Saudi Arabia is the Middle East’s largest market of healthcare consumers. What’s particularly attractive about it is that although it’s a large market, it’s far from mature. With KSA’s aging, yet affluent population, there’s an unprecedented opportunity for investors to benefit from new developments in healthcare.
In 2005, KSA spent US$13 billion on healthcare, 25% of which was supplied by the private sector. Public healthcare spending saw a compound annual growth rate of 7.2% between 1999 and 2005; spending is expected to reach US$20 billion by 2016.
High spending, increased value
The challenge is on to dramatically change the care that’s being provided. High levels of spending and increased focus on value mean the quality of care is set to improve dramatically. The imminent need for a comprehensive information management system, for example, will provide extensive private sector opportunities to contribute to its development and benefit from the flow of information it generates.
Millions of new healthcare consumers
As Saudi Arabia’s population continues to expand rapidly and urbanization continues, millions of new healthcare consumers will be added to KSA’s existing cities as well as the new Economic Cities. Aided by large budget surpluses, the public sector is set to make unprecedented investments to support healthcare provision and complementary sectors such as scientific research. Such investments will require strong private sector partnerships as well as a strong private sector presence overall, to sustain and capitalize on expected demand.
Good reasons to invest
- Brisk growth in market size, eg demand for hospital beds is expected to rise from 51,000 today to 70,000 by 2016. The number of hospitals will rise from 364 to 502
- Large increases in healthcare consumption supported by increasing private wealth and public sector investments
- Opportunity to cater to unmet demand across the healthcare value chain including medical education, research, facilities, provision and reimbursement
- Structural changes in service provision and recent moves towards a compulsory, insurance-based system that will extend to include all Saudis
- Exceptionally high incidence of major disease categories in KSA including diabetes, heart disease, and congenital disorders
- Private hospitals, pharmaceutical companies and medical device manufacturers seeking international partners
- An unfulfilled need for a comprehensive, national health information system