Dubai hospitals are ailing in saturated healthcare market 

• Dubai hospitals close
• Operators struggle with rising costs
• Aster DM sells majority stake

The general healthcare sector in Dubai is buckling under saturation, with weaker operators shutting down or battling financial woes, Dr Azad Moopen, the founder and chairman of Aster DM Healthcare, told AGBI.

The healthcare sector in the emirate faces a challenging economic climate, marked by stubborn inflation, high interest rates and slow growth.

The introduction of mandatory medical insurance policies has also squeezed profits for providers, as insurance tariffs remain stagnant and operational costs rise, including higher rents and salaries.

“We see many hospitals, clinics and pharmacies either closing down or struggling to give salaries,” he said.

“Dubai has an open-door policy, so anybody can come here. There is no difficulty in starting an establishment. [But] while entry is easy, it’s also not the best place because there’s a saturation. People shouldn’t risk coming into a geography where there is already saturation.”

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Moopen added that the UAE market for primary and secondary healthcare has limited growth prospects despite an increasing population, in contrast to India.

However, more specialised healthcare services such as transplants and oncology are needed.

“Advanced care is what people should be looking at now, rather than the ordinary primary and secondary care,” Moopen said.

Market saturation is also a factor in Aster DM Healthcare’s decision to demerge its Gulf and Indian businesses.

Based in the UAE and listed in Mumbai, Aster DM Healthcare runs 34 hospitals, 131 clinics and 502 pharmacies in India and across the Gulf.

India’s growth rate

The company will sell a majority investors’ stake in its Gulf operation to private equity firm Fajr Capital in a $1 billion deal, and a 30 percent investors’ stake in its India business for about $300 million.

It derives 75 percent of its revenue from its Gulf business.

Moopen said the India-listed arm was failing to hit its target valuation, because its Gulf business was not being adequately valued by the Indian market.

“There was a huge lag on the India shares price,” he said.

The UAE and wider Gulf countries are still seeing growth, Moopen said, but India’s growth rate nearly is triple that of the GCC, with the healthcare sector’s compound annual growth rate in India estimated at 15 percent, far exceeding the Gulf’s 4.5 percent.

He attributed this to India’s 1.4 billion population and a “huge demand-supply gap”.

In addition to expansion in India, Moopen said Aster wants to have a “significant presence” in Saudi Arabia.