Aditya Bhattacharji manages Eurasia Group‘s healthcare analysis. In his second piece for PharmaBoardroom, Aditya examines the dangers of nationalism and populism for the private sector.


The biggest global risk I see is with active pharmaceutical ingredients, most of which come from China, which has been at the centre of trade tensions, with no signs of receding.


Last month I described the evolution of the public-private split in healthcare in favour of the private sector. What should multinational healthcare firms expect as they claim a larger share of the healthcare pie? A challenging policy environment, certainly, guided chiefly by two enduring global phenomena: nationalism and populism. I’ll take each one in turn.



Nationalism will mostly create risks to both revenues and costs. In a tenser geopolitical environment where countries are increasingly looking inward, there is a risk that concerns such as national security edge out issues such as healthcare, creating healthcare funding (and therefore revenue) risks for private actors. Thailand’s military government, while not currently trading blows, has already sacrificed part of its legendary healthcare budget for higher defence spending. I’d also draw specific attention to costly supply chain issues—over the past year or so, we have seen medical supply shortages created by conflict (for instance, the Qatar blockade), currency issues (Egypt’s float of the pound), and of course trade skirmishes (name your battle). The biggest global risk I see is with active pharmaceutical ingredients, most of which come from China, which has been at the centre of trade tensions, with no signs of receding.


The longest burning consequence of nationalism will be protectionism, the contours of which are changing (more qualitative barriers to market access) but the spirit of which is not (country-based production requirements). Firms will increasingly have to navigate the costs associated with localizing, the appropriate vehicles for doing so and the creeping revenue risks associated with maturing local players. And of course, there is the potential opportunity cost of foregoing a market altogether.



Populism is more of a mixed bag than nationalism. Here’s the upside—displeasure with the state of healthcare is a key concern worldwide, galvanizing political will behind the issue in markets as diverse as the democratic US to state capitalist China. The vector of that political will is more challenging in some cases. Establishment players are targets, and healthcare firms (Big Pharma especially, MedTech less so) are chastised for profiteering at the expense of the public. Product pricing is the biggest hurdle, and it’s a rare instance of global political cohesion that is growing at a worrisome clip. Emerging markets with strong civil society groups, such as South Africa, Brazil, and India, have always pressed the private sector to adjust their businesses to cater to wider populations.


But I’m particularly concerned about Latin America and Europe, both of which are working on new mechanisms to push back against industry, the latter being especially aggressive in this regard. Similarly, the sigh of relief within industry after President Donald Trump’s Rose Garden speech on lowering prescription drug prices back in May was unwarranted; his appointees have set in motion a transformative vision to reduce medicine prices, and even though it won’t happen this year, turbulence is coming.


The silver lining?

The massive information asymmetry that characterized the patient-healthcare system dynamic (and has caused healthcare to be so highly regulated in the past) is quickly eroding. Armed with health and wellness apps, we are all increasingly empowered consumers. Indeed, regulatory easing is apparent across segments of the pharmaceutical and medical device spectrum, in part because it allows officials to get products to market faster. But even here there is a risk: imagine an adverse event blamed on cursory regulatory practices, the reputational risks that would ensue for the manufacturer, and the post-market surveillance burden that would be levied on all stakeholders.