The GCC Health Care Boom: What to Expect

Last week I attended a lunch sponsored by the US-UAE Business Council in honor of Mr. Mahmood  Al-Ansari, Executive Director of the health care division of Mubadala, the major investing arm of the Abu Dhabi  government.  Given my own recent work in the area of GCC health care projects, I felt it would be useful to highlight some key points about this area of growing interest.

For those of you that keep up with business developments in the Persian Gulf region, health care is hot.  It makes sense – the Gulf states are now leveraging decades of heavy investments in infrastructure, hospitality, and real estate into creating health networks that serve not only domestic needs, but those of the greater region, from Africa to the Central Asian States to India.  This holds particularly true as the Gulf Cooperation Council (GCC) focuses on increasing health care tourism (the Dubai Health Care City announced  issued a health care tourism guide in June). One estimate in Arabian Business late last year estimated the market could be worth $44 billion by 2015.

For those in the health care industry, entering the market may seem like a no-brainer.  The prospects are undoubtedly attractive.  Before you begin your rush to the region, however, it would be good to keep some key strategies in mind.

1. Complying with Import Requirements

I have addressed local laws more broadly in the next paragraph, but import requirements are a critical concern for entities that intend to import medical devices into the GCC for their facilities.  Getting equipment in is a critical part of establishing a health care facility especially given the technology-intensive nature of the business these days.  The same goes if you intend to export medicines and supplies into the region.

2. Ensuring You Satisfy Local Laws

Health care tends to be very regulated in many jurisdictions and there are key issues you need to consider.  Particular attention must be paid to issues such as building codes, health standards, etc.  All these can add to costs and increase wait times for approvals.

3. Safeguarding Your Territory

Companies in the region tend to act very strategically, but remember, there is a lot of redundancy in many key sectors of the market. A one-of-a-kind facility in Abu Dhabi or Dubai could easily become replicated in more than one other place in the nearby vicinity. In a region where intra-regional travel is easy and commonplace, you must take great care that your exclusivity and territory are contractually well-protected.  If you are using a technology that is unique to the region, you may want to secure comprehensive territorial rights from the foreign manufacturer.

4. Protecting Yourself from Your Personnel

While the situation may have improved markedly in recent years, skilled health care human resources are not as readily available in the Gulf as they may be in the U.S., Canada, or Europe. As with anywhere else, it is important to ensure that you can attract and keep top talent. However, in this cash-rich region with a near insatiable demand for talent, you must also be careful not to train your competition.

5. Ink a Solid Agreement with a Reputable Local Partner. In some cases a local partner is not necessary, but oftentimes in the GCC it is a must. It is imperative that you pick the right partner. Risk can be reduced by due  diligence beforehand. There are services that provide business intelligence on players in the local markets.  Local or foreign, you want to make sure you have a solid contract with the partner (as well as any vendors, naturally). This can be required by local law but even if it is not, your agreement should envision and plan for key contingencies to help avoid potential financial and reputation loss later.

The market for the health care business in the MENA region is naturally very bright and promising.  However, it is not without its challenges. Accordingly, it is critical that opportunities be assessed well and that planning be thorough.

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