Landmark Group, a retail and hospitality conglomerate, is branching out into the UAE healthcare sector for the first time.The company, based in Dubai, plans to open 20 clinics across the country with an investment of Dh100 million (US$27.2m).
The unexpected move comes as total healthcare spending in the UAE is projected to reach as much as $17 billion by 2015.
Landmark yesterday outlined plans to open 20 primary healthcare clinics during the next two to three years. The company, which has a turnover of $4.7bn and owns retail brands including Babyshop and Home Centre, as well as Citymax hotels, is also aiming to expand its iCare clinics across the region.
"It's a risk at the end of the day," said Vipen Sethi, the chief executive of Landmark Group. "But it's not a major risk. Today it's a good line to get into."
Spending per capita in the UAE is among the top 20 in the world at more than $1,500, according to research by Deloitte.
The sector's contribution to GDP is expected to grow from an estimated 2.9 per cent last year to 3.4 per cent by 2015, according to the research.
Investments in facilities in the sector include the Cleveland Clinic, which is under development in Abu Dhabi. DM Healthcare Group this month announced it planned to roll out a new brand of budget clinics aimed at lower-income patients.
The UAE Government spent an estimated $8bn in 2010 and is believed to have spent 24 per cent of last year's federal budget on social and healthcare development, according to Deloitte.
Analysts say there is still huge scope for development in the healthcare sector in the region.
"In the last three years there has been some kind of awakening that we have been under-investing in health care and governments have been rushing to try to fill this gap," said Jad Bitar of Booz & Company.
But an increase in the cost of health care "has led governments to realise that they ... need to rely on the private sector to offer some of these services", he said.
Mr Bitar described Landmark Group's announcement as "a smart move", saying chains of clinics required relatively low capital expenditure and could achieve a return on investment quite rapidly.
"It is a sustainable business model because demand is there," he said.
Landmark's primary healthcare clinics are described as "affordable". Its first clinic launched yesterday in the Oasis Centre, a shopping mall on Sheikh Zayed Road in Dubai. Its second clinic is expected to open in Discovery Gardens Dubai in a few days' time.
"The advantage for Landmark is that they already have strategic geographical positioning through their retail business, so it would be easy for them to capitalise on their geographic presence," said Prem Jagyasi, an independent healthcare consultant.
"The concept in western countries like a 'quick clinic' and 'minute clinic' is missing in Gulf countries," he said. "The primary healthcare system is the backbone of any healthcare system. As much as we need facilities for complicated surgery, we also require easy accessible, available and affordable services which are provided by primary healthcare."
Renuka Jagtiani, the vice chairwoman of Landmark Group and the wife of the company founder and chairman Micky Jagtiani, pointed out that there were some parallels between the retail and healthcare sectors.
"We don't consider it very different because healthcare is also about the customer," Ms Jagtiani said.
"It's about understanding the customer, understanding what value is for that customer and catering to the need."from the national.