Big Pharma still big on emerging markets

The emerging-markets gold rush continues. Drugmakers continued their race into those fast-growing, tantalizing new markets. India, China, Brazil, Russia, Mexico--all so alluring in a world in which countries that could once be counted on for steady increases are no longer delivering.

So while drugmakers cut jobs and otherwise retrenched in the U.S. and Europe, they continued to recruit emerging-markets salespeople and draw up plans for R&D and manufacturing facilities there. Novartis and its $500 million plans for Russia, Novo Nordisk's $100 million insulin plant in the same country, Sanofi-Aventis' plans for a plant in Saudi Arabia, Eisai's bid to move Aricept manufacturing to India for export worldwide ... drugmakers are bulking up in these new markets, literally.

Of course, the buyouts and partnerships and licenses haven't stopped. In its first China partnership, Merck teamed up with Sinopharm, aiming to spread its vaccines in that country; the deal could expand to cover prescription drugs, too. Merck also partnered with South Africa's Adcock Ingram in a bid to expand in that country; the company is aiming for 25 percent of its sales in emerging markets.

Then there's GlaxoSmithKline, which bought Argentine drugmaker Laboratorios Phoenix for $253 million, snapped up a 9.9 percent stake in Korea's Dong-A Pharmaceuticals, snapped up China's Mei Rui urology drug specialist for $70 million, and partnered with a Russian vaccines company, JSC Binnopharm. Pfizer bought a 40 percent stake in Brazil's Laboratorio Teuto for $240 million. Sanofi-Aventis bought Chinese consumer drugs company BMP Sunstone for $520 million, among other emerging markets forays.

But the biggest emerging markets deal of 2010 was Abbott Laboratories' buyout of Piramal for $3.7 billion, which placed it at the top of the Indian pharma market with 7 percent of sales. The company wants to grow its Indian revenues to $2.5 billion by 2020.

And here lies one of the potential pitfalls in these promising markets: Abbott's buyout, coming as it did on top of several other mergers, spooked India's pharma industry, and in turn, government regulators, who are now thinking about ways to protect their domestic drugmakers. Another pitfall: China's recent decision to slash drug prices, including some prices on meds from foreign companies. If emerging markets find ways to clamp down on hopeful global drugmakers, they could quickly appear a lot less golden.

Special Report: Big Pharma's Top 5 Emerging Market Deals