At Gold’s Gym in Riyadh, Majdi Omar is using his childhood inspiration to get Saudis into shape.
“When I was small, I wanted to be like Arnold Schwarzenegger,” the 30-year-old personal trainer said at the city-center club, pointing to a picture of the former bodybuilder and governor of California. “I tell all my clients that exercise is very important for health.”
With few Saudis following that advice, the country has one of the highest diabetes rates in the world, according to studies including a June 2011 report from Imperial College London and the Harvard School of Public Health. Heart diseases and cancer are also becoming more widespread. Among the causes: lack of exercise, social restrictions on women patients, and dietary changes as western-style fast-food chains expand.
Results include a surge in health spending, projected to reach $20 billion by 2016. That is creating opportunities for companies from Royal Philips Electronics NV (PHIA), which started a Saudi health unit last month and forecasts that the market will grow by 8 percent annually over the next five years, to General Electric Co. (GE) Insurers, hospital-builders and gyms like Gold’s are also poised to expand as the world’s biggest oil exporter ramps up its budget.
“The health care system is overstretched,” and foreign companies will help cover the gaps, said James Reeve, Deputy Chief Economist at Riyadh-based Samba Financial Group.
Saudi diabetes rates range between 20-25 percent of the population, according to Osama Alem, a consultant ophthalmologist at King Abdulaziz Medical Center in Riyadh. That may reach 50 percent by 2020 “if nothing is done,” he said.
The average incidence among the 34-member Organization for Economic Cooperation and Development was 6.5 percent in 2010. Rates were 10.3 percent in the U.S. and 8.9 percent in Germany.
The government plans to increase the number of hospitals by 38 percent in the next four years, according to the government- run Saudi Arabian General Investment Authority.
“Across Riyadh, you see hospitals being built,” said Fahad al-Turki, senior economist at Jadwa Investment Co. “The two fiscal packages last year were huge. Part of it was to support the infrastructure in the health sector.”
King Abdullah declared $130 billion of extra spending in February and March last year in response to popular movements that toppled leaders from Tunisia to Yemen. The 2012 budget allocated 87 billion riyals ($23 billion) for health and social services.
U.A.E.-based Habtoor Leighton Group said last month it won a 1.2-billion riyal contract to build specialist hospitals at King Fahad Medical City in Riyadh. Saudi Arabia is “our largest growth market,” Paul Redstone, head of its Saudi unit, said by e-mail on Oct. 22.
Philips is joining Al Faisaliah Medical Systems to sell health-care products in Saudi Arabia. General Electric said last month it has invested $1 billion in the kingdom, part of it in health care.
“It makes a lot of sense to do health-care ventures in Saudi Arabia,” Graham Bell, managing partner at Bridge Partners FZE, said in an interview. “You have the market and the manufacturing advantages.” Bridge is working with Latterell Venture Partners to start a health-care fund and a plant to make insulin delivery devices in the kingdom.
“If you talk to some of the pharmaceutical companies, this is a high-growth area for them,” said Asim Bukhtiar, head of research at Riyad Capital. In particular, companies offering infant nutrition benefit from fast population growth, he said.
Almarai Co. (ALMARAI), the largest food producer in Saudi Arabia by market value, started in 2010 a joint venture with Mead Johnson Nutrition Co. (MJN) to produce and distribute infant nutrition products in the Persian Gulf.
Largely unscathed by last year’s Arab uprisings, the $600 billion Saudi economy will expand 6 percent this year, according to the International Monetary Fund.
Rising incomes are altering eating habits and leading to more diet-related illnesses. “We need more awareness among the population of the risk,” Alem said. “These programs, although they cost a lot of money, are nothing in terms of cost for treating the complications.”
Khawla Al-Omair is an exception. She stays healthy by taking bicycle spinning classes at her gym in Riyadh. “I didn’t want to lose weight as much as I wanted to get fit,” the 28- year-old translator said. “There are no outdoor activities at all and there are not enough gyms for women.”
Gold’s, a chain based in Irving, Texas, has seven gyms in the kingdom, including three women-only locations in Jeddah. At the Riyadh branch, Omar is training about 80 men. “If they want to burn fat, they have to exercise,” he said.
Samba’s Reeve has a starker warning.
“Much of the effort is being directed towards the symptom rather than the cause,” he said. “They have to do something, like raise public awareness, to avert the on-going chronic decline in health indicators.”
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