By Peter Rose, Managing Director, Maetrics

UK life sciences firms are continuing to look to emerging markets for growth opportunities as healthcare spending in the UK contracts, with the National Health Service (NHS) set to achieve an unprecedented efficiency savings of £50bn by 2020. By contrast, emerging middle classes and increased life expectancy are driving up the standard of living in many emerging economies – and the demand for medical products. In fact, while the global pharmaceutical market is expected to grow 4.5% a year on average to 2016, emerging markets are expected to grow at three times that pace. China, for one, aims to have total healthcare coverage of its 1.35 billion population by the year 2020, equivalent to over $180 billion growth over four years.

Latest research commissioned by Maetrics, a full-service life sciences consulting company, confirms that 43% of UK life sciences businesses say that reduced healthcare spending will be one of the main challenges they face this year. Additionally, a quarter (26%) of respondents are concerned about the stability of the UK economy.

But with potential also comes risk, and businesses expanding abroad face the challenge of navigating varying complex national regulatory systems. The Maetrics research highlights that the biggest challenge facing the life sciences industry, according to 50% of respondents, is compliance with emerging market regulations.

Regulatory compliance surrounding drug safety, counterfeiting and good laboratory practices (GLP) is a critical issue as fines can not only be crippling for smaller businesses, but can also expose them to reputational damage, patient safety issues, criminal sanctions and, critically, investor rejection. This is particularly relevant for businesses investing in and developing new drugs; in fact, the Maetrics study shows that another key challenge for 2015 are new product launches, with 46% citing it as a top obstacle.

UK life sciences businesses also report that they face an industry skills shortage, with 43% of respondents agreeing that finding specialised staff will be difficult. Staff shortage issues in the industry were initially highlighted by the ABPI in 2008, but since then the issue has worsened and in 2012 the industry topped the PWC’s “talent challenge” poll.

Finally, 20% of respondents in the Maetrics study reported that M&A activity will pose a significant challenge in the next year. Commentators agree that M&A transactions almost doubled in 2014 compared to 2013, and this trend shows no sign of abating with activity still buoyant in early 2015. Specifically, pharmaceutical companies in the USA are continuing to make acquisitions in low-tax economies, and larger pharmaceutical companies remain focused on building capability in specific diagnostic areas.

While concerns remain for the life sciences industry about emerging market expansion, the opportunity for growth is potentially unprecedented. Key to success is having a strong quality and compliance team, whether internally or externally through a consulting partner. It’s clear that to fully leverage the opportunities in emerging markets, confidence in interpreting and implementing regulations will be an integral part, as will understanding the situation in developing countries.