Middle East healthcare spending surges as demand soars

Healthcare is a major growth area in the Middle East, with public and private investment in the sector forecast to exceed US $150 billion in 2016. In the GCC in particular, governments are allocating ever‑increasing budget shares to healthcare, to meet soaring demand fuelled by high population growth rates, longer life expectancy and the extension of compulsory health insurance, as well as the spread of lifestyle diseases and chronic illness. 

Private hospital in Jiddah, Saudi Arabia

 

By Peter Feuilherade

This article was first published in The Middle East magazine, London, April 2014 issue

Former British health minister Lord Darzi, a keynote speaker at the January 2014 Arab Health Exhibition in Dubai, noted that the Middle East has some of the highest per capita levels of obesity and associated chronic illness like diabetes and cardiovascular disease. “It has a rapidly changing demography, both in terms of population growth and an increasing life expectancy. These are necessitating an increased level of spending on healthcare and the rapid expansion of provision. There is also a heavy reliance on imported human and material healthcare resources; and a significant level of overseas spending on healthcare due to a lack of local specialist healthcare provision,” he added.

International healthcare technology providers like General Electric Healthcare and Philips, whose US and European sales have dipped because of budget constraints, are hopeful of double-digit percentage growth in the Middle East, not just in the established markets of the GCC but also in emerging or post‑conflict markets like Iraq.

Across the Middle East and North Africa (MENA) region, non-communicable diseases like obesity, diabetes and cardiovascular diseases are widespread, while smoking‑related respiratory diseases are on the increase. The scale of the health challenges is vast. Cardiovascular disease is responsible for 45% of deaths in the Middle East; four GCC countries are in the global top 20 for obesity; and there is a high and rising incidence of major depressive disorders and anxiety.

A September 2013 survey by the World Bank and the Seattle-based Institute for Health Metrics and Evaluation found that “potentially preventable risk factors such as poor diets, high blood pressure, high body mass index (an indicator of obesity and overweight), and smoking are contributing to the growing burden of non-communicable diseases in the region.” Another factor is lack of exercise, particularly among women.

At the same time, poorer Middle East countries, including Iraq, Yemen and Djibouti, continue to struggle with a high level of communicable diseases, while the outbreak of polio in Syria has prompted a massive immunization campaign across the Middle East.

Saudi “bonanza” for foreign firms

GCC governments are making significant investments to meet growing demand for healthcare and bring the sector up to international standards. Saudi Arabia, whose economy and population make up approximately half that of the GCC states collectively, is seen as leading the way.

Total healthcare expenditure in the six GCC states is expected to rise to US $79.2 billion by 2015, while the GCC’s combined pharmaceutical and healthcare market is set to exceed US $133 billion in 2018, according to the Frost & Sullivan business consultancy.

Although GCC healthcare spending is expected to increase at a compound annual growth rate (CAGR) of 11.4% until 2015, a shortage of medical graduates and other skilled staff is making countries heavily dependent on expatriates to fill healthcare jobs and poses a big challenge to be tackled, global consultants Ernst & Young note.

Recruitment ad for Saudi private hospital

 

A growing number of GCC governments are also enforcing mandatory medical insurance.

In response to discontent about overcrowded hospitals and shortages of medicine, healthcare infrastructure in Saudi Arabia is accelerating at a rapid rate, funded by an annual healthcare budget of US $27 billion. Stock market listings planned by two of the Kingdom’s biggest private hospital operators reflect the boom in its healthcare industry. Several new healthcare cities are under construction, and the number of hospitals is expected to increase by more than 100 within the next three to five years.

According to Reuters, “this could make Saudi Arabia the world’s fastest-growing major healthcare market over the next few years, helping to diversify the economy beyond oil and providing a bonanza to foreign companies selling medicines, equipment and services.”

In the UAE, Dubai’s recent move to make health insurance mandatory for all workers would be a catalyst for private investment in the emirate’s healthcare sector, in the same way that a similar law in Abu Dhabi was in 2005, said Michael Bitzer, CEO of Daman, the UAE’s largest health insurer with over 2.4 million subscribers.

The law will make employers responsible for providing at least an “essential benefits package” for every worker and will come into effect in several phases by 2016, said the Dubai Health Authority. The government will remain responsible for the coverage of local citizens, who are estimated to make up less than a fifth of the population.

The UAE’s healthcare budget is around US $12bn, and spending on healthcare as a percentage of GDP is the third highest in the Gulf at around 3.3%, after Bahrain and Saudi Arabia. About 36% of UAE hospitals are owned and operated by the Ministry of Health, while the private sector catered to 64% of the whole population in 2011.

According to the Oxford Business Group, medical tourism in Dubai looks set to grow beyond the US $1.69 billion in revenue earned in 2012, and a number of health and pharmaceutical groups are eyeing Dubai as a regional centre, owing to its well-developed transport and communication links and continuing advances in technology and research.

Qatar is set to launch the second phase of its compulsory health insurance scheme in April 2014, when all Qatari citizens will be brought under the new system. And Oman, which built its last major hospital 20 years ago, plans to open the first phase of a US $1 billion International Medical City in Salalah in 2016. A population expanding at 4% a year is putting increasing strain on healthcare in the Sultanate, despite a 32% increase in the sector’s budget from 2012 to 2013.

“Strong returns” for private equity

The growing number of mandatory health insurance programmes in the GCC is increasing reliance on the private healthcare sector. Across the wider MENA market, private equity firms see significant room for expansion, particularly in services such as long-term care, specialized care and rehabilitation.

“Experienced private equity investors know that the MENA healthcare sector presents significant opportunities and strong returns for those who can get the balance right, by bringing international experience and global insight to the local market,” argues Dr Helmut M. Schuehsler, chairman of TVM Capital Group, a European private equity fund. He points out that because individuals from the MENA region spend US $15 billion a year travelling abroad for medical care, “governments and private companies will both benefit from providing more focused, high quality care locally”.

To meet rising expectations across the Middle East for expanded and better quality health services that are on a par with international standards, expenditure on healthcare as a percentage of GDP will need to be raised further. Training local doctors and medical staff and establishing research and clinical trial centres in the region should also become a top priority.

 

Going green: cutting costs with smart buildings

By 2050, according to current forecasts, about 6,3 billion people, comprising nearly 70% of the world's population, will be living in cities. This great surge of urbanization and the rise of megacities, each with a population greater than 10 million, will occur mostly in developing countries and boost demand for smart buildings and housing. 

 By Peter Feuilherade

Smart buildings in Lusail City, Qatar

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This article first appeared in the November 2013 issue of e-tech, published by the International Electrotechnical Commission (IEC), Geneva.
 

Evolving concept

The concept of a smart (or intelligent) building has evolved over the last four decades and now generally refers to the integration of a range of systems that improve the lifestyles of a building’s occupants and the efficiency of its operations, especially its consumption of energy and other utilities. The automation of building operations, management and maintenance is integral to the concept.

In the words of the US-based Institute for Building Efficiency, "at the most fundamental level, smart buildings deliver useful building services that make occupants productive (e.g. illumination, thermal comfort, air quality, physical security, sanitation, and many more) at the lowest cost and environmental impact over the building lifecycle."

Smart buildings are often, but not exclusively, associated with the smart city, a term originally used to signify the roles of technology and innovation in urban development, but now increasingly linked with achieving sustainability.

Wide range of features

Achieving a smart building's aims, for economic and environmental reasons, involves the use of a wide range of features including adaptive lighting with occupancy sensing; smart meters that display overall use of electricity and help consumers to monitor and reduce their usage; sensors that gather and wirelessly communicate alerts or data about heat, light, movement and use of space; and the exchange of data between different systems. The cost of wireless sensors has dropped below USD 10 per unit and makes the installation of a smart building management system increasingly affordable.

With commercial buildings accounting for 40% of global energy consumption and contributing 20% of the carbon emissions, BEMS (building energy management systems) can help minimize energy use and cost. Smart buildings play a vital role in the effectiveness of Smart Grids, by helping to align energy generation with energy consumption. Buildings can receive requests to reduce demand when wholesale prices are high or when grid reliability is jeopardized. A smart building management system can also usually detect when an item of equipment is close to failure and alert staff to deal with the problem.

The main forces driving the smart building market are the ability to reduce carbon dioxide emissions, cut maintenance and operating costs and enhance the life of the building as well as improving the comfort and security of its occupants.

Asia and Middle East lead

Central courtyard and windtower at the Masdar Institute, Abu Dhabi, UAE

Although Europe and North America pioneered smart cities in the 1980s-90s, more smart buildings are now being built from scratch in the Middle East and even more so in Asia, with its soaring rates of urbanization.

Smart buildings can be found in smart city projects such as Masdar City in the UAE (United Arab Emirates), Lusail City in Qatar, King Abdullah Economic City in Saudi Arabia, Songdo in South Korea and Fujisawa in Japan. In China, the government has planned more than 600 smart city projects during its 12th Five-Year Plan (2011-2015), with an emphasis on water and energy infrastructure, energy-efficient buildings and traffic management. Asia’s dynamic construction activity is expected to bolster its current share (25%) of the global market for building automation systems and controls, BEMS (20%) and intelligent lighting controls (17%).

The Middle East, despite enjoying low energy costs, is also a prolific source of progressive smart building design. Qatar, Saudi Arabia and the UAE allocated more than USD 63 billion to develop smart city projects between 2012 and 2017. The aim of the developers of the USD 22 billion project in Masdar City, 17 km from Abu Dhabi, is to create the world's first zero-carbon, zero-waste city, with the emphasis on energy efficiency.

Huge developing market

The US-based market research and consulting firm Navigant Research forecast in July 2013 that the worldwide market for BEMS, driven by technology advances as well as growing familiarity among customers with the benefits they bring, will grow from just under USD 1,8 billion in annual revenues in 2012 to nearly USD 5,6 billion in 2020, a CAGR (compound annual growth rate) of 15,3%. The market will be concentrated in North America and Europe, although the Asia-Pacific market is where growth is fastest.

Meanwhile, global revenues from wireless control systems for building automation will reach USD 294,8 million by 2020, when annual worldwide shipments of wireless nodes for building controls will total 36 million units. And global revenues from networked lighting control equipment within commercial buildings will grow from USD 1,7 billion in 2013 to USD 5,3 billion in 2020.

According to Navigant, the trillions of dollars that will be spent on urban infrastructure present "an immense opportunity for new transport management systems, Smart Grids, water monitoring systems, and energy efficient buildings".

The smart buildings market, along with other "smart" sectors such as energy, water and transport, is a major contributor to the worldwide growth of the overall smart cities market.

A forecast by the US company IDC Energy Insights estimates that global spending on smart building technologies alone will grow from USD 5,5 billion in 2012 to USD 18,1 billion in 2017 (a CAGR of 27,1%).

Global technology research firm ON World predicted in September 2013 that 100 million WSN (Wireless Sensor Network) devices would be installed in non-residential smart buildings globally by 2019, an 11-fold increase from 2011.

Energy and electricity are key

The IEC develops International Standards covering a broad range of systems, equipment and applications used in the construction and maintenance of smart buildings, encompassing lighting, automation, access control, energy systems, appliances, elevators and escalators, among others. The work of IEC TCs (Technical Committees) plays a vital role in helping to ensure safety as well as interoperability.

Some of the IEC TCs working in the smart buildings sector include TC 34: Lamps and related equipment for general, professional and emergency lighting; TC 59: Performance of household and similar electrical appliances; TC 82: Solar photovoltaic energy systems; TC 47: Semiconductor devices; and TC 72: Automatic electrical controls.

For Smart Grid applications, the IEC published a Smart Grid Standardization Roadmap in 2010 and has defined a range of Standards, among them Standards for substation control (IEC 61850), energy (IEC 61970) and distribution management (IEC 61968) and meter reading (IEC 62056). The CIM (Common Information Model) for Distribution and Energy Management provides a CIM necessary for exchanges of data between devices and networks, primarily in the transmission (IEC 61970) and distribution (IEC 61968) domains, and is a cornerstone of IEC Smart Grid standardization.

Integration and interoperability of smart building technologies

Smart building technologies such as wireless sensors are becoming increasingly interoperable. Several technologies are converging in building controls that will, for example, allow light sources to carry out a dual role as sensors and information nodes too in a distributed network, managing heat, air conditioning, and building security as well as office lighting. Cloud-based technology will have a growing impact on how intelligent buildings are run, linking them with power grids and multimodal transport systems.

There is a strong business case for strategic investments in smart building technologies which help to reduce facility operating costs over time. However, some property owners and investors still need persuading. In the view of Leo O'Loughlin, senior vice-president of Jones Lang LaSalle’s energy and sustainability services business, "not everyone is aware that the tremendous advantages of today’s affordable smart building management technologies easily justify the cost".

GM Crops Vital to Combat Global Hunger - UK Report

A leading UK scientist says there are no longer valid moral objections to genetically-modified crops, which are vital to prevent global hunger.

Genetically modified food (IMAGE – Illuminating 9/11)

Genetically-modified crops are vital to prevent a future global hunger crisis, the UK Government's chief scientific adviser Professor Sir John Beddington said on 24 January 2011.

Moves to block cultivation of GM crops in the developing world on ethical or moral grounds could no longer be tolerated, he added.

He was speaking in advance of the publication of his government-commissioned report which warns that urgent action is needed to avert future global hunger on a huge scale, the UK Press Association reported.

"Massive Pressure on Food Production"

The report contains a detailed analysis of the global food situation and was compiled by 400 scientists from 35 countries. It said factors including a growing global population, climate change, scarcity of water and energy were putting massive pressure on food production.

The report concluded that a billion people are hungry, another billion malnourished, and that unless action is taken, there will not be enough food for the growing population.

Climate Change "To Bring New Diseases"

Sir John, who was professor of applied population biology at Imperial College, London, until his appointment as chief scientific adviser in 2008, said on BBC Television's "Breakfast" programme on 24 January 2011 that the world would need 40% more food, 30% more water and 50% more energy by the middle of the century, at a time when climate change would start to have "serious environmental impacts" on the planet.

Climate change would result in spreading drought and a rise in salination, and was likely to bring with it new diseases, and "we need organisms that actually address that," Sir John said.

He added: "If there are genetically modified (GM) organisms that actually solve problems that we can't solve in other ways, and are shown to be safe from a human health point of view, and safe from an environmental point of view, and they can solve problems we can't solve otherwise, then we should use them."

But on BBC Radio's "Today" programme on 24 January 2011, Sir John also noted that GM crops were not the only way forward.

"GM may be the answer for certain problems," he said, such as drought areas, but in general "there is no one simple solution". Issues of waste and under-investment in agriculture also had to be dealt with.

"We are not making any more land, we have got to look for a significant and sustainable intensification of agriculture."

Moral Objections to GM Food "Untenable"

Sir John argued that ethical or moral objections to block cultivation of GM crops in the developing world were not tenable.

It was no longer acceptable to reject GM foods merely on the grounds of "scaremongering", particularly as food prices rocket and the world warms, the Daily Telegraph reported him as saying.

Dr Julian Little, chairman of the UK's Agricultural Biotechnology Council, echoed Sir John's views, The Telegraph added. "The majority of people recognise that crying wolf on this subject without one substantiated health issue is not going to work anymore," Little said.

However, Sandra Bell, a food campaigner with Friends of the Earth, said it was too early to tell whether there were any negative health effects from eating GM food.

"Thirty years of research and development into GM has not delivered the solutions we need in terms of feeding people who are hungry and solving the problems of malnutrition," The Telegraph quoted her as saying.

Food Riots

The Observer newspaper on 23 January 2011 noted that Beddington's warning came in the wake of food riots in North Africa and rising global concern about mounting food prices.

"A number of very important factors are about to change our world… Its population is rising by six million every month and will reach a total of around 9,000 million by 2050. At the same time, it is estimated that by 2030 more than 60% of the population will be living in cities and will no longer be involved in growing crops or raising domestic animals…," The Observer quoted him as saying.

The paper commented that his support for GM crops would "enrage" many environmental groups, who believe it is wrong for the West to impose a technology it has developed on the Third World.

Critics of GM also believe that Third World farmers should not have to depend on foreign companies for the seeds they need for planting.

Beddington's report, "The Future of Food and Farming".

was presented on 24 January 2011 not just to the UK Department of Environment, Food and Rural Affairs (Defra), but also to the Department for International Development, which directs UK foreign aid.

Huge Fall in Agriculture's Share of Global Aid - Report

Agriculture's share of global development aid fell dramatically in the last 25 years, a U.S. research organization has said.

 

Vietnam village communal farm (IMAGE – Peter Feuilherade)

Agriculture's share of global development aid has fallen to a quarter of what it was 25 years ago, the Washington-based research organization Worldwatch said in a report published on 12 January 2011.

While investment in agricultural development by governments, international lenders and foundations has escalated in recent years, it is still nowhere near what is needed to help the 925 million people who are undernourished, Worldwatch said in its report entitled "State of the World 2011: Innovations that Nourish the Planet".

It found that "since the mid-1980s when agricultural funding was at its height, agriculture's share of global development aid has fallen from over 16 per cent to just 4 per cent today."

Worldwatch warned that with the world population approaching seven billion people, and an increase of up to 40 per cent expected by 2050, governments needed to take "urgent action".

Agriculture "In Trouble"

Worldwatch said there had to be a revolution in investment in food and water to reverse a "frightening" long-term depletion of stocks, the French news agency AFP reported on 12 January 2011.

"Agriculture as we know it today is in trouble," the institute's report added.

Agriculture employed more than one billion people worldwide, but it was the biggest consumer of ever-scarcer water and a huge producer of greenhouse gas emissions.

Although agriculture accounted for one trillion dollars of the global economy, it was also responsible for 70 per cent of water withdrawals and 15 per cent of greenhouse gas emissions, much of that from developing countries.

Worldwatch said small farmers who dominate the industry would be the key to maintaining food supplies for the world's estimated one billion hungry people.

Producing More Food "Not The Answer"

According to Worldwatch, studies have shown that increasing food production is not having an impact in reducing hunger in the world.

"From 1980 to 2009, the production of barley, corn, millet, oats, rice, rye, sorghum and wheat increased by nearly 55 per cent," the report said. But "hunger also increased and countries' food self-sufficiency declined in that same period."

"The international community has been neglecting entire segments of the food system in its efforts to reduce hunger and poverty," said Danielle Nierenberg, co-director of Worldwatch's Nourishing the Planet project. "The solutions won't necessarily come from producing more food, but from changing what children eat in schools, how foods are processed and marketed, and what sorts of food businesses we are investing in."

Developing countries needed investment to make them less dependent on food imports and international markets. They should put more emphasis on small-scale and less intensive farming, the report added.

Serving locally grown crops to schoolchildren, for example, had proved effective in reducing hunger and poverty in many African nations, Worldwatch said.

Moreover, "roughly 40 per cent of the food currently produced worldwide is wasted before it is consumed, creating large opportunities for farmers and households to save both money and resources by reducing this waste," according to Brian Halweil, Nourishing the Planet co-director.

Agricultural Aid to Africa "Minuscule"

Drought-hit East Africa   (IMAGE – NASA)

 

Focusing on data for Africa, Worldwatch cited statistics from the Organisation for Economic Cooperation and Development (OECD) showing that in 2008, 1.7 billion dollars were given in official development assistance to support agricultural projects in Africa. It described this as "a minuscule amount given the vital return on investment", and predicted that given the current global economic conditions, investments were not likely to increase in the coming year.

"Much of the more recently pledged funding has yet to be raised, and existing funding is not being targeted efficiently to reach the poor farmers of Africa," Worldwatch's report noted.

Looking at sub-Saharan Africa, where almost 240 million of the world’s 925 million hungry people live, Worldwatch advocated building up soil and water (not just donating seeds for planting), using existing food more effectively, and thinking about the global climate impact of growing food, Reuters news agency reported.

"African farmers could remove 50 billion tons of carbon dioxide from the atmosphere over the next 50 years, primarily by planting trees among crops and stewarding nearby forests," warding off "disastrous climate change," the report said.

The State of the World 2011 report is accompanied by other informational material including briefing documents, summaries, an innovations database, videos, and podcasts, all of which are available at http://www.nourishingtheplanet.org/

 

Technology the answer to global population growth?

A report by engineers from around the world says technology could hold the answer to problems posed by population growth.

Kenya's biggest slum - Kibera in Nairobi (IMAGE – Tom Maruko)

The UK-based Institution of Mechanical Engineers (IMechE) warned in a report published on 12 January 2011 that billions of people could face hunger, thirst and slum conditions as the world hurtles towards population overload by the end of the 21^st century.

The report, entitled "Population: One planet, too many people?", was compiled with input from more than 70 engineers around the world, and is the first of its kind by the profession.

It warns that the earth’s resources face being swamped as the global population, currently 6.9 billion people, swells by an extra 2.5 billion by the end of this century.

But it says the problems posed by the population explosion could be solved with existing technology, and sets out a series of "engineering development goals".

Mega-Cities and Water Wars

The IMechE report predicts that soaring urbanisation will lead to the number of "mega-cities" of more than 10 million people rising to 29 by 2025, and the planet's urban population increasing from 3.3 billion in 2007 to 6.4 billion in 2050.

Food will also become an increasingly precious commodity. Developed countries such as the UK will be forced to abandon what the Institute calls their "throwaway" lifestyle.

Water consumption will increase by 30% by 2030, and a 50% increase in water extraction for industrial use is forecast in Asia.

This, the report warns, could create civil unrest and land battles for resources as climate change looms.

"Existing Technologies Are The Answer"

The report lists energy, food, water, urbanisation and finance as the five areas which will be significantly affected by the effects of population growth.

Its lead author, Dr Tim Fox, told BBC Radio 4's “Today” programme on 12 January 2011: "The scenario shows that the population will peak at 9.5 billion in 2075,and will reach something like 9 billion in 2050… The challenge of providing food, water, energy and homes internationally can be met through existing technologies that are available today …

"The bulk of population growth through to the end of the century is going to take place in the newly developing nations, at the same time as they are going through the process of industrialising. What the report shows and calls for is for us to transfer this knowledge, technology and expertise to enable them to not make the same mistakes we made."

In remarks published on the IMechE website, Dr Fox said: "Population increase will be the defining challenge of 21st century, a global issue that will affect us all no matter where we live. Britain is in a currently in a prime position where it has, at its fingertips, some of the most groundbreaking engineering solutions in the world – and the brightest and most educated engineers. We need to work right now with the Department for International Development to set up a knowledge ‘swap-shop’ of engineering skills with other countries. This is not altruism. This is self-defence."

"Up to 1 billion people could be displaced by climate change over the next 40 years and we are likely to see an increase in unrest as resource shortages become clear," Fox added.

BBC environment analyst Roger Harrabin commented on the BBC website on 11 January 2011 that the report would be welcomed by some who consider that climate change has assumed too dominant a role in international policy circles.

"But others will criticise the institution for allowing climate change and population to be set against each other in the public debate," Harrabin added.

More "Good News" On Sustainability

Another report on sustainability, mentioned on the New Scientist website on 11 January 2011, said the 9 billion people projected to inhabit the earth by 2050 need not starve in order to preserve the environment.

"Agrimonde describes the findings of a huge five-year modelling exercise by the French national agricultural and development research agencies, INRA and CIRAD…The model suggested that realistic yield increases could feed everyone, even as farms take measures to protect the environment, such as preserving forests or cutting down on the use of fossil fuels. The key will be to tailor detailed solutions to different regions."

New Scientist commented: "It is the second report on sustainability launched this week to provide a healthy dose of good news."