Investment in the Health Sector: The Gulf is a market for foreign healthcare companies

Economists anticipated significant growth in the healthcare sector across the Arab Gulf countries in 2024, driven by a surge in both foreign and local investments, creating abundant opportunities for development. The Global Health Forum in Riyadh witnessed the signing of 138 agreements, memorandums of understanding and deals, at more than SR 13.3 billion and in the presence of more than 111,000 visitors and interested local and international stakeholders.

Qatar, the UAE, and other Gulf countries have observed a notable uptick in investments within the health sector, signaling burgeoning opportunities for its expansion. The influx of investments in healthcare and pharmaceuticals has propelled this market to become the largest in the entire Middle East region.

The Gulf countries are experiencing a consistent increase in foreign investments, driven by their steady growth across various sectors. Notably, there’s a significant surge in foreign investments specifically directed towards the healthcare sector within these countries. This trend, alongside substantial government spending and ambitious plans for expansion and diversification, has elevated their healthcare sectors to positions of leadership, garnering global attention.

Saudi Arabia: Increase in Healthcare Investments

The healthcare sector in Saudi Arabia is experiencing an unprecedented surge in investment opportunities, accompanied by both horizontal and vertical expansion. With annual spending reaching around $2.4 billion, the Kingdom is reaffirming its dedication to becoming a hub for advanced healthcare initiatives. While the government continues to support the healthcare sector, there’s notable growth from the private sector, showcasing its capacity to establish and efficiently manage major hospitals. This has prompted the government to pursue sector privatization through a mechanism ensuring quality and efficiency. This approach aims to deliver services to citizens via an insurance framework, ensuring sustainability and quality across the board.

Saudi Arabia has made significant progress in its healthcare transformation, positioning itself as an attractive destination for health investments. The sector’s contribution to the gross domestic product is projected to rise from SAR 199 billion in 2020 to SAR 318 billion by 2030.

Consequently, the Kingdom urges investors to consider opportunities in the Saudi healthcare sector, which is projected to reach a total of SAR 330 billion (USD 88 billion) by 2030. The private sector’s contribution to the gross domestic product is anticipated to play a more significant role in the coming years, with projections indicating a rise to 145 billion in 2030, up from 72 billion in 2020. Riyadh recently hosted the Global Health Exhibition under the theme “Invest in Health,” attracting 300 local and international companies specializing in healthcare.

It is noteworthy that Saudi Arabia has plans for over 100 partnership projects with the private sector in healthcare services over the next five years. Capital investment opportunities in these projects by the private sector are estimated to reach SAR 48 billion.

In June 2023, the Public Investment Fund (PIF) announced the establishment of the Pharmaceutical Investment Company (Lifera), a commercial-scale contract development and manufacturing organization, to enable the growth of the local biopharmaceutical industry, strengthen national resilience, and supporting Saudi Arabia’s position as a global pharmaceutical manufacturing destination. 

In this context, Saudi Arabia’s Ministry of Health recently welcomed a delegation of Canadian companies specializing in healthcare and medical services. The delegation also emphasized the potential for long-term cooperation between the two countries in the field of medical education, especially in light of Canada’s expertise in areas such as digital health, virtual healthcare services, and artificial intelligence applications.

Meanwhile, Amanat Holdings has partnered with Mada International Holding to develop Ministry of Health Public-Private Partnerships (PPPs) projects in Saudi Arabia, focused on the long-term care and rehabilitation segment. Partnership unlocks potential for significant PPP opportunities in Saudi Arabia commencing with participation in the upcoming 900-bed PPP post-acute care tender in Riyadh and Dammam.

Key milestone in the value creation strategy for Amanat Healthcare and is expected to accelerate the Company’s target of delivering 1,000 beds. The combination of Amanat and Mada International Holding creates a powerful strategic partnership with extensive expertise in Saudi Arabia, that is optimally positioned to further unlock regional PPP opportunities and accelerate Amanat’s expansion plans in the Kingdom.

Qatar: Steps to Enhance Innovation and Research

A new study issued by Investment Promotion Agency of Qatar (IPA Qatar) said Qatar’s focus on the integrated care models and promotion of health and prevention against diseases is an indicative of projections for a long-term growth for healthcare sector in the country.

The new study that was published recently indicated that health promotion and disease prevention underpin its commitment to ensuring the well-being of existing and future generations.  The nation is taking big strides in fostering innovation and research, which is evident in initiatives like the Qatar Genome Programme and Qatar Biobank, as well as collaborations with renowned institutions such as Weill Cornell Medicine, Mayo Clinic, Imperial College London, Cleveland Clinic, Johns Hopkins Medicine, and University College London.

Sustained high levels of investment for the expansion of healthcare infrastructure and services ensure a positive market outlook across primary, secondary, and tertiary care. The country already boasts several state-of-the-art healthcare facilities. 

Aspetar, was the first specialized orthopaedic and sports medicine hospital in the GCC; Hamad Medical Corporation (HMC), was the first hospital in the Middle East to be accredited by US-based non-governmental organization ACGME International.

IPA Qatar also stated that the country’s pharmaceutical market is forecast to grow at a compound annual growth rate (CAGR) of 6.1% between 2021 and 2026, with solid efforts in place to attract foreign investment to expand local production. 

This includes a recent agreement between HMC and Qatar Pharma that sets out a three-year roadmap to reach self-sufficiency in pharmaceutical production.

According to a report published on “LA Biotech” website, Qatar’s investments in the healthcare sector and pharmaceutical industry are projected to reach USD 11.8 billion by the year 2024. The report highlights that Qatar’s focus on investment in this sector signifies not only a doubling in the size of Qatari projects within this field but also aims to establish itself as a prominent hub for this industry, attracting foreign investors.

This creates a competitive business environment, supported by a robust medical infrastructure and substantial investments in research and development. 

Additionally, the commitment to delivering world-class services remains paramount, reflected in healthcare spending that surpasses $1.827 billion, leading among the Gulf Cooperation Council countries.

Foreign investors will find a valuable and competitive business climate in Qatar, backed by a stable and resilient economy, pro-business regulations and a vibrant knowledge ecosystem. The country’s strategic investments in healthcare institutions, skilled talent, and world-class tech infrastructure pave the way for remarkable growth and innovation in the healthcare sector.

The Investment Promotion Agency Qatar’s (Invest Qatar) 2022 report underscores the remarkable growth in foreign direct investment within the country. It also highlights the creation of new projects and jobs in the local labor market as a result of these investments. Additionally, the report positions Qatar at the forefront among countries attracting foreign direct investment, both regionally and globally.

The report revealed that the State of Qatar achieved a surge in foreign direct investment (FDI), as it attracted USD 29.78 billion in 2022. 

Due to the country’s strong and stable economic growth and attractive investment prospects, 135 new FDI projects were recorded, creating 13,972 new jobs in 2022. This represents almost 25 times the value of FDI projects from the year before and a doubling of jobs created compared to 2021.

UAE: The Growth of the Pharmaceutical Industry

Over time, through meticulous planning and concerted efforts, the UAE has evolved into a dynamic testing ground for cutting-edge innovations and intelligent solutions within the healthcare sector, with a particular focus on pharmaceuticals. This progression bolsters the country’s leadership position and competitiveness in both healthcare and pharmaceutical fields, establishing it as a hub for advanced technologies, smart applications, and the integration of artificial intelligence. Moreover, it has emerged as a regional and international launch pad for pharmaceutical companies seeking to introduce their products in the Middle East.

Official statistics indicate that over 90% of international pharmaceutical companies now have regional headquarters and scientific offices based in the UAE. Additionally, more than 50% of these companies cater to a region spanning across Africa and Eastern Europe.

Currently, there are around 95 scientific offices representing these international companies in the UAE. They offer logistics support from the UAE to serve 41 countries in various aspects such as medicines, medical supplies, training, and programs. The pharmaceutical market is undergoing substantial growth, with projections indicating it will reach $4.7 billion by 2025.

AstraZeneca unveils new sustainable offices at TECOM Group’s Dubai Science Park as part of drive to net zero healthcare.

The offices are part of a raft of measures by AstraZeneca to accelerate the transition to sustainable healthcare in the UAE and will contribute to AstraZeneca’s drive to cut emissions and be science-based net zero by 2045 at the latest.

Increased foreign investment in Dubai-based high-tech companies will benefit Dubai’s healthcare sector. Healthcare expenditure in Dubai is expected to boom over the coming years, with spend on medicines forecast to rise at 8% CAGR. Meanwhile, ongoing investment in pharmaceutical production alongside the medical device industry is predicted to see both markets grow at a rate of 8.2% CAGR and 4.4% CAGR through to 2025. Both sectors are key priorities of the 2030 Dubai Industrial Strategy, which aims to elevate the emirate as a global platform for knowledge-based, sustainable and innovation-focused businesses. 

In Abu Dhabi, the Department of Health endeavors to build a healthcare system that consistently delivers high-quality services, catering to the needs of community members. This goal is pursued by strategically supporting investments in the emirate’s healthcare sector. The Department focuses its efforts on bolstering the healthcare sector, aiming to create an open market for investment in various health facilities including centers, clinics, pharmacies, dentistry, and other privately paid beauty services not covered by insurance.