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Exclusive: Healthcare investors need strong counter-parties

Makarem Batterjee, President of Bait Al Batterjee Holding Co shares his thoughts on the healthcare industry landscape, opportunities, challenges and more!

"Investors need to cherry pick partners that combine long-term growth visions with strategic depth" "Opportunity is in companies that augment capabilities in healthcare with that of investment management" "The role of technology will be central to the creation of a successful seamless model of engagement"

While on one hand, the looming global economic slowdown is expected to impact the balance of investments and exits in the GCC region, the healthcare landscape looks primed to ride the wave. Backed by positive government policy, the sector is looking to welcome new infrastructure, improved preventive healthcare, as well as enhanced education and training of healthcare professionals.

The gradual rise in the GCC population, as well as higher treatment costs, will see the GCC healthcare market gain momentum in the coming years, according to World Bank and WHO reports. A 2019 Frost & Sullivan study also points to a boost in public-private partnerships in the GCC that could boost ongoing digital health and smart hospital projects.

AMEinfo spoke exclusively to Makarem Batterjee, Vice Chairman of Middle East Healthcare Company (MEAHCO), a company listed on the Tadawul Stock Exchange; President of Bait Al Batterjee Holding Co; and the President of Saudi German Hospital Group about the current healthcare industry landscape, opportunities, challenges and more!



Investing in healthcare

Makarem Batterjee: Investors are unlikely to generate superior returns by simply creating a diversified portfolio across sectors and asset classes. Rather, they need to choose strong counterparties to invest with. These would be counterparties with a long-established track record and ability to weather downturns, as well as having a competitive business model. They need to cherry pick partners that combine long term growth visions with strategic depth and operational excellence.


Opportunities and challenges

Makarem Batterjee: When we look at the healthcare industry landscape it is important to look at the GCC and the different areas within MENA separately as each region currently poses different opportunities and challenges specific to their demographic and economic status.

In the GCC, there is a greater focus on mergers and acquisitions so far as general hospitals and medical centers are concerned, with new ventures being mostly in specialty sectors. This is because major cities have a reasonably extensive hospital and medical clinic network. Going forward we are likely to see greater consolidation in core services, the emergence of new specialized services, and a shift towards privatization and public-private partnerships.

The North Africa market is tackling the growing gap between supply and demand and the need for more world-class hospitals. There are emerging groups that are seeking access to higher quality healthcare. Availability of quality healthcare isn’t as easily available compared to products and services such as smart mobile phones, automobiles, and hospitality, etc. Thus, there is a huge need for new world-class hospitals and other healthcare facilities.

Working towards Vision 2030 in Saudi Arabia, we will see the focus and shift towards privatization and an increasing transition towards health insurance thereby changing the focus from B2C to B2B. There will be greater demand for efficiency and a stronger interface between health insurance companies and health care providers. Providers of quality and efficient health care services will be successful whereas healthcare providers, providing substandard services will see themselves being increasingly squeezed out.



Innovations and technology

Makarem Batterjee: The role of technology will be central to the creation of a successful seamless model of engagement between the patients, healthcare providers, and insurance companies.

At SGH Group, we offer the highest quality of care by providing our patients best in class innovations and technology, not only in the procedures and expertise we offer but in the entire patient experience. Innovation and technology enable SGH Group to treat rare and high-risk conditions, speed up recovery time, increase ease and efficiency for patient and insurance engagement and therefore reduce delays and rejection rates. The use of technology is imperative to the health and wellbeing of our communities as well as the success of our business.


Role of private equity in healthcare

Makarem Batterjee: Private equity companies are traditionally asset management companies that deploy funds into a multitude of varying opportunities. I believe these non-specialized asset management companies will have a limited role to play in the healthcare sector due to lack of in-depth knowledge, experience, and scale that are critical for investment success in this sector.

The return on investment will be much higher for private capital providers who invest in large and diversified health care platforms.  The opportunity is in companies that augment their capabilities in health care with that of investment management, and not the other way around.  For example, SGH Group is a unique player which operates in diverse cities and markets ranging from major and small cities in Saudi Arabia and the UAE, as well as large emerging markets such as Egypt. Furthermore, SGH compliments these operations with its hospital in Yemen. As such, we are perhaps the only group that brings on board expertise and experience of operating in markets that have the characteristics of developed markets, emerging markets, and zones where there is difficulty accessing quality healthcare. This uniquely positions us to truly understand the dynamic and ever-changing healthcare landscape across the region.

As Founder of Humania Capital, my aim is to augment our strong health care ecosystem with best in class expertise in investment and private equity thereby delivering a unique triple win – for the patients, the investors and the management. This perhaps is the most optimal route to relieving human suffering in a sustainable manner.