A flurry of new deals signed in the first quarter of 2014 are set to push up trade between Bahrain and India, while also paving the way for the Kingdom to continue expanding its health care sector and pharmaceuticals industry.
Trade relations between the two countries received a boost in February, when King Hamad bin Isa Al Khalifa made his first visit to the subcontinent, accompanied by a business delegation organised by the Ministry of Industry and Commerce and the Economic Development Board (EDB).
A total of 27 memoranda of understanding were signed during the state visit, while business-to-business activity across the economic spectrum generated seven major deals.
The health care sector, which is seen as offering high growth potential in Bahrain, accounted for two of the seven deals. The India-based Kerala Institute of Medical Science agreed to channel $30m into expanding its presence in the Kingdom, having already opened its 65-bed advanced-services facility, the Royal Bahrain Hospital, in 2012. Meanwhile, Mankind Pharma, India’s seventh-largest pharmaceuticals company, signed a marketing and distribution deal with Deeko Group Bahrain, giving the Indian company a foothold in the GCC market.
The new Bahrain-Indian deals should bolster the efforts of Bahrain’s National Health Regulatory Authority (NHRA) to transform the Kingdom into a destination for pharmaceuticals and health care investment. However, while the Kingdom’s demographic and economic trends have set the scene for industry expansion, the sector still faces a number of challenges, led by staff shortages.
All hands on deck
The new investments demonstrate the ongoing interest in Bahrain’s health care industry, although employment in the sector has so far been unable to keep pace with expansion, with the industry growing by around 10% per annum and sector employment growing at around half this rate since 2009, according to the EDB. The ratio of doctors available to treat Bahrain’s population stood at 1.4 per 1000 people, figures showed, compared to an OECD average of 2.8 per 1000 people. Furthermore, only half of the nurses practising in the Kingdom are Bahraini nationals, according to data, although recent drives to improve take-up on training programmes could generate a shift in balance.
Addressing staff shortages will be a key component of Bahrain’s efforts to tackle so-called lifestyle diseases, such as obesity and diabetes, which, in keeping with a trend evident across the region, are rising at alarming levels.
Bahrain placed in the top 20 on a global list ranking countries according to their obesity levels. Over one-third of women (38%) and one-fifth of men (22%) in Bahrain are classed as obese, according 2013 research by The Economist. In addition, more than 20% of the citizens are diabetic.
According to World Bank data, Bahrain’s spending on health as a share of total government expenditure was 9.6% in 2012, down from 10.7% in 2009. Over the same period, per-capita expenditure also dropped nearly 10%. The draft 2014 budget, which is run at a deficit, allocates 5.3% of government spending for health care.
Businesses have taken on a greater role in the wake of reduced government investment. Bahrain’s private health care industry has grown at over 12% per year since 2007, according to the EDB. The organisation cites private health care, along with oil-related industries, as the main driver of GDP growth in 2012.
While health care offers opportunities for industry expansion, it also has a broader part to play in the Kingdom’s longer-term plans for growth. A recent World Bank report on health care strategy in the MENA region pointed out that the comparative advantages of a young, expanding population were “contingent on a healthy, educated workforce”. As the private sector moves into a more central role within the health care industry, the national focus looks likely to remain firmly set on prevention and the promotion of positive lifestyle choices.
Achieving the objective of developing Bahrain into a regional medical services hub, as well as reaching the Kingdom’s wider economic and social goals, will be at least partially dependant on the government’s ability to continue fostering deals such as those established during the February Bahrain-India trade mission. As government resources continue to be directed towards other sectors, private investment in health care provision is set to become increasingly important.
Follow Oxford Business Group on Facebook, Google+ and Twitter for all the latest Economic News Updates. Or register to receive updates via email.