10 Insights On The Business of Healthtech In The MENA Region Built by Entrepreneur Middle East and Lucidity Insights, The Business of Healthtech in MENA is a report that explored innovation in the region's healthcare sector in 2023.
By Erika Masako Welch Edited by Aby Sam Thomas
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Built by Entrepreneur Middle East and Lucidity Insights, The Business of Healthtech in MENA is a report that explored innovation in the region's healthcare sector in 2023.
Here's a list of the ten key insights that can be gleaned from this report:
1. Israel, Oman, Turkey, and the UAE are in the top 20 world economies for healthcare efficiency
Source: Lucidity Insights
The Bloomberg Health-Efficiency Index, first conducted in 2013, tracks life expectancy and medical spending to determine which healthcare systems have the best outcomes around the world. Asian countries dominate, with Singapore, Hong Kong, and Taiwan rounding out the top three most efficient healthcare systems, followed by South Korea and Israel. The UAE has the 13th most efficient healthcare system, and Oman and Turkey have the 18th and 19th most efficient healthcare systems in the world.
2. The MENA has the lowest healthcare expenditure as a percentage of the gross domestic product (GDP), but highest out-of-pocket expenses as a percentage of expenditure; possibly in part due to younger demographics.
Source: Lucidity Insights
The MENA has one of the highest out-of-pocket expenditures in the world. High out-of-pocket expenditures for healthcare is often associated with negative health outcomes. Due to poor habits on consumption spending and cases of impoverishment, prescribed treatment plans are often not complied to when we must pay 30% out-of-pocket for those drugs and treatments. Due to the cost that these treatments, screenings, and tests incur, individuals may be less likely to go to see a doctor for minor check-ups or for preventative medicine.
Source: Lucidity Insights
Of course, many argue that the MENA region has some of the youngest populations in the world, requiring infrequent access to healthcare services. Country demographics certainly play a role in how much a country spends on healthcare, as well as on their out-of-pocket payment policies. The region is likely to see a shift, particularly in the GCC over the next two decades, as countries like the United Arab Emirates will go from housing a population that is over 60 years old at 3% in 2020 to grow to 20% of the population by 2050.
Source: Lucidity Insights
Source: Lucidity Insights
3. Healthtech funding in the MENA (excluding Israel) has been experiencing a steady rise over the past 15 years
Source: Lucidity Insights
Source: Lucidity Insights
4. Healthtech companies in the MENA (excluding Israel) have reached a combined value of over $1.5 billion in 2022, a 22x increase since 2016
Source: Lucidity Insights
Healthtech has been exploding in the region, with valuations of healthtech startups seeing a significant jump since the COVID-19 pandemic started in 2020. Interestingly, though some startups that were founded in the 1990s and 2000s have also seen an increase in value, it is those companies that have been established since the 2010s that are most highly valued today.
When comparing the five-year growth trends by sector between 2016 and 2021, healthtech startups saw the highest valuation growth, followed by foodtech and marketing (software-as-a-service) companies. This likely speaks to both the drivers presented during the pandemic, which quickly educated both consumers and healthcare institutions on the value of technology to increase efficiencies, as well as the new technologies that have come online in the most recent years, which have seen an increase in business models coming to the MENA region that have already proven themselves on the global stage.
5. Following global trends, care delivery is the largest healthtech vertical in MENA, by funding raised
Source: Lucidity Insights
Care delivery is the most funded healthtech vertical in the MENA (excluding Israel), which represent 39% of all funding flows, followed by administrative workflow startups that have garnered 30% of venture capital (VC) funding. Digital therapeutics rounds out the top three with $97 million invested, accounting for 16% of all VC funding in the region's healthtech sector.
6. The UAE is the healthtech startup capital of the MENA region
Source: Lucidity Insights
The UAE is the undisputed healthtech startup capital of the MENA region, when excluding Israel. UAE healthtech startups have fundraised over $460 million to date, 6.2x more funding than Egypt in second place. That means that 75% of all VC funding going to MENA healthtech are going to UAE startups.
7. Nine out of ten of the most funded healthtech startups in the MENA (excluding Israel) are headquartered in the UAE
Source: Lucidity Insights
Nine out of 10 of the most funded healthtech startups in MENA (excluding Israel) are headquartered in the UAE. Admin workflow that help book appointments with doctors and clinicians online, followed by care delivery players that facilitate tele-medicine and online doctor appointments are the most well-funded sub-sectors. Bayzat and Vezeeta are both booking platforms leading the pack in fundraising with $96 million and $68 million raised respectively.
8. 93% of healthtech startup funding rounds in the MENA region are below $10 million, with seed and Series B raising the most funding in total to date
Source: Lucidity Insights
Source: Lucidity Insights
9. 38% of healthtech startups in the MENA (excluding Israel) have successfully raised two or more rounds
200 healthtech startups in the MENA region (excluding Israel) have successfully raised at least one round of funding. 38% have successfully raised two or more rounds of funding. 17% have successfully raised over three rounds of funding, and 10% have successfully raised four or more rounds. This tells us that there is a healthy maturation of healthtech startups in the region, though there is still significant room to grow.
Source: Lucidity Insights
10. Healthtech investment in the MENA is dominated by domestic investors
Source: Lucidity Insights
Healthtech startups don't have to go outside the region much to get access to funding, or so the data says. 80% of all VC investments in healthtech startups have been made by MENA-based investors and funds. 11% of funding comes from Europe, followed by 7% from the United States. Dedicated healthtech funds were largely unheard of prior to the pandemic, but today, there are over eight funds dedicated to healthcare and healthtech investments, with a combined total of over $2 billion.
Source: Lucidity Insights
To read more about the transformative innovation of digital health in 2023, read the full report here.
This article was originally published on Lucidity Insights, a partner of Entrepreneur Middle East in developing special reports on the Middle East and Africa's tech and entrepreneurial ecosystems.
