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Egypt’s healthcare sector is changing. It may lag behind its neighbours in the MENA region, but it is starting to catch up fast and that presents opportunities for investors. Mansoor Ahmed, director (MENA), healthcare, education, PPP and development solutions at Colliers MENA looks at the current state of the market and analyses just where those opportunities are likely to present themselves.
Egypt is the most populous Arab country in the world with over 100 million people living within its borders and another 10 million living abroad. And with population growth running at a rate of 2.5% per annum, demand for physical and social infrastructure, including healthcare and education services, is growing.
Egypt’s healthcare sector lags MENA both quantitively and qualitatively, but that needs to change. There is a demographic imperative. In 2019, there were 1.3 beds per 1,000 population compared to 1.9 beds for the overall MENA Region but by 2030, according to analysis from Colliers, Egypt will require an estimated 38,500 to 117,000 new beds, which will come at a cost of US$8bn–US$13bn at the lower end of the estimate to as much as US$25bn–US$40bn at the upper end.
Rapid reforms are underway. Covid-19 may have put huge pressure on Egypt’s healthcare system, but the pandemic also provided an opportunity to strengthen it with reforms such as the implementation of a Universal Health Insurance (UHI) plan. Nonetheless, the longer-term success of Egypt’s healthcare sector depends on how quickly the market embraces new technologies and innovations, founded on global research and development (R&D) and adopts a data driven, patient-centric and results oriented approach to the industry.
Key attractions of Egypt’s healthcare sector
1 ‒ The changing population profile
Based on Colliers estimates, Egypt’s population is expected to grow from its current 101.6 million level to 130 million by 2030 and 175 million by 2050, with the increase set to fuel demand for healthcare services. Total population numbers will drive up overall levels of demand for healthcare, but it will be its composition that determines the type of services provided.
Around 75 million (74%) of the current population is under the age of 40 and that cohort is expected to increase to 86 million by 2030 and 115 million by 2050. Concurrently, only 8% of the population is over the age of 60 (approximately 7.7 million), but this age group is expected to increase to 18 million by 2030 and reach 13.8% of the population (around 24 million) by 2050.
Key demand factors
Mother and childcare: Between 2021‒2030, approximately 26 million babies will be born in Egypt, creating huge demand for mother and childcare facilities and services, such as obstetrics, gynaecology, and paediatrics
Lifestyle diseases: Globally, Egypt has one of the highest prevalence of lifestyle diseases with approximately 15% of the population over the age of 20 with diabetes, 32% with obesity and over 25% suffering from hypertension
Geriatric care: Population growth in the over 60s will drive demand for geriatric services such as long-term care, rehabilitation, and home care. Presently there are 5.5 million over the age of 65, but this number is expected to increase to 7.7 million by 2030
Rejuvenation and anti-aging: Globally, regionally, and domestically, there are increasing demand for services focused on rejuvenation and anti-aging service such as stem cell therapy and hyperbaric oxygen therapy (HBOT)
2 ‒ Key Causes of Death in Egypt
Non-communicable disease, including cardiovascular disease, diabetes, cancer, and chronic respiratory disease, are currently the leading national cause of death in Egypt.
Non-communicable diseases account for approximately 82% of all deaths and 67% of premature deaths.
3 ‒ Lifestyle Diseases
In recent years, the rate of diabetes-related illness has increased dramatically in the MENA region. International Diabetes Federation (IDF) data shows that of the 463 million people with diabetes globally in 2019, MENA contributed 55 million.
Estimates suggest that by 2045 diabetic patients in MENA will rise to 108 million. Egypt’s age adjusted diabetes prevalence rate, at 17.2% among the 20 to79-year-olds totalling over 11.9 million, is one of the highest among MENA countries and other developed countries.
Another widespread lifestyle disease is obesity. Egypt’s obesity prevalence rate among adults is 32%, which is higher than some developed countries, as well as other countries in MENA.
These trends indicate that the demand for specialties such as endocrinology, nutrition consulting and bariatric surgeries will be on the rise.
Research suggests that demand for Centre of Excellence facilities providing these specialties has been increasing in the region and this trend will be reflected in Egypt.
4 ‒ Implementation of Universal Health Insurance law
The Universal Health Insurance (UHI) plan was launched in 2018 to reform the fragmented healthcare system in Egypt. The comprehensive healthcare insurance scheme will cover all governorates by 2032, with implementation taking place over six phases, each phase focusing on a different geographic area.
In 2018, around 55.6 million of the population was insured. An historical CAGR of 2.7%, suggests that numbers insured by 2020 should reach 58.6 million, but this target is likely to be exceeded given the introduction of the universal health insurance law in 2018.
The emergence of the insurance market will have a significant impact on private healthcare and may also drive, as seen in many other markets, the need for more cost-effective practices and greater efficiencies.
Market Opportunities
A focus on daycare surgery
Constantly developing technology has resulted in improved diagnostics, advancements in new surgical techniques, anaesthesia administration and enhanced postoperative care. These advances have resulted in a significant increase in daycare surgeries across the globe and particularly in the developed world. In Egypt, their prevalence is likely to grow in line with regional benchmarks, such as 32% in the KSA and around 42% in the UAE, offering tremendous opportunities for expansion. A move towards daycare surgeries not only reduces the need for significant capital outlay due to fewer hospital beds required but will improve cost efficiency.
Based on a UK study, average daycare costs were £698, compared to the average elective inpatient cost of £3,375. Ongoing growth in the insurance market will also add impetus to the preference for daycare treatment.
A focus on centres of excellence
As a result of urbanisation, and rising life expectancy and disposable income, there has been an increase in chronic/lifestyle diseases such as diabetes, coronary problems, and other obesity-related illnesses. Six specialties now account for over 80% of all surgery. Colliers expects that, like in many other developed nations, Egypt will experience a realignment of treatment through the establishment of specialised Centres of Excellence (CoE), away from family clinics and general hospitals.
Long term care/Rehabilitation
One of the biggest changes in Egypt’s population profile is an increase in life expectancy. This has increased from 46.8 years for males and 49.3 years for females in 1960 to 69.8 years and 72.6 years for males and females respectively in 2020. Life expectancy is predicted to continue rising and could reach 75 years for males and 79.3 years for females by 2050.
Egypt’s over-65s in 1960 totalled just a tad more than 1 million, but by 2020 there were roughly 5 million in that age bracket and by 2050 there could be almost 16 million.
Egypt currently requires around 19,000 dedicated Long-Term Care (LTC) beds to cope with elderly patients. By 2050, it is likely to need almost 62,000.
Primary care
Owing to Egypt’s large population and high hospital occupancy rates, the country will require more primary care clinics and medical centres to meet the demands of a rising population.
Laboratory and diagnostic centres
There is a need for more standalone laboratories and diagnostic centres in Egypt to support the increasing volume of outpatient facilities.
Increasing demand for qualified and specialised Human Resources
A key, yet often ignored, prerequisite for the provision of quality healthcare services is the availability of human capital. Without qualified, specialised human resources, even the best medical facilities using the most advanced medical equipment are not efficient. By 2030, an additional 88,000 doctors will be required, 73,000 extra nurses and 18,000 pharmacists.
Furthermore, to improve healthcare service provision in Egypt, the country needs to adopt new medical technologies, and that will need advanced medical education for specialised doctors, registered nurses and AHPs in the fields of artificial intelligence, data analytics, robotic medical sciences, and genome sequencing.
Medical tourism
Egypt has earned a strong regional reputation for having quality doctors and infrastructure at a competitive price. Easier visa access than some of its regional competitors is also business supportive.
These factors have helped Egypt become a regional medical tourism hub, attracting tourists mainly from North, East, and West Africa & GCC. This traffic helps increase utilisation rates of existing healthcare facilities.
Beauty and cosmetic
Higher income levels and aesthetical awareness have resulted in increased demand for beauty and cosmetic treatments, such as body contouring, anti-aging, lipoplasty (liposuction), eyelid surgery, breast implants, rhinoplasty, facelifts, Botox, medical spas, and hair transplants. In response to demand, a large number of beauty and cosmetic centres have emerged in upscale areas of Cairo and elsewhere.
Health driven wellness resorts/second home developments
One attraction of Egyptian property is as a hedge against inflation. The recent devaluation and currency fluctuations have seen residential prices rise by approximately 20% (in EGP terms) year-on-year; a trend supported by a lack of supply in the residential market.
Alongside primary accommodation, a second tier of property interest has emerged over the last decade with holiday or vacation homes becoming a popular investment and lifestyle choice. Demand in this sector will remain underpinned by the volume of products and choices available to consumers, both in terms of location and price points.
Sustaining high occupancy levels all year round in second homes can be challenging. Colliers has seen these challenges being addressed through the introduction of healthcare and wellness-driven resorts, long-term care, and rehabilitation facilities.
These facilities have a positive impact on occupancy rates by attracting not only vacationers, but retired households and those seeking longer holidays within proximity to healthcare facilities.
Seasonality is one factor behind demand levels but ‘pull factors’, such as proximity of hospitals, clinics, long-term rehabilitation centres, wellness retreats, fitness/skill retreats and retirement homes, also contribute to the equation.
Opportunities exist within the holiday home market for developers that provide essential community infrastructure.
Healthcare/medical cities and parks
Regionally, and in Egypt specifically, there is a new trend in developing healthcare/medical-driven mixed-use developments, known as ‘Healthcare Cities/Parks’ or ‘Medical Cities/Parks’. These are a combination of retail, residential, commercial and hospitality developments working together to form a desirable destination.
Conclusion
Egypt’s healthcare sector, particularly the private healthcare sector, offers several lucrative opportunities for developers, investors, and operators. However, it also possesses several challenges, such as high costs of capital and a brain-drain of qualified doctors and paramedical staff to other GCC countries.
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