TAKING A FRESH LOOK AT EMERGING MARKET
Growth patterns in developed markets continue to flatten
Firms are shifting more of their focus- new sources of revenues and
profitability in emerging markets
Reason for hope: Driven by increasing wealth and a growing
awareness of the advantages of good healthcare and healthier lifestyles,
emerging markets are developing into sources of significant growth.
•Stagnation of mature markets
•Increased regulatory hurdles.
Cluster 1 Cluster 2 Cluster 3
BRICMT economies Second-tier countries
PHARMACEUTICAL POTENTIAL OF EMERGING MARKET AND
Source: IMS Health Market Prognosis; Global Insight; Booz & Company analysis
PHARMA MARKET GROWTH (2011–12) VS. PHARMA MARKET SIZE (2012)
The population of the individual countries is depicted by the size of the bubbles.
Volume market share by product class
(Standard units): BRICS
% of patients in BRIC countries who could
afford high cost therapies in 2011 and 2015
Source: IMS MIDAS Q411 based on ethical market only.
STATE OF THE HEALTHCARE SYSTEM
• Health care spending around 9% of GDP
• Free or reduced cost medicines for patients with chronic diseases
• All the drugs to be kept behind the counter
• 3rd largest pharmaceutical market in the Americas, after the US
• Demand for pharmaceutical products growing by 10% per year
• Expected to reach US $27 billion by 2015
• MNCs moving in- Eg. Amgen, Sanofi, Pzifer, Valeant
• Local drug makers- massive detailing, opening up new R&D units
• Generics are an increasing market
• Medicine prices are regulated by CMED
• ANVISA- grants marketing approvals to new drugs
• Alternative channels to communicate with physicians include- remote
detailing and special attention dedicated to physicians websites.
• Sales representatives can make unlimited visits to doctors’ offices
• Material gifts and trips from reps are prohibited
• Promotion at point of sales
THREE KEY TRENDS AFFECTING BRAZIL’S
• Innovation is declining in the retail segment
• Outpatient therapies addressed by
commoditized drugs, mainly branded
• Generic players growing stronger
• Innovators focus on niche markets or turn
to careful investments with strong brands
eg.Sanofi, Novartis, Pfizer
• On the public side, creation of an
economic evaluation agency
(CITEC), caused a barrier to product
inclusion in funding programs
• On private side, payers tending to
avoid over-expenditure on complex
• Unmet medical needs in complex
diseases favors innovative non-
• Migration of MNCs to non-retail
• Technical differentiation of new
products prevails over commercial
aggressiveness of local companies
Source: IMS Health, Pharmerging-Brazil
The Russian healthcare system is fully subsidized
Spends 4.5% GDP on healthcare
Doctors are among the lowest paid professionals
The market is very volatile and lacks a highly developed infrastructure
Foreign manufacturers dominate
Most large pharmaceutical companies are localized with the help of a state program
Up to 70% of the pharmaceutical market is paid for out-of-pocket by consumers
Source: Cegedim Relationship management-Emerging market today & tomorrow
Local manufacturers currently produce outdated, low cost drugs, and many do not
meet GMP standards
• Innovative products makes 20% of the market
• Generics accounting for 60%
• Traditional drugs 20%
Prescription drugs have a 60% market share
Most essential drugs are foreign, and the prices of everything on the EDL are regulated
by the state
Concerning compensation, pharmaceutical companies cannot accept gifts
The only money they can accept is payment for clinical trials, educational activities,
and scientific activities
Plans to let go of assets dragging down the budget figures
The Ministry of Health will develop and approve standards for treatment
Limited pharmaceutical sales reps’ access to doctors
Market growth is expected to be within 15% in 2015
Defining patient registers
All Russian manufacturers must comply with GMP standards
Want to reduce its dependence on imported drug so international companies need to
localize their effect
Pharma 2020, whose goal is to have at least 50% of drugs made in Russia and 25% made
by a Russian company
For OTC, patients awareness through programs and ads seen on television, web sites,
magazines, brochures, and educational stands for patients in outpatient clinics
For registering drugs in Russia is very time-consuming, strategy of using several
Working with district managers and having qualified key account managers can
smooth the difficulty of working with a government that is less accessible and less
India’s Healthcare System
Indian healthcare sector is expected US $280 billion industry by 2020.
Estimated to grow 14% annually.
Struggling to meet the needs of its vast population, but government programmes
and reforms in the health insurance industry should improve the situation.
Rural India contains more than 100 million
Government is successfully pursuing its goal
of providing 80% of the population with
healthcare access in the next few years.
last five years - addition of 15,000 health
sub-centers & 28,000 nurses.
No. of primary health centers has increased
by 84%, taking the total number to 20,107.
The Pharmaceutical Market
Third largest volume in the world.
Ranks 14th in terms of value.
Expected to reach US$55 billion in 2020.
Key Challenges to Further Growth in Emerging Markets
Lack of healthcare infrastructure
Lack of IP protection
Challenging/nontransparent contracting and tenders
Talent issues (e.g., recruitment, development, and retention)
Lengthy product registration processes
Supply chain and distribution issues
Competition from multinationals
Source: Booz & Company analysis
Future Trends & Strategies
Global pharma players can take advantage of a
variety of options to maximize their investment in
OTC sales are on the increase, offering
opportunities to achieve high volumes and enhance
pharma brands in India.
Expertise in contract manufacturing & scrutiny
around quality issues is driving significant
improvement in manufacturing standards.
Phase III trials are now strongest, Phase II and IV
trials are expected to grow, as more companies start
offering end-to-end services.
Weak intellectual property laws.
A clause that disallows patents for treatments that
are not more efficacious than those already on the
Global Pharma’s evolving business
models and options in India
Healthcare spending : Below 5%
Great Economic disparity
Ambitious goal in 2009 : 90% insurance coverage in 3years
China as imperative sales market:
• Internal booming market
• A strategic logistic location near Asia Pacific emerging markets
• Market for delocalization of raw materials(antibiotic ,cephalosporins
• a platform for research programme and innovative drugs.
• Largest patent application country after USA .
Annui model :Centralize the purchase of drugs to reduce price abuse and consequential cost
Beijing allowed Annui province to introduce its blind bid and tender process.
Prescribing institution allow 0% markup on drugs listed in EDL and purchase of this pharmaceuticals
through two enveloped centrally controlled bid
1st envelope: Ensures technical and quality.
2nd envelope: Price focus.
Shanghai model attempts to balance price quality and benefit.
MNC and domestic impacted on profitability.(Decreased in 30% profitability)
MNC expanding presence in china : But Domestic industry growth is faster
Essential Drug List: Requires key account manager a skill to build relation with hospitals
and government takes years
Pharma Sales Rep very few are detailed , high turnover , frequency of visit is regulated
Sales rep as educator or medical science liason
Greatest challenge is rotating system of physicians by government hence no accurate data
2nd Largest market by 2015
1. Aging population.
2. Increased incidence of chronic disease.
3. Significant investments.
Branded generics less lucrative to MNC’s
Chinese physicians will loose bonuses.
Slashing of whole sale price of drugs .
China evolves without stability .
Flexibility is vital in china.
Diversification is key in china
Doctor education assures long term success.