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PHOTOGRAPHER:

BALINT

PORNECZI/BLOOMBERG

Andy Mukherjee

Jan 15, 2016 12:22 PM MPST

HOLISTA COLLTECH LTD

AS

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23:28

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AUD

The big story in global food markets over the past decade has been the unleashing of
pent-up Asian demand for protein. As prosperity rose, per capita pork consumption in
China jumped 27 percent between 2001 and 2013. Dal, the legumes that together with
milk meet the bulk of India's protein needs, is now four times as expensiveas it was 10
years ago.

But alongside this well-documented trend, a lesser-known shift is taking place in

carbohydrates. Rice-eating households of Asia are now consuming wheat like never
before. This cultural switch in preferences, which is creating new opportunities for
food companies and headaches for health systems, is already obvious in Japan, and it's
only a matter of time before it becomes visibleeven in Vietnam, one of the leanest
countries in Asia ranked by body mass.

Less Sushi, More Muns

Consumption of rice in Japan has been steadily declining while wheat is on the rise

Milled Rice

Wheat

12%changesinceDec.'03
10
8
6
4
2
0
-2
-4
-6
-8
Dec '04

Dec '05

Dec '06

Dec '07

Dec '08

Dec '09

Dec '10

Dec '11

Source: Bloomberg Intelligence

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The biggest opportunity -- or threat, depending on one's perception -- is perhaps

presented by white bread, the most ubiquitous item in a wheat-based diet that packs
six teaspoons of sugar into just twoslices, according to Rajen Marnicka, the CEO of
Australian-listed biotechnology company Holista CollTech. White bread could easily
add billions of dollars to the cost of treating diabetes, heart ailments and other obesitylinked diseases inAsia's less-developed countries. McKinsey estimates the global
economic impact of obesity at $2 trillion, or 2.8 percent of the world's GDP, with South
and East Asia projected to witness a 71 percent surge in the number of people with
diabetes between 2013 and 2035, the third-sharpest increase after Africa and the Middle
East.

With lifestyle diseases taking over from those bred by poverty, it's little wonder then
that health-care stocks on the MSCI Asia-Pacic Index have seen average annual
earnings expansionof 67 percent over the past three years, versus 23 percent in the U.S.
and 28 percent in Europe:

In Good Health
Healthcare stocks in Asia have the best earnings per share growth globally

Healthcare EPS growth 3-Year

66.92%

70%
60
50
40
30
20
10
0
U.S.

Asia

Europe

Latin America

Source: Bloomberg

For a biotech company like Holista, whose shares have risen almost 56 percent this
year, it's time to take a hard look at the dough. The company claims that a combination
of its all-natural formula -- extracts ofokra, barley, lentils and fenugreek -- and Swiss
bakery-ingredient makerVeripan's sourdoughhas brought down the glycemic index
reading of white bread to the lowest level achieved in trials anywhere. The lower the
GI, the less rapid the increase in blood glucose.

Of the500-odd specialty pharmaceuticals companies in emerging Asia tracked by

Bloomberg, the biggest by revenue is CJ CheilJedang. It entered into an agreement
with China's MeiHua Holdings this week under which the Chinese company will take
over the Korean food-additive maker's China factory in exchange for shares in itself.

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The goal of the consolidation, according to Samsung Securities, is to control Chinese

prices of lysine, an animal feed booster.

For now, protein remains the bigger draw. But expect carbs to become an increasingly
important segment as the Westernization of food habits leads to an unhealthy
convergence of body mass. It's already happening:in Malaysia, for instance, 14 percent
of the population is obese, according to the World Health Organization.

The shift in breakfast patterns from porridge to bread may not seem like much, but
over a couple of generations, the costs could pile up and threaten to break Asian
governments' budgetary rice bowls.

This column does not necessarily reect the opinion of Bloomberg LP and its owners.
To contact the author of this story:
Andy Mukherjee in Singapore at amukherjee@bloomberg.net

To contact the editor responsible for this story:

Katrina Nicholas at knicholas2@bloomberg.net

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