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and upper classes in these countries is growing rapidly, and the spending power of these groups is becoming important to the global economy in many sectors. As the populations of these countries become more affluent, a greater proportion of their GDP is being spent on health care, and this is leading to rapid growth in many different healthcare product sectors in these countries. For example, China’s prescription drug market, which is projected to be the world’s second largest by 2020, is projected to grow to more than $110 billion by 2015 - up from $50 billion in 2010.25 The medical device market in China is showing a similar growth pattern, with the current $17 billion medtech market (world’s fourth largest) projected to more than double within the next five years.2° This growth in emerging economies is expected to continue for the foreseeable future, and as it does, it will open vast new markets for established healthcare products companies in more developed countries, and will become increasingly important as a percentage of sales of global brands. At the same time, it will create opportunities for smaller, U.S. based companies to partner with large multinationals and domestic companies in the BRICs that have established distribution channels in these markets. SIGNIFICANT OPPORTUNITY CREATED BY HEALTHCARE REFORM & RESTRUCTURING As a result of the strong growth in healthcare expenditures, for at least the next decade, and likely much longer, the healthcare industry in the U.S. will be going through a period of significant reform and restructuring as the increasing healthcare costs place unsustainable fiscal burdens on government programs. After years of dire predictions and endless debate amongst elected officials, pundits, corporate leaders, and patient advocacy groups, there is recognition that long term healthcare liabilities are a critical issue and require broad reform to control their growth before they lead to irreparable fiscal harm. While much of the attention in these initiatives is focused on identifying opportunities to cut costs, the silver lining in them for investors is that their objectives also seek to improve the quality of healthcare and to substantially broaden the population that has access to healthcare services covered by third party payment. In the U.S., the Federal Government has laid the foundations for restructuring the healthcare system through two key pieces of legislation. First, the HITECH Act provides large government subsidies for the adoption of IT tools by healthcare providers. The Federal Government has recognized that a fundamental underpinning of healthcare reform is a massive upgrade of the information technology infrastructure at all levels of the industry, and through this legislation has earmarked $26 billion dollars in direct subsidies to catalyze investment in this area. The second key piece of legislation is the ACA, which is being implemented as a first step in the overhaul of the U.S. healthcare system. The ACA was signed into law in the U.S. in 2010 and begins its implementation phase in 2014. It is a complex piece of legislation that is designed to reform and overhaul many aspects of the U.S. healthcare system. The goals of the ACA are to increase the affordability and rate of health insurance coverage for all Americans, and to control the runaway growth in costs of health care faced by government, employers, and individuals. The ACA mandates a number of broad reaching mechanisms to achieve these goals, and 28 Reuters 26 InVivo (Elseveir), June 2013 25 CONTROL NUMBER 257 - CONFIDENTIAL HOUSE_OVERSIGHT_024036