Healthcare in Asia won’t be that cheap for long, and neither will business (probably)

The global pharmaceutical landscape is changing. Big pharma companies are merging and getting bigger in order to expand their pipelines, and they are getting leaner,  shedding jobs in the most expensive markets.  The future of big pharma, everyone seems to think, is in low-cost Asia.

I recently talked to a big pharma exec who seems to think otherwise.   While he acknowledges that the industry is undergoing changes and increasingly moving East, he also talks of it being a process that is much more akin to an equilibrium  than a one way plane route.

Asia has some innate advantages over other markets due to its population size.  It is easier to find target patient populations for clinical trials simply because the number of people in countries like India and China is so great. Doctors and drug monitors are also comparatively less expensive in some Asian economies than in the West.

But, the pharma executive points out, a lot of places in Asia are already some of the most expensive in the world.  Singapore and Hong Kong medical and PhD talents, for example, demand a market price that comes close to what one finds in the West.

The issue is one of perception.  It is easy to see the job shift as permanent if one thinks of the developed West’s (America, strongest EU members) position in the world as static, and sees Asia as playing catch up.  In fact, the executive says, if the current mergers and job cuts in America prove anything it’s that Asia is not the sole mover. America and the developed West, too, are moving.  Moving down.

As little as ten years ago, doing a drug trial in Eastern and Central Europe was a good way for pharma companies to make money.  Now, according to the executive, it costs the same to conduct a trial in Poland as it does to conduct one in Germany.  The same sort of trend, he says, could likely happen in Asia.  The result is that America may once again become a cheap option for doing healthcare business.  At that time, salaries in the US should be lower relative to what they are now since the value of goods and services across the world will be somewhat more uniform.  If America and the West can keep building on their current experience advantage, then there is the additional possibility of America and the West, ironically, being the place where companies go to get more for less.

I have heard the argument for equilibrium before.  I buy it.

The best example I have seen is by Dr. Hans Rosling (His bio has this to say; ”A professor of global health at Sweden’s Karolinska Institute, his current work focuses on dispelling common myths about the so-called developing world) one of the world’s foremost Western experts on India and Asia’s developing regions.

Dr. Rosling’s central dispute is that the developed world is too willing to see the relationship with its developing neighbors as being governed by a static construct rather than by a dynamic equilibrium.   This is reflected in policies which serve to propagate the status quo.  The truth, he seems to claim, is that the developing world is stronger than anyone gives it credit for, and the developed world’s powers are much more fragile than they seem.

Depending on how you see the world, Dr. Rosling is either a maverick hero who dares to break through the Orwellian veil of media spin,  a weaver of fairy tales that allow people in developing countries to sleep soundly at night knowing that their future hopes will soon be realized, or just a very educated person who is using what he has learned through a lifetime of looking at the world from several unique perspectives to give the rest of us a glimpse into the possible future that awaits.

Whether equilibrium happens or not, Americans and others in the developed West working in corporate healthcare fields  have a dynamic future to look forward to.  The floodgates letting high-paying jobs leave from the West to the East will eventually close, and some jobs may even come back to the United States.  Until that happens, the pharma executive says, the industry will continue to merge and shed jobs.  But, equally important,  the markets will continue to expand and new opportunities will continue to open up.  More than ever, a premium will be put on education.  The jobs of the past decade that required a masters or X years of work experience will not return, and will increasingly be given to PhDs or MDs on top of their other duties.

This may sound like a harsh reality, but it is also an inevitable one.  High paying jobs in the future will exist, but they will take more work to maintain simply because the competition will be that much higher.  It’s important to swallow this bitter pill, convince yourself it tastes good, and move forward.  Good luck to everyone.