The pharmaceutical industry in Asia is gearing up to be at the center of the global market—and most expect that the shift has already started. A survey by PwC shows that 55% of MNCs and 62% of domestic companies believe that the center of gravity of global pharma will be in Asia rather than the Americas or Europe. Asia could well become the biggest pharmaceutical market and will look radically different in the medium-term.
Asia has its own set of challenges and risks and demands a "whole new strategy approach" for all emerging markets to compensate for the internal factors of MNCs that can limit their success. These challenges include intellectual property rights, corruption, reputation, regulated pricing pressures, affordability, and lack of knowledge of the local business environment and culture. Generic and domestic companies, meanwhile, have been performing well in the same environment.
Role reversalIn the last three decades, MNCs have contributed greatly to the transfer of knowledge to generic companies in areas such as technology, marketing know-how, working methods, management techniques, R&D, and branding. However, now is the time that MNCs can also learn significantly from generic companies amid the changing global industry landscape. This evolution has enabled generic companies to outpace MNCs' performance in most emerging markets, including Asia.
What can MNCs learn from generic companies?
There are 13 important lessons that pharma MNCs can learn from generic companies when planning and designing their strategies in emerging markets in Asia and other regions.
» Think outward rather than inward: MNCs should analyze the market needs and understand the local dynamics, rather than rely solely on their indigenous pipeline and wait for headquarters to feed new products.
» Disease profile of the population: Every market has its own set of disease burden, which may not be answered by an MNC's indigenous pipeline. The product portfolio can be designed in such a way to address the local disease profile, and MNCs may introduce off-patent products to address the unmet treatment solutions.
» Diversified product range: Various markets may have a different market share for each anatomical therapeutic chemical (ATC) classification, but, generally, more than 85% of market share remains within the top ten ATCs. Similar to generic companies, MNCs should have no limitation in introducing products in all ten ATCs, rather than limiting them to an inherent strong foothold of product options, which may not be significant in different markets.
» Outsourcing R&D and manufacturing: The majority of MNCs believe that the industry is failing to fully grasp the potential of outsourcing and, thus, are missing opportunities. According to the PwC survey, 56% of companies agree that organizations do not view outsourcing in a dynamic way. Nevertheless, today, a majority of companies are willing to outsource R&D, clinical trials, and manufacturing—with suitable controls and good partnership selection to counter the risks of outsourcing. The major benefits of outsourcing can be low-cost manufacturing and capacity optimization, allowing MNCs to focus on branding, sales, and marketing.
» Flexible management method and localized decision-making processes: It's unavoidable that the bigger a company's hierarchical management in different regions, the longer it takes to get approval from headquarters on certain decisions. A delegated decision-making process (within a broader strategy frame) can help pharma MNCs expedite "speed to the market," which is paramount in emerging markets, and especially in generics.
» Healthcare products: Shrinking pipelines at MNCs, pricing pressure, and ever-upgrading regulatory regimes have created a space for MNCs to introduce products in areas such as healthcare, consumer, personal care, dietary supplements, and phytopharma, among others. And to do so the way domestic generic companies have successfully done in bringing alternative solutions to patients, as a clear shift is being observed from chemical products to more natural options. Today, natural products are available in standardized forms, manufactured in a pharmaceutical framework mode, and are clinically supported. Hence, the same learning curve in the pharmaceutical business can also be used for alternative medicine brands.