The vibrant, energetic nature of emerging markets continues to beckon as a
major new business opportunity for the pharmaceutical industry. Emerging
markets - particularly those in Brazil, Russia, India, and China (BRIC) - have
experienced significant growth over the last decade. In contrast, in 2011, Big
Pharma was plagued by (1) an austere economic landscape that negatively
impacted the growth of mature pharmaceutical markets, (2) high levels of
patent expiration and generics erosion, and (3) a seemingly intractable new
product drought. Not surprisingly, the promise of emerging markets proved
difficult for most Big Pharma companies to ignore. The question for
pharmaceutical management, and by extension the financial community, is
whether Big Pharma's emerging market strategies will be a short-term fix or a
long-term bonanza. Will strategies based on increasing volumes by heavily
discounting innovative brands for low- to middle-income patients and growing
lower-margin generics businesses in emerging markets be sufficient to justify
the shift of resources away from the developed markets; to fund innovative R&D
for the development of new drugs; and to bolster the pharmaceutical industry's
poor growth in the mature markets of North America, Western Europe, and Japan?
In this report we discuss these issues and the lessons to be learned from
company strategies in emerging markets.
Questions Answered in This Report:
The bullish growth forecasts of emerging markets are difficult for Big
Pharma companies to ignore. What growth opportunities exist in emerging
markets? Which pharmaceutical markets are forecast to grow between 2010 and
2015, and which ones will contract?
Big Pharma companies are investing heavily in emerging markets to expand
sales forces, build production and R&D facilities, and form local
partnerships. What recent deals have occurred in Argentina, Brazil, India,
and Russia? Why have certain deals raised concerns? What barriers may result?
Patient access and market access are key issues for MNCs in emerging
markets. What are some Big Pharma companies doing to make drugs more
affordable to increase patient access? How do partnerships with
nongovernmental organizations help accomplish MNCs' goals? What are the likely
risks from differential pricing strategies in different markets?
Above all else, shareholders demand that pharmaceutical companies run
profitable businesses. How do Big Pharma's operating margins compare in
mature and emerging markets? Can Big Pharma's emerging market strategies grow
profits in addition to revenues? What are the issues and the likely pitfalls?
Big Pharma companies are reallocating significant amounts of resources to
emerging markets. What is the economic contribution of the
biopharmaceuticals sector on the U.S. economy? What is the likely impact of
the transfer of high-value jobs, skills, services, and technologies from
mature to developing markets?
Protectionist policies and market access barriers exist in many markets.
Why does Argentina block drug importation from unlisted countries? What
does India plan for controlling the acquisition of domestic Indian companies
by foreign predators? What does Prime Minister Putin advocate to drastically
reduce drug importation in Russia?
Scope:
Geographies: Africa; Argentina; Asia Pacific; Brazil, Russia,
India, and China (BRIC); United States.
Barriers: Local manufacturing requirements, technology-transfer
requirements, nontariff trade barriers, barriers to drug importation,
protectionist policies, price restrictions, affordability of medicines,
leakage, parallel trade, drug reimportation, reference pricing pressures,
austerity measures in mature markets, political sensitivity, enforcement of
good manufacturing practice (GMP) standards, lax intellectual property
enforcement, counterfeit drugs, favoritism toward local companies, tax on
medicines, time required to register a new drug.
Pharmaceutical markets: Size and growth rates of the global
pharmaceutical market, market share trends by country, growth rates by
country, market expansion from 2010 to 2015, pharma operating margins, job
losses in the U.S. pharmaceutical industry from 2000 to 2011, import and
export levels of drugs, direct and indirect value of pharma jobs in local
economies, technology transfer to emerging countries, out-of-pocket payment
markets, oligopoly.
Expert insight: Barrie G. James, Ph.D., provides insights on global
and Russian pharmaceutical markets. Dr. James is the principal of Pharma
Strategy Consulting in the United Kingdom. Previously, he held executive
positions at Ciba-Geigy, Merck & Co., Syntex, and Schering-Plough in strategic
planning, marketing, and business development.
Expert insight: Peter Wittner provides insights on pharmaceutical
markets in Argentina, Brazil, and India. Mr. Wittner is the principal of
Interpharm Consultancy and specializes in generics strategies. Previously, he
worked at Ranbaxy (U.K.), H.N. Norton (subsequently part of Ivax), Evans
Medical, A.H. Robins, and Koppel & Co. in general management, business
development, and sales and marketing.
Exhibits: 13 data-rich tables and figures.
Table of Contents
Executive Summary
Strategic Considerations
Stakeholder Implications
Growth Opportunities
Extensive Dealmaking
Overcoming Price Barriers
Partnerships with Nongovernmental Organizations
Access to Healthcare and Differential Pricing
Lessons from Tiered-Pricing Strategies to Drive Volumes
Running a Profitable Business
Pharma Industry Operating Margins
Lessons from the Potential for Lower Margins
Reallocation of Pharmaceutical Resources
Job Losses
Value-Added Economic Impact from the Pharma Industry
Lessons from Reallocation of Resources
Argentina - Blocking Low-Cost Generics Imports
Lessons on Argentine Trade Barriers
Brazil - Buying Market Access
Brazilian Acquisitions
Lessons on Acquiring Local Targets
India - Pushback to Big Pharma's Acquisition Strategies
Multinational Corporation Acquisitions
Stakeholder Concerns
Leader of the Opposition for Lok Sabha
Indian Pharmaceutical Alliance
Parliament's Standing Committee on Health and Family Welfare
Department of Industrial Policy and Promotion
Organization of Pharmaceutical Producers of India
Ernst & Young
Planning Commission
Cabinet Meeting
Lessons on Indian Protectionism Policies
Russia: Overcoming Barriers to Access
Putin's Call to Stop Promoting Foreign Drugs
Meeting the Domestic Drug Manufacturing Requirement
Good Manufacturing Practice Standards
World Trade Organization Membership
Lessons from Recent Changes in the Russian Pharmaceutical Market
Experts
Barrie G. James, Ph.D., principal, Pharma Strategy Consulting,
provides insights on global and Russian pharmaceutical markets.
Peter Wittner, principal, Interpharm Consultancy, provides insights
on pharmaceutical markets in Argentina, Brazil, and India.
Tables
1. Pharmaceutical Pre-R&D Operating Margins by Geographic Area,
2009-2020
2. Economic Impact of the U.S. Biopharmaceutical Sector, 2009
3. Allowed Country Lists for Drug Importation Into Argentina
4. Market Share of Domestic and Multinational Corporations and
Number of Pharmaceutical Companies in Argentina, Brazil, and Mexico, 2008
5. Market Share of Top 20 Pharmaceutical Companies in Brazil, 2010
6. Acquisition of Indian Companies, 2006-2010
7. Market Share of Top 10 Pharmaceutical Companies in India, 2011
8. Big Pharma and Russia's Domestic Manufacturing Requirement
Figures
1. Worldwide Pharmaceutical Market: Market Share by Geography,
2005, 2010, and 2015
2. Worldwide Pharmaceutical Market: Growth by Geography, 2005-2010
and 2010-2015
3. Layoffs in the U.S. Pharmaceutical Industry, 2000-2011
4. U.S. Exports by Industry, 2005-2010
5. Pharmaceutical Market Size and Growth by Geography, 2011
