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Pharmaceutical Executive Digital Edition - May 2012

 is our annual snapshot on the state of the industry—the 

 50. While numbers no longer provide the clarifying lens for a drugs market characterized by endless churn, we found some interesting insights nonetheless. First are the very significant pressures on growth, which are transforming an industry once associated with the open cash register to the lock box, where every last dime must be accounted for in the quarterly race for returns. EBITDA (earnings before interest, taxes, and depreciation/amortization), which essentially measures how efficiently a company is managing its assets, is the performance indicator to beat, at least according to Wall Street. Pinching those asset pennies is critical as 2011 revenues for the Pharma 50 rose only just above the rate of inflation, at 2.8 percent. In other words, the industry's reputation as that growth industry no one wants to pay for is more secure than ever.  

 50 numbers also show that the predominant response to tightening market conditions remains building on the advantages of size and scale, with the 10 largest companies in the 50 accounting for well over half of total revenues. The big players, however, are attempting to be nimble with their resources, as exemplified by the decision of the largest of the large, Pfizer, to enter the rare disease segment now dominated by smaller, specialized firms. The bottom ranks of the 50 are going for bulk too, but the transition is bumpy as witnessed by the fact that revenues of the smallest firms are collectively down from last year, where every company on the list had revenues of at least $2 billion. No more.  

The advantages of size and scale are evident as well in the growing representation of biologics among the 

 50's top product offerings, accounting for eight of the 20 biggest selling drugs. The challenge of manufacturing and promoting these complex medicines safely across multiple markets requires costly investments in state-of the-art technology and advanced know-how, not to mention a solid global orientation. A global base is even more important now that many regional markets—led by Western Europe—have tanked in the midst of the public debt pile-up, requiring a ruthless paring of domestic health spending. One result? More than €10 billion in unpaid bills for reimbursed medicines.  

The lesson is an inducement for the industry's regional players to expand beyond borders if they wish to grow. Those that have done so comprise the more interesting additions to this year's list, including our first South African entry, Aspen Pharmacare, which is investing heavily in some of the mature markets.     

The emphasis on being and staying big has its downside, if only because there is just not a lot of new blood vying for a place in the top ranks of the business. Looking back five years, to the 

 50 of 2007, the top 10 companies are the same as this year's, with one exception—Wyeth, a victim of merger fever, has been replaced by Abbott. We see this as primarily good news for payers, who like to know the enemy from a position of intimacy, and not especially positive news for the patient. It's not that the biggest of Big Pharma aren't producing safer and better drugs for patients—the trend toward specialty meds and the utilization of companion diagnostics underscores this fact—but the constant need to meet forecasts and keep shareholders happy in the short-term perpetuates a climate anathema to risk, the bread and butter of innovation. Simply put, some shaking at the top means that more fruit falls from the trees.   

And there are some promising signs of diversity towards the bottom of the list, particularly among companies that pose an implicit challenge to the conventional model built around a calculation of input 

 of marketable products. It's a bit startling to see that one new entry to the 

 50, Valeant Pharmaceuticals, the "search and development" company, managed to post $2.5 billion in sales while spending just over $65 million on research. That's a rounding figure for Pfizer—or more specifically, 0.7 percent of the industry leaders' $9.1 billion. If those numbers say anything at all, they reinforce the importance of this industry finding the right formula in balancing risky internal investments in innovation against expanding societal expectations for good medicines that deliver great outcomes. And that formula depends as much on luck—wedged by reputation—as it does on size. 

From the Editor

The industry's reputation as a growth industry no one wants to pay for is more secure than ever, writes Pharm Exec Editor William Looney.

Pharma 50 Comment: Seeding Beyond the Base

Discretion to set prices for new medicines free of government intervention is heading toward extinction in Europe, with the UK looking set to follow Germany in a race to an ill-defined destination it calls "value-based pricing." On target for phase-in at the end of 2013, the prospective new regime—dubbed by critics as a stealth system of payer-based value controls—will impact pricing beyond the UK, if only because most industrialized countries outside the US references UK prices in setting their own drug tariffs. Combined with controversial reforms to the National Health Service (NHS), an eroding base in clinical trials, and a politically charged debate on patent incentives linked to industrial policy (see sidebar), the price changes are likely to contribute to further erosion of the UK's reputation as a stable and predictable market for Big Pharma investors.  

The reform is much more than a simple endorsement of value-based pricing (VBP). What the government intends is to abandon one of the most venerable structures for P&R in Europe, the Pharmaceutical Price Regulation Scheme (PPRS), which was introduced more than a half century ago and, as negotiated at five-year intervals,  stands as a symbol of close policy coordination between politicians, the health bureaucracy, and industry. In its place looks to be a far more hierarchical arrangement in which industry will basically function as price takers in a process administered exclusively through the Department of Health.  

One reason why the changes have attracted less attention than they deserve is the larger debate over reform of the NHS, which is being reorganized under a bill now making its way through Parliament. Ironically, the NHS reforms promise more autonomy to local physicians in funding patient care and introduce more private sector competition in service delivery—just as the demise of the PPRS removes what is left of pricing freedom in medicines, in favor of outright controls. And although the NHS reform is expected to cut $8 billion in costs to the $160 billion system by 2015, none of the savings are pledged to improving access to medicines.  

In addition, industry itself is taking a low profile on the drug proposal, with the Association of the British Pharmaceutical Industry (ABPI) declaring basic support for VBP as a framework for evaluating a future pact with government. Rob Walton, an analyst for Wisper Public Affairs, noted in a recent blog that the industry position was "so uncontroversial" that the Department of Health was able to cite it in responding to critics of a PPRS overhaul during the first public consultation on its plans last year.  

ABPI Director Stephen Whitehead's support for VBP—"it provides significant opportunity to both improve patient outcomes and stimulate the development of new and innovative medicines of the future"—did feature prominently in the government's press releases. But the language is highly nuanced and accompanied by a number of important caveats; like many other aspects of the debate on access and pricing in Europe, the way the industry speaks in public can be open to interpretation.   

It is also true that there is little consensus on exactly what the government intends to do, and—more importantly—how and to what effect the new regime will be implemented. The discussion itself has been exhaustive to the point where all parties think they have heard back at least some of what they have said. VBP has been on the reform docket since 2007 and the Conservative coalition government formally presented it as a replacement to the PPRS in 2010.  

The fundamentals of the plan are relatively clear. The government intends to curtail the National Institute for Health and Clinical Excellence's (NICE) power to determine whether the NHS should adopt a drug for reimbursement or not, with formal recognition granted to the Department of Health (DOH) as the sole entity responsible for making pricing decisions on new products. NICE will retain responsibility for conducting initial cost-effectiveness appraisals on selected drugs and is given an expanded remit to set broad therapeutic guidances on how these medicines should be made available in the treatment of diseases.  Pharma companies will decide on whether to offer products to the NHS at the prices the DOH government sets down, while physicians make a judgment on whether to prescribe them.   

The nub of the matter is that these decisions will hinge on price thresholds geared to the maximum amount the government is prepared to pay, with higher thresholds in place for medicines tackling particularly severe diseases or diseases with unmet needs; those that can demonstrate "wider societal benefits"; and those that evidence "greater therapeutic innovation and improvements compared with other products." 

Despite Whitehead's broadly welcoming words, the government's narrow definition of innovation in the VBP proposals, in phrases such as "significant improvement relative to existing treatments," is a cause for ABPI concern. "Huge breakthroughs that transform treatment outcomes in a disease area don't happen very often in the normal course of science," Paul Catchpole, the ABPI's Director of value and access, told 

. "You have to be able to reward the incremental steps in order to get onto the next step." He highlights that in areas such as colorectal cancer, recent important advances have only arrived through a series of increments. "The danger is if we don't reward those increments, if those treatments aren't used, then the UK will start to fall behind other countries that are making them available."  

Paul Healy, senior researcher for the UK think tank Stockholm Network, is similarly concerned that if innovation is understood only in a "binary sense," and follow-on medicines are viewed as duplicative and wasteful,  it  "could hinder the potential for the breakthrough innovations that very often are discovered on the back of these follow-ons." In addition, he says, patients could be deprived access to follow-ons, many of which are clinically superior to their first-in-class counterpart and can be a more effective means for treating patients. Half of all the drugs on the current World Health Organization (WHO)  Essential Drug List, he reminds us, are follow-on compounds. 

More bluntly, industry analyst Walton accuses the government of "forgetting how the model of pharmaceutical innovation works." True, he says, science occasionally provides a breakthrough of epic proportions, "but often this is more by luck than judgement." 

The apparent favoring of the elusive breakthrough over steady incremental innovation is just one frustrating symptom of what some see as the VBP proposals' general vagueness. "The devil lies in the details," says Catchpole. "The problem is that so little detail has been elaborated so far." For ABPI, there needs to be a system where all the important aspects of innovation can be appropriately identified, valued, and rewarded. And innovation is dependent upon your position as a stakeholder, Catchpole adds. 

The Stockholm Network's Healy agrees.  He contends that if a VBP system fails to appreciate the true value of medicines by focusing only on factors that policymakers, rather than patients, perceive to be valuable, then industry innovation may only be directed toward those medicines. Patients may value treatments that offer, for example, greater dignity, convenience, and independence, but if such medicines are insufficiently rewarded in the pricing system, manufacturers may be duty-bound not to develop them in the long term. 

This scenario, of course, runs counter to the government's pledge that VBP will boost patient access to new useful medicines. But, for Healy, VBP's retention of cost-effectiveness thresholds means that the concerns many patients have about being denied treatments are likely to continue anyway. "These thresholds can be a particularly useful tool for policymakers," he says, "but in truth they are a fairly clumsy one-size-fits-all method of assessing value." Their arbitrary nature, he argues, will continue to establish indelicate fine lines between patients being treated or not.   

The current system, with NICE as the gatekeeper for determining routine NHS access to medicines "has some teeth in that there is a mandatory funding direction in place, which requires PCTs [primary care trusts] and local NHS organizations to make the medicine available," says Catchpole. But even with this system there is variation when it comes to consistency of uptake and access to medicines. "If it's a problem now it is certainly likely to continue to be one in any new system of value-based pricing," he adds. 

As for the loss of NICE's role within the system, there is a fear that the government's proposed method of evaluation will be far more subjective than the one NICE currently uses, and one that is much more open to influence. For NHS blogger Nigel Edwards, this will put politicians back into the process, allowing for "horse trading" and less transparency.  

Ed Schoonveld, Market Access & Pricing Practice leader at ZS Associates, told 

 that "the NHS seems to be looking for more flexibility to avoid negative reactions to NICE rulings, particularly in oncology and other therapy areas where there have been strong patient group and media reactions." But he admits that that flexibility "will in all likelihood also reduce transparency." 

The new scheme will essentially move to a price-making approach. According to industry consultant Leela Barham, the price that the NHS is willing to pay will be clearer; companies can either accept that price, provide evidence to convince the NHS to pay more, or justify why they won't lower their price. But if VBP is intended to help combat the problem of NICE currently saying "no" to expensive drugs, Yorkshire Cancer Network's David Thomson adds that it will also no longer be able to say "yes." "There is nothing in the proposals which says that GP consortia have to pay for drugs priced at the VBP price," he adds.  

 But it is not lost on any observer that instead of putting NICE on the hot seat when it recommends denying access to a drug, the new regime will put the onus back on industry—patients will be knocking on company doors for that essential explanation of why a price doesn't measure up to bringing it to market. 

The government is also neglecting the confidence factor in terms of what is lost by the disappearance of the PPRS. "PPRS was a voluntary, negotiated system agreed by joint consensus of the parties, largely in private. It looks like this element will be lost," says Schoonveld. "I don't see how global drug companies will be able to voluntarily accept the price-control nature of VBP." Healy reminds us, however, that the PPRS was "never an ideal arrangement," given that it involved behind-the-scenes negotiations between manufacturers and policymakers. "The problem," he says ironically, "is that it seems to work." 

Over its 55 years, the PPRS, in the opinion of the industry and many other observers, was predictable as well as flexible. It regulated not product price but overall profit of the firm, so that companies could set their own prices as long as the return did not exceed an agreed company-wide ceiling. It allowed companies to know in advance what sort of returns they could expect from sales within the NHS and adjust these in response to a product's performance. Although price cuts did lately figure in to the PPRS, having been imposed as part of the last two PPRS negotiations, there was a basic assurance to industry that no further actions on price would be taken over the lifetime of the five-year pact. "This exempted the UK from the ad hoc, arbitrary price cuts or givebacks seen in other European countries," Healy said.   

For Catchpole, the loss of the PPRS presents a potentially twofold problem.Its current objectives are geared both to the promotion of a strong pharma industry and to governing the healthcare system. "It ensures value for money for the NHS and it permits fair and reasonable prices for medicines, so that industry is, at a minimum, able to cover its R&D costs," he says. But the stated objectives for VBP "don't make any reference to industry requirements with regard to fair and reasonable prices—only to the needs of the health service." 

What's more, the government has said the VBP will only apply to new medicines launched after 2014. Says Catchpole: "There are only 20 to 30 medicines a year that will go through that process." But there are many thousands of existing medicines already on the market that will not be subject to VBP. "There has to be a system in place that will also cover those medicines."  Significantly, the government plan is silent on that score, but wider "genericization" of the market is a possibility because the Department of Health has been pursuing that approach for the oldest drugs, for some time.   

And finally, what are the consequences for UK pharma on the international stage? Might the introduction of VBP see the UK competitive position further eroded? Rob Walton, pulling few punches, believes so. "We should prepare for a period of significant retrenchment in the UK pharmaceutical base once the PPRS has gone," he writes. Tacitly, the ABPI agrees. "Historically, the UK is one of the first launch markets in the world for new medicines because it has rapid freedom of price setting at launch," says Catchpole.  

And UK prices are used commonly as a benchmark in many other markets: Twenty-five percent of markets that have some kind of price referencing system reference the UK price in their own processes, and another 15 percent of countries indirectly reference UK prices. The UK's position as a commonly referenced market means that the reforms will "likely be met with manufacturers reconsidering how quickly they want to launch their products there," adds Healy. 

If assessments were to accurately measure the value of medicines to society in the UK, this would not be too problematic, given that manufacturers would be delaying or not launching products that society values less. But, says Healy, "as VBP in the UK would not be considering all factors of value, patients may be forced to endure longer waits for some innovative medicines to be launched  here." Similarly, Schoonveld warns that "companies will now have no choice but to deny access to new drugs where accepting a substantially lower price in the UK would impact business in the rest of Europe, Canada, and Japan." Thanks to the PPRS, the NHS already pays relatively low prices for medicines when compared with other developed countries. "If VBP assisted the NHS in extracting even further reductions," says Healy, "this could have a global effect on revenues and consequently on global investment in R&D." 

Overall, most experts believe that reforms in a slow growth market such as the UK are unlikely to drive the global strategies of the Big Pharma players.  But this does not mean that changes in the UK will not shape what other countries do to control price and access to medicines in the future.  Schoonveld notes that while European countries have looked at the UK's cost-effectiveness-based system, most countries will probably not adopt the UK model as its approach is fundamentally different. "The messiness of the UK decision-making is hardly inspiring."   

Nevertheless, the bottom line is that the UK denominator is trending down, not up—and Big Pharma will have one less country to cite in making the case that innovation must be rewarded.   

also cautioned that the dire forecasts do not necessarily apply to the 

 of value-based pricing. Reforms that establish a closer association between the price of a medicine and the value it presents to society are to be welcomed, and it may be that VBP will offer more latitude for incentivized pricing in outcomes-driven disease areas such as cancer, particularly where there are good diagnostic tools involved.  

The fundamental problem for critics of the government's proposals is the confusion as to what "value" actually means. For Schoonveld, VBP, as the DOH is defining it, "does not mean anything." He contends the drug industry has always engaged in value-based pricing where it could—and when it was not restricted by government intervention. In reality, he says, the prospective UK system could be called "Value-Based Price Control." 

Arguments about definitions notwithstanding, what is indisputable is that the VBP (and other healthcare) proposals are being shaped by the pressures of an economic crisis. As such, changes aimed at establishing a more sustainable healthcare system could be outweighed by measures that are trying to plug holes in public finances. When the UK government's plans for VBP were first drawn up, Walton reminds us, the world was a different place. 

The government's consultation document ended with the assertion that its preference would be "to achieve a negotiated agreement on value-based pricing," with the hope that these negotiations "might begin sometime in 2012." But a DH spokesperson threw no more light on this for 

, and simply re-iterated that VBP was on course to take effect as originally set out in the proposals. That is just 18 months away, not long for lobbyists to secure the clarification of detail and definition that the industry is looking for. The industry strategy is to get tough behind the scenes, reminding politicians of the "hollowing out" investment consequences of taking the same path as Germany, where introduction of the AMNOG reform legislation (see 

, November 2011) has resulted in the predicted lower price increases but at the expense of delays in the launch of medicines with EU approval. If this situation were mirrored in the UK, says ABPI's Paul Catchpole, "it would be a really bad outcome. Nobody benefits—not the patient, not the NHS, nor the industry."  

Features

Will changes to the P&R system in the UK finally put some real metrics behind the elusive concept of value?

Value-Based Pricing: Too High a Price for UK Pharma?

 50 shows an industry whose growth has slowed to a crawl in the face of patent expirations, aggressive payers, and a tough environment for approvals. The 50 this year sold $610 billion in human prescription pharmaceuticals, up just 2.8 percent from last year's $593 billion. The top 10 grew even more slowly—by just 2.6 percent—and accounted for 59 percent of the 50's total sales, just like last year.  

In a year in which investors have looked with increasing disfavor on large R&D budgets, R&D spending grew by just 4.5 percent, from $101 billion to $105. Among the top 10, R&D was almost flat, growing by just 1.6 percent.  

Four companies dropped off the 50 because of mergers: Genzyme (last year's number 29), now a part of Sanofi Aventis; Alcon (previously 39), which was acquired by Novartis; Cephalon (previously 40), which is now a part of Teva; and Nycomed (previously 48), bought by Takeda.  

The consolidation that knocked these companies off the list had another effect: The companies at the bottom of the list are smaller. Every company in the 50 last year had sales of at least $2 billion. This year, the smallest, Aspen, had sales of $1.66 billion. The drop is even steeper when you look at revenue as a percentage of the total revenues of the whole

50. Last year's smallest company accounted for 0.4 percent of the total revenue of all 50 companies in the ranking. This year, the equivalent figure was 0.2 percent—only half as big a percentage. By way of comparison, in 2004, the first year when all 50 companies had sales of more than $1 billion, the smallest company accounted for 0.3 percent of the revenue of the 50.  

Channel Distribution by US Dispensed Prescriptions and US Sales 

New additions include a reincarnated Valeant (44), formed when Biovail—Canada's largest publicly held pharma, a specialist in CNS drugs and delivery—purchased the American firm for $3.3 billion, adopting its name and putting Valeant CEO Michael Pearson in charge of the combined operation. Endo Pharmaceuticals (45) is currently in the process of "reinventing" itself with a new business model and name (Endo Health Solutions); the company grew its branded and prescription pharmaceutical business by 38 percent in 2011. Grifols, the Spanish manufacturer of plasma fractionation products (47), grew revenues by more than 80 percent, partly as a result of the acquisition of US-based Talecris. And finally, Aspen Pharmacare, the 50's first African company, grew its revenues by 29 percent last year, and its CAGR since 1998 is 46 percent. The company has been expanding its footprint, most recently by the acquisition of Australia's Sigma.  

While some of the data this year may be a little depressing (incidentally, the anti-depression class of drugs jumped to number one in the US, surpassing lipid regulators), the hint of diversity and new ideas creeping up from the bottom of the list is a cause—albeit a small-cap one—for optimism.  

Top 25 US Pharma Products by Prescriptions 

*Special thanks to the IMS Institute for Healthcare Informatics and IMS Health for supplemental data

faced a brutal year of patent expirations in 2011, including not just US exclusivity loss for its leading product, Lipitor, but Aromasin, Xalatan, Vfend, and Protonix as well. Still, the industry giant had five products that sold $2 billion or more, and revenues that topped $500 million in 18 countries outside the US. It also acquired King for $3.6 billion, providing a broader profile in pain, and sold formulation specialist Capsugel. Approvals included Xalkori (crizotinib) for some lung cancers with the ALK gene. 

won 15 approvals in the United States, the EU, and Japan. Among them was US approval for Arcapta Inhalr for COPD. It also launched the oral MS drug Gilenya. While still integrating Alcon, the world's largest eyecare company, acquired last year,  Novartis bought Genoptix, a diagnostics company, for $458 million, and hit a key landmark as Sandoz's generic version of the anticoagulant enoxaparin became the company's first "generic blockbuster," with sales of more than $1 billion. 

gained FDA and EU approval for Victrelis, the first new medicine for chronic hepatitis C in almost a decade. Other approvals included Juvisync, a combination of the diabetes drug Januvia with the statin Zocor. Merck also bought Inspire, an ophthalmic specialty firm, for $430 million and formed alliances with India's Sun Pharma (to promote branded generics in emerging markets) and Parexel (to pursue biosimilars). As the year ended, CEO Kenneth Frazier was appointed chairman, replacing Richard Clark. 

acquired Genzyme for $20 billion in April, the largest of 30 new transactions in 2011. Others included the acquisition of pediatric specialist Topaz Pharmaceuticals and Universal Medicare, a consumer health company in India. Jevtana, for advanced prostate cancer, launched in Europe, and the Allegra family of allergy products launched in the US on an over-the-counter basis. Lost market exclusivity included Taxotere, Xatral, and Nasacort in the US and Aprovel in Western Europe. 

gained simultaneous FDA approval for Zelboraf, a targeted therapy for metastatic melanoma, and its companion diagnostic test—a first. It also acquired Anadys, a hepatitis C specialist, for $230 million, and announced a partnership with Evotec to develop oncology biomarkers. In a controversial decision, FDA withdrew approval of Roche's Avastin for breast cancer—though CMS announced it would continue to reimburse for it. For the first time, the family-owned bloc of Roche shares dipped below 50 percent when Maia Oeri dropped out of the group. 

 announced the $660 million sale of 17 noncore OTC brands, including Beano, Goody's, Ecotrin, Fiber Choice, Sominex, and Tagamet, to Prestige Brands. US approvals included Benlysta, the first new lupus treatment in more than 50 years (developed with Human Genome Sciences); the anticonvulsant Potigal (developed with Valeant); and Horizant for restless leg syndrome (developed with XenoPort). 

sold its Astra Tech subsidiary, which makes dental implants and medical devices for surgery and urology, to Dentsply for $1.8 billion. FDA approved Brilinta, AZ's new anticoagulant, reversing its 2010 rejection of the drug, as well as giving the nod to Caprelsa, the first approved therapy for nonoperable advanced medullary thyroid cancer, an orphan condition. Meanwhile, Japanese regulators approved Nexium—a decade after the drug's US launch. 

 while struggling to put manufacturing problems behind it, took a commanding position in the orthopedic market with its $21.3 billion acquisition of medical-equipment maker Synthes. It won approval for Zytiga (for late-stage prostate cancer) and the anticoagulant Xarelto. J&J exited the drug-eluting stent market it helped create. It sold off its Jannsen dermatology business and the US rights to St. Joseph's aspirin, and bought the over-the-counter brands of India's J.B. Chemicals & Pharmaceuticals. 

announced plans to split itself into two companies: a medical products company focused on medical devices, branded generics, and nutritionals; and a research-based pharmaceutical company. The spinoff is slated to take place late this year. Abbott also received European approval for a new absorbable heart stent, and filed for multiple new indications for Humira. 

successfully fended off a challenge to its Cymbalta patent in federal court, preserving its market exclusivity until at least June 2013. It won US and EU market approval for Bydureon, the diabetes drug it developed with Amylin, only to have the nine-year-old partnership break up in November. It announced a strategic alliance with Boehringer Ingelheim focused on diabetes. The partnership won US and UK approval for Tradjenta/Trajenta. In July, Lilly acquired the animal health business of Janssen, a Johnson & Johnson company. 

is a Partner in Oliver Wyman's Health and Life Sciences Practice. He can be reached at 

is Marketing Director in the Health & Life Sciences practice of Oliver Wyman. He can be reached at 

More consolidation didn't boost sales at the top, but a handful of nimble newcomers posted impressive growth on the other end of the curve.

Pharm Exec 50: Growth from the Bottom Up

This sponsored supplement was produced by Focus Reports.  

Project Coordinator: Mariuca Georgescu, Chiraz Bensemmane 

Contributors: Solene Pignet, Marine Neveu, Herbert Mosmuller 

Associate Editor: Rachel Marusak Hermann 

For exclusive interviews and more info, please log onto or write to 

An emerging country with a dynamic market, South Africa is widely seen as the gateway to Africa. From major multinational pharmaceutical corporations to burgeoning local generic companies, a wide range of industry players are present, developing their best strategy to make the most of the many opportunities within the country's borders and beyond. 

 Cover art 'Dejected' by South African artist Benon Lutaaya			

In just the past few years, South Africa has hit several key economic benchmarks demonstrating the country's upward trajectory. The country recently achieved its 1st Millennium Development Goal (MDG), reducing the proportion of the population living on less than 1 USD per day by half. Additionally, South Africa celebrates its second anniversary in 2012 as a member of BRICS, the international economic organization that includes Brazil, Russia, India, China and South Africa. Inclusion into the group of emerging economies bolstered South Africa's global standing and brought hope for a significant increase in trade relations with its fellow member states.  

Despite these major steps in the country's development, South Africa still faces significant challenges including the heavy burden of the HIV/AIDS epidemic, persisting poverty, and complicated racial issues. At the crossroads of these challenges, the national healthcare system is affected by major inequalities. Seventeen years after the fall of apartheid, a clear divide still runs through the country's healthcare sector. Fixing the system is one of the government's top priorities. 

Dr Aaron Motsoaledi, South Africa's Minister of Health			

Minister of Health Dr. Aaron Motsoaledi explains, "Today, discrimination has been cleared and abolished by the constitution. Unfortunately, we discover that we still have two healthcare systems, which, this time, are no longer defined by law. It is not written anywhere, it is not allowed by the constitution, but it is there, and it exists.... Whether you belong to one or the other is no longer determined by your color, but by how much money you have in your pockets."  

In an attempt to remedy this situation, the South African government has launched some major national healthcare initiatives. From implementing National Health Insurance (NHI), to engaging in dynamic Public Private Partnerships (PPP), these initiatives are changing the face of healthcare in South Africa. Combined with a dynamic medicines market which includes both innovative drugs and branded generics, the South African market continues to evolve, revealing new opportunities along the way. 

The Department of Health in South Africa is committed to completely transforming the country's healthcare system. Launched in 2010 by the ruling party, the African National Congress (ANC), the national health insurance program aims to ensure healthcare coverage for all South African citizens.  

Under the current system, South Africans rely heavily on private insurance to access health services. In fact, the country has one of the highest rates of private insurance reliance in the world at 44%. However, only a fraction of the population can afford private insurance, resulting in what the government is calling a 'two-tiered health system.' 

The government calls the reform necessary given the country's consistently poor health outcomes despite its relatively high proportion of health spending. Compared to other BRICS countries, South Africa's health contribution, more than 9% of its total budget to public health, is second only to China, which spends 10%. 

Val Beaumont, executive director of IMSA			

Health Minister Dr. Aaron Motsoaledi says the problem is systemic. "The problem is how the Gross Domestic Product (GDP) is distributed. In South Africa, 5% of the GDP out of the 8.5% spent goes to 16% of the population, while only 3.5% goes to the other 84% of the population. Now, this 16% is the elite, the well-to-do, the employed, the powerful, and the healthy. The remaining 84% of the population are mostly very poor, unemployed, very sick, and carrying the biggest burden of diseases." 

The reform is scheduled to be implemented in phases over a 14-year period and is said to involve changes in the service delivery structures, administrative and management systems. The government has worked out a roadmap to boost public healthcare quality before the introduction of the NHI fund. 

Luciano Marques, CEO and country president of Novartis South Africa (Pty) Ltd 			

Chief Director of the National Department of Health, Dr. Anban Pillay, says, "The focus is to improve the system so that when the NHI is ready, even those who are in the private market can use the public health system and be confident about it." 

The government will create a fund derived from tax incomes through which private and public providers will be contracted, and patients will access services that will be paid through the fund. However, from a macro-economic perspective, there are concerns related to the modalities of financing. Critics say that the country's small middle class and 25% unemployment rate will make raising sufficient funds through the proposed tax scheme a major challenge. 

Aspen Pharmacare, East London, South Africa			

However, Pillay refutes these concerns. "Our costing had taken account of the worst case scenario. To assess what is the country's capacity to finance the NHI, we have looked at what the government is currently spending on healthcare as well as how much South Africans are spending on private medical insurance. Combining these two funding streams allows us to achieve efficiency in our purchasing." 

From a pharmaceutical industry point of view, the NHI plan could represent significant growth opportunities. Luciano Marques, CEO and country president of Novartis South Africa, says, "The implementation of NHI will broaden the access of medicines to more of South Africa's citizens." 

"Only 8 million people are currently covered by private healthcare insurance. An additional 42 million people can have more access to medicines through NHI. Broadening access to healthcare is closely aligned with Novartis' mission of caring and curing," Marques says. 

Others from the industry are more cautious. Val Beaumont, executive director of Innovative Medicines of South America (IMSA), says, "Theoretically, South Africa is going to be a much larger market for medicines when we move to universal coverage with equal access to healthcare. However, in the same context, there are going to be new rules, new policies, and new requirements. Therefore we need to make sure that there is an opportunity for innovative medicines there, as clearly we expect a lot of pressure on prices in that environment." 

Aspen: South Africa’s Leading Generics Provider			

Richard de Chastelain, country division head of Bayer Healthcare South Africa, says that it is too early to give a prognosis on what NHI will mean for the pharmaceutical industry. "These are exciting times, but for the time being, we have to take NHI out of the equation as we do not know what that model is," he explains. 

Similarly, Vicki St Quintin, chief operations officer of the Pharmaceutical Industry Association of South Africa (PIASA), says that the jury is still out. "We hope that the NHI will ultimately lead to a greater access to medicines and therefore greater benefits to the patients, while retaining access to innovative medicine. In other words, we would be very concerned if the system introduced would involve an 'always cheapest' type of approach, restricting choice for the patient." 

John Fagan, general manager of Sanofi South Africa			

South Africa's move to providing universal health care through NHI is not meant to weaken the role of the private sector in public health. On the contrary: as part of the reform, the government envisions increased partnership with the public sector. 

Dr. Motsoaledi says that NHI should strengthen collaboration between the sectors. "When we say we want to bridge that gap between the public and the private systems, we actually want to blend these systems so that they do not work as separate entities. That is what NHI is all about. Can you blend the systems in such a way that they support each other instead of being separate?" 

Collaboration between the public and private sector is occurring in many areas of the healthcare and pharmaceutical industry across South Africa. For many, Public Private Partnerships (PPPs) are seen as a sustainable solution to some of the country's most pressing health challenges. 

Michael Flemming, CEO of Life Healthcare 			

Last year, the treasury department announced that private businesses would be attracted to the public health sector to improve the quality of service in state hospitals. Critics raised concerns that private sector involvement would lead to expenditure increases, job losses and a decline in the quality of care. Proponents countered criticism by arguing that there are not enough state funds to make needed upgrades to public hospitals.  

The Life Healthcare Group, a leading private hospital operator in South Africa, has the largest PPP in healthcare in the country. One of the group's hospitals, Life Esidemi, is managed in partnership with the government. Michael Flemming, CEO of Life Healthcare Group, says the collaboration is a success. "We have 4,000 beds which are full every day of the week, where we look after government's patients. Life Esidemi is the perfect response to the government's need to increase the number of beds available to its people."  

Flemming believes that the PPP model provides a viable solution to the most pressing health challenges. "It is sad that the government is not using this model more. It is good model, a cheap model, which provides good quality care."  

It's a model that has also proven successful in addressing other public health challenges. In 2003, Litha Healthcare Group, Ltd., a South African-based company with product offerings spanning across vaccines, pharmaceuticals, medical devices, and cold chain logistics, set up The Biovac Institute, a PPP which aims to improve the development and production of affordable, quality vaccines for South Africa and its neighboring countries. 

Richard de Chastelain, country division head of Bayer healthcare South Africa 			

The Biovac Institute is the only human vaccine manufacturing facility in South Africa. Its mission is to ensure that the country has the required domestic capacity to respond to both local and regional vaccine needs. 

Selwyn Kahanovitz, group CEO of Litha, says that a PPP was the right model given the public health need driving the institute's mission. "In our case, the PPP model also allows the government to have strategic input to monitor what is happening, but not to be in the driver's seat. It allows the private sector to operate, to drive, to make the business decisions. Meanwhile, the government is in the background monitoring and making sure that the strategic objectives are met," he says.  

Sanofi Pasteur, the vaccine market leader in South Africa, contributes to the consortium. John Fagan, Sanofi's general manager of South Africa, says, "This partnership, which is fairly unique in our group, provides vaccines for the national pediatric immunization program as well as for the broader public health needs of the country, such as outbreak and mass immunization campaigns and seasonal and pandemic flu responses." 

From increasing the number of hospital beds to improving the availability of vaccines, the government is working with the private sector in response to a wide range of public health challenges. Another PPP example can be seen in the effort to produce active pharmaceutical ingredients (API) nationally. 

Litha: Expanding its Pharmaceutical Portfolio			

Country Report

In just the past few years, South Africa has hit several key economic benchmarks demonstrating the country's upward trajectory.

Country Report: South Africa

Data is information waiting to happen, but today's global pharmaceutical companies are riddled with data—so much so that their numerous functions and disparate systems struggle to know what to do with all of it. Worse still, these data are usually disconnected, duplicated, and, all too often, inaccurate. 

Data is generated by the day-to-day activities that take place in each department. Regulatory operations personnel, for example, produce documents, develop submissions, and file them in for approval. However, a submission begins long before the documents themselves are created. The process commences with the generation of concepts that get encapsulated into documents, which ultimately form the regulatory submission. Submissions become part of a portfolio across multiple nations, with concomitant licenses that must be managed. In most cases, data gathering is managed locally, with regulatory departments drawing on the minimum amount of information needed to adhere to requirements or track commitments.  

What is often missing is the ability to aggregate information across the enterprise so that it can be used to conduct more predictive work, such as project planning across the portfolio, resource planning, and pre- and postmarketing activities. In so doing, companies can manage their activities more holistically. Other industries have been quicker to grasp the importance of information management.  

Perhaps one of the best examples is the automobile industry. For example, when problems arise with a particular model, the manufacturer can respond quickly by linking information with warranty information. When a manufacturer spots a trend, like a faulty part, it can ensure that its dealers are ready with the new parts and also send out relevant recall letters, thereby helping to minimize any escalation in cost. 

Pharmaceutical companies are aware of the data they generate and capture. According to a survey by the consulting group Ovum, the pharmaceutical industry is ahead of other industries when it comes to adopting enterprise applications, such as customer relationship management (CRM) and enterprise resource planning (ERP) solutions, but lags behind with business intelligence solutions such as regulatory tracking and management systems that can harness data productively. Poor information management can create a bottleneck for companies on multiple levels, as well as add unnecessary cost burdens. Take the cost of storage, for example; failing to manage data results in the retention of redundant information and records, which occupy storage space within a system. Then there's the time cost associated with chasing information needed to meet regulatory requirements or to make a business or strategic decision. One particular problem that company leaders have identified is the use of multiple terms or definitions to describe one thing, because it may mean that information about a product exists within several systems, with each system having its own definition. Consolidating this information can pose challenges. Information management aims to reduce the time it takes for people to locate relevant content and enable them to make confident business decisions based on informative data.  

From a strategic point of view, good information management is what stands between sluggish response times and streamlined business practices. All of a company's information should be connected. Ideally, submissions flow into licensure, which then flows into the portfolio. Tracking resources via project planning, the authoring process, the submission process, the application process, and, ultimately, approval makes it possible to form a bigger picture of how resources are being managed and where they might best be directed. Companies can use this informational picture for resource prediction across multiple products and countries. For instance, good information management can concurrently track license renewals, products that are coming to the end of their patent life, new products entering the market, and the state of current R&D projects. This information can help answer questions such as: 

» Is it in the company's interest to continue marketing a particular product?  

» Should the company look for a partner?  

» Are there opportunities for a product extension, and what would the market potential for additional indications be? 

Good regulatory information management results in a detailed understanding of all the components pertinent to a particular product. If a problem arises somewhere along the line, it also enables the company to quickly determine what the problem is and decide on a resolution. 

Successful information management requires a technology solution that encompasses all enterprise applications, including document management, ERP, and customer management. Ovum analyst Sarah Burnett describes the complete, multilayered enterprise package as the information management stack.  

The information stack begins at the infrastructure level, which comprises both internal applications, such as file systems, databases, and archiving; and external sources of data, which may encompass cloud deployments such as software services, RSS feeds, and web-generated information. 

Next comes data management, life cycle management, the retirement of old data that is no longer required, archiving, and records management. Often, companies have data or reports that, while not active, need to be accessible in the near term. Even though some solutions allow for this type of storage, it's important that companies learn how to classify information to simplify the task of finding it. There's a need to standardize the way information is classified, as the use of different terms negates the value of data storage. Another crucial aspect is metadata management. What that means is that more time needs to be spent resolving issues around data definitions and improving data quality, because having good and consistent data from the outset will allow companies to produce better quality reports and analysis. 

The third layer in the information management technology stack comprises data extraction and integration. First, there's data warehousing or data consolidation, which deals with longer-term data cycles. This system is most appropriate when there are definitional discrepancies or when a lot of data cleansing is required. Data warehousing or data consolidation is valuable insofar as it lets personnel conduct multidimensional analyses. If, for example, a number of issues have arisen during drug development, business leaders can use the data to analyze the value and cost of the project.  

Another technology that fits into the extraction and integration layer is data federation, or data virtualization, whereby a department or business leader might grab snippets of information from different systems for quick access and analysis. This technology is most applicable for small quantities of data that don't require substantial transformation or cleansing. According to Burnett, data virtualization enables users to quickly access data that is pertinent to their particular requirements. Master data management, which gives users a single view of an important part of the business, such as a product or a customer, also fits into this layer. One example might be filling in missing pieces of data in a record or removing errors from a record. The final part of the extraction/integration stack is service-oriented architecture or data services. This is another way of breaking data into components that can be reused at various points throughout the organization. 

Information services is second from the top of the stack. For most users, this level is where the more familiar tools and applications such as search, retrieval, audit, and forecast are found. 

At the top of the stack is delivery, which focuses on making information easier for the user to digest and understand. Delivery allows information to be synthesized for a particular user, such as financial, project management and development, or scientific research. 

Regulatory information management involves more than tracking submissions. The processes and technologies used to enable successful regulatory information management help companies consolidate disparate systems and produce meaningful, holistic information that leads to better decision-making. Only by having clean, consistent, and reliable data is it possible to build a broad picture of how an organization's resources are currently being used and how they can be maximized in the future.  

Special Section

Companies know they need regulatory information management. What they don't always know is where to start and how to weave this vital capability across the enterprise.

Managing Information Overload

On both the clinical and commercial sides of the pharmaceutical business, the options for using data have proliferated to the point of becoming overwhelming. Everything is bigger, from the databases themselves, to the investment required, to the payoffs for getting it right.   

Other sectors—namely the retail, consumer packaged goods, and financial industries—have been coping with Big Data for as long as a decade. So, why is it just now becoming topical in the pharmaceutical industry? There are two interrelated reasons. 

First, the healthcare delivery system has traditionally been very fragmented, and information has not flowed freely across entities. Rather, each party has used its own data (or created data as a biproduct of automation), and there was no impetus to share it. However, with the rapid increase in usage of Electronic Medical Records (EMRs), which is the result of federal funding, the creation of Accountable Care Organizations (ACOs), and the rise of health information exchanges, those silos are breaking down. There is a drive to allow information systems to communicate with one another across all points in the delivery of care.   

Second, there is a growing, almost insatiable, demand for information as healthcare becomes evidence-based. Every party in the system—from manufacturers, to payers, policymakers, to providers and patients—has much to gain from understanding what works and what doesn't. And that requires a comprehensive view that can only be gained from multiple data sources that, when amassed, become Big Data.   

The Obama administration further reinforced the need for Big Data in its March 29 announcement of $200 million in funding for a "Big Data Research and Development Initiative," which seeks to improve our ability to extract knowledge and insights from large and complex collections of digital data. While the initiative is intended to address scientific discovery, environmental and biomedical research, education, and national security, healthcare clearly stands to benefit from such significant investment. 

The new sources of information that are causing such a stir within the pharmaceutical industry include: 

The data contained in these systems provide a detailed clinical picture within the site of care and contribute to an overall view of a patient's treatment pathway. 

Patients use social networking to, as the Pew Internet & American Life Project described it, "lend a hand, lend an ear, lend advice" to one another. "Listening in" on such public exchanges can provide rich insights into the patient or prescriber perspective.    

Privately funded and government-sponsored longitudinal studies produce a wealth of information on treatment practices, patient persistence and compliance, and health outcomes, which are increasingly required by payers. 

When, in the foreseeable future, an individual's genome can be mapped affordably, the amount of data—while staggering—will bring exponential value to medicine. It will be possible to go beyond understanding what works and what doesn't, to actually predicting what will work, person by person.  

If the FDA succeeds in mandating that pharmaceutical companies install systems to track and trace their products, the systems would generate a data point every time a package "hits a node" on the distribution system.   

When all of these elements are added to existing information sources—including secondary data, a company's own closed-loop marketing program, or other internal data—the Big Data challenge grows exponentially. 

Underlying the interest in Big Data is the desire to gain a competitive advantage via speed to insight and faster, more effective decision-making. Companies that lag behind their peers and other stakeholders in making use of Big Data risk being at a disadvantage at the research bench, in the market, and at the negotiation table. It becomes obvious even through the following broad list of potential applications that no company could afford to be left behind in using Big Data, which can be used to: 

» Assess the feasibility of clinical trial designs and recruit trial subjects   

» React more quickly to market changes via real-time market measurement and sophisticated KPIs  

» Enhance commercial activities and enable more personalized messaging  

» Deploy predictive capabilities rather than retrospective analytics 

Like a kid in a candy store, the industry is looking at the new data sources and the insights they can offer as a tempting array of choices. But on what should they spend their dime? What is the best investment strategy? Which new sources will yield the greatest return? What might they miss if they head down one path too early?   

This speaks to the need to not only understand what can be gained from each new source of information, but to also work backwards from an understanding of what it is a company wants to achieve. Just as "form follows function" in design, "data follows strategy" in business.  

Questions also inevitably arise around a company's ability—from a technical, organizational, and intellectual standpoint—to extract the value from Big Data. But before they begin, organizations must consider collection, aggregation, integration, and presentation of the data.  What technology investment is required to store and mine the data? What should be done in-house, versus by business partners? What skills and IP should a company safeguard as a competitive advantage?    

We contend that the necessary technology to deal with Big Data either exists today or is currently in development. And, since technology is always advancing and changing, it could be argued that a company's plans should be "technology agnostic."  Consider the various layers of technology involved:   

The technology exists to collect, aggregate, and store massive amounts of structured and unstructured data. It requires a lot of "heavy lifting," but it can be—and is—done. IMS's technology infrastructure is a case in point: We routinely process 38 billion transactions each year, which are collected from nearly 700,000 reporting sites worldwide. Few pharmaceutical companies are likely able to process data on this scale cost-effectively on their own, simply because of the upfront investment required.  

Even so, we are seeing advances today and on the five-year horizon that will short-circuit some of the work and time required to code and extract data. In the near-term, there is a methodology being tested by Internet search companies that may be applicable to industry databases. Essentially, it uses algorithms to reduce the amount of data that needs to be restructured when it is loaded by spotting what has changed. Further into the future, we may be able to do away with having to retrieve data from storage when we need it; everything could be immediately accessible in memory on solid-state disks.  

The tools that can support analytics across Big Data are becoming available. Software manufacturers and service providers are investing billions in their development, although we certainly are not there yet when it comes to being able to analyze every aspect of Big Data simultaneously. One scientist captured it well. While referring to his computer, he lamented, "The cure for cancer is in that box, but we can't get it out." 

One exciting area of progress is in predictive analytics (as opposed to retrospective analytics). This will be invaluable in marketing (being able to predict customer behavior), outcomes research, and potentially for payment and reimbursement schemas based on historical behaviors. 

Great strides are being made in data visualizations, and mobile business intelligence is quickly emerging as a capability. Data visualization tools can be utilized to enable non-data programmers to analyze the data in real-time. More comprehensive mobile reporting is on the way, and companies ought to be establishing their mobile strategy now. 

So, the necessary technology is coming along, and, in fact, is already ahead of most firms' ability to adopt it. The limiting issues and most daunting challenges around Big Data are related more to a scarcity of resources (talent, time, and budget) than they are to technological capabilities. 

In the continuum that stretches from acquiring Big Data on the one end to reporting findings from it on the other, what should pharma keep "close to the vest?" What functions/responsibilities ought to remain in-house?   

It likely will be impractical for pharma to be in the business of acquiring Big Data, given the vast number of sources and privacy rules associated with this. At the same time, it my be highly inefficient for pharma to process and deliver the data, as cloud-based computing and storage has made owning storage and processing impractical for most entities at the scale the cloud affords.  

The IT infrastructure for dealing with Big Data will be in private and public clouds and maintained by someone else. Routine analytics will be outsourced. Reporting will be outsourced. What companies must have, though, will be people responsible for: 

» Setting the company's technology strategy and designing the architecture for internal systems  

» Implementing and overseeing data governance   

» Managing the company's many business partners   

» Designing or approving new analytical algorithms and approaches  

» Understanding the insights that analytics provide and using them for applications that provide strategic competitive advantage   

As a first step, firms must recognize that partnerships with third-party providers will be required, given the considerable costs involved. Data aggregators, cloud solution providers, and analytical software companies all will play some role in the necessary capabilities. The fast-changing environment requires being open to new and evolving data and technology solutions.   

Options for using data have proliferated to the point of becoming overwhelming. So what opportunities does this information explosion present?

Super-Size Me: Optimizing the Information Explosion

In late March, the Supreme Court debated the merits—or lack thereof—of the Obama Administration's Patient Protection and Affordable Care Act (ACA). The law's key provision, the individual mandate, sparked a proliferation of analogies from the Justices. Some of the analogies were helpful, some less so, but each one provided an insight into that particular Justice's thinking on the issue. Can you match the analogy with the Justice? (Hint: Two are from Justice Scalia) 

Answers: A: Justice Scalia. B: Justice Breyer. C: Justice Sotomayor. D: Chief Justice Roberts. E: Justice Scalia. 

Column

In late March, the Supreme Court debated the merits-or lack thereof-of the Obama Administration's Patient Protection and Affordable Care Act. Can you match the analogy with the Justice?

Comparing Apples to Broccoli

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 of them. 

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.  

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. 

Today, pharma companies seem to be divided into two camps—those that are successful in developing innovative medicines and those that are struggling to keep up, only producing  "me-too" products. Both can benefit from a strong CVP to secure market access in these emerging markets. Companies with innovative products can leverage a CVP for early market access, but companies with just "me-too's" can use a CVP to bolster their weaker market position. 

To gain market access in emerging markets, pharma companies face pressure to offer a convincing Corporate Value Proposition to governments.

Pharmaceutical Executive-05-01-2012