Asia-Pacific Healthcare: Managing Diversity

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The Asia-Pacific region is a vast geographic area, home to almost half of the world’s population and numerous emerging and developed markets with great investment potential for healthcare and life sciences companies. However, the degree of diversity within Asia-Pacific creates formidable challenges for MNCs operating in the region.

“APAC is estimated at 25 per cent of the global economy and within 10 years it is expected to grow to 35 percent.”

Martin Dewhurst, McKinsey

With stagnating growth rates in Western economies and their increasingly stringent pressures on controller healthcare costs, Asia Pacific has often been viewed as the next frontier for unlocking much sought-after growth. “APAC is estimated at 25 per cent of the global economy and within 10 years it is expected to grow to 35 percent,” postulates Martin Dewhurst, senior partner at McKinsey and co-convenor of their global pharmaceuticals and medical products practice. He further outlines that “there are two billion people in just this region and the developing countries are projected to grow between six-ten percent compared to one-two percent growth in the United States.” “That being said,” continues Dewhurst, “companies are shifting into a second era in the region; the first was one of great excitement and optimism and while they are still very ambitious for the region, they experience the challenges much more.”

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Indeed, while the tantalizing appeal of lucrative, untapped Asian markets still exerts a strong grip on investors, the degree of diversity in terms of demographics, disease profiles, healthcare systems, and regulatory regimes present big challenges according to Fredrik Nyberg, CEO of APACMed — a non-profit trade association established in 2014 to unify the voice of Asia’s medical device industry. “10 or 15 years ago, the focus was almost exclusively on Japan and China. Today, the region as a whole contributes to 15-20 percent of global sales for many of our members, and markets such as India, Indonesia and Vietnam are getting much greater attention,” details Nyberg.

Moreover, today the innovative potential of many countries of Asia is of increasing interest to foreign service providers – no longer can one view many of these economies as large, population driven consumer markets. Alan Ong, executive vice president for Asia Pacific at INC Research enthuses “like most CROs, we see the enormous potential of Asia due to the population size and the growing developments within the region… A number of years ago the attraction to Asia Pacific was access to this large population at a lower pricing point, with Japan as an exception… Now we are starting to see an increasing number of Biotech companies from Korea, China, and Taiwan, and they are developing their pipelines. We did not see this just five years ago…” The growth potential such opportunities present is substantial, and Ong attests “this region’s contribution to the overall revenue of INC Research is only increasing and we expect this to continue and grow. We are experiencing double digit growth and there is more potential.”

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After years of organizational focus on Japan as the advanced market in the region and the behemoth Chinese market, many Western companies have found themselves rather tangled when attempting to access traditionally undervalued markets across emerging Asia. “The inherently dynamic nature of the region has come as a surprise to some people —dwindling growth rates, rapidly rising inflation, and deepening devaluation of major currencies by as much as 40 to 80 percent over the past couple of years has of course been a challenge to navigate through from a business perspective,” muses Takeda’s president of emerging markets Giles Platford. “Although these countries are extremely individual in nature and lack the homogeneity of Europe, the sheer level of diversity and complexities actually introduces certain commonalities that you can leverage in terms of leadership styles and management capabilities,” advises Platford.

Janssen’s company group chairman of Asia Pacific Kris Sterkens believes “succeeding in Asia Pacific entails first coming to terms with the sheer level of diversity that you’re dealing with. This region exhibits considerably distinctive dynamics and regulatory frameworks compared to say the convergence of healthcare systems in Europe.” “But no matter what market you’re in,” he argues, “you’re starting to see an evolution of how stakeholders choose to engage with pharmaceutical companies. They don’t want to only interact with reps anymore, or at least not all the time, often opting instead for alternative channels including digital platforms. However, you still want to accept the fact that culturally there are differences, while identifying the shared commonalities that we as a regional team can capitalize on. We don’t have to reinvent the wheel in each market, as there are some strategies we can execute across all or most of the markets. Ultimately, it’s both a science and an art—constantly evaluating where exactly you can achieve commonality and where you should embrace diversity.”

Zimmer Biomet’s senior executive advisor for Asia Pacific Stephen Ooi is confident that the “key is not viewing the market from purely the company’s perspective. For example, there are fewer regulators in emerging markets in comparison to the number of regulators in more developed markets to address the huge amount of reviews and approvals. At the same time, regulators in emerging markets also need training. That is why for us as a corporation it is much more beneficial to take the approach where we ask ourselves: how can we make their jobs easier and help them to better understand our technology?”

“The biggest risk is to think of Asia Pacific as a homogenous market.”

Bob White, Medtronic

While a confluence of factors need to be taken into account to capture growth in such a diverse region, Medtronic’s senior vice president and president of Asia Pacific Bob White conveys the most detrimental pitfall one can make when operating in this region. “The biggest risk is to think of Asia Pacific as a homogenous market. This is simply not the case. Indonesia, for example, has the world’s fourth largest population—approximately 250 million—with a fragmented healthcare system that is facing the burden of communicable and non-communicable diseases,” reveals White.

Writer: Alex Ackerman

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