Of the most notable changes in the global healthcare industry, is the adoption of a new business model that shifts its focus from developing blockbuster drugs and building pipelines, to business portfolio evolution, the regulatory landscape and emerging markets. These strides are being taken to develop better patient outcomes, as well as to counter the slow market growth and declining profitability of the global healthcare industry.
The drivers behind this shift are numerous. They include factors such as generic competition, pricing pressures, expansion into emerging markets and a persistent economic slowdown to name a few. And so, as a result of the challenging climate, the life sciences industry is transitioning away from a primary-care, towards targeting specialist secondary care indications.
Across the GCC states, which include Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, a very dynamic life sciences and healthcare market is rising. This is primarily due to their growing and aging population and increasing total health care expenditures per capita.
The GCC population is in fact expected to continue growing at five percent Year on Year, driven mainly by the influx of expatriates to the region, according to a recent Deloitte report. While the dominant age group is estimated to be the 30-44 year old group, the 45-65 and 65+ age groups are expected to grow cumulatively by an average of six percent between 2011 and 2020. This aging population will further increase the burden on health care systems and costs.
In addition, we are witnessing many prevalent trends across the GCC, that are likely to impact life sciences and healthcare companies operating in the region. They include governments’ increasing investment in health awareness and lifestyle changes programs and technological advancements; the growth of smaller clinics and ambulatory centers; increased interest in medical tourism; and new health care regulations.
The GCC healthcare market is also facing many challenges. Primarily, GCC States’ heavy reliance on government financing as well as increasing health care costs are dampening growth. Other challenges include limited medical education options, capital-intensive health care for the private sector, a shortage of medical personnel, and a healthcare infrastructure that lags behind developed nations.
However, despite the many challenges and shifts, the global life sciences outlook for 2013 is favorable. Aging populations, opportunities in emerging markets and technological advancements will no doubt fuel the industry’s growth in the coming years.
By Herve Ballantyne
Healthcare industry leader at Deloitte Middle East