Prevenar 13 for pediatric use will reach infants and young children in the world's poorest countries.--Courtesy of Pfizer


Emerging Markets Sales 2012: $11.97 billion
Percentage of Sales in Emerging Markets: 20.2%

Two years ago, Pfizer ($PFE) reorganized to put more focus on its branded-drug business, realigning into what CEO Ian Read called an innovative core and a value core. Around the world, the company sequestered its newer drugs and R&D on one side, and its old, established, sometimes off-patent products on the other. Old geography-oriented management went out the window.

Except for emerging markets. There, products new and old have mingled together. That choice says more about the nature of emerging countries than it does about Pfizer, really. It speaks to one of the key challenges in the world's fastest-growing pharma markets--cost. With governments trying to finance healthcare for more citizens than ever and consumers still bearing the brunt of drug costs, older, cheaper drugs are hot. A growing middle class in China and India can pay for Pfizer's branded meds like Enbrel, but far more patients have access to generics and cheap older brands.

So, while Pfizer's established products unit--which includes older drugs that are off patent or soon to be--brought in about one-fifth of the company's 2012 biopharma sales worldwide, in emerging markets, the same products accounted for 46% of sales.

Pfizer has expanded in some markets via acquisition; it bought Brazil's Teuto in 2010, gaining access not only to that company's brands in its home country, but distribution and marketing reach for Pfizer brands that, like Viagra, were soon to face generic rivals there.

And then there are alliances, like the one Pfizer forged in 2012 with China's Zhejiang Hisun Pharmaceutical to produce branded generics for that country. For the joint venture, Hisun put in $295 million and 75 products, plus local market knowledge, and Pfizer invested $250 million, 8 products and the expertise to help Hisun vault upward to finished products from the APIs it previously specialized in. The JV said last fall that it planned to more than double its workforce to 1,500 by the end of this year.

The other part of Pfizer's "value" core is consumer healthcare, and that business is looking to emerging markets, too. Over-the-counter drug brands are often the top-selling drugs in developing countries. It bought Denmark's Ferrosan in 2011, expanding its reach in Russia and Ukraine.

In prescription drugs, Pfizer expects high-single-digit growth in emerging markets, though that growth can vary widely from country to country. That forecast has been pretty steady quarter after quarter. But change is afoot for the management of emerging markets: In July, Pfizer said it would split its operations three ways, with emerging markets and developed markets both under each umbrella.

This choice says more about Pfizer than it does about emerging markets. The company has been shedding units to focus more tightly on its core businesses, and shareholders have responded enthusiastically. Some investors and analysts are calling for more. While a wholesale split-up isn't in the cards now, Read is setting up financial reporting to better describe its individual businesses.

One unit comprises vaccines, cancer and consumer healthcare; another covers immunology, metabolic diseases and a few other therapeutic areas; and the third encompasses off-patent products, generics, and any Pfizer brands set to go off patent through 2015. Olivier Brandicourt, who had been running Pfizer's established products and emerging markets division, has since decamped for Bayer, where he will take over from the recently departed CEO of Bayer HealthCare.

For more:
Bayer taps Pfizer's Olivier Brandicourt to head HealthCare division
Pfizer to split operations three ways
JVs like Pfizer, Hisun give Chinese pharma a shot at Western markets
Pfizer boosts consumer ops with Ferrosan deal
Hisun-Pfizer workforce to more than double in size
Pfizer in talks to buy Brazil's Teuto


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