Making Sense of Market Chaos
A case in point is the industry's not-so-evident stake in the outcome of the current turmoil linked to democratization in North Africa and the Middle East. Not only is there a broad reputation play in getting on the "right" side of a shifting policy dynamic, significant changes are possible in the way business is conducted around health and pharmaceuticals. The potential for an assertive new class of actors to drive decisions on basic issues of industrial policy needs to be assessed through the appropriate focus on outreach and stakeholder support.
Looking ahead is the critical first step. Market analysis alone suggests these countries are important as a source of future opportunity. Egypt, Pakistan, and Turkey have been tapped by IMS as leaders of its "pharmerging 17" high-potential markets, followed closely by Saudi Arabia and Jordan.
The landscape of need is also promising. All countries in the region share the common characteristic of youthful populations, high adult literacy, and are experiencing a full-blown transition from infectious to non-communicable disease. Patients want access to modern medicine, and there is a trained professional infrastructure to administer drug therapy. Yet public investment in health services remains low. Despite their growing populations, spending on health for countries in what the World Health Organization (WHO) defines as its Eastern Mediterranean Region is stagnant, at less than $60 billion a year—what the US spends every 10 days.
Simple health conditions amenable to prevention continue to fester: tobacco use is rampant, while malnutrition is a hidden plague among young children. And cultural barriers continue to dog essential public health interventions—pervasive gender bias helps explain why 460,000 people in the region are living with HIV even as these countries have the world's lowest rate of coverage on anti-retroviral drugs.
In evaluating the next stage of the region's prospects for Big Pharma investment, the following factors are relevant:
The region's governments, already sensitive to the issue of "health as a human right," will put more emphasis on the WHO's global health equity agenda. To build popular support, interest is likely to increase in essential drugs access and transposing initiatives such as the Pan American Health Organization's (PAHO) "revolving fund" for vaccines, which basically replaces private resourcing with a public health procurement approach that requires furnishing stock at the prevailing lowest price—globally.
Trade and industrial policy will strike a more populist cast. Expect countries like Jordan, which once touted its support for "world class" patent protection, to emerge as more cautious participants in the debate on the globalization of IP, to avoid appearing as a shill for the foreign multinational investor community.
Regional cooperation around a "pro-Arab" health agenda is likely to gain fresh momentum. One action pharma can take is to emphasize its capacity to boost drug quality, with particular emphasis on guaranteeing the supply chain and fighting counterfeits. Health ministries are likely to face more pressure to evidence their value to the public. Helping to slow the incidence of adverse effects linked to low quality as well as poor compliance is one way to demonstrate success for institutions on which the industry depends, but whose legitimacy has been undermined by repeated public health disasters over the past few years.
Some thoughts for a world in flux … until next month.
Supply Chain Strategy: Managing risk and opportunity in a changing global landscape