2022/2023
Foreign Direct Investment and Policies in the Health
Sector in Asia and the Pacific
ASIA-PACIFIC TRADE AND INVESTMENT TRENDS 2022/2023ii
ACKNOWLEDGEMENTS:
This Brief was written by Vanika Sharma, Consultant, Investment and Enterprise
Section, Trade, Investment and Innovation Division, ESCAP. The Brief was developed
under the supervision of Rupa Chanda, Director, TIID; Heather Taylor-Strauss,
Economic Affairs Officer, Technology and Innovation Section, TIID; and Yann Duval,
Chief, Trade Policy and Facilitation Section (TPFS), TIID. Natnicha Sutthivana
provided secretariat support as well as cover design and editorial layout. The Brief
was copy - edited by Robert Oliver.
ASIA-PACIFIC TRADE AND INVESTMENT TRENDS 2022/2023iii Contents
Highlights ................. 1
1. Introduction ................ 3
2. FDI and Health: Literature review .......... 4
3. Health sector FDI definition and trends ........ 6
3.1 Health sector FDI trends ............ 6
3.2 Mergers and acquisitions in the health sector in Asia and the Pacific .... 12
3.3 Country-wise health sector FDI trends in Asia and the Pacific ........ 13
4. National investment policies in the health sector ............ 17
4.1 Restrictive policies ............ 17
4.2 Liberalizing policies ........... 19
5. Policy recommendations for increased investment in the health sector ..... 24
6. Conclusion ................ 27
References .................... 28
ASIA-PACIFIC TRADE AND INVESTMENT TRENDS 2022/2023ivHighlights
x The ongoing COVID-19 pandemic has exposed the cracks in the current health sector.
From 2019 to 2020, investment in the health-care sector dropped by 45 per cent and
continued to decline in 2021 to 34 per cent in the first three quarters of 2022.
x Globally, greenfield investment in the health sector, from 2008 to 2021, fluctuated
considerably, falling by 28 per cent between 2008 and 2012 and then increasing by 97
per cent to US$ 24 billion by 2021. Global peaks and falls have been replicated in the
FDI received by countries in the Asian and Pacific region, while the share of global
inward FDI in the health sector in Asia and the Pacific has declined over the period.
x Greenfield FDI in the health sector in Asia and the Pacific was 49 per cent lower in 2021
compared to 2008. However, prospects for 2022 look better, with an increase of 78 per
cent in the first quarter of the year, compared to the same period in 2021.
x On individual subsectors, between 2008-2021 in Asia and the Pacific, the
pharmaceutical subsector attracted the highest amount of greenfield investment, US$
36 billion, followed by the medical devices segment which was received US$
20 billion then biotechnology and healthcare, which received US$ 17 billion and
US$ 10.8 billion respectively.
x Prospects for the pharmaceutical subsector in Asia and the Pacific are subdued for the
remainder of 2022, with a steady value of US$ 96 million worth of greenfield
investments undertaken in the first quarter of 2022 in the pharmaceutical subsector.
For medical devices, however, the first quarter of 2022 witnessed a sharp increase in
investments, reaching US$ 1.2 billion. At the same time, the biotechnology subsector
only reached US$ 55 million. Investment in the health-care subsector in 2021 was also
more promising, with an uptick reaching close to US$ 60 million.
x FDI flows through cross-border M&As have been on a constant rise since the early
2000s, with the total value of projects increasing from US$ 2 billion to US$ 10.6 billion
from 2001 to 2020. Most M&A deals in the region took place in the pharmaceuticals
subsector – close to 2,500 between 2010 and 2020. This was followed by the health-
care subsector and then biotechnology.
x Mergers and acquisitions in the Asia-Pacific region have been larger than greenfield
investment for the health sector, where ownership of assets is valued, given the health
sector’s strategic importance in most countries.
ASIA-PACIFIC TRADE AND INVESTMENT TRENDS 2022/2023 1