The future of MENAT’s Healthcare 3

A sector facing up to far-reaching change

This is a pivotal moment for the dynamic and competitive market that is that is the North Africa and Turkey (MENAT) region’s healthcare sector.

Contents MICHAL PERLICEUSZ SECTOR HEAD, HEALTHCARE, Introduction 3 CMB MENAT – HSBC BANK MIDDLE EAST

Digital disruption, shifting demographics, the far-reaching impact of Contributors 4 the COVID-19 pandemic, and pressure from insurers and regulators are transforming global healthcare. Each of these factors is critical in MENAT State of the sector 6 too – but the evolution of the sector here has created a unique healthcare ecosystem.

Regulation 10 HSBC set out to take the temperature of the industry in the region. To do so, prior to the coronavirus outbreak, we spoke to key figures working in the field within government, major providers, clinical practice and consultancy. Technology 11 Their candid views add up to a fascinating snapshot of a region and a sector The future 12 in flux. It will provide useful insight for anyone with an interest in the future of the region’s healthcare, as it – like many regions globally – come to terms with a new normal following the arrival of COVID-19. Banking 14

Get in touch 15  Call us to discuss how your business can benefit from HSBC’s deep expertise and extensive network in MENAT. +971 442 36252 4 The Future of MENAT’s Healthcare

Contributors

HSBC interviewed industry experts Andrea Tithecott Dr. Ibtesam Al Bastaki Shehzad Jamal across the healthcare sector to Partner, Head of Regulatory and Healthcare Director of Investment and Public Private Partner, Healthcare & Education – Knight Frank Practices – Al Tamimi & Company Partnership Department – Health gather their insights and perspective Authority (DHA) Shehzad is a Partner at Knight Frank and leads on the most signifcant trends Andrea Tithecott is a Partner in the Regulatory the healthcare and education practice across practice in Abu Dhabi and head of Al Tamimi & Dr. Ibtesam Al Bastaki is currently a Director of the Middle East and African region. He has affecting the industry today. Company’s Healthcare Group. Andrea joined Investment and Partnership at the Dubai Health over 15 years of experience in consulting with the frm in 2013 to establish the Regulatory Authority (DHA), and is responsible for the assignments in Europe, Asia, Africa and the Practice which was quickly ranked by development of various health-related public Middle East. From the platform of Knight Frank, Chambers & Partners for signifcant expertise and private projects in the Emirate of Dubai. he and his team advises healthcare clients on in regulatory and local compliance issues. Her In addition to her main role, she also advises market entry, operator & investor search, business practice area has focused upon regulatory on best practice to ensure holistic expansion models, strategy and transaction services. In compliance, investigations and disputes, risk in healthcare industries across the UAE. addition, he also liaises with investors seeking management, crisis management, trade and Previously, she headed up the health strategy to invest in the care home market in the United customs, public policy and advocacy, corporate and performance team at the Prime Minister’s Kingdom and North America. governance, due diligence, and licensing/permit Office for the UAE’s Vision 2021. Her role at the issues. For governments she has contributed organisation also led to the introduction of the to the development of new law and policy. She national key performance indicators and the Magda Habib has been instrumental in developing the frm’s revamping of the federal health strategy. CEO – Dawi Clinics Healthcare Practice Group. With a passion for building brands, Magda has Mansoor Ahmed been fortunate to be involved in the launch of M V Suresh Director (MENA Region) Valuation & Advisory many promising businesses that have contributed CEO – National Pharmaceutical Industries – Development Solutions, Healthcare, to the development of the Egyptian market and (NPI) Education, Infrastructure & Public Private harness the enormous potential available. During Partnership (PPP) the frst 15 years of her career, Magda was a key M V Suresh is the CEO of National member of the executive team that created and Pharmaceutical Industries (NPI), Oman. He has Mansoor has been the Director for Development built Raya Holdings Group, a leading technology been associated with NPI since its inception, Solutions, Healthcare, Education and Public brand in the Middle East. In 2008 she co-founded initially as its CFO and thereafter as the CEO. In Private Partnership (PPP) in the MENA region Fawry for Electronic Payments, and helped lead the initial phases Suresh contributed signifcantly since 2010, working across the UAE, Saudi the company to become the largest electronics to stabilising the operations of the company, over Arabia and Egypt offices. He has over 20 years of payment platform in Egypt, with more than 50 the past two decades, he has been instrumental experience in consulting and applied economic thousand payment points nationwide. Driven in transforming NPI into the vibrant organisation research at Colliers International, Ernst & Young, by the obvious need for standardised, holistic it is today. As the CEO of the company, he is Andersen Consulting, Manazel Real Estate PJSC primary healthcare services in Egypt, Magda involved in developing and implementing a in Business / Strategic / Operational Planning and established Dawi Clinics in November 2016 – a long-term strategy for the organisation including Transformation, Operators Search & Selection, group of medical clinics that aim to provide upgrading the Quality Management Systems (the Market and Financial Feasibility Studies, families with comprehensive medical services facility is EU GMP approved), growing production Valuations, Due Diligence and Private Equity. and unique check-up programmes through the capabilities, strengthening R&D and expanding Mansoor works with Colliers’ international offices implementation of internationally recognised into new markets. The Company is now poised to and centres of excellence worldwide to bring standards. take advantage of emerging opportunities in the together global innovations with in-depth local region as well as further afeld. knowledge to their clients. 6 The Future of MENAT’s Healthcare 7

Collaborating for change

As MENAT governments step back from healthcare provision, businesses are taking on new responsibilities.

The tilt from public towards private “The Government is very clear that it healthcare provision has become cannot fulfl the entire demand on its more marked across the region own, and that it needs to partner with over the past decade, refects the private sector in various forms,” she M.V. Suresh, CEO of National notes. Pharmaceutical Industries. In those states which have already “Historically there were only implemented mandatory health government hospitals,” he refects. insurance, the impact on service patterns “At frst, private hospitals catered is becoming clear. largely for the expatriates.” “Since it was introduced in Abu Dhabi “Now, with the advent of medical in 2014, the average number of times insurance, citizens have the choice to a patient visits a doctor increased from go to a private hospital. Growth will once or twice to four times a year,” says move towards the private sector.” Shehzad Jamal, Partner, Healthcare & Education at Knight Frank. Insurance drives demand Magda Habib, CEO of Egypt-based “Once insurance has kicked in Dawi Clinics, certainly sees the roll- throughout the region, you will fnd the out of universal health insurance there government taking the role of healthcare as a trigger for market transformation. administrators rather than operators, giving a massive boost to private sector operators as they take a greater role.”

MENA’s healthcare With the market will grow from advent of medical US$ 185.5 billion insurance in 20191 citizens have the choice to go to a private to hospital. Growth will move towards the US$ 243.6 billion private in 20231

sector 1 https://www.arabhealthonline.com/en/visit/Hospital-projects-in-the-MENA-region.html 8 The Future of MENAT’s Healthcare 9 Workforce shortages are going to be a critical concern

losses for hospital chains already in in Abu Dhabi are expats, according to Dr Ibtesam Al Bastaki, Director operation, on the basis of their track recent research2. of Investment and Public Private record of proftability. However, it is Partnership Department at Dubai still very challenging for new players in “Workforce shortages are going to Health Authority, says: “We anticipate the market: they face a lot of problems be a critical concern,” warns Andrea greater collaboration between public generating funds,” he says. Tithecott, Partner, Head of Regulatory and private sectors across the UAE and Healthcare Practices at Al Tamimi to offer value-based health services, There are fnancial challenges for & Company. improve delivery of specialised care, established players too, notably bring new and innovative models related to the current slowdown in the “The UAE needs to focus on some supported by technology changes, and wider economy. A delay in payments of the key workforce issues of fnding also help address the talent needs.” has trickled down from insurers and and recruiting from a diminishing talent governments to affect hospitals, pool. Quality is going to be king, and “Ours is comparatively a young health retailers, distributors and manufacturers. businesses will only deliver all the key system, but if you look back 10 or 15 elements through the quality of the years, the region has come a long way.” Talent is key to success workforce.” Another hurdle states must overcome is getting skilled professionals in place Ambitions for innovation to meet rising demand. There has Despite these challenges, participants been little progress in tackling the are upbeat about the prospects overreliance on expatriate workers: 90% for improving healthcare through of healthcare workers in Dubai and 96% partnership. 2 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6346501/

Squeezed margins, growing revenue Existing players have the edge One effect of the insurance change is the The widespread adoption of new 90% erosion of margins, thanks to insurers’ regulations is raising standards. of healthcare workers negotiating power. However, the overall Combined with the need for efficiency in Dubai revenue pool is vastly expanded, with and specialisation, this is leading to and a recent analysis suggesting MENA’s consolidation. Smaller providers are healthcare market will grow from US$ being acquired or replaced by bigger, 185.5 billion in 2019 to US$ 243.6 billion professionalised groups, better placed 96% in 20231. to achieve economies of scale. in Abu Dhabi Governments have acted to prevent In this environment, new players are oversupply and there is collaboration are fnding it hard to gain a foothold, between public and private healthcare observes Mansoor Ahmed, Director 2 providers so they’re not always vying for Valuation & Advisory – Development expats the same business. Solutions, Healthcare,Education, Infrastructure & PPP at Colliers A highly rationalised licensing process International also means there are not too many organisations competing for the same “Investors are happy to fnance the target market. frst two to three years of operating 10 The Future of MENAT’s Healthcare 11

Regulation Technology Pain precedes the cure Transformation

Like other sectors – and in the face of COVID-19 severely testing resources – healthcare is grappling with the impact of MENAT under way governments’ determination to demonstrate international standards. The region’s thirst for new technologies gives it an edge in healthcare, but it is essential that new ideas The drive for standardisation and quality As providers seek to balance regulatory “One of our biggest issues is across the region is a welcome one, compliance, alongside patient acceptance, commercialising a product. By the time are validated before being integrated. with clear benefts for public health for new methods, it will be important for we have registered a product, the real and patient outcomes. all stakeholders to work together from commercialisation takes place in year four. providers to regulators to insurance Developing 10 products each year would Across MENAT, a host of health tech “There are a number of incubator The process inevitably presents networks. cost US$8 million dollars over four years. start-ups are offering digital solutions programmes in Dubai to support challenges for healthcare players, And unfortunately there is no funding that promise new efficiencies for those health technology innovation. We are however. Besides primary law, they “Regulatory requirements are becoming available for R&D here, so you have to with the means to invest. licensing telehealth companies: over must navigate a sea of regulatory codes more and more stringent. That is fund it internally.” – MV Suresh, NPI the past 12 to 18 months, several new of practice, guidance, and procedural painful now, but will be good in the Telemedicine, in particular, is poised companies have established a base documents to support the growing long run. For example, the Dubai Health “Forward-looking regulators like the Dubai to make a breakthrough for follow-up here and have begun to roll out patient range of formally-licensed activities. Authority has introduced a new nursing Health Authority are actively amending consultations. For example, the Dubai services.” – Dr Ibtesam Al Bastaki, accreditation. This puts pressure on key elements of healthcare regulation Health Authority’s smart home care DHA The region’s fragmented regulatory hospitals and staff, but it means that frameworks in order to make healthcare project ensures home-bound patients market makes innovation especially hard within a year or two, as people are projects much easier to deliver and can be monitored without the need “The Dubai Health Authority has started for international healthcare frms. While accredited, the quality of care will thereby more attractive.” – Andrea to visit a hospital after treatment. to use AI to forecast patient conditions. guidelines are often common across improve.” – Shehzad Jamal, Knight Tithecott, Al Tamimi & Company Combining test results and patient states, providers are investing much time Frank Artifcial intelligence, specifcally voice history, these machines can predict in dealing with the regulatory authorities technology, has advanced to the point potential problems and care required. in each country, and registering their where it can help physicians become Some healthcare operators have also products or facilities in each. more efficient through the automatic started to design their own smart recording of patient consultations. The watches (development is in progress) UAE is a leader here, with its Artifcial under their membership schemes, so Intelligence Strategy 20311 setting they can monitor their patients. This targets for technological transformation will help reduce the overall cost of care. in healthcare and other sectors. Dubai’s Telemedicine, which was once used adoption of AI is already streamlining in the region to get second opinions, the process of radiology tests for is now being used in primary care as Regulatory requirements are residency purposes. well. This could have a big impact on how hospitals are designed in future.” – becoming more and “A lot of young people are coming up Shehzad Jamal, Knight Frank with brilliant ideas. However, the belief that medicine can be reduced to an Uber model is an oversimplifcation. more I believe that integrating valid Artificial Intelligence 1 technology into the business makes Strategy sense – we are launching our own stringent mobile app, giving more control and data to patients – but you have to pick 2031 and choose between what has been validated and what is hype.” – Magda is setting targets for Habib, Dawi Clinics technological transformation in healthcare and

1 https://government.ae/en/about-the-uae/strategies-initiatives- other sectors and-awards/federal-governments-strategies-and-plans/uae- strategy-for-artificial-intelligence 12 The Future of MENAT’s Healthcare

Areas which are The future under Growth opportunities the radar Lifestyle diseases, medical tourism, and the need for will also grow signifcantly, specialised care are some of the key challenges in MENAT. such as Which sub-sectors offer the greatest promise in region? mental

MENAT states have unmet demand pharmaceutical market, with around so the geographical distribution for specialised care in felds such 80% of the market share. This is a gap across Egypt is not optimal. They health as paediatrics and obstetrics. Other that the region’s pharma manufacturers have good medical schools and no specialties are also running to catch will be keen to exploit. shortage of physicians, but the skills up: Dubai alone will need an extra 241 and technology require innovation, so care orthopaedics and rheumatology beds by Finally, we are likely to see signifcant there is a lot of opportunity.” – Magda 2030, and a similar number in respiratory growth in areas such as mental Habib, Dawi Clinics medicine, according to analysts. health as a result of changes to behaviour, lifestyle and stress. “Pharma production in Rapid economic growth, sedentary Meeting these evolving Dubai is on the GCC presently lifestyles and unhealthy diets have demands could mean track to achieve its amounts to only contributed to soaring rates of obesity, developing healthcare goal of attracting about 25% of the hypertension, ischemic heart disease and experiences that focus total requirement, other conditions. Saudi Arabia, the UAE, on overall wellness of and there is very , Kuwait and Qatar all feature mind and body rather 500,000 little research done in the top 20 countries for diabetes than a purely treatment- health tourists a year here. As drugs come prevalence worldwide. Governments based approach. by 20211 out of patency, there are starting to focus on prevention is huge potential for measures, but providers will be treating “Over the next two to three the manufacturing sector the consequences of ‘lifestyle diseases’ years, we need more centres of in the Middle East.” – M V for many years to come. excellence in tertiary care; rehabilitation, Suresh, NPI physical therapy and long-term care; The market for medical tourism will chronic disease management; mental “The primary healthcare system is not fully continue to grow, with particular impacts health; and ambulatory care. Looking developed or embedded. Patients in the in felds such as dentistry, orthopaedics, longer term, focus areas for investment GCC go to specialists for even the basic cosmetic surgery and fertility treatments. include prevention, precision medicine level of care, which puts a lot of strain on Dubai is on track to achieve its goal of and genetics, and population health the healthcare infrastructure. Abu Dhabi attracting 500,000 health tourists a year management.” – Dr. Ibtesam has started to manage this very recently, by 20211. Al Bastaki, DHA but the wider region has yet to adopt a primary care system.” – Shehzad Jamal, MENAT’s use of generic drugs currently “Primary and secondary healthcare Knight Frank lags far behind that in western countries. in Egypt are very much centralised in Branded imported drugs dominate the Cairo and in the large urban centres, “Instead of just providing acute care, governments are now looking at preventive care – for example, in Saudi, new housing schemes need to have access to jogging tracks or swimming pools. If you’re able to control lifestyle diseases, you can control future expenditure.” – Mansoor Ahmed, Colliers International

1 https://www.strategyand.pwc.com/m1/en/ideation-center/ media/private-sector-participation-in-the-gcc.pdf 15

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Banking A partner for success Ensuring a healthy relationship between bank and client Get in touch HSBC supports the region’s healthcare Attracting new investment is critical Bolster your growth by pairing with a businesses to address their everyday for this capital-intensive sector. And bank that offers strong local knowledge Contact us today to find out how we can help challenges, through services ranging investors beneft from the involvement as well as comprehensive services. your business thrive and grow in MENAT. from working capital facilities to cash of a funding institution with a profound Contact one of our regional team management. At the same time, we help knowledge of healthcare. today to fnd out how we can help your Michal Perliceusz providers look to the longer term and business thrive and grow in MENAT. Sector Head, Healthcare, seize the sector’s growth opportunities. That is the role we will continue to CMB MENAT – HSBC Bank Middle East For example, we advise on mergers, play at HSBC – acting as a supportive  michal.perliceusz@.com acquisitions and IPOs, and we have partner to businesses in one of  +971 442 36252 recently provided fnance for several new MENAT’s most fascinating industries. hospitals and manufacturing facilities. www.business.hsbc.ae/sectors-hub Issued by HSBC Bank Middle East Limited U.A.E Branch, P.O.Box 66, Dubai, U.A.E, regulated by the Central Bank of the U.A.E for the purposes of this promotion and lead regulated by the Dubai Financial Services Authority. © Copyright HSBC Bank Middle East Limited 2020. All rights reserved.