BMI View: We uphold our outlook for continued strong growth in the UAE's pharmaceutical and healthcare markets, driven by expanding insurance coverage and medical tourism. Our growth outlook is supported by positive financial results for pharmaceutical distributor Al Ittihad Drug Store, and healthcare providers Al Noor Hospitals and NMC Health, with these results a good indicator of market growth. These key factors, boosted by strong economic performance and a relatively stable political environment make the UAE one of the most attractive markets for multinational drugmakers looking to set up operations in the Middle East.
Headline Expenditure Projections
Pharmaceuticals: AED9.46bn (USD2.58bn) in 2014 to AED10.29bn (USD2.80bn) in 2015; +8.7% in local currency terms and +8.8% US dollar terms. Forecast revised upwards form last quarter.
Healthcare: AED50.79bn (USD13.83bn) in 2014 to AED54.29bn (USD14.79bn) in 2015; +6.9% in local currency terms and +7.0% US dollar terms. Forecast revised upwards from last quarter.
The UAE is one of the most rewarding markets for pharmaceutical and healthcare providers in the Middle East and African region. It has a fast-growing private healthcare sector, which brings with it demand for innovative and patented drugs. The UAE's relative political stability also contributes to the country's high regional score. In our Q3 2015 Indices, the UAE scores 59.4 and is the most attractive market in our Middle East and African regional matrix followed closely by Saudi Arabia (59.3).
Key Trends & Developments
The UAE government has launched a new health-insurance programme in Dubai with the aim of supporting nationals not covered under any other government-funded health-insurance scheme, reports the National. The scheme, dubbed 'Sa'ada', is expected to benefit 130,000 people by offering them healthcare at 23 private hospitals and more than 500 medical clinics in and around Dubai. Interested candidates can register by using Emirates ID cards at clinics and medical centres. The insurance plan is likely to encourage early diagnoses and improve the prospects of successful treatment.
UAE-based pharmaceutical distributor Al Ittihad Drug Store (IDS) has reported a 28% year-on-year (y-o-y) growth in total sales turnover for Q115, outshining the overall industry growth of 12%. The company also recorded a 43% y-o-y increase in the consumer division during the same period, owing to organic growth from its existing portfolio and the launch of new products. IDS exceeded its own quarterly records with more than 1.3mn units packed, shipped and delivered in the market.
New India Assurance has introduced three health insurance products, Euromed Silver Plus, Gold Plus and Diamond Plus, to cater to its customers demand in Dubai and Northern Emirates of the UAE. These health insurance products comply with the Dubai Health Authority (DHA) requirements. The launch comes at a time when the DHA has made health insurance compulsory for all citizens in a phased manner. The products cover maternity, pre-existing disease and dental treatments, focusing on treatment in the UAE. An additional feature is optional travel cost refunds to avail in-patient treatment. The company collected a gross premium of AED285mn (USD77.59mn) in the UAE in 2014, where Dubai alone contributed AED203mn (USD55.2mn), according to Director and General Manager K Sanathkumar (Trade Arabia).
The UAE-based Al Noor Hospitals Group has reported a 11.9% y-o-y increase in revenue in Q115 to AED458.8bn (USD124.9mn). The group's outpatient volume grew in line with expectationa during the reported quarter, supported by healthy contribution from new and acquired clinics. 'Inpatient volume increased as expected, with increases in Airport Road Hospital and Al Ain Hospital compensating for a reduction at the Khalifa Street Hospital,' stated the group (Zawya). The Khalifa Street Hospital continues to face competition and temporary disruption from ongoing refurbishments. Al Noor posted a net cash position of USD93.7mn, and continue to remain debt free which will enable the group to continue exploring further acquisition opportunities.
The UAE occupies the first position among the Gulf Cooperation Council nations and fifth globally in terms of strengthening the supervision of medicines, and the number of counterfeit medicines sold in pharmacies in the country is zero, according to undersecretary of the Ministry of Health, Amin Al Amiri. The Ministry of Health coordinates with multinational drug manufactures, local customs administration and maintains a tight control on ports to prevent fake drugs entering the national distribution system. The ministry also continuously monitors and follows-up with pharmacies and warehouses operating in the country to stop leakages of any adulterated products.
BMI Economic View
The UAE's economy will see significant growth rates over the coming quarters, as a host of indicators bode well for the non-oil sector. Consumer and business sentiment remains positive, underlining our particularly upbeat views on household consumption and fixed investment, even in the context of lower oil prices. We forecast real GDP growth of 4.0% in 2015 and 3.8% in 2016, broadly in line with the previous three years.
BMI Political View
Political risks facing the UAE government will be primarily focused in the foreign policy arena as domestic risks offer little concern. The recent trials of Muslim Brotherhood members are the latest crackdown against domestic opposition groups, however the threat posed is minimal, especially compared with the rest of the region.