The healthcare arm of the giant US technology and services conglomerate General Electric (GE) has signed a deal with the private equity firm Gulf Capital to develop a diagnostic business in the region and tap into a market that is expected to grow fivefold to US$60 billion (Dh220.38bn) by 2025. GE Healthcare will work with Gulf Capital to initially deliver healthcare services in Egypt and Saudi Arabia, followed by an expansion into other high-growth markets in the region. The financial terms of the deal were not disclosed.
"Health care has really moved to the top of the list in terms of what's on people's minds, where capital is going to go, and where investment is going to go," Jeffrey Immelt, the chairman and chief executive of GE, said last week. The prognosis for healthcare spending in the Middle East is positive. As countries struggle to cope with ageing populations and the rising incidence of obesity-related diseases such as diabetes and cardiovascular illnesses, various estimates peg the value of the healthcare sector across the Middle East and Africa at between $15bn and $18bn a year, and growth at a rate of 9 per cent a year.
"It's immense across the Islamic world, from Pakistan all the way across Africa," Mr Immelt said. "The funding sources will come out of this region, and the technology will have to be localised and developed. The information technology that supports it will have to be localised and developed. So we think that health care really is going to be very dynamic in this region." One of the more lucrative investment opportunities in the sector are in specialised healthcare delivery and supporting services, said Imad Grandour, the executive director of Gulf Capital.
"Such services, like diagnostic imaging centres or labs, have easy-to-understand business models, have controlled and well understood cost structure, need limited real estate investment, can be quickly replicated across geographies and sustain better margin pressures," Mr Grandour said. The global market for diagnostic imaging services, such as computed tomography and magnetic resonance imaging, reached $168bn last year, or about 4 per cent of total health spending.
The sector has grown at a rate of between 10 per cent and 15 per cent as part of a trend where spending on preventive and non-invasive medical procedures has increased, Mr Grandour said. Tommy Trask, the executive director of Alpen Capital, a Dubai-based investment bank, said the rising interest in the Middle East healthcare sector was largely due to government initiatives to modernise healthcare systems.
"Whenever you have a growing market like the Middle East, there's opportunity for equipment suppliers that we do not see in other parts of the world," Mr Trask said. "I imagine that every supplier in the world is very keen to be doing business here." * additional reporting by Asa Fitch @Email:dgeorgecosh@thenational.ae
