Digital health use and benefits in KSA and UAE

(9 pages)

Throughout the Middle East, consumers are enthusiastically adopting digital services. Smartphone penetration rates in the Kingdom of Saudi Arabia (KSA) and the United Arab Emirates (UAE) are among the world’s highest, at an estimated 93 percent, with citizens using the devices to access digitized public services.¹

Survey methodology

We employed a two-step approach to learning how consumers in KSA and UAE think about digital health. First, we conducted a market scan to identify digital-health applications used in the two countries. To identify adoption trends, we analyzed nonunique download numbers from the Google Play store and Apple’s App Store.

To measure consumer sentiment, we then surveyed the preferences of 1,400 users and nonusers of these digital-health apps in various demographics. We ran statistical tests (Chi-squared and Cramér’s V) to determine if there were any significant relationships between respondents’ demographic characteristics and their survey answers. This analysis did not reveal any significant demographic associations.

In this context, KSA and UAE seem well-positioned to reap benefits from digital-healthcare technologies. In 2022, McKinsey surveyed 1,400 consumers in KSA and UAE to better understand their sentiments toward and experiences with digital-health services (see sidebar “Survey methodology”). The survey revealed high levels of interest and awareness in such technologies. Based on our findings, we believe that KSA and UAE could use digital-health solutions to benefit patients and improve outcomes in areas including chronic-disease management, diagnostics, and preventative care. Indeed, with proper management, the combined digital-health market in KSA and UAE could reach $4 billion by 2026 (Exhibit 1).

The digital-health market in the Kingdom of Saudi Arabia and United Arab Emirates is expected to reach about $4 billion by 2026.

Four major themes emerged from our consumer sentiment study:

Awareness of established digital-health solutions like e-pharmacy and teleconsultations is high. In both KSA and UAE, online pharmacies are the most widely used digital-health solutions, followed by fitness apps. Teleconsultations, online fitness classes, and diet-management apps all have moderately high adoption rates, but condition-management and mental well-being apps are used much less often. In all categories, between one-quarter and one-half of consumers have no awareness at all of digital-health apps, which suggests that education and marketing campaigns could be effective in promoting greater adoption (Exhibit 2).
User retention is high for existing solutions. Among those consumers who have used digital-health apps, large majorities (between 64 percent and 87 percent, depending on the type of app) say that they continue to use the apps at least from time to time (Exhibit 3).
Consumers primarily value the convenience and time savings provided by digital-health solutions. In both KSA and UAE, nearly half of respondents said digital-health apps save them time and offer convenience. Around one-third of respondents found digital-health platforms more effective than in-person care, while approximately one-quarter of consumers said they were motivated by the value and affordability of digital-health options (Exhibit 4).
Most nonusers are interested in trying wellness applications and online pharmacies. Majorities of nonusers in KSA and UAE expressed interest in trying online pharmacies, online fitness classes, and applications for wellness, fitness, or diet management (Exhibit 5). Nonusers showed slightly less interest in apps for condition management and mental well-being, although slim majorities of respondents in KSA did say they were interested in trying such apps.

Most consumers have never used digital-health applications.

Retention is high among users of existing solutions.

The main propositions driving consumer adoption are convenience and time savings.

Most nonusers are interested in trying wellness and online pharmacy apps.

Potential service growth opportunities

Seven digital-health submarkets are emerging in KSA and UAE

Fitness apps such as calorie counters, step counters, home-workout apps, fitness trackers, and fitness gamification apps
Telehealth services, including virtual visit systems and apps for booking physician appointments
E-pharmacy solutions that let consumers use their smartphones to fill and renew prescriptions, send questions to pharmacists, and shop for pharmacy products
Health-management tools for women’s health and maternity care, such as apps for pregnancy testing and birth planning
Condition-management apps for mental health, stress reduction, mindfulness, sleep improvement, and managing chronic conditions such as diabetes
Health insurance via proprietary apps that offer services including access to benefits and the ability to manage appointments and claims
Diagnostics and related services such as home-testing kits, preventive diagnostics, and apps for promoting good health

The survey responses reveal potential growth opportunities in the Middle East for companies to provide digital services across the various submarkets to improve people’s health and wellbeing (see sidebar “Seven digital-health submarkets are emerging in KSA and UAE”). KSA and UAE can accelerate the development of digital-healthcare services by focusing on product and value propositions, refining go-to-market approaches, developing new business models, and investing in promising technologies. Overall, the goal should be to improve patient outcomes by developing digital-health capabilities that match consumer needs and preferences. Here is a detailed look at four areas representing major digital-health opportunities for KSA and UAE (see sidebar “Marketsizing methodology”).

Market-sizing methodology

To size the digital-health market, we looked at six types of applications: teleconsultation, online pharmacy, home diagnostics, chronic-disease management, wellness and disease prevention, and a catchall “other” category that includes e-booking, medical chatbots, licensing and platform-as-a-service, and marketplace offerings. There may be additional use cases in, for instance, personalized messaging, e-triage, patient support networks, and e-payment integration.

We calculated the market size and forecasts as follows:

Teleconsultation. This market refers to virtual consults with patients through phone, video, or chat services. We took total in-person consultation numbers from available public data in KSA and UAE, and identified the top teleconsultation companies, which together constitute 80 percent of the teleconsultation market. We engaged in phone discussions with a few to understand the number of consultations they manage per year, but when this was not possible, we relied on online searches for this data. We used these figures to estimate the baseline adoption rate for teleconsultations as a share of total consultations for 2021. This baseline (2022) was close to 1 percent. We then looked at other mature markets, such as the United States and Europe, to ascertain their compound annual growth rate (CAGR) of teleconsultation adoptions from when the service was first introduced and, based on those, assumed a median 24 percent for KSA and UAE. We also assumed a median teleconsultation price of $23 in KSA and $45 in UAE. This median price was based on our scanning of telemedicine players in KSA and UAE and the prices they charge for virtual consultations.
Online pharmacy. We first identified the total market size of prescription and over-the-counter medications. We then called top online pharmacy players in KSA and UAE to learn what percentage of their total sales are online, giving us a view of the 2021 baseline conversion rate from in-person to online pharmacy transactions. Across markets, this baseline was 10 percent. We then used a CAGR in online pharmacy conversion of 15 percent, which is equivalent to the e-commerce market CAGR in KSA and UAE.
Home diagnostics. In this market, patients can arrange for appointments to have phlebotomists visit them and draw a blood sample for analysis and subsequently report it digitally. For this market calculation, we identified the number of chronic-disease and general diagnostics (biochemistry and blood tests) per capita per year using clinician interviews (because there was no reported breakdown of blood tests across the markets). Then we identified the average spend per capita for each category and applied adoption rates across the two markets.
Chronic-disease management. This market refers to digital-therapeutic applications (excluding technology and devices) that are targeted toward patients with chronic diseases like diabetes and heart disease. For this market, we looked at the usage rate of applications for chronic-disease management and support, including dietary apps and logbooks such as those for diabetes and heart disease. We first determined the prevalence of chronic disease (excluding cancer) in KSA and UAE from global databases, then looked at the chronic-disease-app download rates of top players and talked with experts. The baseline adoption for 2021 was 3 percent in KSA and 10 percent in UAE. We assumed the CAGR in adoption would be similar to that of teleconsultations, 24 percent.
Wellness and disease prevention. We limited this classification to traditional wellness and dietary-improvement applications and compared KSA’s and UAE’s populations with download rates for the top wellness applications in each country. We assumed that 50 percent of those who downloaded the application use it, and again used 24 percent as the CAGR for adoption.
Other. We limited this to e-bookings. We assumed a 10 percent adoption rate of e-bookings and a 2 percent commission rate revenue by platforms that run the e-booking system.

B2B2C partnership go-to-market strategies

Our survey shows that many consumers in KSA and UAE remain unaware of the diverse range of available digital-health technologies. Our field experience tells us there are high costs associated with business-to-consumer (B2C) customer acquisition in digital healthcare. The industry may be able to reduce its customer acquisition costs by focusing on business-to-business-to-consumer (B2B2C) partnerships between digital-health solution developers and healthcare professionals, insurance companies, or employers. The partners can then deliver the developer’s digital-health solutions to their patients, customers, or employees.

For example, a developer of a hypertension-monitoring app could partner with an insurer that can incorporate the app into its complementary healthcare offerings or with a corporation that adds the app to its package of employee benefits. In both cases, the developer obtains preferential access to a group of customers who, in turn, benefit from an easier way to keep tabs on their hypertension risk.

Huma is a British digital-health start-up that offers episodic and chronic digital healthcare. After testing and proving its value proposition, it recently received $200 million to scale up, which it will do with its partners, the governments of the United Kingdom, Germany, and UAE and key pharmaceutical companies.²

Bundled subscriptions and behavioral financing

Our survey showed that many consumers have tried digital-health options based on recommendations from people they know and trust. Survey respondents also said that value and affordability motivate them to use digital-health services.

These findings indicate the potential for new business models based on innovative pricing options, including bundled subscriptions and behavioral financing.

With a bundled subscription model, consumers typically pay a monthly recurring fee instead of making a one-time purchase. Subscription models are associated with high customer retention. For example, the UK-based global telemedicine and health AI company Babylon Health, which uses a subscription pricing model, had a three-month user retention rate of 95 percent in 2020. This helped the company achieve a fourfold increase in annual revenue from 2020 to 2021.³

Behavioral financing involves setting fees based on consumers’ behavior, as measured by smartwatches and other wearable devices. For example, a wearable device could be offered for an initial one-time fee, followed by a monthly subscription that could be lowered or waived based on how many miles users walk or calories they burn. Such incentives could also be offered in partnership with gyms, providers of healthy meals, retailers of home fitness equipment, and other health-related businesses.

Vitality, a health insurance company based in South Africa, uses this behavioral financing strategy. Vitality members pay a small up-front fee to receive an Apple Watch on a 24-month financing plan. The monthly fee can be waived if the consumer earns a set number of activity points per month. In one study, this subscription-based incentive resulted in almost 34 percent more tracked activity a month.⁴

Gamification and seamless integration

In our survey, consumers indicated that they want engaging solutions. Digital-health developers in KSA and UAE can make their tools more engaging by deploying gamification techniques. Sidekick Health, a digital-therapeutics leader based in Iceland, has found success by collaborating with gaming companies to dramatically improve retention and engagement and strengthen the clinical impact of its digital tools for consumers with chronic diseases. Sidekick users can rise through various achievement levels and gain points based on certain healthy-behavior tasks such as taking medications, drinking enough water, increasing activity, and making healthy food choices. One randomized trial showed the retention rate on Sidekick to be 80 percent after four months and 75 percent after six.⁵

Consumers also want digital-health apps that are convenient. One element of convenience is making sure apps can be integrated with devices or other apps a patient already uses. Apple’s Health app, for example, allows users in the United States to share their secure health data on metrics including heart rate, exercise, sleep time, and lab results directly with their doctor or with another user, such as a spouse or exercise buddy.⁶

Expansion into digital therapeutics

New digital-health businesses could have a positive impact where there’s strong consumer demand and inadequate supply. One such area is digital therapeutics, which uses evidence-based interventions to treat or manage a disease or condition by accompanying or replacing existing treatment protocols. Widespread chronic diseases such as diabetes and hypertension cause severe suffering, deprive patients of years of healthy life, and place a heavy burden on healthcare systems. By incorporating digital-therapeutics solutions into patient care, for example to monitor blood sugar levels and administer insulin, KSA and UAE could benefit patients and alleviate some of the pressure on healthcare providers.

The digital-therapeutics market in KSA and UAE has far from reached its full potential. Current usage levels for apps are quite low, likely because few solutions have reached the market, there is limited awareness of those that have, and it is unclear how digital-therapeutic services will be reimbursed. Our research shows that digital-therapeutics apps represent less than 1 percent of digital-health downloads in KSA and UAE.

Several apps operating in other countries demonstrate the potential opportunities for digital-therapeutics services in KSA and UAE:

Diabetes management. BlueStar offers mobile digital coaching for managing type 1 and type 2 diabetes that integrates with health devices such as blood glucose meters and insulin pens. A randomized controlled trial has shown that the app helped type 2 diabetes patients achieve a 1.2 percent decrease in their hemoglobin A1c, a common measure of blood sugar levels.⁷
Blood pressure management. A systematic review and meta-analysis of digital-health interventions showed that digital counseling alongside antihypertensive medical therapy lowered systolic blood pressure by 50 percent relative to controls (−7.3 mm Hg compared with −3.7 mm Hg).⁸
Mental health. A randomized controlled trial found that users of a mental-health smartphone app had fewer depressive symptoms (3.5 percent) over a 12-month period than the control group (8 percent).⁹

Nontraditional players are tapping into digital health

What was underrecognized prior to the COVID-19 pandemic has now been increasing in relevance. Digital-health solutions have been on the rise in the Middle East, especially in markets with high digital penetration among the population like in KSA and UAE. It is also attracting new entrants as consumer awareness and acceptance of digital-health solutions continue to increase. These entrants include a mix of investors, digital-health start-ups, e-commerce companies, retail conglomerates, pharma companies, health system providers, payers, and even telecommunications companies. As they continue assessing how to scale further and enhance adoption to boost digital-health value and impact on lives, start-ups and other solution developers can address the four areas we highlight and potentially grow as unicorns. New pricing models, B2B2C go-to-market strategies, and gamification methods collectively hold the potential to push down customer acquisition costs and accelerate the growth of the digital-health sector in KSA and UAE.