Top 10 Emerging Markets for Global Pharmaceutical and Healthcare Companies
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Emerging markets will account for 26 percent of global revenues on average for pharmaceuticals and healthcare companies by
2017, up from 15 percent today, according to the "Business Perspectives Report on Emerging Markets 2012-2017 from Global Alliance
Intelligence [GIA]."
However, a high percentage (94 percent) of pharmaceuticals and healthcare companies surveyed said they would like to have
done something differently in how they planned and executed their emerging markets strategy. Many would like to have made
greater efforts to enter earlier, while others would have adapted better to local conditions and prices, or ensured they had
better local market intelligence and due diligence.
The survey also showed that availability, accuracy, and completeness of intelligence on emerging markets is an issue for pharmaceuticals
and healthcare companies. Nearly eight out of 10 of the 38 companies surveyed said that such information is not readily available
in their organizations while nearly 90 percent doubt the accuracy and completeness of the information they obtain.
One of the largest challenges to 2017 will be capturing growth in rural areas, which until now have been too fragmented to
effectively enter. Global pharmaceutical and healthcare companies will also find themselves coming up against local competitors
that may have the upper hand when it comes to leveraging local relationships and established procurement systems to undercut
newcomers in pricing.
It could be for such reasons that the pharmaceuticals and healthcare companies in GIA's report say that local distribution
and access to customers, pricing, and localized competitive positioning are their top three success factors in emerging markets
over the next five years.
Success Factors in Emerging Markets, 2012–2017
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They also said amongst their top five threats would be competition from both local and foreign companies. The heavy hand of
the government is also a major threat, with corruption and a flimsy rule of law, bureaucracy, and red tape—regulations and
taxes—being the other top five threats.
It is not difficult to see how this will be played out in reality.
Threats in Emerging Markets, 2012–2017
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Roche's Xeloda (capecitabine) is a publically-funded drug in China that is used in the treatment of metastatic breast and
rectal cancers. It has become effectively "non-reimbursable" due to lack of information and some initiatives to control public
health spending on prescription therapies. Public hospitals in Shanghai no longer stock capecitabine and the drug could be
subjected to government-mandated price cuts (which applies to all NRDL listed drugs), without the benefit of broadened access.
To address similar problems, many other companies work closely with local governments to allow for tiered pricing and other
flexible approaches to establishing value by considering local socioeconomics, disease areas, viable margins, and empowering
local markets to make their own decisions.
In other emerging markets, government regulations and policy are designed to favor local companies. The Russian Ministry of
Industry & Energy is working towards having local players provide 50 percent of the drugs in circulation in the Russian pharmaceuticals
market by 2020.
Looking ahead, pharmaceuticals and healthcare companies must be agile enough to secure effective distribution networks, navigate
bureaucracies, and price effectively. What is most critical in the short-term is investment in the market research and competitive
intelligence required to stay ahead of both local and foreign competitors.
Nicolas Pechet is Senior Vice President Asia Pacific at Global Intelligence Alliance. He can be reached at Nicolas.pechet@globalintelligence.com
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