As companies expand outside the mature US, EU5, and Japan triad, they have adapted their traditional commercial models to
the customized needs of alternate geographies. For specialty products, this has posed a difficult challenge as treatments
may require complex handling or levels of patient care that are hard to secure in areas with poor infrastructure and sporadic
practice patterns. In addition, in countries where individual patients bear a significant portion of the out-of-pocket costs
of treatment, companies must deploy and fund novel approaches to increase disease awareness and identify patients at risk.
It is a necessary pre-condition to gain patient acceptance and position the local market for sales of higher priced therapies.
It suggests higher fixed costs to developing the business there.
Despite these challenges, the past few years have seen a significant increase in specialty sales and volumes across all geographies
(see Figure 1). Using our proprietary information, we find that even with absolute growth in all the markets, the proportion
of the specialty segment still increased. The increase was most prominent in the US, EU5, and Japan, with the proportion rising
by at least five percentage points in each region. For example in the US, 27.5% of sales were in specialty products in 2013
while the remaining 72.5% were primary care, OTC, and all other prescription products. This proportion increased from 21.5%
in 2008, and was driven by new launches and broader adoption of existing treatments.
Figure 1: Specialty market percent of total sales by geography (Data: IMS)
The geographies on the X-axis represent the market tiering approach employed by IMS Health. For example, what we call the
"Pharmerging" markets are split into three tiers. Tier 1 is China, Tier 2 is India, Russia, and Brazil, and Tier 3 includes
the remaining 17 Pharmerging countries that have greater than $25,000 per capita income, expressed on a purchase price parity
basis, and have five-year pharmaceutical market aggregate growth of greater than $1 billion. Tier 3 countries include Algeria,
Argentina, Colombia, Egypt, Indonesia, Mexico, Nigeria, Pakistan, Poland, Romania, Russian Federation, Saudi Arabia, South
Africa, Thailand, Turkey, Venezuela, and Vietnam.
For this article, we diverged from the tier model and put Mexico and Turkey with the remaining BRIC countries to reflect the
priorities of most pharmaceutical companies, and because these countries are more advanced in their adoption of specialty
medicines. In addition, we have included non-retail sales for Brazil and Mexico. All other remaining countries outside the
BRIC and the other 17 Pharmerging countries are grouped together as ROW. This group includes the smaller European countries
as well as Canada and Australia.
If we look specifically at the companies in the Pharma 50 list, we see that the increase in specialty pharmaceutical sales
for US, EU5, and Japan is primarily driven by these top companies in global sales of Rx products (see Figure 2). In these
markets, there is already a high level of specialty products usage, aided by a well-established infrastructure of specialist
facilities and physicians to treat and prescribe these medicines.
Figure 2: Specialty market percent of total sales by geography and by Pharma 50 (Data: IMS)
There is also a strong increase in their usage likely due to the large investments companies have placed in securing access
for specialty medicines in these markets, an increased aging population in these countries, and societal willingness and ability
to pay for treatments for complex—often rare— diseases.
The increasing spend on specialty drugs for the Pharmerging markets, including BRICMT and Tier 3, is relatively smaller than
the other markets, likely reflecting a higher cost of therapy relative to income, higher levels of cost borne directly by
patients, and a relatively younger patient population that carries a greater need for products focused on primary care.
Although companies have been placing significant emphasis on expanding their specialty franchise into these areas, they still
face challenges around drug awareness, availability, and affordability. This has slowed the transition to specialty and led
to smaller changes in the product mix than in the US, EU5, and Japan. The significant increase in specialty products within
ROW also reflects the investments being made by Pharma 50 companies in smaller markets outside of the G7 that have established
infrastructure for these types of products (e.g., in Scandinavia, East Europe, Australia, and Canada).