Innovation, Infrastructure Substantial as Expenditure Grows

Experts agree that the Middle East is poised to put its weight behind the burgeoning medical sector and that industry-wide innovation will help spur success, firmly placing the region on the world map as a turnkey healthcare provider. On the other hand, they point out that the success of the sector lies also in the sound development of a sustainable infrastructure.
Innovation in the healthcare sector is seen by some critics as too radical but previous experiences show that to make a real difference, incremental change to products, processes or services is essential. “Innovative thinking is nothing without a superior infrastructure and fortunately it seems that regional markets, Dubai, Oman and Jordan particularly, have recognized this. Government and the private sector in these markets are showing healthy signs of backing the sustained growth of the healthcare industry,” says long-time promoter of medical innovation Dr. Karl Groth, a director of the General Partner.
Like tourism, healthcare can be a catalyst of a growing economy; it is a critical subject for policy makers and a key to successful, sustainable economic growth. Recent figures estimate that overall healthcare expenditure in the Gulf could increase by more than 400 percent to reach $60 billion in the next 17 years. This is a sure sign that the healthcare sector is one for investors, and others, to back. Internalizing the medical innovation process within the Middle East means that the rewards gained will also be for the region - for investors, for inventors, for the workforce, the medical specialists, the patients, and the region’s economy. Healthcare accounts for less than 10 percent of total GNP in the region and is bound to increase to 25 percent within the next ten year, according to Groth. Peggy Farley, Managing Director of the General Partner said that globally, nearly 65 percent of all medical equipment components are outsourced at some level and there is increasing competition among medical firms in India and China, providing low cost alternatives.
“However Arabia has the right ingredients to rival any region in quality medical manufacturing, business practices and forward-thinking environmental strategies,” she states. She said that recent global medical manufacturing research indicates that the percentage of finished goods outsourced is projected to double from 14 percent to 27 percent between 2008 and 2010.
The medical technology manufacturing sector requires a highly-trained and educated work force. Enhancing innovation in healthcare will create knock-on effects in jobs, increase wealth and improve the overall health of the population, according to Groth. “The wealth of the Middle East is not solely its oil and gas; its more important wealth is the capability of its people, especially in science and technology,” he added.

Economic Growth; Healthcare Demand on the Rise
Healthcare demand in general will rise 240 percent in the GCC region over the next 20 years, with health risk factors, ageing, population growth and medical inflation contributing to the rise in spending, according to Dr. Ioan Cleaton-Jones, a Senior Health Specialist in the Health and Education Department of the International Finance Corporation (IFC), a member of the World Bank Group. In response to this spending increase, the total number of hospital beds is projected to rise from 68,250 in 2006 to 114,450 by 2015 and 161,750 by 2025. McKinsey & Co recently modeled disease trends in the six Gulf Cooperation Council countries and projected these figures.
High-income countries such as the UAE, Kuwait, and Saudi Arabia spend only 2.2 to 3.4 percent on healthcare. These spending levels will continue to rise as populations grow, people live longer, experience fewer infectious diseases and get more chronic diseases of old age and affluence such as heart disease, diabetes and cancer, according to Cleaton-Jones who was speaking at the GE Healthcare Middle East Media Summit which was held June 08 in Dubai.
Numerous countries in the Middle East and North Africa region are exhibiting strong economic growth. While high-income examples such as the UAE, Kuwait, and Saudi Arabia are well-known, middle-income countries such as Oman, Jordan, Egypt, and Tunisia are also growing fast with annual economic growth of 5-7 percent.
Cleaton-Jones added: “While high oil prices are a big reason for capital flows into the region, several countries are making far-reaching economic reforms to improve their business climates and attract investors, thereby driving more sustainable economic growth in the region.” According to the World Bank’s ‘Doing Business’ report which tracks the economic reforms for 178 countries; last year, Egypt rose from the 152nd position to the 126th in the world, making it the world’s top reformer, while Saudi Arabia rose from 33 to 23, and Tunisia from 93 to 88. This is considered a milestone in helping increase intra-regional investment.