Emerging Markets Healthcare

Healthcare leaders see emerging market payoff

As emerging market economies mature, one area of growth is healthcare services.

As emerging markets in Asia and Latin America mature, one area of investment opportunity is healthcare services.

The areas of growth include preventative and public health, expanding health insurance in the workplace and a broader array of surgical procedures.

Boston Scientific Corp. (NYSE: BSX) and Abbott Labs (NYSE: ABT) are good examples of how that is working its way back to the sales and profits of multinationals.

Boston Scientific makes medical devices that are used to treat such conditions as  heart disease, pulmonary and vascular issues and urological and chronic pain. The company was founded in 1979, has 32,000 employees and had sales of $9.8 billion in it latest 12 months. Boston Scientific has a market capitalization of US $58.3 billion

boston scientific resonate paemaker healthcare
Boston Scientific’s Resonate devices regulate heart beats. Source: Boston Scientific

Growth in emerging markets helped the company to a strong quarter, with a nearly 20% increase in revenues from China and Latin America. This includes its Watchman device, which is designed to prevent blood clots that form in the heart from reaching the brain. It also benefited from the strong performance of heart disease products in the broader Asia-Pacific region.

Abbott  Labs was founded by Chicago doctor Wallace Abbott in 1888 to make drugs. Today it sells medical devices, diagnostic tools for diabetics and over-the-counter medicines. These include infant formulas Similac and Pedialyte and Ensure, the adult nutritional supplement. It split off its research-based pharmaceuticals into AbbVie (NYSE:ABBV) in 2013. Abbott has a market cap of U.S. $148 billion and annual revenues of $31.3 billion on a trailing 12-months basis.

In reporting its latest financial results Abbott noted that emerging markets including India, Brazil, Russia and China, along with several emerging countries represent the most attractive long-term growth opportunities for Abbott’s branded generics products.

Sales in these geographies increased 2.8 percent on a reported basis in the third quarter and increased 6.8 percent on an organic basis, which excludes an unfavorable foreign exchange effect. Organic sales growth was led by strong growth in India, China and Brazil.

In related news, biotechnology multinational Amgen (NDQ: AMGN) is investing US $2.7 billion in the Chinese biotech firm Beigene.

The all-cash deal  gives Amgen a 20% stake in BeiGene and going foward, BeiGene will commercialize some of Amgen’s cancer drugs which will be sold in China.

The Chinese pharmaceutical market is growing by double digits and is in second place behind only the United States. The investment is another example of how growth in healthcare services in emerging markets like China is leading to investments by established multinationals.

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