BMI View: As a result of recent announcements from Al Ittihad Drug Store and the Dubai Health Authority (DHA), we have upgraded our forecast for the UAE's pharmaceutical and healthcare markets. The UAE will continue to be one of the most attractive pharmaceutical markets in the Middle East for both new and existing players given the country's fast and efficient drug approval process, diversified economy, and rapidly expanding population. Market growth will be further boosted by continued investment into specialty healthcare infrastructure and the roll out of mandatory health insurance. However, further medicine price cuts will continue to impact profit m argins of innovative drugmakers.
Headline Expenditure Projections
Pharmaceuticals: AED9.46bn (USD2.58bn) in 2014 to AED10.32bn (USD2.81bn) in 2015; +9.1% in local currency terms and +9.2% US dollar terms. Forecast revised upwards form last quarter.
Healthcare: AED47.29bn (USD12.88bn) in 2014 to AED49.93bn (USD13.59bn) in 2015; +5.6% in local currency and US dollar terms. Forecast revised downwards 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 Q4 2015 Indices, the UAE scores 61.8, up from last quarter's score of 59.4, making it the most attractive market in our Middle East and African regional matrix followed closely by Saudi Arabia (59.3).
Key Trends & Developments
In September 2015, the UAE's health ministry announced that the prices of 188 innovative drugs will be reduced from January 1 2016, reports Khaleej Times. At least 77% of the drugs that will be affected include drugs for the central nervous system, according to Amin Hussain Al Amiri, assistant undersecretary for public health policy and license sector at the ministry.
As of July 2015, approximately 2.7mn UAE citizens and expatriate residents had been enrolled in the mandatory health insurance cover, which has completed its second phase out of three. The scheme aims to cover about 3.2mn people by 2016 when the scheme achieves its target of providing basic health cover to all Dubai residents. The three-phased insurance law came into effect in 2013.
In July 2015, The Health Authority Abu Dhabi (Haad) temporarily closed five healthcare facilities for violations after checks were made by an auditing team. The violations recorded included lack of cleanliness, failure to comply with room disinfection and medical devices quality control standards, mixing sterile and non-sterile tools, and inappropriate storage of medical files. Haad's audit team also registered four violations against health professionals for practising without licence and issuing sick leave certificates without using the electronic system for diagnosis of patients.
In July 2015, UAE-based Thumbay Group expanded its healthcare services with the opening of a family clinic in Umm al-Quwain emirate. The clinic will offer free consultations and check-ups, free electrocardiograms and discounts on diagnostic investigations during the first three weeks of operations. The company plans to open 15 more clinics over the next two years.
In July 2015, the UAE government signed an agreement with UK-based Proton Partners International and Albans Partners General Trading to begin work on a new proton beam therapy cancer treatment centre in Abu Dhabi in 2015. This would make the UAE the first country in the Middle East, Africa and Asia to have proton beam therapy treatment for cancer by 2018.
In June 2015, the Ministry of Health's Drugs Pricing and Registration Higher Committee approved the registration of 85 new drugs for the treatment of ovarian cancer, tumours, high blood pressure and lung cancer prevention. Of the approved drugs, 23 are innovative, four are biological, 17 are locally made, 23 are resembled, and seven are Gulf-made drugs.
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. The UAE's increasingly assertive foreign policy will continue to be born out in Yemen where we expect Emirati forces to become entrenched in a drawn-out conflict.