Emerging Markets
Enter the ‘pharmerging’ markets
The rapidly growing economies of China, Brazil, Mexico, South Korea, India,
Turkey and Russia, with their increasingly well educated and affl uent middle
classes, present attractive opportunities for global pharma, but what’s the best
strategy for tapping into them? David Campbell explains
T
he year 2008 will be marked by to the potential of the pharmerging markets,
DAVID CAMPBELL
unprecedented changes in the global but in the year that ended September 2007,
pharmaceutical market. For the fi rst the top 20 pharmaceutical companies
time, the world’s seven key markets – the increased sales in these countries by about
US, Japan, the UK, Germany, France, Spain 10.5%, a figure considerably above the total
and Italy – will contribute less than 50% market growth.
of the overall industry’s growth. In 2008,
global pharmaceutical sales will grow 5-6%,
China
to reach more than $735 billion. While the
With a population of 1.3 billion, more than
US will remain the single largest market,
the combined populations of the US and
growth in the country is slowing. The US will
Europe, China provides the most visible
account for 33% of total gains in 2008, down
opportunity in the growing pharmerging
from 52% in 2002.
category. The Chinese pharma market has
At the same time, growth will reach
more than tripled since 1997; by 2010 it is
double digits in what IMS Health terms the
expected to double again, tying with the UK
seven “pharmerging” markets: China, Brazil,
for the position of the fifth largest market
for ethical and OTC drugs. In 2008, the
Mexico, South Korea, India, Turkey and
Chinese market will grow by 14-15% to
Russia. These markets will grow at an
$17-21billion. Traditional Chinese medicine is
expected 12-13% (a total of $85-90 billion),
now being balanced out by western
accounting for about 24% of total global
medicines.
growth, and almost equalling that of the US.
The Chinese government has taken a
The pharmerging markets have several
strong stance with regards to healthcare
elements in common. Rising GDP in these
policy, overseeing annual price cuts, enforced
countries will increase access to better
generic prescribing, and an anti-corruption
medical care. Currently, the pharmerging
campaign that targets promotional activity,
markets rely primarily on generic drugs, but
product approvals and manufacturing.
as the socioeconomic and educational levels
National health insurance will cover all
in these countries continue to rise, the
citizens by 2010. There is also a clear agenda
growing middle classes are driving a market
to grow the domestic pharmaceutical
for more innovative and branded drugs. At
industry, by working with western
the same time, rising standards of living and
pharmaceutical companies to establish drug
increasing life spans will shift the focus away
discovery and development centres.
from infectious diseases towards
Western companies have also expressed
cardiovascular disease, diabetes and other
willingness to license products in China to
chronic illnesses.
help ensure the success of domestic players.
With populations of these countries
Evidence shows that China is being
numbering in the billions, this shift will have
positioned as a centre of drug discovery. The
a major worldwide impact on pharma. For
country offers an attractive location for
example, the World Health Organization
R&D, with the costs of medical research and
(WHO) predicts that by 2030 diabetes will
testing typically 30-60% lower than in
affect about 42.3 million people in China
western countries. With education a primary
and 79.4 million people in India, up from
goal among Chinese people of all
20.7 million and 31.7 million respectively in
socioeconomic levels, large numbers of
2000.
scientists are becoming available to work in
Protection of IP in the pharmerging
drug development. However, the Chinese
markets will improve with the ratification of
infrastructure does not yet support
the World Trade Organization’s amendment
regulatory compliance, and questions about
on TRIPS. And multinational corporations bureaucracy, quality of data and timeliness
will be favoured because their marketing retard the progress of medical research.
and sales skills are superior to those of local The drug distribution model in China is
companies. In addition global companies also evolving. The Chinese government aims
produce lifesaving, innovative drugs that may to reduce the current figure of
not be available in developing countries. approximately 10,000 wholesalers and
Until recently, little attention had been paid distributors to about 100. Hospitals charge a
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