughly 20 percent of those expenditures.
Reaching 2.6 percent in 2010, the U.A.E.’s healthcare expenditure is relatively low as a proportion of its GDP; however, the country’s healthcare spending per capita, currently at $1,200 per person, puts it among the top 20 countries in the world in that category.
The Regulatory Environment
A handful of regulatory agencies oversee the U.A.E.’s healthcare system, each responsible for a different facet of the overall market. The U.A.E. is a model of intellectual property protection and leads the region in the enforcement of its stringent patent protection laws, copyrights, and trademarks, creating an appealing investment environment for companies providing innovative treatments and technologies.
Ministry of Health
The Ministry of Health, headed by Minister of Health Hanif Hassan Ali Al Qassim, is the federal authority mandated to unify the U.A.E.’s health policies, develop a comprehensive, nation-wide health service, and ensure that healthcare remains accessible across the country. It is the body in charge of regulating healthcare in the Northern Emirates of Sharjah, Fujairah, Ras Al Khaimah, Ajman and Umm al-Quwain.
Federal Health Authority
The Federal Health Authority (FHA) was established in December 2009 to take over the “executive responsibilities” of the Ministry of Health. The FHA was established to “increase the efficiency and competitiveness” of the U.A.E.’s healthcare system.
Dubai Health Authority
The Dubai Health Authority (DHA) is the regulatory authority that oversees the health care sector in Dubai. DHA’s mission is to ensure access to health services, maintain and improve the quality of those services, improve the health status of nationals, residents and visitors, and oversee a “dynamic, efficient and innovative health sector” by setting policy and strategy for the sector in the Emirate, and as a service delivery provider itself.
Health Authority of Abu Dhabi
The Health Authority of Abu Dhabi (HAAD) is responsible for setting the strategy for the Emirate of Abu Dhabi’s health system and setting the road map for Public-Private Partnerships (PPPs) in the Emirate. HAAD shapes the regulatory framework for the health system and sets and enforces its standards. It also regulates the scope of services, premiums, and reimbursement rates of providers and payers.
Investment & Partnerships
Increasing the level of private healthcare investment is a priority across the U.A.E. Indeed, like many countries facing a surge in healthcare costs, the importance of bringing private healthcare providers and insurance agencies into the equation is paramount to controlling prices. Additionally, the U.A.E.’s government agencies are focused on creating the right environment for public-private partnerships and foreign direct investment in the sector. Critical supply gaps have created direct investment opportunities for U.S. companies and they are strongly encouraged to partner with local providers as they seek to enter this important, high-growth market.
The U.A.E. is already home to a number of high-profile partnerships which seek to bring Western technology, practices, and standards to the U.A.E. in an efficient and culturally relevant manner.
• Cleveland Clinic Abu Dhabi—a partnership between The Cleveland Clinic and Mubadala—is scheduled to open its 360-bed multi-specialty tertiary care hospital in 2012 as part of Mubadala’s commitment to building a “world class integrated healthcare delivery network.”
• The Johns Hopkins University Medical School works in partnership with Tawam Hospital, a 466-bed facility in Al Ain.
• Dubai Health Care City (DHCC) consists of two free zones—a medical cluster and a wellness cluster—on a total of 23.2 million square feet of land and has attracted a number of top U.S. companies and institutions as its key partners.
Key Sectors
• The U.A.E.’s pharmaceutical sector has enjoyed tremendous growth over the last few years, and projections put its compound annual growth rate (CAGR) at 9.96 percent yearly, reaching $3.58 billion in 2019. One report estimates the CAGR will reach 17 percent between 2010 and 2013.
• The U.A.E.’s medical devices market is estimated at about $361 million, with U.S. imports currently accounting for 28.5 percent of the total. One recent report estimates a CAGR of more than 11 percent from 2009-2012.
• The U.A.E. is positioning itself to become a hub for global medical tourism and a preferred destination for domestic and foreign patients seeking high quality and cost effective procedures and treatment.
Challenges and Opportunities
“Our endeavor is to ensure the availability of world class, quality medicines at affordable prices across the globe.”– Mr. Ayman Sahli, C.E.O. Julphar Pharmaceuticals
The U.A.E. market overall is rather small, with about 8.2 million people, over 80 percent of whom are expatriates. Moreover, the nature of the GCC’s political and regulatory environment means that there is no easy way to deliver products and services throughout the GCC, which is home to a population of over 35 million residents. Over 50 percent of the U.A.E. population qualifies as low income by national and international standards.
However, the U.A.E.’s healthcare development has not kept pace with its rapid population growth and the penetration of hospital beds in the U.A.E. is currently below international standards, which average 3 beds per 1000 people. In 2010, the U.A.E. had fewer than 2 beds per 1000 people, revealing significant growth potential. The U.A.E. also has emerged as a leader in the GCC with its favorable pricing on pharmaceuticals and its strong IP protection regime.
Overall, the U.A.E. has positioned itself as an attractive investment prospect for U.S. companies seeking to expand their footprint in the Gulf region. The country presents a substantial growth opportunity within the framework of strong regulatory oversight and ambitious plans to expand and improve healthcare coverage for its growing population. Through strong partnerships and direct investment opportunities, U.S. companies have the potential to build a strong business and a positive reputation for their high quality products and services in the U.A.E. and the surrounding region.
