Are emerging markets worth $47B less than pharma expected?

Emerging news about emerging markets has dampened some of the excitement for drugmakers. And today, there's more: A report from the market research firm GlobalData finds that an unholy convergence of intellectual property worries, price controls and budget cuts is eroding earlier forecasts for emerging-market sales growth.

And how: GlobalData says the gap between pharma's expectations for emerging markets and the "actual realizable [yearly] revenue" could be a whopping $47 billion.

Some Big Pharmas have started acknowledging the risks--and admitting that their earlier emerging markets predictions turned out to be a bit too rosy. "These companies had their own forecasts when moving into these emerging markets and they haven't found what they expected," GlobalData's Adefemi Adenuga told the Financial Times.

China and Russia are using European prices--which have been slashed significantly over the past two years--as benchmarks for their own drug spending. That puts the squeeze on foreign companies' prices. And then there's the threat of compulsory licensing, as Bayer has seen in India with Nexavar. While governments may not actually force generic licenses on many companies, just a few could induce drugmakers to cut their own prices as a defensive move.

This isn't to say that emerging markets aren't worth the effort. They are still the fastest-growing on the planet. But profiting from them promises to be a much more complicated effort than drugmakers may have expected.

- see the FT coverage

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