The Enable Blog #1: Emerging Markets: Be a BRIC (in the wall) or a VIP?
Ever since Goldman Sachs came up with the acronym, “BRIC” or “BRICS” for the emerging economies of Brazil, Russia, India, China and South Africa, the term has been used creatively on several occasions. The Economist has made particularly good use of the acronym in recent headlines like “India’s economy: A BRIC hits the wall” and “Indonesia’s middle class: missing BRIC in the wall”.
On a recent visit to Taiwan, my host asked me: “Rachit, you have heard of BRICS, but have you heard of V.I.P?”. The acronym V.I.P. is used for the next wave of emerging economies – i.e. Vietnam, Indonesia and the Philippines. I responded by saying that “VIP” definitely sounded like the better acronym!
A lot has been written recently about emerging economies and their ability to be a growth engine for the global economy. Life sciences companies (e.g. medical device makers) are evolving business models around designing and developing products specifically for the emerging economies. It begs the question though – how should the emerging economies be prioritized for life sciences opportunities? Should it be based on population (China followed by India and others), or by some other criteria like rate of GDP growth?
What if we were to take a step back and consider whether we are even using the right lens for our world-view? For example, there will eventually be a third and fourth wave of emerging economies after BRICS and VIP. As and when that happens, will the new business models not need to be customized individually for each country? Surely there has to be a more efficient approach, one which could be replicated between all emerging economies.
What if we were to move the lens of our world-view away from the fixation on national boundaries? And what does a national boundary represent anyway? In India for example, a simple stroll down a street brings into stark contrast the income disparity between different segments of the population. Surely the needs of these segments are very different from each other.
Perhaps “market-segmentation” is the lens we have been missing in evaluating emerging market opportunities for life sciences. And market segments could be aligned between several countries – between BRICS and VIPs, and others.
Life sciences products with real clinical impact for under-served market segments could well tap genuine and sustainable demand. Demand, which transcends national boundaries. Demand, which is real and sustainable in BRICS, real and sustainable in VIP, as well as real and sustainable in Ghana and Uruguay. For that matter, demand, which is real and sustainable in the under-served segments of the “developed economies” as well. With demand will come opportunities for supply and with opportunities for supply will come competition. Is this a growth-engine the world has been missing?