"We are seeing more innovative health care business models coming out of India" -Haopeng Yang, PhD, Matthews Asia
While Asia’s tech companies tend to capture the media spotlight, the region’s health care sector is also quietly setting a brisk pace for growth and innovation. The opportunities for companies that can help care for aging populations and treat chronic health conditions such as diabetes and heart disease continue to expand and grow. Meanwhile, the pandemic has brought new business models and new ways of delivering patient care to the fore. In this roundtable discussion, portfolio managers Taizo Ishida and Winnie Chwang, and senior analyst Haopeng Yang, PhD, share their insights on the growth of Asia’s health care sector.
As a growth investor, what do you find most appealing about health care?
Taizo Ishida: Across Asia’s health care sector today, we see a lot of diversity and innovation. As bottom up stock pickers, we have access to an ever-broader universe of companies with strong research and development capabilities, backed by skilled management teams. Today’s health care upstarts may be tomorrow’s benchmark constituents. While other sectors in Asia’s regional indexes such as materials and financials tend to represent relatively mature industries, health care is a very young industry and regional indexes generally have not caught up to the sector’s growth potential.
Health care can also play an interesting role in portfolio construction because companies in the sector can play either offense or defense, meaning some companies may have very high growth potential while other companies in the sector may offer steadier, less cyclical growth. While biopharma companies might be looking to create a blockbuster drug—one with more than US$1 billion in sales—the general nature of health care companies tends to be more defensive. The defensive nature of the sector may be somewhat underappreciated by investors. Patients still need access to health care in every market environment, so consumer demand is fairly consistent across market cycles. Accordingly, we see attractive growth potential and less cyclicality in health care.