Life Science Opportunities in Emerging Markets

30 Oct

By Shaoyu Chang, Research Analyst, LSN

Shaoyu 10*10The biotechnology industry is growing in the Asia-Pacific and Latin America regions,[1] and it is attracting local and foreign entrepreneurs and funding. Compared with companies in developed markets, ventures in these regions have unique opportunities and challenges as a result of the large populations and rising healthcare requirements. Two areas of R&D hold particular promise.

Medical devices—particularly diagnostic equipment, implantable devices, and products for the prevention of disease—represent a rapidly expanding market in China, India, and Brazil, given their aging populations. Because consumers in these countries are also often brand-conscious and willing to pay higher prices for better quality products,[2] large medical-device manufacturers from Western countries are positioning themselves to tap into the market potential by merging with or acquiring local players. [3] For example, in 2013, the UK’s Smith & Nephew announced the buyout of Indian trauma-device maker Adler Mediequip. This move followed in the footsteps of other major mergers or acquisitions by Stryker, Zimmer Holdings, and Medtronic.

The generic drug market is another area of promise in emerging economies. While big pharmaceutical companies in developed markets are plagued by patent cliffs and generic competition, generic drugs have solid double-digit growth in emerging markets. The rising prevalence of chronic diseases along with cash-strapped healthcare systems and consumers’ fear of counterfeit products have created a demand for low-cost, high-quality treatments. It is noteworthy that while multinational corporations such as Atavis, Mylan, and Abbott are gaining a more significant foothold in the emerging generic-drug markets, drug makers from the developing world, such as Ranbaxy from India and Aspen from South Africa, are now among the top players in the field and are operating on a global scale.

Therapeutics currently accounts for the largest chunk of total funding in most biotechnology hubs. However, R&D for new drugs is a high-risk path in emerging economies in light of its demand for capital, talent, and a favorable regulatory environment. “It needs 75 different kinds of expertise to develop a new drug,” warned Jonathan Flaming, General Partner with Oxford Bioscience Partners, who spoke at a recent conference in Boston. “Even in the U.S., you cannot do it everywhere.”[4] He believes that an emerging economy such as China is not well positioned to develop new therapeutics for several reasons, including the lack of professionals and the cultural issues. Mixed results from government-backed incubator initiatives, such as Malaysia’s BioValley[5] and India’s ICICI Science Park and Gujarat Science Park,[6] appear to support his point.

Emerging markets represent a vast and growing need for healthcare innovation that is underserved by lack of local infrastructure. This presents a significant opportunity for companies working on technologies in developed countries that are able to penetrate these emerging markets. LSN’s research team has uncovered a number of investors in the Asia-Pacific region that are looking for companies that are developing products for Asia and other emerging markets. Be on the lookout for more articles on this topic as we uncover additional information on the investment landscape for these regions.

[1] Gautam, A., & Yang, S. (2014). “Market watch: A framework for biomedical innovation in emerging markets.” Nature Reviews Drug Discovery, 13(9), 646-647.

[2] Weeks, L. “Five Trends Transforming the Medical Device Industry in 2014.” June 5, 2014. GxP Lifeline. Accessed from

[3] Buford, T. “Trend continues as Big Orthos focus on emerging markets.” June 30, 2014. OrthoStreams. Accessed from

[4] Flemming, J. “What are the Best Cross Border Opportunities Today for American and Chinese Entrepreneurs and Investors?” October 25, 2014. Talk at 2014 CABA Biomedical Investment & Entrepreneurship Symposium, Boston, MA.

[5] Lerner, J. (2009). Boulevard of broken dreams: why public efforts to boost entrepreneurship and venture capital have failed–and what to do about it. Princeton University Press.

[6] Chakma, J., Sammut, S. M., & Agrawal, A. (2013). Life sciences venture capital in emerging markets. Nature biotechnology, 31(3), 195-201.


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