2024 was a year of twists and turns for investors, marked by volatile markets, geopolitical events, and evolving global dynamics. Fortunately, the first half of 2025 has been better, thanks in part to decelerating inflation and relatively strong oil prices. 

Yet, as the earnings season continues to play out and the situation remains fluid and uncertain due to geopolitical conflict, questions are mounting about the economy’s strength across the Middle East region. 

However, attention eventually turns toward the future, where the outlook of certain sectors appears more positive. This includes medical technology (medtech) and pharma, which are benefiting from favorable trends.

Analysts say businesses in this space could benefit from new products that help treat ailments that plague millions. There’s a lot of pent-up demand, and people are willing to pay high prices for medical devices that monitor their vital signs and lifestyle medicine. 

In the medtech segment, fitness or diet-based apps, and some products, such as smart mobile blood glucose monitors for diabetics, make a difference in millions of lives.

For instance, Insulet, which manufactures wearable pods that enable diabetes patients to forgo daily insulin injections and provide up to three days of continuous insulin delivery, has a strong global demand for its product. 

The Middle East and North Africa (MENA) region has one of the highest diabetes rates globally, affecting nearly 1 in 6 adults. Innovations in diabetes management have immense potential to tap into this market.

With scientists predicting the MENA region will be the center of the world’s youth obesity crisis by 2050, you’d imagine the pharmaceutical powerhouses in the region have joined the global gold rush for weight-loss drugs, and investors are throwing money at anyone who can spell “peptide.” 

No, not yet. Even with ample commercialization opportunities, deep pools of capital, and many companies in the region that have the capabilities to manufacture. 

NOT ENOUGH GROWTH

“The medtech sector in the GCC stands today at $15-20 billion. It has witnessed moderate growth of about 5-6% over the past decade and is expected to continue growing, at about 7%, over the next decade,” says Marwan El Hachem, Partner, Bain & Company. 

Despite the rising incidence of chronic and lifestyle diseases, aging demographics, mandatory insurance, and healthcare privatization, the medtech-pharma sector in the GCC has not made significant progress.

But why hasn’t there been more growth? Why are we yet to see multibillion-dollar investments in the sector? Is it too much regulation and a lack of a skilled workforce? The answer is complicated.

“Regulatory and compliance policies complexity, fragmentation, and approval processes remain challenging,” says El Hachem. “GCC regulators are rushing to develop the necessary environment for approvals, monitoring, and enablement of medtech in the region.” 

“Procurement processes, especially the centralized government ones, tighten margins and do not sufficiently integrate patient and surgeon/medical staff needs.”

Local human capital also needs significant upskilling and awareness, he adds.

Even the pharma sector faces fragmented regulations, limited IP enforcement, and underdeveloped R&D infrastructure, says Dr. Basem Albarahmeh, General Manager of Globalpharma, the UAE’s leading pharmaceutical manufacturer. “Specialist talent remains scarce, and fragmented health data hampers digital innovation.”

Observers say that millions of patients in the region will be able to benefit from developments in these sectors, which not only will meet its own needs and enhance patient safety but also facilitate groundbreaking discoveries and a more efficient drug development process.

LOCALIZATION AND PARTNERSHIPS

Recently, there’s been a growing emphasis on transforming the healthcare sector in countries like Saudi Arabia, Oman, and the UAE. 

This includes ambitious initiatives such as the Health Sector Transformation Program in Saudi Arabia and the UAE’s Centennial 2071 Plan that prioritizes healthcare, aiming to develop infrastructure, expertise, and services that match international standards. 

The COVID-19 pandemic has caused a fundamental change in the healthcare industry operations, and brought to the fore the region’s extreme reliance on global markets and imports of essential medicines and healthcare products. 

Inevitably, governments across the GCC have been forced to renew their focus on localization efforts to overcome the severe impact of disrupted global supply chains and bolster their domestic manufacturing capabilities, while addressing other challenges in the sector.  The UAE and Saudi Arabia are keen on localizing vaccines, plasma products, and biosimilars. Abu Dhabi state investor Mubadala significantly increased investment in life sciences and medtech.

“Recent history has seen relatively strong localization-driven activity,” says El Hachem. 

One way the medtech-pharma sector is undertaking localization, in addition to localized manufacturing, is through partnerships and joint ventures with global companies. 

“Siemens Healthineers Innovation program to train local talent in the kingdom, Abu Dhabi’s collaboration with Cleveland Clinic on personalized precision medicine program for oncology to boost diagnostics and clinical research infrastructure, are some of the examples,” says El Hachem.

Saudi Arabia, which is working to boost its local production, has over 200 pharma and medical equipment facilities and has invested almost $3 billion.

A crucial step in Saudi Arabia’s pharma localization is its PIF-backed partnership with Novo Nordisk. The partnership aims to localize and oversee 90% of the kingdom’s insulin production. 

In May, Saudi Arabian Minister of Industry and Mineral Resources Bandar Al-Khorayef visited Denmark to accelerate local production of insulin, GLP-1 drugs, and advanced biotherapeutics in Saudi Arabia with a partnership with Novo Nordisk. 

“Localizing pharmaceutical production strengthens health security and mitigates supply chain risks, as exposed during COVID-19. Countries like the UAE and Saudi Arabia are offering incentives and infrastructure to drive self-sufficiency,” says Dr. Albarahmeh, adding that Globalpharma plays an active role in this shift, creating skilled jobs and supporting regional R&D. 

“The region has seen over SAR 1.4 billion in pharma localization investments, including Saudi deals with Sanofi and Vertex,” adds Dr. Albarahmeh.

Localization is a win-win situation. It benefits local businesses, and when multinational companies partner and establish joint ventures with local manufacturers, they gain wider access to markets for their drugs and transfer knowledge.

Dr. Albarahmeh says, “These tie-ups expand local production and tech transfer,” adding that they helped Globalpharma anchor itself in the region by signing agreements with four international players this year: PharmaPrimes Laboratories (Jordan), Nerhadou International (Egypt), Aora Health (Spain), and BioSyent Pharma Inc. (Canada).

As governments and local businesses hone and streamline their policies and processes, El Hachem says diagnostics and imaging, remote monitoring, cardio devices, and robotics will likely lead the way in medtech growth.

“Government initiatives, regulators and SWFs are playing a key role in unlocking the medtech market towards greater innovation, localization and growth,” adds El Hachem.

However, to address the changing demands of a diverse population, experts emphasize that the region’s pharma-medtech industry must continue to invest primarily in research and development to pioneer new treatments and delivery methods. 

Not only is it good for its business, but it will also provide the region with a competitive advantage in terms of leading the world in life sciences.

In a few years, experts say the medtech-pharma sector in the region has the potential for outsize returns only if the challenges associated with regulation and workforce begin to fade.