JULY 2009

THE BUSINESS MAGAZINE OF PHARMA

VOLUME 29, NUMBER 7

F U T U R E
a
dramatic shift is underway in terms of where the global pharmaceutical industry is turning for growth and profitability. The cause is all too familiar: While the so-called major marketsthe US and Canada, Britain and Western Europe, and Japanare expected to fuel 70 percent of global sales this year, their contribution to global growth is forecast to drop to a measly 16 percent by the end of 2009. Eclipsing these once-dominant sales drivers are a group of seven emerging marketsBrazil, India, Turkey, Mexico, Russia, South Korea, and, of course, China. These new engines are forecast to generate a phenomenal 51 percent of 2009s global growth, albeit while adding only 11 percent to global sales (see "The Growth Gap"). Call these the tier-1 emerging marketsor pharmerging, for short. Meanwhile, tier-2, which includes 21 far-flung nations ranging from Venezuela to Vietnam, Chile to the Czech Republic, is on tap to deliver an impressive 22 percent of 2009s global growth and 6 percent of its global sales (see Pharmerging Fast Followers").

PHARMERGING
BY R aYm o n d H i l l a n d m a n dY CH U i

T H E

a new world of revenue growth is just breaking the horizon. here's a first view of tomorrow's pharma

Though for a long time it's been only a minor industry concern, the rest of the world is now emerging as pharmas great bright hope; these 28 nations, in particular, are expected to carry industry growth and contribute mightily to profitability for the next decade.

Big Pharma, Big Wake-Up Call

While the pharmerging markets represent virtual virgin forests for healthcare sales, most global drug companies remain underexposed in these opportunity-rich markets, indicating that the contribution of revenues from these markets is much less than the potential of the markets. In part due to their colonial ties, European pharmas such as Britains GlaxoSmithKline and France's Sanofi Aventis have an advantage over their US-based competitors, with

So Far, So Pharmerging

However wildly they differ from one another in culture or politics, the seven pharmerging markets have in common more than just their aboveTHE GROWTH GAP THE GROWTH GAP Pharmerging and tier-2 emerging markets will contribute three quarters of global growth in 2009 average growth in the Pharmerging and tier-2 emerging markets will contribute three quarters of global growth in 2009 pharma sector. They also MATURE PHARMERGING TIER-2 EMERGING REST OF WORLD MATURE PHARMERGING TIER-2 EMERGING REST OF WORLD share disease profiles that 100% 100% 9% 11% 10% 10% 2009 MARKET SHARE, US$ 17% are markedly different from 90% 9% 11% 10% 10% 5% 2009 MARKET SHARE, US$ 6% 17% 90% 9% 5% that of the major pharma 6% 7% 80% 9% 11% 10% 22% 7% REST OF WORLD markets. Their public health 80% 11% 10% 22% REST OF WORLD 19% 70% TIER- 2 programs are expanding, 19% 70% EMERGING TIER- 2 21% 12% along with access to medi- 60% EMERGING 21% 6% 12% 60% cines for their populations. 50% 6% 50% And the main focus of each PHARMERGING 11% 79% 51% 40% 73% PHARMERGING 11% 79% market is on primary care 51% MATURE 71% 40% 73% 61% MATURE 71% 30% and generics. Together with 61% 30% 52% the tier-2 "early emerging" 20% 52% 20% markets, the pharmerging 10% 16% sector accounts for more 10% 16% 0% than 3 billion people, or 0% 2001 2003 2005 2007 2009(f) 45 percent of the planet. 2001 2005 2007 2009(f) SOURCE: IMS HEALTH, MARKET 2003 PROGNOSIS, MARCH 2009 While much is made of their SOURCE: IMS HEALTH, MARKET PROGNOSIS, MARCH 2009 exploding middle-class populationand its poPHARMERGING FAST FOLLOWERS PHARMERGING FAST FOLLOWERS The 21 tier-2 early emerging markets tential buying powerin The 21 tier-2 early emerging markets 2003 2008 2013 MARKET SIZE (CONST US$BN) AND % CAGR 2008-2013 fact less than one tenth of 2003 2008 2013 MARKET SIZE (CONST US$BN) AND % CAGR 2008-2013 these 3 billion can afford 31-34% SAUDI ARABIA 5-8% VENEZUELA* 31-34% SAUDI ARABIA 5-8% Western medicine. Still, VENEZUELA* 9-12% SOUTH AFRICA 9-12% ARGENTINA that adds up to 300 mil9-12% SOUTH AFRICA 9-12% ARGENTINA liona population close PUERTO RICO EGYPT 7-10% 8-11% PUERTO RICO EGYPT 7-10% 8-11% to that of the United COLOMBIA ALGERIA 5-8% 4-7% States. COLOMBIA ALGERIA 5-8% 4-7% PAKISTAN CHILE 6-9% 8-11% The global pharmaPAKISTAN CHILE 6-9% 8-11% ceutical market, valued PERU 9-12% 13-16% ROMANIA PERU 9-12% at $773 billion in 2008, 13-16% ROMANIA ECUADOR 9-12% HUNGARY 5-8% is expected to reach $910 ECUADOR 9-12% HUNGARY 5-8% 10-13% to $940 billion by 2013. THAILAND CZECH REP. 5-8% 10-13% THAILAND CZECH REP. 5-8% By then the pharmerging INDONESIA 7-10% BULGARIA 11-14% markets will be worth a INDONESIA 7-10% BULGARIA 11-14% 6-9% LITHUANIA PHILIPPINES 12-15% projected $155 to $185 bil6-9% LITHUANIA PHILIPPINES 12-15% lion. Global growth will VIETNAM 17-20% VIETNAM 17-20% stand at about 3 to 6 per1 2 3 4 5 6 1 2 3 4 5 6 1 2 3 *VENEZUELA5 4 6 1 2 4 5 6 cent, and the huge shift in SOURCE: IMS HEALTH, MARKET PROGNOSIS, MARCH 2009; 2013 MARKET SIZE NOT CHARTED DUE TO INFLATION VOLATILITY 3 SOURCE: IMS HEALTH, MARKET PROGNOSIS, MARCH 2009; *VENEZUELA 2013 MARKET SIZE NOT CHARTED DUE TO INFLATION VOLATILITY the proportions of growth from the mature to the pharmerging markets is almost certain an average exposure rate of about 8 percent vs. 5 percent, to continue (see "Five-Year Forecast"). respectively (see "Positive Exposure"). In 2008, GSK purSOUTHEAST ASIA SOUTHEAST ASIA LATIN AMERICA LATIN AMERICA

SALES US$B

MIDDLE EAST & AFRICA CENTRAL & EASTERN EUROPE MIDDLE EAST & AFRICA CENTRAL & EASTERN EUROPE

FIVE-YEAR FORECAST
180

future business. What are the potential benefits (and risks) of entering the mar$155-185B ket in a particular geographic area? 10-20 160 RUSSIA* 14-17% 2. How? Develop a clear strategy. What 15-25 SOUTH KOREA 7-10% 140 will be the focus of the portfolio? 15-25 INDIA 11-14% 3. When? Develop a logical flow for transi120 15-25 TURKEY 11-14% tion. What are the local manufacturing $91B 12-22 MEXICO 4-7% 100 or distribution capabilities? What kind 7 BRAZIL 7-10% 10 22-32 of resource investment may be needed? 80 CHINA 20-23% 10 What is the cost of capital? When is the 11 60 optimal time to enter the market, con11 tinue there, or exit? 40 65-75 19 Since every market is unique, suc20 cess requires a customized approach. 25 The consumer is often the payer in these 0 2008 2013(f) markets, and payment tends to be outSOURCE: IMS HEALTH, MARKET PROGNOSIS, MARCH 2009; RUSSIAS 2013 ESTIMATE BASED ON SEPT 08 FORECAST of-pocket. Identifying third party payers, a major market component, is very chased the entire Egyptian product portfolio from Bris- important. Additionally, disease states vary widely not only HEALTHCARE REFORM CHINA-STYLE A ve-point plan and billion folks tol-Myers Squibb for 1.3the company has already realized between the mature and the pharmerging markets, but also REFORM FOCUS gains. Additionally, GSK acquired a 16 KEY INITIATIVES in among pharmerging markets. What applies in Britain is very percent stake Increase coverage of medical insurance Basic Medical the largest African generics company, Aspen, which will different from what is of importance in China or India. Pharup to over 90% by 2011 Insurance System also assume marketing and distribution control of GSK mas must target their efforts accordingly. products in South Africa. Meanwhile, Sanofisbe centrally purEssential Drug list will recent purchased National Essential and distributed by Drug List chase of Brazilian generics maker Medleythe government and Mexican Know Your Facts genericsPrimary Health maker Kendrick has positioned the French firm Analysis of specific marketing initiatives shows that success in More investment in CHCs, drive primary care patients from as LatinCare Provision Americas leader in that sector. hospitals to CHCs pharmerging markets depends on five critical factors: A number of other drug companies have already scored 1. Differentiating what is necessary in the market from what More Basic Enlarge NRCMIS, of the earliest notable successes in these markets. One build more county hospitals would be desirable but not essential Healthcare Provision entrants was Swiss-based Nycomed, which entered the 2. Gathering the most relevant, accurate, and timely informaRussianPublic Hospital1993, and Pilotnow rankedhospitals in 2009 market in is reforms in public number 11 tion to understand and measure emerging markets with zero mark-up, and roll out by 2011 Reforms among Russian pharmas. Additionally, much of the recent 3. Devising portfolio strategies that supply local market needs, growth at Bayer came from China and Turkey. Yet reaping while remaining aligned with headquarters objectives only single-digit percentages of annual sales from a sector 4. Defining and implementing commercial models that will that represents nearly half the global population is nothing increase productivity and return on investment to boast about. There's no doubt that the industry needs 5. Understanding pricing and market access strategies that to pay much greater attention to the pharmerging markets maximize product value than it currently does. The question is how. Many drugmakers increase their exposure to pharmerging markets through the expansion of their existing operations, as Keys to Unlock a Market in the Making opposed to entering those markets where they dont currently When entering a pharmerging market, its essential to develop have a presence. Nonetheless, identifying the ideal pharmerging a business strategy that's flexible enough to adapt to local markets for a particular organization, whether through expanneeds. At the most general level, you need to know as much sion or new entry, requires significant due diligence. The degree as possible about healthcare usage by the population, about and structure of participation in these markets varies greatly, national and local economic situations, about the degree of with opportunities and threats specific to each region. infrastructure development, and about specific regulatory or In Brazil, for example, the capabilities of state-owned governmental controls. pharmaceutical manufacturing could enable relevant importing of pharmaceuticals with incentives to private partners, Tailor Your Approach and competition among generic drugs is increasing. OpportuNew investments must be managed judiciously by answering nities in Brazil include the ability to influence legislation and three key questions: increase government spending, the growth of private health
CAGR 2008-2013: ~13-16%

All of the pharmerging markets will show signi cant growth in the next ve years

1. Where? Develop a clear position for

SALES US$B

POSITIVE EXPOSURE
COMPANY
abbOtt amgen astellas astraZeneca bayer bOehringer bms eisai gsK J&J lilly mercK nOvartis nOvO nOrdisK pfiZer rOche sanOfi aventis schering-plOugh taKeda Wyeth
SOURCE: IMS MIDAS MAT DEC 2008

Top pharmas' performance in pharmerging markets varies widely

% 2008 REVENUE
4.6% 0.1% 4.1% 5.3% 14.4% 7.7% 5.2% 2% 5.6% 4.6% 4.3% 4.2% 8.3% 5.5% 5.5% 4.8% 8.8% 8.7% 0.1% 5%

% CAGR 2003-20008
11% 126.4% 23% 23.4% 16% 12.9% 1.9% 21.6% 8.3% 10.9% 12.4% 7.6% 14.4% 26.2% 8.7% 8.3% 12.5% 8% 7.5% 7.2%

2008 SALES US$(000)

$893,302 $14,627 $255,448 $1,735,701 $2,252,510 $1,735,701 $746,666 $140,482 $2,053,256 $1,353,483 $827,213 $1,095,347 $3,003,200 $430,278 $2,368,065 $1,452,385 $3,126,276 $1,166,524 $15,644 $780,093

insurance, and increased public awareness of disease. Threats include competition among other entrants into this market, government cost-containment initiatives, and government investment in public laboratories. By contrast, the Russian market is highly fragmented and high-pricedunlike Germany or the US. Patients pay out-of-pocket for about 60 percent of their drugs, while physicians lack data about disease incidence and standard treatment guidelines. Opportunities include increases in private insurance and reimbursement, along with improved physician education. Threats include the pressure to reduce prices, the influence of powerful lobbies for local firms, an overall lack of knowledge about diagnosis and treatment, and government influence on prescribing.

Two Success Stories

The experience of GSK in India provides a model for success in a pharmerging market. The company implemented a going local strategy that targeted and licensed customized drugs. GSK entered the market very early, positioned from the beginning to focus on small drugs that had minimal market value in mature markets but met local market needs. The company built an Indian product portfolio that was dramatically different from its global portfolio (see "Britain vs. India"). Now the number three player in India, GSK has a significant share of the nations market and continues to show favorable revenue growth.

A CLASS ANALYSIS
CHINA
Other betalactam antibacterials all Other cns drugs KanpO & chinese medicines standard sOlutiOns OncOlOgics

The top five therapy classes in each pharmerging market

INDIA
angiOten-ii antag. human insulin & analOgs cephalOspOrins

S. KOREA
antivirals excl. hiv angiOten-ii antag.

BRAZIL
angiOten-ii antag

MEXICO
angiOten-ii antag. erectile dysfunctiOn prOducts infant fOrmulas anti-Obesity preparatiOns hOrmOnal cOntraceptives

RUSSIA
antivirals excl. hiv antirheumatic nOn-sterOid hOrmOnal cOntraceptives cOld preparatiOns interferOns

TURKEY
human insulin & analOgs OncOlOgics b2-stimulants & cOrticOids anti-epileptics

anti-ulcerants Oral antidiabetics lipid regulatOrs muscle relaxants

lipid regulatOrs

anti-ulcerants Oral antidiabetics

antiplatelets benign prOstatic hypertrOphy prOducts

antipsychOtics

SOURCE: IMS HEALTH, MIDAS, MAT DEC 2008. LEADING THERAPY CLASSES RANKED BY CAGR 2004-2008 GROWTH AND SIZE

manager is in place, they'll do well. However, with a Glaxos two drug portfolios for the two nations werent exactly separated at birth mediocre manager, they run the risk of losing touch with BRITAIN INDIA the market. R3F b2-stimulants & cOrticOids J1D cephalOspOrins & cOmbinatiOns 2. Strengthen HR and TrainR3A b2-stimulants J1c brOad spectrum penicillins ing Comprehensive programs are required to retain talent D7b tOpical cOrticOsterOids cOmbinatiOns J5c hiv antivirals and develop bench strength n2b nOn-narcOtic analgesics A10b Oral antidiabetics to take on junior and middleH2A plain cOrticOsterOids n3A anti-epileptics management roles. Keeping A2b antiulerants J7A pure vaccines the team happy requires not n2c anti-migraine preparatiOns D6A tOpical antibiOtics/sulph. only monetary compensation p1b anthelmintics n4A anti-parKinsOn preparatiOns but also a focus on career deR3D cOrticOids A11e vitamin b cOmplex velopment. The commitment n7b antismOKing prOducts J7A pure vaccines to focus on people must come from senior management. PerR1A tOpical nasal preparatiOns A12A calcium sonnel must be reviewed on a D7A tOpical cOrticOsterOid plain H3A thyrOid preparatiOns regular basis, and comprehenn6A antidepressants & mOOd stabiliZers R6A antihistamines systemic sive talent development plans J1c brOad spectrum penicillins b3A haematinics, irOn & cOmbinatiOns must be put in place. To sucn2b nOn-narcOtic analgesics R5c expectOrants ceed, a company needs to be SOURCE: IMS HEALTH, MIDAS, MAT DEC 2008 perceived as a place where career development is an integral Likewise, Schering-Plough scored notable success in Chi- part of the culture. In addition to providing superior products, na, aggressively pursuing an over-the-counter strategy that, successful firms distinguish themselves by providing long term along with its prescription business, grew the companys career growth and personal development opportunities, as well sales more than five-fold, from $20 million to $100 mil- as demonstrating a sustained commitment to the region, includlion, in a five-year period. The company made significant, ing the continued investment in expanding manufacturing fawell-targeted investments in sales and marketing resources, cilities and setting up R&D centers. as well as in consumer spending for its OTC business, to 3. Local Government Affairs Team Recruiting former govachieve this high rate of growth. ernment employees is an attractive option for many companies. These candidates offer an invaluable understanding of The Right Organizational Model the regional policymaking processes, and have access to key As pharmerging markets gain increasing attention, their im- government stakeholders and authorities. portance within a pharmas overall corporate structure rises. 4. Stable Senior Leadership A stable senior leadership team Business leaders for the pharmerging markets are today in is critical for successful execution. This provides continuity, consome cases reporting directly to CEOs, as growth and profit- sistency, and commitment for the companys long term growth. ability are increasingly linked to tapping these new markets. Tactical execution is 80 percent of the game in pharmerg- The Global Economic Crisis Angle ing markets. Even though a strategy is sound, it could still While the global pharmaceutical industry navigates a challengfail miserably because of challenges in on-the-ground execu- ing economic climate, its worth noting that economic conditions tion. Four points to watch for are: affect markets to varying degrees. The extent of the economic 1. Regionalization To overcome differences among re- impact on each pharma market is influenced by the healthcare gions in purchasing power and business practices, adopt a burden borne by patients, and the short and long term policy regional strategy for management, with sales force, market- responses that governments implement. In this regard, the imporing, commercial, human resources, and government affairs tance of some pharmerging markets may actually increase with teams structured by region. This will ensure that they will the global recession. adopt practices suitable for that region, and react promptly For example, the effect of the global economic crisis on Rusto the changing environment. Companies that regionalize sia has been much different from that on China. Forty percent only their sales force run the risk of relying too much on first- of Russias GDP is comprised of oil and gas revenue, which has line sales managers in the region. If a very competent sales made the country much more vulnerable to the steep recession.

BRITAIN VS. INDIA

al growth in 2009

FIVE-YEAR FORECAST
180

an increased focus on disease preven- nies, for their part, prepared dossiers CAGR 2008-2013: $155-185B ~13-16% tion and better control of the spread of and launches for their own continent 10-20 RUSSIA* 14-17% RKET SHARE, US$ a population 160 billion and infectious disease. ith of 1.3 before turning their sights on the US, 15-25 SOUTH KOREA 7-10% aggressive government healthEnlarging the population covered un- with the rest of the world again a minor 140 15-25 INDIA 11-14% OF WORLD care reforms, Chinas untapped der basic health insurance is projected consideration. But with China now on 120 15-25 TURKEY 11-14% market has pharma execs licking their to help double the size of Chinas phar- the verge of entering top-five status, $91B 12-22 chops. As pharmaceutical sales in West- maceutical market over the next five such MEXICO 4-7% longer serves. True, myopia no 12% 100 7 % BRAZIL is evolving rapidly. True, hisern Europe and North America tally single- 10years. Its estimated that the essential the market 7-10% 22-32 80 CHINA 20-23% digit growth, the stats for this rising tiger 10drug list will comprise some 400 drugs, torical information is limited; key data G 11% 11about half of which contain chemiare explodingwith a compounded annual are still emerging. But companies that 60 MATURE 71% growth rate of 22.6 percent from 2003 11cal molecules currently sold by global do not broaden their drug development 65-75 to 2008, reaching $24.5 40 billion. Chinas 19pharmas. As the government works to and launch planning process to include pharmaceutical market, which was the reduce pressure on overcrowded city in-depth, early-on analyses of China 20 worlds eighth largest in 2006, is projected 25hospitals by building new ones, these are shortchanging themselves. 0 to climb to third place by 2013. By 2020,2008 hospitals will also purchase more 2013(f) China is set to be the worlds largest econ- MARKET PROGNOSIS, MARCH 2009; RUSSIAS 2013 ESTIMATE BASED ON SEPT 08 FORECAST equipmentin turn, promoting better engage As early As possible SOURCE: IMS HEALTH, omy, with GDP growth steadily rising faster prevention and earlier diagnosis of conGlobal brand development teams than other pharmerging should begin tracking a countries like Brazil, India, HEALTHCARE REFORM CHINA-STYLE new products potential A ve-point plan for 1.3 billion folks and Russia. in China in Phase II or REFORM FOCUS KEY INITIATIVES III. There are more than Increase coverage of medical insurance Basic Medical High-Speed enough questions to up to over 90% by 2011 Insurance System 5-8% Healthcare Reform answer: What would it Essential Drug list will be centrally purchased National Essential At the center of Chinas take to sell a product in 9-12% and distributed by the government Drug List healthcare metamorphoChina, and what are the 8-11% sis is its $125 billion potential rewards? What More investment in CHCs, drive primary care Primary Health patients from hospitals to CHCs Care Provision stimulus package, which might be the business 4-7% aims to offer health covopportunity? What steps More Basic Enlarge NRCMIS, build more county hospitals erage8-11%more than 90 to must be taken nowin Healthcare Provision percent of Chinas poputhe laboratories, with 13-16% Pilot reforms in public hospitals in 2009 lation by 2011. The govclinical, regulatory as Public Hospital with zero mark-up, and roll out by 2011 Reforms 5-8% ernment plans to invest well as commercial dethat $125 billion in the partmentsto ensure 5-8% next three years to protimely registration and 11-14% vide basic, affordable healthcare ser- ditions such as cancer, cardiovascular commercialization? How well are Chivices for the public (see "Healthcare disease, hepatitis, and diabetes. Medi- nese physicians positioned to treat the 12-15% Reform China-Style," this page). This cal equipment, diagnostic reagents, disease targeted by the product? What capital will be directed at medical in- and vaccine manufacturers will benefit do patients understand about their 3 4 5 6 surance (46 percent), healthcare orga- from this massive initiative. own condition? How must the developLITY nization (47 percent), and public health ment program be adjusted to account (7 percent). Healthcare coverage will Launching a Global Brand in China for anticipated clinical requests of loexpand greatly; essential drugs will be More often than not, building the mar- cal health authorities? Which potential reimbursed by insurance, and the price ket, rather than taking share from the joint-venture partners might be contactof essential drugs will be determined competition, is the name of the game ed, which suppliers might be tapped, by tenders with no distribution margin. for launching pharmaceutical products which distribution networks would help More than 2,000 county hospitals and in China. facilitate? clinical centers in rural areas will come There was once a logical sequence Local teams can provide the on-theonline, along with improved capabili- for those who led pharmaceutical com- ground analyses of specific disease ties at existing community hospitals, panies. US-based companies sought states that US- and Europe-based mansupport for specialized hospitals, and to penetrate the US market first, pur- agers need. They should be brought experimentation on the elimination of sue Europe second, and the rest of the into the development and launch cycle the hospital drug markup. There will be world would follow. European compa- early, as key members of the team.

Smashing china!

All of the pharmerging markets will show signi cant growth in the next ve years

SALES US$B

MIDDLE EAST & AFRICA CENTRAL & EASTERN EUROPE

become Truly OUT OF POCKET INSIDE CHINA Private healthcare payout are 50 percentcompared to 90 percent in India and 35 percent in the US Global GOVERNMENT HEALTHCARE EXPENDITURE SOCIAL HEALTHCARE EXPENDITURE PERSONAL HEALTHCARE EXPENDITURE At the same time, organizations must % BREAKDOWN OF HEALTHCARE EXPENDITURE 100% undertake the realign% OUT OF POCKET IN COUNTRY ments necessary to HEALTHCARE 60% 58% 56% 54% 52% 49% FINANCING fully leverage the China 80% INDIA 90% market. This will entail MEXICO* 83% reconfiguring operating BRAZIL 80% RUSSIA 60% committees so that 60% CHINA 49% they are truly global SOUTH KOREA 49% in orientation and ITALY* 43% US 35% 40% reachrespectful of JAPAN 30% the data and insights of SPAIN 27% UK* 25% regional players, cogni20% GERMANY 20% zant of cultural differCANADA 17% FRANCE 13% ences, and united by a TURKEY* 14% shared desire to make 0% 2001 2002 2003 2004 2005 2006 the most of these far SOURCE: OECD 2008; WHO 2008; CANADA, CIHI 2007; CHINA MOH 07, *ESTIMATED FROM AVAILABLE SOURCES away and often unknown emerging markets. Systems must be put into place so compound. Such markets must first be economy. Most patients in China still pay that clinical development objectives are built. Physicians and patients must be out of pocket for their healthcare. Too ofaligned with commercial realities. A com- educatedespecially about common ten drugmakers address this pricing issue mon understanding of potential drivers, conditions such as cardiovascular dis- too lateafter having already launched a key success factors, and resource alloca- ease, diabetes, and hepatitis, which product in the US or Europe, at which point tion must be used as a guiding framework. can remain essentially asymptomatic they find themselves in the awkward posiSeamless, fully integrated organization is for a long time before doing serious tion of having to sell it at international price the mandate of this age. damage. Products must be made avail- levels to a limited audience while hastily able not just at key city hospitals but putting into place various charity programs First build the Market at the fast-growing network of commu- designed to address the medically needy. The business of tapping a market nity hospitals, where more patients are In conclusion, launching a global such as Chinas isnt as simple as un- likely to seek care in the future. brand in China means treating the naveiling a first-to-market producteven Affordability also remains a key fac- tion as what it potentially isthe locus if research demonstrates a huge poten- tor, as US and European prices are likely of the next generation of blockbuster tial market of millions of people for the to prove incompatible with the Chinese products. RH & MC

Additionally, industry experts question the Russian governments ability and resolve to improve health insurance coverage and reimbursement for low-income groups. By contrast, the Chinese government recently laid the groundwork for substantial healthcare reform through enactment of a $125 billion stimulus package. This landmark package aims to provide near-universal coverage and substantial improvement to the nations healthcare infrastructure, especially in rural areas (see "Smashing China!"). Expectations for 2009 economic growth in the 15 key developed and emerging countries have declined since the onset

of the global economic crisis. However, growth in publicly funded markets is likely to ameliorate some of the stress, potentially offering a positive uptick in market growth going forward. The era of blockbuster drugs may be coming to an end, but the pharmerging markets can provide great value and new opportunities as they gain an increasing share of the global market.
Raymond Hill is General Manager, Consulting & Services, at IMS Health; he can be reached at rhill@imshealth.com. Mandy chui is Senior Principal, Consulting & Services, at IMS; she can be reached at mchui@us.imshealth.com

Reprinted from Pharmaceutical Executive, July 2009

Printed in U.S.A.

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