Keys to Unlock a Market in the Making
FIVE-YEAR FORECAST
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When entering a pharmerging market, it's essential to develop a business strategy that's flexible enough to adapt to local
needs. At the most general level, you need to know as much as possible about healthcare usage by the population, about national
and local economic situations, about the degree of infrastructure development, and about specific regulatory or governmental
controls.
Tailor Your Approach
New investments must be managed judiciously by answering three key questions:
1. Where? Develop a clear position for future business. What are the potential benefits (and risks) of entering the market
in a particular geographic area?
2. How? Develop a clear strategy. What will be the focus of the portfolio?
POSITIVE EXPOSURE
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3. When? Develop a logical flow for transition. What are the local manufacturing or distribution capabilities? What kind of
resource investment may be needed? What is the cost of capital? When is the optimal time to enter the market, continue there,
or exit?
Since every market is unique, success requires a customized approach. The consumer is often the payer in these markets, and
payment tends to be out-of-pocket. Identifying third party payers, a major market component, is very important. Additionally,
disease states vary widely not only between the mature and the pharmerging markets, but also among pharmerging markets. What
applies in Britain is very different from what is of importance in China or India. Pharmas must target their efforts accordingly.
Know Your Facts
Analysis of specific marketing initiatives shows that success in pharmerging markets depends on five critical factors:
1. Differentiating what is necessary in the market from what would be desirable but not essential
2. Gathering the most relevant, accurate, and timely information to understand and measure emerging markets
3. Devising portfolio strategies that supply local market needs, while remaining aligned with headquarter's objectives
4. Defining and implementing commercial models that will increase productivity and return on investment
5. Understanding pricing and market access strategies that maximize product value
A CLASS ANALYSIS
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Many drugmakers increase their exposure to pharmerging markets through the expansion of their existing operations, as opposed
to entering those markets where they don't currently have a presence. Nonetheless, identifying the ideal pharmerging markets
for a particular organization, whether through expansion or new entry, requires significant due diligence. The degree and
structure of participation in these markets varies greatly, with opportunities and threats specific to each region.
In Brazil, for example, the capabilities of state-owned pharmaceutical manufacturing could enable relevant importing of pharmaceuticals
with incentives to private partners, and competition among generic drugs is increasing. Opportunities in Brazil include the
ability to influence legislation and increase government spending, the growth of private health insurance, and increased public
awareness of disease. Threats include competition among other entrants into this market, government cost-containment initiatives,
and government investment in public laboratories.
By contrast, the Russian market is highly fragmented and high-priced—unlike Germany or the US. Patients pay out-of-pocket
for about 60 percent of their drugs, while physicians lack data about disease incidence and standard treatment guidelines.
Opportunities include increases in private insurance and reimbursement, along with improved physician education. Threats include
the pressure to reduce prices, the influence of powerful lobbies for local firms, an overall lack of knowledge about diagnosis
and treatment, and government influence on prescribing.
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