Amidst the debate and controversy over health care reform in America, there's growing concern that Western pharmaceutical and biotechnology companies may be heading for a crisis of their own.

"The United States used to be the driving engine for whole heath care industry," says Duo Wang, a manager with IMS Health, a global health care consulting firm. "Now they have reached a plateau. The American economy is facing a lot of challenges, and there's a lot of talk about ... restricting health care spending for all sorts of reasons, and innovation has come to a halt in recent years. Most people in the industry believe the growth rate for the health care industry in the United States, as well as in what they call the developed world, is expected to be almost zero for the next five to 10 years."

Many U.S. and European biotech and pharmaceutical companies are now targeting the BRIC nations -- Brazil, Russia, India and China -- as the next big markets for their products. And they have good cause. According to the World Health Organization, cardiovascular diseases -- ailments long considered byproducts of life in developed, industrialized nations -- are the No. 1 global killer now. The WHO estimates nearly 24 million people annually will die worldwide from cardiovascular diseases by 2030, mostly from heart disease and stroke -- with significant rises in cardiovascular disease-related deaths expected in the Eastern Mediterranean and Southeast Asia.

The rising level of cardiovascular disease in South Asia has already been recognized as a serious issue there. Indian Prime Minister Manmohan Singh recently called heart disease "a major health problem for our county." Speaking to conference of heart surgeons, Singh quoted studies that say Indians between the ages of 35 and 64 have lost millions of years of life, "due to premature deaths caused by cardiovascular disease."

Western Companies Have Perceived Edge in Quality Control


Wang says the demand for drugs that combat cardiovascular diseases is growing in the developing world -- thanks to rising affluence, more sedentary populations and Westernized diets. "As a country becomes richer, people develop the same diseases as people in the developed world," she says. "It used to be in the poor countries ... it was mostly about antibiotics, because that's what most problems were. But not anymore. Now people live longer, their environment is much cleaner, they worry about their hyperlipidemia [high cholesterol], they worry about tumors, they worry about strokes."

According to Pfizer (PFE), one of the largest multinational companies in China, its cholesterol drug Lipitor is among their top-selling brands in the world's most populous nation.

Recent scandals in China involving contaminated drugs and food products have also given multinational pharmaceuticals an edge among many consumers in BRIC countries, who believe drugs produced in the U.S. and Western Europe have better quality control than similar, locally-produced drugs. "Even for generic products," says Wang, "they are sometimes willing to pay extra for the brand generic made by the originator."

Meanwhile, those pharmaceutical companies are maneuvering to increase their footholds in the high-growth emerging markets. Illinois-based Abbott Laboratories (ABT) completed a $6.2 billion acquisition of the Belgian firm Solvay Pharmaceuticals last month -- a move Abbott says will take the company further into Eastern Europe and Asia. And Pfizer recently announced its plans to establish an R&D center in the Chinese city of Wuhan, in Hubei Province.

The majority of new pharmaceutical products are still expected to come from Western companies in the next decade, but Wang predicts a lot more initial-stage R&D will be outsourced to India, China and other developing countries. And as the global middle class grows, Wang says, so will the need for these pharmaceuticals: "The wealthier a country gets, the more attention people will put into health care."

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