Navigating emerging markets – opportunities and challenges for pharma
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, and rightfully so, is the role of emerging markets.
Defined by the Financial Times 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 characterised by completely 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 can be attributed 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.
“While sales in mature markets are showing stagnant growth or even regressions, emerging markets show continued growth”
On paper, this would suggest 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, and the strategies for expanding to these markets must be customised and take into account each region’s specific healthcare needs, infrastructure, and regulations.
Potential hurdles and how to overcome them
In addition to the need for customisation, 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.
1. Thinking globally but acting locally
It needs to be kept in mind that the needs and regulations of emerging markets differ not only between countries but also between regions, including between urban and rural areas. A strategy that works in rural Brazil will not necessarily work in urban cities in the same country and can likely also not be directly translated to most rural areas in India or Mexico. That said, customer clusters based on common demographic features and health needs can be identified both within and between regions, and will help when designing market access or marketing strategies.
2. Insight-gathering into local market trends
Gaining insights into the current and anticipated future market trends is key to navigating any emerging market. This includes gathering insights on things such as local healthcare access, care paths, reimbursement and funding (including for both original and generic products), health policies, market demands, the competitive landscape, and the data requirements for market access. This can be done on a large scale by analysing quantitative data from similar markets and/or by collecting qualitative insights directly from local healthcare stakeholders such as physicians, payers, and patients. For the latter approach, digital technologies such as online advisory boards and virtual collaboration tools can be leveraged to streamline the progress.
3. Development of a standardised approach with room for flexibility
Currently, country- and region-specific regulatory and submission requirements vary, and there are limited enforcement resources. This can lead to long delays in getting approval for a product. Hence, as one of the first steps to developing a successful strategy for navigating emerging markets, a “standardised” approach for navigating foreign rules and regulations is needed. However, at the same time, this approach must be able to account for the variability in national or regional regulatory requirements and market demands. Although regulations vary between markets, there are also common steps for all regions and products. By understanding which points will vary and which are commonalities, companies can plan their timelines and processes accordingly. Establishing a harmonised approach will no doubt be difficult, but is by no means impossible.
4. Determination of appropriate resource allocation
When entering a new emerging market, many pharmaceutical companies choose to partner with a local third-party vendor familiar with the current regulatory and reimbursement landscape. This can be done for specific phases or for the whole process. Although this will require substantial upfront costs, the time-savings of such a partnership often proves well worth the investments. Related to this, and just like it is important for companies to create a single, coherent strategy rather than trying to coordinate multiple strategies, there is likewise a need to centralise the company’s resource allocation to avoid duplication of efforts and partnerships.
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 opportunity. By considering and understanding all potential barriers to entering a new, emerging market and by having a standardised, but flexible, strategy prepared for how to navigate these hurdles, pharma can minimise the risks involved and ensure sustained growth for years to come.
About the author
Natalie Yeadon is the co-owner and managing director of Impetus Digital. She brings over 18 years of experience from working in a variety of pharmaceutical sales, marketing, and early brand commercialisation management roles in both Canada and the US, in several different therapeutic areas. Her company offers an effective alternative or supplement to in-person advisory boards or working groups, with dramatically reduced costs, increased stakeholder engagement rates, and minimal environmental impact.