According to a report by Alpen Capital, Gulf healthcare spending is expected to reach $135.5B by 2027, with the UAE and Saudi Arabia leading the surge in spending.
The report states that the current healthcare expenditure (CHE) in the region is set to grow at an annualized rate of 5.4%, from $104.1B in 2022 to the projected $135.5B in 2027. The report was released by the UAE-based banking advisory firm and focused on the healthcare industry in GCC projects.
During the forecast period, CHE in the GCC countries is anticipated to increase at growth rates ranging from 4.4% to 7.4%. Sameena Ahmad, Managing Director, Alpen Capital (ME) Limited, said: “The GCC healthcare industry is expected to grow at a healthy pace owing to a rise in ageing population, improving economic activity, increased focus on preventive care and mandatory health insurance”.
“While digitisation and public-private collaborations have made a progressive impact, the resurgence in demand for elective surgeries, a burgeoning medical tourism industry, and an intrinsic demand for treatment of non-communicable diseases (NCDs) are likely to support growth”.
“We anticipate that the region will offer an array of investment opportunities on the back of privatization initiatives and increasing adoption of technology to create alternative healthcare models”.
According to Alpen Capital, CHE in the GCC is estimated to have grown at a CAGR of 9.5% between 2020 and 2022 to reach $104.1B. During the pandemic, the healthcare sector in the GCC saw significant growth in both inpatient and outpatient levels. The region’s healthcare expenditure is expected to continue to grow, reaching $135.5B by 2027 at a compound annual growth rate of 5.4% from 2022, according to Alpen Capital’s healthcare industry report.
The Gulf healthcare spending report also notes that the GCC’s healthcare industry is shifting from a curative care model to a preventive care model, with increased health awareness levels and a high incidence of non-communicable diseases being the driving force behind the change. The region is also undergoing a significant digital transformation, with regulatory authorities and private institutions investing in smart technologies to diversify healthcare services.
Larger players are expected to target small to mid-sized players and tech-enabled service providers in order to create value-creating opportunities. The expanding population base, high incidence of NCDs, rising cost of treatment, rising medical inflation, and increasing penetration of health insurance are all factors expected to drive growth in the sector.
The demand for healthcare in the GCC is expected to be supported by various factors in the long-term, such as the rebound of economic activity, increased health awareness, and preventive-care strategies by regional governments. Growth rates among GCC nations are likely to vary based on population projections, economic conditions, healthcare costs, and disease prevalence. The UAE is anticipated to experience the highest growth rate of 7.4% due to a rapidly growing population, mandatory health insurance coverage, and high medical inflation.
Saudi Arabia and the UAE are expected to maintain their position as the dominant markets in the region’s healthcare expenditure, accounting for 79.6% of the total in 2027. Qatar, Bahrain, Oman, and Kuwait are projected to experience CAGR growth rates of 5.1%, 6.1%, 4.7%, and 4.4%, respectively. From 2022 to 2027, the GCC is expected to require an additional 12,207 hospital beds, with an estimated annual average growth of 1.9% to reach a total capacity of 133,731 beds. Between 2020 and 2022, the GCC has already added 1,846 hospital beds.
According to the Gulf healthcare spending report, the demand for new hospital beds is expected to increase in Saudi Arabia and the United Arab Emirates, with estimates of more than 8,197 and 1,584 new beds, respectively. While most of the GCC countries will also require new beds, Qatar’s demand is projected to remain steady due to lower-than-average population growth.
The report identifies increasing life expectancy, improving infant mortality rates, and an aging population as key demographic factors driving the region’s healthcare system. The GCC nations’ significant investment in infrastructure and growing purchasing power are expected to fuel further growth. Promoting the region as a medical tourism hub and implementing national health insurance strategies could also lead to increased adoption and usage rates of private hospitals and healthcare services.
