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Here’s why you’ll see more ASX biotechs focus on Asia in the years ahead!

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Investors should expect to see more ASX biotechs focus on Asia in the years ahead. And there are good reasons why.

For many companies, the golden market has been the USA, given its population and stringent regulator the Food and Drug Administration (FDA). If a company can commercialise a drug in the USA, it can succeed anywhere. If it can run clinical trials in the USA, it is difficult to imagine regulators that would not accept the data.

However, companies are increasingly looking to countries in Asia to conduct clinical trials and eventually commercialise goods. It is easy to think of some of the more developed countries like China and Japan. But even developing countries in Southeast Asia are looking more lucrative than they may have been a decade ago. Specifically in the so-called ASEAN region, these are 10 countries in Southeast Asia, all belonging to a formal Association with the ASEAN abbreviation (the Association of Southeast Asian Nations).

These economies have nearly 700 million people between them (Over 300 million live in Indonesia and Vietnam), and a GDP more than twice of Australia. In fact, it only trails the USA, China, Japan and Germany.

Healthcare is a priority and ASX companies can help

It is estimated that antimicrobial resistance (AMR) related costs in Asia are projected to rise to US$550 billion-$700 billion and the APAC region will account for almost half of yearly deaths caused by AMR by 2050. And many ASEAN countries are increasing spending on healthcare, in light of an ageing population and the rise of chronic diseases. Indonesia for example when compared with the US and worldwide prevalence of diabetic foot ulcers, which ranges between 1.4% and 5.9%, the prevalence in Indonesia is 12% in hospitals and 24% in community settings.

It is arguable that new technology, automation and AI may be able to play a role in meeting the growing demand for healthcare. But there is a need for new treatments for diseases. This presents a perfect opportunity for biotech companies to make a difference.

Recce Pharmaceuticals (ASX:RCE) is one company eyeing off Asia. Back in February 2024, the company signed a Memorandum of Understanding (MoU) with leading Indonesian biomedical organisation Etana Biotechnologies (Etana). This MoU aims to support the Indonesian Government’s access to novel infectious disease medicines and facilitate late-stage clinical trials in Indonesia, including a potential Phase III registrational trial for Diabetic Foot Infections (DFI).

Although this initiative is not yet a binding deal, it was significant enough that CEO James Graham personally met with Indonesian Minister for Health Mr. Budi Sandikin, in a meeting joined with Australian Ambassador to Indonesia Penny Williams.

Indonesia is keen for new therapeutics to address health problems, particularly infections. It is estimated that over 10% of Indonesia’s adult population (19.5m) have diabetes, a disease that interferes with the immune system, leading to higher probabilities of foot infections, urinary tract infections (UTI) and surgical site infections. Recce’s leading anti-infective drug candidate RECCE®327 (R327) could make a difference. It has a unique Mechanism of Action that can fight bacteria in a way that other antibiotics cannot, with studies showing that the drug does not develop resistance, even after repeated use. R327 is currently conducting and has completed several clinical trials for multiple indications, including Diabetic Foot Infections, acute bacterial skin and skin structure infections (ABSSSI), UTI/Urosepsis and Sepsis.

Recce is not alone – there are a handful of companies focusing on individual nations in the ASEAN region. Orthocell (ASX:OCC) is aiming to roll out its bone and soft tissue injury product Recell in Singapore, and Osteopore (ASX:OSX) is seeking to commercialise its 3D-printed bioresorbable implants in Singapore and Vietnam, having won regulatory approval for both.

Investors should be seeing an increased number of ASX biotechs with a focus on Asia – particularly the South East region. The demand for healthcare is expected to grow in the years ahead for the same reasons as the West – with an ageing population and increased government policy and spending on healthcare. There is a need for new therapeutics and today’s small-cap biotechs could make a difference. Just as companies like ResMed (ASX:RMD) and CSL (ASX:CSL) began in Australia and made themselves a success in the US market, we may well see the next generation of biotechs find success in Asia.