Pharma Futures 3 Emerging Opportunities

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Section 1 The Siren Call People and traffic on the Chowringhee Road in Kolkata (Calcutta), India
Pharma Futures 3 The Siren Call of the Emerging Markets The commercial importance of emerging markets* is now well established. Multinational enterprises across a range of consumer products sectors have found considerable success there. And the discoveries are reciprocal. As Western multinational enterprises consolidate their presence in emerging markets, so too are emerging market companies gaining a firm foothold on the global stage. While the commercial opportunities are relatively uncontested, the extent to which globalisation will result in successfully meeting the basic needs of millions of poor people across the world is a matter of considerable debate. 1 And on no issue is this more true than in healthcare. Since the beginning of this millennium, real time, global and instant communications technologies have taught the pharmaceutical industry lessons about doing business under continued public scrutiny. * The term ‘emerging market’ was originally coined by International Finance Corporation to describe a fairly narrow list of middle-to-higher income economies among the developing countries, with stock markets in which foreigners could buy securities. And the test is not simply about making commercial sense of new markets. It is also about the extent to which the industry is able and willing to be part of equitable solutions to meeting basic human healthcare needs. Prior to the rapid global slowdown caused by the credit freeze and recession, the economic growth in emerging markets had already created a sizeable middle class, which – despite significantly lower individual purchasing power than Western counterparts – offers tantalising sales potential. The McKinsey Global Institute projects ‘India’s middle class will grow from 50 to 583 million people in the next two decades… [and that] China’s middle class will grow to 612 million by 2025.’ 2 Mexico’s middle class (families with incomes of between US$7,200 and US$50,000) now accounts for over 30% of Mexican households – or 10 million families. 3 In Indonesia, the middle class is expected to grow to 45 million by 2010. 4 And in Brazil the middle class is now said to represent about 52% of the population, or just under 100 million people. 5 These trends are as important for the pharmaceutical industry as for other sectors. Economic and demographic growth in emerging markets has combined with changing disease profiles to present new opportunities to tap new consumers, able and eager to pay for access to medicines. IMS Health estimates that the emerging markets will account for 30% of total global pharmaceutical sales and 50% of pharma sales growth by 2020. The Chinese pharmaceutical market is currently valued at US$17 billion and is growing at 13.3% a year as a percentage of overall health expenditure. 6 It is expected to become the fifth largest pharmaceuticals market in the world by 2010 from its current position as the eighth largest in the world. 7 And other emerging markets are notable too. The Egyptian pharmaceutical market is the largest in the Middle East region, worth an estimated US$2.2 billion in 2008, with a projected annual growth rate of 5%, while the Indonesian market is projected to reach US$3.75 billion in 2012, reflecting a growth rate of around 5–6% per year. 8 ‘We know these markets require a different approach, but the existing business model is very strong. It’s like trying to change the wheels of your car while driving at 40 mph.’ Senior pharmaceutical executive May 2008 The term’s meaning has since expanded to include more or less all developing countries, defined as those with a Gross National Income (GNI) per capita of $9,265 or less. Pharma Futures 3 emphasises countries such as India, Brazil, Russia, China and Mexico characterised by a growing middle class with increasing disposable incomes and a majority population living on low incomes. 9
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Page 17 and 18: Pharma Futures 3 First, per capita
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Page 27 and 28: Pharma Futures 3 Accessible A major
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Page 31 and 32: Pharma Futures 3 Patrimonio Hoy’s
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Page 35 and 36: Pharma Futures 3 But he did not giv
Page 37 and 38: Pharma Futures 3 This model has als
Page 39 and 40: Pharma Futures 3 In October 2007, t
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Pharma Futures 3 Emerging Opportunities

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