Make the Commitment. And Do it Early!
There are clear advantages for the decisive early movers. Companies that take the lead in market entry can often reap the
benefits of more discernible differentiation and better key opinion leader relationships, compared to those who choose to
wait. Bayer AG is a good example, having picked early on two emerging markets (China and Turkey) as the focus for its investments
and then pouring in the resources to secure double-digit sales growth in each. Superior local execution and a stable senior
leadership team have also played an important role in Bayer's performance.
Competition for space in the emerging markets is getting intense, and the choice is to build or buy market share—which, in
turn, requires a substantial resource commitment. Examples include the Sanofi-Aventis acquisition of generics manufacturers
in Brazil (Medley) and Mexico (Kendrick), making the French company Latin America's market leader. Similarly, GlaxoSmithKline's
expanded partnership with Aspen has paved the way for increased access to the wider African market. Novartis has committed
to major investments in China, including $1 billion on R&D, and is investing heavily in R&D capabilities in Brazil. Last month,
Merck announced a major joint venture with local Chinese manufacturer Sinopharm to collaborate on vaccines and other portfolio
products the company does not yet sell in China.
Understand the Local Market; Each is Unique
No defined strategic blueprint exists that can be applied uniformly throughout the emerging market universe. The IMS statistics
make this very clear. There are profound differences in the structure of healthcare, the position of various stakeholders,
the capacities and expertise of governments, and the culture of medical practice. Geographic variations in development and
urbanization are another important, often overlooked factor: internal regional differences can loom as being more important
than contrasts between the countries. Regional and city-based strategies have to be carefully tailored to take account of
these differences. Similarly, disease profiles, treatment paradigms, and diagnostic rates in the pharmerging markets are not
only different from those of the major developed countries but also carry subtle distinctions between the various tiers. Differences
in key market segments, including the role of generics, are a further challenge.
Finally, competition in pharmerging markets is also different to that in the mature countries, with power often in the hands
of local companies who know the operating environment. While the large multinational pharmaceutical companies have no doubt
increased their presence in China, they continue to be outnumbered and outperformed by local manufacturers with their strong
geographic reach, wide distribution networks, flexible promotional methods, and close engagement with local governments and
Leverage Your Global Portfolio—Then Add Local Value
Because local competition can be intense, companies must strive to differentiate their offerings, relying on the global portfolio
of medicines that with some effort and ingenuity can be adapted to local conditions. Pfizer has found success by building
scale while maintaining strict criteria on what it will introduce to the market. "Our core focus is on select products that
we can show have been proven scientifically superior to the current standard of care," says Maradei. "It includes not only
innovative treatments, but generics, where we can demonstrate that superiority against local players through our quality guarantees
and more reliable product supply."
Bayer also emphasizes a targeted portfolio approach. In China, it opted to invest continuously over time in mature products
for diabetes (Glucobay) and hypertension (Adalat). The company has been able to achieve a dominant position in these high-growth
therapy areas and now derives 3 percent of its global revenue from China.
Another tactic is fostering customer loyalty around the portfolio. In the Philippines, IMS helped one big pharma company devise
a strategy to deploy a bundle of useful supplementary services, such as free blood tests, for an infusion product where patients
undergoing treatment were subjected to substantial down time. These "loyalty programs" can make a big difference in capturing
what is in many emerging markets a fragmented, unorganized, and still evolving customer base.