Pfizer, AstraZeneca outpace Big Pharma in emerging markets as growth ticks upward

A few years ago, emerging markets were souped-up engines heating up pharma growth. Now, with economic slowdowns in key markets such as China, they’ve moved into a lower gear—but in the third quarter, drugmakers saw signs of an upward shift, at least in the short term.

Emerging markets growth for Big Pharma’s top companies ticked upward to 3.6% in Q3, Bernstein analyst Tim Anderson wrote in a Wednesday note to investors. That’s up from 1.8% in Q2, if down slightly from the first quarter, when growth amounted to 4.4%. 

This means that emerging markets growth is leading the way again, ahead of U.S. and the rest of the developed world at 2.3% and 0.9% for the group, respectively.

“In our view, drug companies should continue to invest to ensure they capture share in the longer-term, gradual, yet inevitable shift from older off-patent medicines to more lucrative, novel, on-patent medicines,” Anderson noted.

And while the emerging markets may not be as hot as they were, they’ll still account for about 25% of global drug spending by 2020, QuintilesIMS said in a report last November. And per-capita script volume and drug spending in all the “pharmerging markets” are expected to grow between now and then, at average rates of 45%-plus. Part of that spending growth, the report noted, will come from broader use of new, on-patent meds that naturally cost more per patient—and deliver more sales per script.

Pfizer tops growth list; GSK trails

Of course, some multinational drugmakers saw higher growth than others, as acquisitions, new products and marketing initiatives paid off. Pfizer, for instance, posted 8% growth over the past four quarters, thanks to its Hospira acquisition and its growth in sterile injectable drugs. More growth could be coming as well; Pfizer recently restored its vaccines unit in China after authorities finally approved its pneumococcal vaccine Prevenar 13, a big seller in other countries. And in June, the pharma giant said it would build a $350 million biosimilars plant in the country.

Pfizer’s fellow Big Pharmas have been pushing for faster approval of their new-to-market drugs, particularly in China, where Gilead Sciences and AstraZeneca have tapped new executives and partners to push approvals and production on the ground. While it waits for broader approval, Merck & Co.'s immuno-oncology med Keytruda won an import license for China's resort island Hainan under a government program designed to draw medical tourists.

Amgen and Sanofi, meanwhile, suffered setbacks in their attempts to bring new products Repatha and Dengvaxia to India; both companies lost their bids for clinical trial waivers that would have allowed them to launch in that country without local clinical trials.

Meanwhile, GlaxoSmithKline, very active in the developed world, delivered the slowest emerging markets growth among its rivals over the past four quarters, at 0.4%, Anderson calculated. Its China sales outpaced the rest, however, at 24%, partly in thanks to inventory stocking.

GSK’s growth may be impressive of late, but it’s also having trouble with China’s drug gatekeepers, with recent decisions emblematic of pricing challenges other pharma companies face there, too. In May, China slashed the price of the antiviral drug Viread, marketed by GSK in that country, by two-thirds, and cut AstraZeneca’s lung cancer pill Iressa back by half.

Price caps on older meds

And for off-patent drugs, the cuts could be more severe, in China and beyond, Anderson wrote. Some sources say off-patent meds account for more than 50% of multinational drug company sales in these countries, he noted.

“One risk to appreciate ... is that off-patent drugs are likely to see increased pricing pressure over time as emerging markets healthcare delivery modernizes,” the analyst said.

It’s certainly happening in India, where the government is not only working on revamping its entire pharma regulatory framework, but expanding its list of drugs subject to price caps. Last December, the country’s health ministry expanded its list of essential medicines, which are subject to price controls, by adding 100 new drugs.

Sanofi’s managing director in India, for one, has spoken out against India’s pricing policies, which come at a time when the country is tightening up its quality standards. “Any pricing regime must be predictable and transparent,” Shailesh Ayyangar said during the unit’s general meeting in May, “and must take into consideration the stringent requirements on the quality front that the manufacturers have to adhere to for patient safety.”