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(Last updated: 27 August 2008)
Trends and opportunities
The market
The United Arab Emirates (UAE) is perhaps the most attractive market in the Middle East and North African (MENA) region. This country has the highest annual per capita consumer of pharmaceuticals in the Middle East.
It has been forecast that the health services and pharmaceuticals sector will continue to expand in the coming years. Experts predict that the demand for healthcare in MENA will rise by 240 per cent in the next 20 years. Key factors driving the growth include increasing public and private wealth fuelled by the oil boom, strong and strengthening healthcare infrastructure, approvals of more medicines, a friendly regulatory environment and the absence of significant local competitors. Indeed, the Dubai Chamber of Commerce & Industry (DCCI) noted that only 700 firms have a presence in the market. These firms specialise in the pharmaceuticals, trading and manufacturing for health, hospitals and medical devices market. This indicates a young market, but a market which is on the cusp of booming.
The expanding health sector is said to also be fuelled by the country’s medical tourism. The Abu Dhabi Chamber of Commerce & Industry (ADCCI) predicted that medical tourism will rise by 15 per cent annually. The UAE has created institutions such as Dubai Healthcare City, to entice more medical tourists to this region and expand the market. Significant development of healthcare infrastructure and facilities in the country also means that nationals do not have to seek treatment outside the country. This maintains a need and market for advanced healthcare facilities in UAE.
In the past, a significant obstacle in establishing a thriving health market has been the cost of pharmaceuticals. The Ministry of Health is responsible for setting medicine prices in the UAE. Despite near-zero trade tariffs within the Gulf Co-operation Council (GCC) trade bloc, UAE drug prices were often double the cost of pharmaceuticals in other Gulf states. This difference in costing was mainly due to the country’s wealth and the small pharmaceutical base. In light of growing popular opposition to high pharmaceutical prices, the Government has recently shown an increasing willingness to reduce drug prices to bring them more into line with other GCC states.
To surmise, there is a growing market and there is also growing demand. With government actively reforming the sector to reduce barriers, the market is ripe for entry.
Dubai
The Government of Dubai has recognised that as Dubai continues to grow, it must continue to develop health services that match international best standards. Dubai’s growing expatriate population, rapidly rising the demand for high quality healthcare facilities, services and medicines, are all driving huge investment of both government and private sector into this industry.
It has been announced that the Dubai Health Authority (DHA) will be responsible for strategy and setting, health regulation, health funding and public health. From this point onwards one newly created government regulatory body will be responsible for all health service professionals and services in Dubai. Implementing this new regulatory body will occur in phases. It is anticipated that the plan will be completed by 2012, with the DHA health funding process fully implemented by 2015. There will be no distinction between public or private health services providers in Dubai.
Abu Dhabi
In May 2007, Abu Dhabi announced an AED1 billion corporate initiative to take advantage of the rising demand for healthcare. This initiative demonstrates the potential which the UAE possesses.
The Abu Dhabi Health Services Company (Sinha) will own all health and medical facilities, properties including lands, workers as well as contracts and agreements relating to healthcare in the Emirate.
Opportunities
The establishment of health-related free zones has increased the interest of global pharmaceutical players. This has encouraged such players to set up regional centres in the UAE, so as to expand their presence in the MENA region.
The Dubai Biotechnology and Research Park (DuBiotech) is one such free zone. It aims to attract a mix of biotechnology and pharmaceutical companies active in research and development, scientific discovery, testing, production, storage, sales and distribution as well as business support and legal services. Companies located in the DuBiotech Park will receive 100 per cent exemption on corporate and personal tax guaranteed for 50 years.
Another free zone is Dubai Health Care City (DHCC). This zone is being developed by corporate giant Dubai Holding’s subsidiary, Tatweer. Tatweer is part of government efforts to develop medical facilities that will attract patients to Dubai from other regions.
It is also worth noting that the academic centre complex includes the Harvard Medical School Dubai Centre (HMSDC), Dubai Harvard Foundation for Medical Research and Maktoum Harvard Library. These research institutes also act as an added attraction to the market.
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