Emerging markets like those in Brazil, Russia, India and China (BRIC) may not be as fertile for healthcare technology investment as many analysts once thought they would be.
During a recent industry briefing, Frost & Sullivan partner Reenita Das said that while countries like the U.S. were dealing with budget cuts and slow economic growth, the markets in BRIC countries were rapidly expanding. Still, government policies and competition might not make these markets the panacea that healthcare companies had expected.
"Although emerging markets are often touted as the way forward for healthcare companies, recent protectionism laws and fierce competition from generics may have reduced the appeal of countries such as India and China, leading some to believe they aren't the 'promised land' they once were," Das said during the briefing.
State interference in BRIC countries is discouraging international investment. For instance, price control policies in India cut prices for certain drugs and devices, which meant lower profits for foreign manufacturers. China introduced a fast-track process for approving new drugs, but companies that have not conducted tests in the country could be left out.
The Brazilian government wants to encourage domestic growth, so it has significantly raised tariffs on imports. At the same time, Russia has introduced policies that would limit the state's ability to purchase medications from foreign countries.
As Das sees it, demand for healthcare products exists, but companies have to rethink their strategies by either navigating protectionist policies or persuading governments to eliminate them. They can do the latter, she says, by delivering value.
"It is very clear we need to rethink emerging market strategies and start changing the dialogue," Das concluded. "We must move away from looking at it as a volume business in terms of large number of patients and demographics."
Edited by
Alisen Downey
