President Abdel-Fattah Al-Sisi signed Egypt's Universal Healthcare Act into law on Monday after lengthy debates in parliament about the impact of the legislation on the availability of healthcare and the number of its beneficiaries. The law may trigger more debate about potential profits for healthcare-sector investors as the market expands. “Investors are very optimistic, even though it's too early to assess the benefits of the new law,” said Ahmed Abdel-Nabi, a senior financial analyst at Mubasher Financial Services. “Despite excellent features and clear criteria in Egypt's healthcare sector to attract investors in general, there is nothing to explain the increase in the number of listed companies in this sector on the stock market except the latest legislation,” Abdel-Nabi explained. The performance of the healthcare sector on the Egyptian stock exchange over the three months from mid-October 2017 to mid-January 2018, which included parliament passing the new law on 18 December, showed a remarkable increase. The consultancy firm Multiples Group issued a report in 2015 pointing to sources of strength in the sector, including its size, larger than that of any other Middle Eastern or North African country, the country's population growth, flexible demand and low income rates. The report described healthcare as a “defensive” sector in the face of market fluctuations, making it attractive to many investors. The sector has witnessed major take-overs over the past few years, most notably the UAE's Abraaj Group taking ownership of the Cleopatra Hospital, the Cairo Specialised Hospital, the Nile Badrawi Hospital and the Shorouk Hospital in Cairo. In its 2015 report, the Multiples Group said there were opportunities to expand investment in the sector after increased payment of insurance dues had expanded the market. Abdel-Nabi told Al-Ahram Weekly there had been debate among health-sector investors about the impact on profits of the new law. This requires “the creation of a permanent committee at the [General Authority for Comprehensive Health Insurance] for pricing medical services… including nine to 15 people. At least one quarter of members should be independent experts specialising in pricing medical services. It should also include representatives of private-service providers, as long as these are no more than a quarter of its members.” “These stipulations concern investors because they could limit profits or increase losses due to regulating prices as the market expands. The impact of this clause has not been gauged,” Abdel-Nabi said. Mohamed Al-Meseidi of Enjaz Consulting, a consultancy firm, believes that as the healthcare market expands in Egypt more patients will opt to be treated in private hospitals, driving down prices. According to Al-Meseidi, investors also want more, so far unspecified, incentives from the government to expand investment in regions lacking healthcare services. Noeman Khaled, an analyst at CI Asset Management, an investment firm, believes that investor optimism is based on the expectation of the government paying large fees to the sector after allowing state-funded medical services to be carried out at private hospitals. He said it would be important for the health insurance system to be able to collect premiums on time, as this would encourage more service-providers to join the new system.
