Western drugmakers headed into the BRIC countries to provide the kind of volume growth they couldn't scare up elsewhere. But it is not turning out exactly as planned. India has expanded price controls. Russia is talking about limiting government drug purchases, while Brazil is raising tariffs. So now what are drugmakers to do?
According to a new study from Frost & Sullivan, they must start sizing up BRIC markets differently. "It is very clear we need to rethink emerging-market strategies and start changing the dialog," partner Reenita Das said recently, according to Pharma Times. "We must move away from looking at it as a volume business in terms of large numbers of patients and demographics to more about where we can deliver the value to create the access that is required to meet demand."
It is tough news to hear about the fastest-growing markets in the world. Many companies have been investing in places like China and Brazil, and those who haven't are just now beginning to pile in out of fear the will be left out. Amgen ($AMGN) recently created a joint venture there and Teva Pharmaceutical Industries ($TEVA) CEO Jeremy Levin says he thinks his company is ideally suited for China's needs.
Sanofi ($SNY) is a good example of a company that already has invested heavily in China, and so far so good. It has four new plants coming online there this year, and it has been rewarded for those investments. It already has some some €1 billion per year (more than $1.28 billion) in revenue there, and sales grew by 15% last year, CEO Christopher Viehbacher has said. He expects "double-digit" growth this year. But Viehbacher also has said that he is now looking beyond the BRIC countries for acquisitions because price tags for suitable partners there have gotten pricey.
Das was not suggesting that drugmakers abandon efforts in the emerging markets, only that they look at them different. She said because they are emerging, drugmakers should look at them as an opportunity for using new technologies and "a new commercial model that has the potential to become a relevant option for use in the developed world as well."
Some companies are already trying that in China, where the government is now extracting discounts for expensive treatments. Novartis ($NVS) is offering some free doses of cancer treatment Gleevec for each dose purchased as a way to make it more affordable there but not have to cut its price elsewhere.
- read the Pharma Times story
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