Will Khashoggi case fallout affect the Saudi healthcare market?

The CEOs of Siemens, Uber, Japan’s biggest bank and the US Treasury secretary pulled out of a conference in Saudi Arabia which started yesterday, in light of journalist Jamal Khashoggi’s death. Might this dampen international appetite for taking part in crown prince Mohammed Bin Salman’s healthcare reform process?

Turkish president Erdogan yesterday branded the killing of Washington Post journalist and Saudi dissident Khashoggi a “planned murder.” The affair has led to an international outcry and unanimous condemnation from Western leaders – though some have sought to distance crown prince Mohammed Bin Salman from the affair, putting it down to a few bad apples in his administration.

The outcry has now been felt in the business world. Several notable CEOs pulled out as speakers of this week’s three-day Future Investment Initiative conference in Riyadh, including those of JP Morgan, HSBC, Blackrock, and Christine Lagarde of the IMF as well as the above-named dignitries.

In an admirably thorough Linkedin post, Siemens AG CEO Joe Kaeser put the decision to do so down to considerations about what a CEO’s responsibilities and response should be, rather than Siemens’ wider involvement and 2,000 employees in the Kingdom. We hear that the group is seeking to partner with operators to seize lab outsourcing opportunities as part of Vision 2030.

With so many other big names following suit, could this affair be dampening the appetite for investing in or taking part in the Saudi healthcare outsourcing process? We asked the same question last year following the infamous “anti-corruption” purge. There was broad agreement then, from inside and outside the country that it would not have a real impact and that delays were more likely to come from endemic issues around administrative capacity and the gargantuan task at hand. Our coverage as we entered 2018 confirmed this.

In response to our titular question, Fuad Zubaidi, head of business development for healthcare services management company Interhealth Canada’s Saudi subsidiary says, in effect, the opportunities continue to outweigh any political fallout: “I don’t think it (the death) will be a deterrent. The business environment is reforming and once the PPP law is in place the market for the private sector will be huge.”

A spokesperson for Siemens Healthineers, the recently-IPOed medtech arm which is 85% owned by Siemens, indicated to Healthcare Nova that its delegation will also not be attending the event in Riyadh, but added: “Given our long lasting business relations in the country, we continue to engage in discussions with the government and our customers in the Kingdom of Saudi Arabia how we can help to improve healthcare for the people.”

Would it be reasonable to cite the killing of a journalist – however abhorrent the circumstances – as a reason for now deciding to change tack on Saudi or pull out completely? The UN says that over 5,000 civilians have died and 13 million are at risk of starvation in Yemen which is in the midst of a Saudi-led coalition’s intervention in the country’s civil war (2015-present) – a situation into which it has to be noted Saudi Arabia has also pledged billions in aid for.

No one had expected Saudi Arabia to become a democracy and episodes drawing condemnation – Khashoggi, the anti-corruption purge, Yemen in some quarters – are unlikely to go away. Talking to those with a vested interest and interested watchers, it seems to us these goings-on are currently unlikely to deter those who’ve invested time and money in the process thus far.

And recent developments reaffirm that suggestion that business is going ahead more-or-less as usual in the Kingdom. We recently heard that global dialysis player Diaverum is set to have its contract renewed and the first privatisation of a quasi-government hospital facility is in the final stages of completion. Considering all of this, we suspect the killing of a journalist is more likely to affect – and probably quieten – the PR narrative around such healthcare deals, rather than prevent them happening.

We would welcome your thoughts on this story. Email your views to Cameron Murray or call 0207 183 3779.