Our Emerging Markets Equity team’s Michael Lai and Elizabeth Wu take a look at a new breed of innovative enterprises in China that could transform health care outcomes in the years ahead.
COVID-19 has cast a spotlight on health care systems around the world, with China in particular attracting attention due in part to its relative success in virus suppression and leading role in supplying medical products globally. In some instances, trends already in place are being reinforced. Structurally, we see increased innovation emerging in the health care sector, similar to the dynamism that characterized the early days of China’s technology boom. We believe several forces are at play:
- The right place: China’s health care demand is swelling alongside an aging population, growing lifestyle diseases, and rising incomes. At the same time, increasingly open capital markets are channeling funds to health care companies with rising research and development (R&D) spending.
- The right time: The government is pushing for innovation, efficiency, and self-sufficiency in health care to meet mounting medical needs. Various policies are lowering costs, while also addressing product quality and safety.
- The right people: China is drawing overseas-educated Chinese scientists and entrepreneurs back to its shores. High-profile returnees, coupled with an abundant pool of homegrown talent, are propelling domestic drug and medical device development.
In our view, these forces have aligned to create a compelling long-term health care investment environment in China, while in the near term, the pandemic is accelerating the process of localization. Governments globally are seeking to reduce reliance on complex foreign supply chains for essential health care products, presenting both opportunities and challenges for Chinese companies.
Individuals in the United States can download the full article .pdf here to continue reading.
Individuals outside the United States can download the full article .pdf here to continue reading.
What Are the Risks?
All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments; investments in emerging markets involve heightened risks related to the same factors. To the extent a strategy focuses on particular countries, regions, industries, sectors or types of investment from time to time, it may be subject to greater risks of adverse developments in such areas of focus than a strategy that invests in a wider variety of countries, regions, industries, sectors or investments. China may be subject to considerable degrees of economic, political and social instability. Investments in securities of Chinese issuers involve risks that are specific to China, including certain legal, regulatory, political and economic risks.
The companies and case studies shown herein are used solely for illustrative purposes; any investment may or may not be currently held by any portfolio advised by Franklin Templeton Investments. The opinions are intended solely to provide insight into how securities are analyzed. The information provided is not a recommendation or individual investment advice for any particular security, strategy, or investment product and is not an indication of the trading intent of any Franklin Templeton managed portfolio. This is not a complete analysis of every material fact regarding any industry, security or investment and should not be viewed as an investment recommendation. This is intended to provide insight into the portfolio selection and research process. Factual statements are taken from sources considered reliable, but have not been independently verified for completeness or accuracy. These opinions may not be relied upon as investment advice or as an offer for any particular security. Past performance does not guarantee future results.
Important Legal Information
This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice.
The views expressed are those of the investment manager and the comments, opinions and analyses are rendered as at publication date and may change without notice. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market. All investments involve risks, including possible loss of principal.
Data from third party sources may have been used in the preparation of this material and Franklin Templeton (“FT”) has not independently verified, validated or audited such data. FT accepts no liability whatsoever for any loss arising from use of this information and reliance upon the comments opinions and analyses in the material is at the sole discretion of the user.
Products, services and information may not be available in all jurisdictions and are offered outside the U.S. by other FT affiliates and/or their distributors as local laws and regulation permits. Please consult your own financial professional or Franklin Templeton institutional contact for further information on availability of products and services in your jurisdiction.
Issued in the U.S. by Franklin Templeton Distributors, Inc., One Franklin Parkway, San Mateo, California 94403-1906, (800) DIAL BEN/342-5236, franklintempleton.com – Franklin Templeton Distributors, Inc. is the principal distributor of Franklin Templeton U.S. registered products, which are not FDIC insured; may lose value; and are not bank guaranteed and are available only in jurisdictions where an offer or solicitation of such products is permitted under applicable laws and regulation.
© Franklin Templeton Investments
© Franklin Templeton Investments
Read more commentaries by Franklin Templeton Investments
