Health sector next target for Saudi private equity

• Demographics driving strong demand
• ‘Huge potential’ in wellness sector
• 30,000 more hospital beds needed

Private equity is looking to Saudi Arabia’s healthcare and wellness sectors for the kingdom’s next growth areas as it tries to manage a burgeoning young population. 

Some 60 percent of Saudi Arabia’s 32 million-plus population are under 30, and analysts from research company S&P say the kingdom’s demographics are the main reason for a sustainable strong demand for private healthcare providers.

Dhiraj Joshi, a partner at consultants Arthur D Little in the Middle East, says health is very much an up-and-coming area for Saudi venture capital.

“A lot of focus has been on fintech, education and ecommerce. But I think health tech is where you’ll see a lot of activity in the next two or three years.” 

He says there is also huge potential in the wellness sector, especially for Saudi Arabia’s youth: “For the young ones, the opportunity lies in how you manage health and wellness so that they don’t become a burden on the health sector.”

S&P predicts that Saudi Arabia will need another 30,000 more public and private hospital beds between 2023 and 2030. It also predicts a gap between services in densely populated cities and more remote areas.

This year the Jada Fund of Funds, wholly owned by the Saudi Public Investment Fund, led a $250 million fundraising round to invest in major healthcare companies. The Saudi healthcare sector also had three initial public offerings this year, totalling $788 million, or nearly 22 percent of the total proceeds in the Gulf. 

The private sector is also playing a vital role, accounting for around half of healthcare investments, according to data from the Ministry of Investment.

“An important aspect of this expansion also includes investments in telemedicine,” says Ayman Mohamed, an analyst in healthcare and life sciences at consultancy company JLL.

“This has already been adopted by more than 83 percent of private hospitals to provide teleconsultation services, improving healthcare access.”

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Saudi Arabia’s economic reform plans include a mandate to improve the health of a population previously known for its sedentary lifestyle and fast-food culture, causing high rates of obesity and diabetes. 

It allocated SAR214 billion ($57 billion) to its health and social development sector in 2024, and spending is projected to grow at a compound annual growth rate of nearly 5 percent up to 2027. 

Many of the government’s giga-projects, including King Salman Park, Diriyah and Qiddiya, are planned to have vast green spaces and outdoor activities to help improve the health of Saudi citizens. Wellness is also a key theme of luxury resorts such as AlUla, The Red Sea and Amaala.

Brazilian company Oncoclínicas, one of Latin America’s largest chains of oncology, hematology and radiotherapy clinics, is setting up a cancer outpatient care centre in Riyadh in collaboration with the private Saudi family conglomerate Al Faisaliah Group.

Even advertisers have a renewed focus on the Saudi healthcare industry.

Marie Claire Maalouf, chief creative officer of the marketing consultancy and PR company Edelman in Europe, Middle East and Africa, told an industry forum in Dubai this week that humour has become a new trend in marketing healthcare.  

“We’re even seeing humour in healthcare, which is usually associated with something super-serious. There are a lot of legalities to talk about any healthcare brand. But we’re starting to see even in the oddest categories the use of humour,” she said.