Find out the current state of life sciences and healthcare in Asia-Pacific and its implications for the future.
We are in the 21st century, reaping the benefits of science, technology and innovation that took place more than 200 years ago. The world has come a long way since the first vaccine (smallpox) was developed in 1796 by Edward Jenner and the rise of modern medicine in the 1800’s resulted in the invention of the stethoscope in 1816 by Rene Laennec.
Speaking to Fabio La Mola, partner at L.E.K. Consulting Singapore, we find out the state of life sciences and healthcare in Asia-Pacific and its implications.
Broadly speaking, the life sciences and healthcare are industries that touch human health.
Life sciences would comprise biopharma, and all the sub-sectors that support drug discovery (contract research organisations), regulatory and approvals (regulatory consulting), production (contract manufacturing organisations), distribution, and commercialisation (commercial data, real world evidence, contract sales organisations).
Healthcare would include the financing and delivery of healthcare, from governments to private payers, hospitals, primary care and other delivery organizations. Digital and health tech companies would be included across the spectrum, depending on the focus and functions served.
Current state of life sciences in Asia-Pacific
In Asia-Pacific (APAC), the current state of the life sciences sector remains positive, with significant growth opportunities. However, this statement hides the considerable diversity that the region has, and that government, healthcare companies, pharma, medical devices and other service providers have to contend with on a daily basis.
The region is home to a very diverse range of countries at different stages of development and vastly different healthcare systems. For example, Singapore is facing an ageing population, with a median age of 40 while the Philippines has a fairly young population, with a median age of 24. APAC is home to developed and developing countries, which means a varying percentage of the population with vastly different needs.
Fabio says from a market perspective, China is now the largest pharma market in APAC, followed by Japan, and is still growing at a respectable five to six percent rate, which is not much different from the U.S. rate.
Emerging markets such as Vietnam and Indonesia are seeing growth closer to 10 percent p.a, which are largely driven by the extension of universal healthcare and greater ability to pay. In developing APAC, healthcare is an aspirational good, and most patients will pay out of pocket to get better standards of care. As a result, higher GDP per capita results in faster than GDP growth for the healthcare sector.
Across subsectors, the CROs are enjoying significant local growth due to the substantial presence of local APAC innovation, which requires proper clinical validation through trials.
In addition, medical devices are growing faster than biopharma, due to the expansion of healthcare provision, which requires both greater investment in capital equipment and diagnostics tools.
Barriers in Asia-Pacific
In this decade, the life sciences industry is faced with a rapidly evolving and increasingly competitive landscape.
This has also raised several new challenges, including increased pricing pressure, uncertain market access dynamics, evolving consumer behavior and disruption from non-traditional healthcare players. These trends are forcing life science companies to think strategically about which aspects of their current business they want to invest in and which new avenues of growth they will need to explore.
Also, there is considerable diversity particularly in APAC’s life sciences industry. On a national level, infrastructure, budget and capabilities across the healthcare delivery spectrum and protectionism tendencies make it difficult for multinationals and investors to fully capture market opportunities and bring in innovation. On a regional level, standardised legal frameworks, intellectual property (IP) protection, red tape and affordability still remain key issues hampering stronger growth.
Lastly, the cultural aspect of doing business in Asia should not be underestimated. Market access, pricing, reimbursement and commercial set up all need to be adapted to local nuances.
With the opening of L.E.K.’s new APAC Life Sciences Center of Excellence (CoE), Fabio says they hope to help companies, public institutions and governments in this region navigate the complexity this region’s life sciences market presents through the research and development of market insights. The CoE will compile, synthesise, distill, and disseminate knowledge and insights on current and future issues specific to the life sciences industry.
The CoE will also help shape business strategies and public policies by providing deeper insights into the APAC life sciences industry, ultimately maximising the value of a dynamic global healthcare market.
The future of life sciences
In the next 10 years, Fabio shares a few distinct trends taking greater shape in this industry.
- Asia for Asia innovation, with more and more local companies focusing on innovating for Asia.
- Greater cross-continent M&A activity and investment in R&D to access novel technologies (e.g. Janssen’s investment into Nanjing Legend is a precursor of things to come)
- Greater export of technology from Asia into Europe and the US. The expansion from China, India, Korea, and to a certain extent Taiwan and Singapore, into Western markets will slowly take shape as innovative drugs invented here come to market. This may take many forms, from M&A and direct investments, to cross border collaboration and licensing.
The advancement of technology will create new solutions and improve the current state of life sciences and healthcare, but it will also create new challenges especially in diversity and cultural aspect in this region.
Fabio La Mola is a partner at L.E.K. Consulting Singapore.