Special Report: Lessons Learned in Emerging Pharmaceutical Markets, 2011

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 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. Strategies: Patient access, markets access, tiered pricing, nongovernmental organization (NGO) collaborations, advance market commitment (AMC) programs, patient assistance programs, branded generics market sector, dealmaking, joint ventures, partnerships, acquisitions, reallocation of resources, foreign direct investment (FDI), extensive lobbying, greenfield and brownfield investments. Please note, the PDF e-mail from publisher version of this report is for a global site license.

Additional Information

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.