Trump Focuses On APAC: 4 MedTech Stocks To Watch

 | Nov 16, 2017 12:30AM ET

Asia-Pacific, or APAC, is home to more than half of the world's population, so demand for healthcare is also exceptionally high in the region. Furthermore, the need for cutting-edge MedTech products and services is significantly high across the world, with APAC being no exception.

In fact, a research report by McKinsey shows that APAC is expected to outpace the European Union as the world’s second-largest MedTech market pretty soon (after the United States). Almost 1.1 billion people in the region are expected to enter the 50-plus age group by 2025, indicating emerging demand for healthcare needs. Also, APAC accounts for two-thirds of the global disease burden.

Further, a research report by Statista shows that the MedTech market in the Asia-Pacific region is estimated to reach nearly $78 billion in 2018.

Trump’s Focus on Asia

With the above data pointing toward the huge and unmet healthcare needs within the APAC market, investors may find President Trump’s recent 12-day long Asia trip (with stops in Japan, South Korea, China, Vietnam and the Philippines) to be a positive sign.

Furthermore, his recent tweet – “Our great country is respected again in Asia. You will see the fruits of our long but successful trip for many years to come!”–is indicative of a favorable Republican stance on APAC, especially with respect to business and trade.

Here we take a sneak peek at two major postulates of Trump’s recent Asia visit:

Bilateral Trade Agreement

Trump’s promise to augment bilateral trade agreements with Indo-Pacific nations instills our confidence in his APAC policies. However, Trump specifically mentioned that these agreements are bound to follow the "principles of fair and reciprocal trade." He also voiced for “free and open Indo-Pacific trade,” emphasizing on increased focus in the nations of Japan, Australia, and India.

Prospects in China

“Pacific is big enough to accommodate both China and the United States,” said China’s President Xi Jinping during Trump’s visit.

China undoubtedly poses serious competitive threat to the United States, not just in the healthcare space, but also in electronic, semiconductors, retail, and other areas. Jinping’s statements clearly hint at the possibility of the countries coexisting peacefully despite the political tensions. This might also be indicative of strategic mergers between companies in the two nations in order to enhance trade practices.

MedTech Companies Eye APAC

Considering Trump’s growing focus on APAC, the region seems to be poised to yield accretive returns in the long term. In fact, stakeholders in the medical universe have been eyeing the emerging market over the last couple of years. These companies are bullish on the growing medical awareness, economic prosperity, an aging population, increasing wealth, government focus on healthcare infrastructure, and the expansion of medical insurance coverage in the APAC space.

Meanwhile, despite the health-policy debacle in the United States and deteriorating economic conditions in Europe, we can conclude that growth in the emerging markets of China, India, Japan, and others will bolster the global foothold for MedTech companies. Below, we take a look at four leading MedTech players that are tapping into and also gaining from the bountiful opportunities in the APAC market:

Baxter International (NYSE:BAX)

Baxter’s solid presence in Asia, precisely in India, is worth a mention; the company has research hubs in Japan and China. In the just-reported third quarter, Baxter completed the acquisition of India-based Claris Injectables, a global generic injectables pharmaceutical company, for almost $625 million. In December 2016, Baxter had initiated the agreement. Per management, the acquisition will bolster Baxter’s foothold in the generic pharmaceuticals space. In the second quarter of 2017, Baxter signed an agreement with India-based Dorizoe Lifesciences for the expansion of its generic injectables pipeline.

Further, Baxter’s strong presence in peritoneal dialysis, nutrition, IV fluids, and anesthesia gases fortifies its footprint in China.

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