Advisory Healthcare Technology Health-Tech An underserved industry within MENA 2017 Contents: Section Page Executive summary 04 The MENA landscape 06 MENA healthcare 08 The health-tech environment 09 The application of health-tech in MENA 11 MENA Investment: Health-Tech 13 10 reasons to invest in MENA 16 About Grant Thornton 17 Global healthcare spending is projected to increase from $8trn to $18trn by 2040, however closer to home this will account for $150bn across the MENA region by 2020, with a compound annual growth rate (CAGR) of 12% - one of the highest across the globe. We share further insight in this report into the opportunities which this digital evolution presents within the healthcare sector. 2 Locking down the value of data Hisham Farouk, CEO of Grant Thornton shares his viewpoint on how connection and personalisation are becoming fundamental elements within Healthcare, which promote a healthy tech-investment landscape for an underserved industry within the MENA region. The global healthcare industry is currently experiencing That said, governments across MENA currently invest an a technological revolution, which may seem grandiose, average 8% of GDP in the region’s healthcare2, which lag however, we are witnessing a shift from traditional to modern- behind other developed economies. Such shortfalls will tech simulated healthcare, which will enable both medical create opportunities for private sector involvement and professionals and patients to access new virtual resources, investment through private equity, venture capital and further aiding effectiveness and efficiency. other forms of funding, which governments are increasingly seeking support from. We are encountering emerging trends which will inevitably transform the industry, these range from digital behavioural The regional market will be shaped by a range of health treatment, telehealth, the use of big-data, wearables opportunities in 2018. Ongoing trends such as compulsory and the important role which blockchain will play going health insurance schemes, generic substitution and medical forward. tourism are expected to continue influencing the industry for years to come, which will give rise to further opportunities for Technology has largely existed within the healthcare industry tech-investors to capitalise on the underserved health-tech for many years, particularly in the form of treatment tools industry. and platforms which identify, diagnose and provide a remedy for various conditions, however the challenge which the industry faces today focuses on accepting, implementing Hisham Farouk and working alongside new and advanced technologies which will revolutionise the industry, whilst providing much CEO needed personalisation and connection for patients. Grant Thornton United Arab Emirates To further manifest this, we are witnessing a new wave of healthcare wearables, with shipments growing from 2.2 mn units in 2016 to a projected 97.6 mn in 2021, which will generate an estimated global revenue of $18bn1. Equally, these global trends resonate across the MENA region too. In the near future, individuals will be able to use wearables to measure and understand personal risk, whilst monitoring real-time results of making healthy choices. With the high rate of technology adoption, the region could become global leaders in using wearable technology to transform personal healthcare. 1 Tractica Health-Tech 3 2 Zawya Executive Summary Overview • Global healthcare spending is projected to increase from $8trn to $18trn by 2040, however closer to home this will Why invest now? account for $150bn across the MENA region by 2020, with a compound annual growth rate (CAGR) of 12% - one of • High penetration level of the highest across the globe. technology across the region • The MENA region is home to an ageing population estimated at 20% by 2050, which according to trends will influence an increased need for healthcare. • Active and prominent focus • Governments across MENA are currently investing 8% of on innovation by regional GDPs, hence funding shortfalls will create opportunities for private sector involvement and investors. governments and service providers • Within the UAE alone, the healthcare market is currently valued at $17bn, which is projected to surge to over $28bn • Ageing population which will drive by 2021, driven by a shift in demand for preventive care, increased demand rates within a rise in specialist medical services, further efficiently integrated health care solutions, alongside the high Healthcare growth potential within specific medical device and pharmaceutical sub-sectors. • Billion-dollar industry with limited MENA Investment Climate and Opportunities access to investment and funding • Upcoming mega-economic events within the UAE, KSA, and • Rising demand and appetite to elsewhere in MENA are significant drivers of development and employment. penetrate technology within the • Mandatory Health Insurance (MHI) schemes and a positive industry employment outlook provide a healthy backdrop for the healthcare industry. • 48% of youth (15-35) believe technology should be used in healthcare. • Financing and support infrastructure for this sector has increased in recent years with US$ 815mn invested $18trn in 2016, with over 100 support structures including incubators, accelerators, and venture capital funds. Global healthcare spending is projected to increase from • Egypt, UAE, Palestine, Lebanon, Jordan, and Saudi Arabia $8trn to $18trn by 2040. record the highest start-up activity in healthcare. • The Medical Tourism Index 2016 ranked 15 cities from MENA in the top 50. 4 Locking down the value of data Health-Tech 5 The MENA landscape As economic diversifi cation plans and reforms take shape across MENA and the Gulf Corporation Companies (GCC), non-oil growth in oil-exporting countries and the GCC are expected to accelerate from 2016 levels of 0.4% and 1.9%, to 2.9% and 3.0% in 20173 respectively. Economic Outlook Policies stimulated by the UAE Vision 2021 and KSA Vision 2030 will signifi cantly contribute to the changing landscape of the region, which will see the emergence of new industries focusing on innovative tech-enabled delivery models. Vision 2030 commits to building new infrastructure, world-class education, healthcare and an open and transparent environment for its citizens and those which reside in the country, whilst Vision 2021 aims to position the UAE amongst the best countries in the world by the Golden Jubilee of the Union. Buoyed by upward trajectories in global economic growth forecasted at 3.5% and 3.6% for 2017 and 2018 and increased oil prices since the 2016 OPEC agreement, the MENA region will harbour a favourable investment climate. From 2020 and after a period of transition during which the region restructures its old economic model, particularly the Gulf, will emerge stronger than ever with diversifi ed, effi cient economies becoming magnets for investment and new ideas, hence infl uencing a global shift towards the region. Demographic profi le The MENA region is home to an ageing population Countries Total population 0-14 15-24 25-59 60+ estimated at 20% by 2050, compared to 2% (0000) today4, which according to trends will infl uence an increased need for healthcare in the future, Bahrain 1493 20 13 62 5 therefore demand will increase for world-class Egypt 97553 33 17 42 8 healthcare which is cost eff ective, effi cient and Iran 81163 24 14 53 9 undistinguishable in quality. Iraq 38275 40 20 35 5 9702 36 19 40 6 The GCC is experiencing a unique demographic Jordan period in which one-half to one-third of the Kuwait 4137 21 12 62 5 population is under 25 years of age5, of particular Lebanon 6082 23 19 46 12 note is KSA, where 50.8 percent of the population Oman 4636 22 15 60 4 are under 25 years of age. This large and Saudi Arabia 32938 25 15 54 6 growing youth population has placed KSA in a demographically historic moment that presents United Arab Emirates 9400 14 11 72 2 its society with sizable opportunities. The country 6 OECD Benchmarking digital strategies in MENA can reap great benefi ts if they can harness the creative and economic potential of this so-called demographic dividend of young people. 50.8% of the population in Saudi Arabia are under 25 years of age. 3 IMF, May 2017 4 World Bank 65 Youth Locking in downthe GCC the value report, of data 2016 6 OECD Benchmarking digital strategies in MENA Why invest in MENA? • A promising economic outlook which will challenge emerging market models, whilst providing a promising landscape and opportunity for investors. • An active and prominent focus on innovation by regional governments and service providers have given rise to various strategies. Egypt, Jordan, Lebanon, Morocco, Tunisia, KSA and UAE have each recognised the strategic importance of digital technologies for public sector modernization, along with disrupting service industries to better serve their residents9. • The region has a high penetration level of technology, whilst being recognised as having one of the highest smartphone penetration rates in the world. Likewise, the regional has a rising demand and appetite to penetrate technology, particularly as a result of the youthful generation. • The strategic geographical position, developed infrastructure and ongoing commitment to continue realigning the regulatory, financial and legal system which is synonymous with global best practice make the region an attractive place to do business. Health-Tech 7 Locking down the value of data 7 MENA healthcare