Emerging market success doesn't come easy

No doubt, 2009 is the year of the emerging market. We all know that Big Pharma has been falling all over itself, moving into the developing world by leaps and bounds. You know the deals--Sanofi-Aventis's drugmaker buys in Brazil and Mexico, GlaxoSmithKline's moves in the Middle East and Africa, and more.

And there are plenty of good, solid reasons for the excitement; oft-quoted numbers from IMS Health, which contrast some 13 percent pharma market growth emerging countries versus low single digits in established markets, tell the story best. "We're starting to see the emergence of a new world order," David Campbell, senior principal at IMS, told the Financial Times. But emerging markets aren't a panacea. They're full of pitfalls.

First, there's pricing. GSK has made hay out of cutting prices in the developing world. Logical, yes? Patients in poor countries often can't afford the prices paid in Europe and the U.S. But there's a risk of "leakage," the FT points out, either via resale of discounted meds in richer countries, or through demands for discounts elsewhere.

Then there's a lack of good, hard market data. IMS numbers aren't comprehensive, the FT says, and most analysts are based in western countries. Drugmakers often don't break out their sales by region. So it's hard to tell which markets are performing well for which companies. And then there's the country-by-country decision on just how much to invest. Own the manufacturing outright, like Sanofi and its Laboratorios Kendrick buy? Or partner up, as Glaxo has done in India and South Africa, and Pfizer has in India. There's more; check it out.

- read the FT analysis

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