As multinational pharmaceutical companies rush to establish themselves in fast-growing emerging markets, they face a dilemma.
While companies refine their value proposition for medical professionals and their patients, governments are asking what economic
value they will bring to the country overall. As governments in emerging markets have significant influence on market access,
one key to market entry will be providing a strategic Corporate Value Proposition (CVP) for each market.
At a time when pharmaceutical companies are rationalizing what used to be considered necessary investments in manufacturing
and R&D in developed markets, adding capacity in emerging markets ranks low on most companies' priority lists. Yet, in many
of the high-growth emerging markets, if companies want to establish a strong market footprint they must offer the government
a robust CVP. The balance is difficult to strike—too little investment in emerging markets could undercut performance in markets
that drive growth; too much investment, too soon, and companies will make themselves vulnerable in markets still developing
legal and administrative stability. Good practices are becoming apparent, however, and wise companies will take advantage
Why do companies need a CVP?
Today, a CVP strategy is more important than ever. The global economic slowdown has encouraged governments to seek investments
with extra urgency. Larger emerging markets have experience and confidence in insisting on technology transfers, either directly
(as in Brazil or China) or through policies that favor local products (as in Russia and Turkey). Meanwhile, pharmaceutical
budgets are shrinking, patients are having to make greater out-of-pocket contributions, and there is growing concern that
new therapies are not cost-effective. All these factors contribute to higher barriers for market entry and more difficulties
in bringing products to market quickly; hence the need for a pro-active CVP strategy.
What would a robust CVP look like?
A CVP should touch on each core attribute of global pharmaceutical companies—research skill, proven ability to convert knowledge
into products, broad networks of scientific experts able to prove clinical worth, marketing depth, and the ability to manufacture
at maximum efficiency.
The lure of a new plant or an acquisition is strong and easy to present in the media, so the "bricks and mortar" commitment
remains most governments' opening position. Fortunately, the more enlightened governments realize that if they are to compete
in the global market, acquiring science and technology expertise is important for their citizens. The challenge is to make
the economic benefits easily identifiable.
For example, a CVP could have three streams of activity: manufacturing; science; and technology; and partnerships. These activities
would progress up a value chain as confidence and expertise increased. For manufacturing, initially this might be just a packaging
facility, but over time it could progress to more complex manufacturing tasks. Similarly with science and technology, initially
the focus might be on science education and clinical trials, and then progress to more complex R&D projects. Lastly, partnerships
with local companies would likely start with marketing but could over time cover manufacturing, science and technology. These
activities would develop the work force and a local knowledge base that can help countries develop a competitive edge.
Companies should take care to explain that each of these elements can have a clear benefit for the local economy. Clinical
trials help talented local researchers stay in country while working on cutting edge projects; they also, according to one
proprietary survey, contribute more than $2 for each $1 in direct spending.
Success in presenting CVPs requires careful attention to the major stakeholders in each market. Political leaders must be
involved, so that they see the benefits for constituencies important to them. Senior technical officials in ministries covering
health, labor, investment, and industry should also be consulted. Opinion leaders outside government in the private sector,
science, and patient groups must be part of the support network for a CVP. A PowerPoint deck left in a government office is
not enough. A successful CVP is by definition a campaign with local support.