The pharmaceutical industry is quickly evolving; to stay relevant and competitive, companies need to stay on top of the most recent trends and technologies. One important piece of the puzzle that has been getting more recognition lately is the role of emerging markets. Financial Times defines emerging markets as “a developing country in which investment is estimated to lead to high income but with great risk.” Many of these markets are experiencing exponential population and financial growth. Consequently, they represent promising targets for Pharma to broaden their reach and increase profits. However, breaking into a new market, especially one characterized by different health issues, priorities, and regulations, represents a serious challenge.
Leading Emerging Markets
At this time, Brazil, Russia, India, China, and South Africa (“BRICS”), followed by Mexico, Indonesia, South Korea, and Turkey (“MIST”) are considered key emerging markets. While pharmaceutical sales in many mature markets are showing stagnant growth or even regressions, the sales estimates in the emerging markets point to continued growth. In fact, it is estimated that emerging markets will account for >30% of the market in 2020.
This shift towards emerging markets is attributable to several economic and demographic factors, including increased life expectancy and prosperity, improved access to healthcare services and public or private funding, and growing populations. Secondary to these changes, the lifestyles and healthcare needs in these markets are also shifting. In places where infectious diseases were once the single major threat, steep increases in the rates of “Western” diseases such as diabetes, heart disease, and cancer are occurring, with no signs of slowing down.
On paper, this suggests that emerging markets are “easy” targets for pharmaceutical companies, since effective treatments for most of these conditions are already available and could be easily marketed. However, the road is far from straightforward. The strategies for expanding to these markets must be customizable and take into account each region’s specific healthcare needs, infrastructure, and regulations.
Potential Hurdles to Navigating Emerging Markets and How to Overcome Them
In addition to the need for customization, and thus the need to first fully understand each market and its characteristics, there are multiple other obstacles to tackling emerging markets. These include things like poor healthcare infrastructure, limited public funding, minimal or no intellectual property protection and regulations, complex market access regulations, and local competition, often in the form of generics. To overcome these hurdles, pharma needs to work closely with a range of local and global stakeholders.
Are Emerging Markets Worth the Risk?
Short answer: most likely, yes. Clearly, navigating emerging markets will require a great deal of time and effort by Pharma. These markets are highly dynamic, and the regional variations in healthcare access, market demands, and regulations can result in substantial risks. However, for companies that can anticipate and quickly adapt to these dynamic conditions, emerging markets represent a promising business opportunity. By considering and understanding all potential barriers to entering a new, emerging market and by having a standardized, but flexible, strategy prepared for how to navigate these hurdles, Pharma can minimize the risks involved and ensure sustained growth for years to come.