Post-Covid, the Middle East is attractive for healthcare innovators and investors
Hamza Farooqui is a pioneer in the African satellite radio player market, growing Worldspace to be a dominant industry player, and influential in building the regulatory framework. He was instrumental in the company listing on the NASDAQ Stock Exchange, and raising US$240 million of new capital. Hamza is a businessman, advisor and entrepreneur who has actively invested in and managed assets for over 20 years.
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While the global biotech and pharmaceutical communities have long known about their threat, the world has now woken up to the seriousness - and inevitability - of epidemics.
The international consensus is that another health crisis is a matter when, not if, and global leaders - including Angela Merkel, Emmanuel Macron and Boris Johnson - have called for an international treaty to help the world better prepare for future pandemics.
In December 2020, the Director-General of the World Health Organization, Dr Tedros Adhanom Ghebreyesus, warned Covid-19 will not be the last pandemic, noting “epidemics are a fact of life” and called for further investment to prepare for them. Tedros cited the “dangerously short-sighted” cycle of throwing “money at an outbreak, and when it’s over, we forget about it and do nothing to prevent the next one.”
Nobody knows how, where and when another epidemic will strike, but the aviation industry mantra of ‘you think safety is expensive, try an accident’ suddenly resonates more than ever. It is inevitable the long-term preparation Tedros calls for, and the likelihood of more healthcare crises, will manifest itself in winners and losers in the biotech and pharmaceutical industries, and capital seeking attractive companies.
The pandemic has also transformed how consumers perceive hygiene and receive healthcare. It has accelerated the shift towards greater dependence on HealthTech and consumers taking hygiene more seriously.
As the CEO of Reckitt Benckiser, one of the world’s largest producers of health and hygiene products, put it: “Improved hygiene is here to stay. There is a seismic shift in how people are living.”
Add in growing populations, demand for preventative/personalised medicine and overall wellness, and the combined investment universe of these different, but mutually compatible, sectors is enticing - demonstrating inherent scale and likely growth.
Data showing the scale of this universe and capital allocation trends is instructive. Grand View Research valued the global biotech market at US$752.88 billion in 2020. Data from Deloitte reveals venture funding in HealthTech innovators grew from US$1.2 billion in 2010 to US$14 billion in 2020. This growth is forecast to continue.
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Where does the Middle East fit in this burgeoning universe? The answer is highly relevant.
The region has emerged as an attractive environment for innovators and investors. Economic and demographic changes have led to a fast-growing middle class and a youthful population - almost half the region’s population is aged 24 years or below. These citizens need healthcare but are consumers too.
A 2020 KPMG report noted healthcare-related expenditure in the GCC grew from $60 billion in 2013 to $76 billion in 2019 and is expected to grow to a further $89 billion by 2022. KPMG added Covid had “a momentous impact” on all aspects of the healthcare industry. Demand is not going away.
Due to its positive approach to adopting new technologies, the Middle East has emerged as a hub for biotech and pharmaceuticals. Mubadala Healthcare and G42 are investing heavily and taking a lead on vaccines. These companies form part of an ecosystem helping and enabling biotech success in the region.
The region has also had huge success in its Covid-19 vaccine roll-out. Several countries were quick to secure vaccines and initiate their inoculation programmes. Data shows the U.A.E. and Israel as global leaders in vaccine distribution, with Bahrain close behind.
Sceptics may contend this success stems from comparatively small population sizes and manageable wealth; but it is the region’s forward-thinking approach and willingness to source vaccines from outside the West that has served it well. While Europe grapples with distribution politics, logistical challenges and vaccine scepticism, the Middle East is leading by example and soon-to-be thriving again.
For investors, there is huge scope to tap into this whole universe. The Middle East’s progressive market, and growth, makes it an enticing area for investors seeking deals and returns.
Embracing HealthTech and increasing investment in biotech and pharmaceuticals will improve the lives of many and equip the world ahead of future crises.
That is reassuring for global citizens and potentially exciting for investors seeking value.
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