Emerging healthcare opportunities

January 27, 2011

By Joe Jimenez, CEO of Novartis. The opinions expressed are his own.

As the global economy begins to see signs of recovery, with momentum from emerging markets like China, Russia, India and Brazil driving recent economic gains, there is a lot of buzz about how companies can best capitalize on the new growth opportunities these markets can offer.

In fact, many of the sessions here at the World Economic Forum in Davos are focusing on ways to encourage innovation, enhance trade and drive growth in emerging markets. This year, it is extremely important that we discuss health care and economic imperatives at Davos.

Governments in emerging markets are increasing their commitment to expanding access to healthcare, but this is putting significant pressure on healthcare budgets. So we need to find ways to work together with government officials and key stakeholders in these markets to jointly address the evolving healthcare needs.

Novartis has already made several significant investments in countries such as China and Russia, and there are some important key learnings that have surfaced in our conversations with government officials, healthcare stakeholders and patients.

The first is the importance of investing for the long term. In China, for example, we are investing $1 billion over five years to build the largest pharmaceutical R&D institute in the country, focusing on areas of local health needs and employing about 1,000 R&D associates. We already have more than 20 ongoing collaborations with universities and hospitals in China alone.

In Russia, we’re building a new state-of-the-art pharmaceutical manufacturing plant in St. Petersburg, part of a $500 million investment to help strengthen local infrastructure and public health collaborations. This will create 350 new jobs.

Emerging markets are also increasing their investment in innovation. China expects to increase R&D spending by 8.7% this year, compared to the US, which projects an increase of only 2.4%.

It is important to play a role in helping the more disadvantaged populations in these countries. Disease profiles in large cities increasingly resemble those of the West due to changes in lifestyle. In China, chronic diseases like cancer, hypertension, diabetes and heart disease are responsible for 80% of deaths.

In rural areas, many people suffer from the most basic health issues, from infectious diseases to lack of access to healthcare professionals, sanitary conditions and medicines.

We are working with local governments to help make an effort to address basic healthcare needs. Our Jian Kang Kuai Che, or “Health Express,” initiative provides hygiene and health information to patients and healthcare professionals in the remote Xinjiang province.

In India, our Arogya Parivar, or “Good Health of the Family,” program has created a sustainable business model in rural parts of India centered around locally hired health educators and raising awareness of diseases, prevention and treatment.

As we look ahead, there is tremendous opportunity for business in emerging markets. Investments are rising, as developing countries accounted for half of global foreign investments last year, growing from $478.3 billion in 2009 to $524.8 billion in 2010. But we must go beyond simply investing and we must be strategic partners in the plan for long-term, sustainable growth.

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