Egypt is targeting a 72 percent increase in investments in its healthcare sector during fiscal 2020-2021 to 21 billion Egyptian pounds ($1.3 billion), according to past statements by the country's Minister of Planning and Economic Development Hala el-Saeed.

However, the most populous Arab country also needs to foster a more investment-friendly environment, reform laws and build on its competitive pharmaceutical manufacturing base to attract investments, according to panellists at a recent webinar on healthcare investment opportunities organised by the British Egyptian Business Association (BEBA).

Ahmed Ezz el-Din, CEO, Cleopatra Hospitals said the healthcare capacity in the private sector is fragmented with fewer 100-bed plus hospitals, and a concentration of services in Cairo and Alexandria. But these drawbacks also constitute opportunities for investors from the Middle East, Africa and Europe eyeing the Egyptian market.

A major stumbling block, according to Ezz el-Din, is outdated laws, citing his company's experience in having to work with 40 to 50-year old rules. He said with the support of the Egyptian government and the health ministry, existing laws governing the healthcare sector should be reviewed to make them more investor-friendly.

Sameh Gabbra, CEO, Samcrete Investments Holding spoke about public and private investments in healthcare with a focus on capacity building, technology, advanced facilities and equipment, and telehealth. He also dwelled on prioritising the improvement of service quality and delivery, reducing dependence on imports, increasing local production, and ease of entry and exit for investors.

M&A activity

Michal Perliceusz, Sector Head, Healthcare - MENAT, HSBC said he noted a growing investor interest in Egypt's healthcare sector in the areas of manufacturing, distribution and services during his interactions with customers, investors, and healthcare experts across the region.

He said COVID-19 crisis had put the spotlight on the healthcare sector with 'greenfield' investments being announced in new hospitals, clinics, pharmacies, and manufacturing facilities.

Opportunities in the fragmented market and funding requirements of existing companies impacted by the COVID-19 crisis would drive Merger and Acquisition (M&A) activity," he noted.

"M&A activity has eased off recently, but as the COVID-19 situation eases, it is expected that these activities are going to accelerate in Egypt and the wider region," he said, adding that HSBC is supporting the healthcare sector with traditional loans, capital and trade financing and M&A products.

African platform

Samer Yassa, Director-Private Equity, EFG Hermes said that in the healthcare sector, his firm has widened its focus beyond Egypt and is aiming to build a healthcare platform for the entire African continent.

He shared some grim statistics, noting that Africa is host to 25 percent of all infectious diseases in the world, including HIV, malaria and tuberculosis, that kill more than 2.5 million patients every year across the continent.

The continent's healthcare situation is also getting more complicated, with more than 50 percent increase in non-chronic diseases like diabetes and heart diseases. Moreover, the ratios of physicians, nurses, and beds per patient are all below 1:1000, which makes for a "really scary situation."

"That means we're neither equipped on the soft side of the infrastructure nor the hard side of having proper beds or equipment," he said.

Healthcare expenditure as a percentage of GDP in most of Africa is below five percent compared to the global average of 10 percent, a gap that could be filled by private sector investment, he noted.

He also highlighted the growing interest of Gulf investors in Egypt's healthcare sector.

"Egypt has successfully established a good base for pharmaceutical manufacturing compared to other countries in the region, giving the country a strong competitive advantage in attracting Gulf-based investors," he concluded.

Reform or regress

The case for reforming the law to attract investments was reiterated by Ziad Bahaa-Eldin, Managing Partner of Bahaa-Eldin Law Office in cooperation with BonelliErede.

He said the government should re-examine the existing medical establishment law, which regulates investments in hospital and clinics; the pharmaceutical law; the universal health insurance law and lastly, the medical profession law.

He stressed that a review of these four laws that jointly constitute the health law is more urgent than ever to ensure that the healthcare sector's future potential isn't hobbled by outdated systems and models in the post-COVID-19 world.

He also called upon British Egyptian Business Association (BEBA), the panellists and participants in the webinar to collaborate and brainstorm on reforming existing healthcare law, approaching it holistically rather than piecemeal, and present their recommendations to the government.

Responding to a participant's query on ownership rules in the healthcare sector, Bahaa-Eldin cited the example of last year's government decree that limited the ownership of foreigners in the education sector to 20 percent, which was widely seen as a regressive step.

He advised that instead of fearing foreign investment, the focus should be on better clarity when it comes to rules, encouraging more competition and strengthening consumer rights. He added that in a post-COVID-19 world, Egypt need investments across all sectors but more so in its health, education, infrastructure, and technology sectors.

(1 US Dollar = 15.99 Egyptian Pounds)

(Reporting by Marwa Abo Almajd; Editing by Anoop Menon)

(anoop.menon@refinitiv.com)

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