Access strategy for success in emerging markets
Over the past two decades nations of lower-middle income and upper-middle-class consumers have developed. This 'Emerging Middle Class', with an average per capita income of between $1,000 and $12,000, now accounts for an estimated $300 billion pharmaceutical market.i To tap the extensive market opportunities this sector provides, companies need to position their supply chains to gain the best patient access possible.
Developing markets are commanding increasing attention from the life science industry. But successful market access – reaching the right patient, at the right place, at the right time – may be the most difficult challenge. Reach and relevance to these patients can be strengthened through successful partnering and by optimising their supply chains.
Specifically, a new group of market giants – Mexico, Indonesia, Nigeria, and Turkey (MINT) – is emerging. Theses countries collectively represent a $28 billion pharmaceutical market ii and all four will be entering the top-10 global economies by 2050.iii
Opportunity and challenge
Therefore the emerging MINT markets are undoubtedly an opportunity. Nigeria may be one of the best prospects, with its estimated $488 billion GDP iv making it the largest economy in Africa, surpassing South Africa for the first time.
In MINT markets, a transition is taking place in therapeutic need, away from infectious diseases towards non-communicable diseases and chronic conditions. Approximately 80 per cent of deaths from non-communicable diseases now occur in emerging markets, according to the World Health Organization.
This transition is a 'call to action' for life science companies to bring their innovative non-communicable disease portfolios and differentiated capabilities to collaborate with others to address this rising, yet preventable, epidemic.
To achieve this, they must look to emerging market leaders. These are the ones who have one thing in common that differentiates them from others: a strong access-to-medicine strategy.
Their strategic approach to market access in these regions has been key to growth and survival. Research shows that the top 10-ranked pharmaceutical companies that have improved patient access to medicines have outperformed their peers by 20 percentage points of stock price growth each year. These companies are more organised in their access approach. Their products and pipelines are meeting more needs. Many are using tiered pricing schemes. They are seeing financial returns consistent with their access initiatives.
By focusing on consumers in emerging markets, companies will see these potential patients steadily grow their revenue streams. Establishing a strong patient base will be worth the entry price as these markets continue to grow and consumer purchasing power increases.
Such correlation between access strategy and strong overall financial performance makes access strategy investment pivotal to long-term growth.
Supply chain transformation
Key to successful access is the supply chain. But how do leading companies position their supply chains as competitive differentiators? Which is the best way to reach the right patient, at the right place, at the right time?
Keep a five-step approach in mind when transforming supply chains and determining a long-term growth strategy:
1. Start with the patient
Many multinational companies don't understand local patient needs. Patients in different socioeconomic and geographical segments seek care and therapies in vastly different ways, so supply chains must be as agile and diverse as the populations they serve. Understanding patient barriers and access behaviours is critical for building end-to-end supply chain visibility.
Companies should be patient-centered, with a comprehensive understanding of patient needs across the referral and care cycle. New intervention points, such as community health workers, local dispensaries, and health centres, must be taken into account.
Closing gaps in the potential and unmet patient pool can help grow the market, retain existing patients and win new patients. One customer-centric approach might involve having employees spend time in stores to tailor company products and supply processes to the local customer.
2. Turn insight into action
In emerging markets, companies must find ways to succeed under volatile market conditions. Embed agile planning to rapidly create actionable business intelligence and insight. Understand the nature of the demand for specific products and devise the supply chain that can best satisfy that demand.
You may want to segment the supply chain to address different types of demand and to optimise the trade-off between speed, cost and product availability. Optimised segmentation can reduce overall supply chain costs by up to 30 per cent and reduce inventory by up to 50 per cent. Companies should have local supply chain talent strategies to ensure they have the right skills in place to support customers.
3. Take it over the last mile
The important 'last mile' focuses on reaching the end patient. A comprehensive strategy includes establishing demand-driven supply networks, cold chain strategies, integrated work systems, and multi-channel fulfillment and distributor integration platforms.
Market-specific approaches are required, depending on a region's political and economic stability. Leading companies tend to favour regional partnerships with distributors.
4. Tap into mobile as a connector
In this increasingly connected world, some emerging and developing markets have leapfrogged directly into mobile technology, forgoing landlines. Companies are tapping into mobility to augment traditional supply chains.
In addition, serialisation and security technologies are finding greater use in combatting counterfeiting and theft. Serialisation technology is an extremely effective tool for detecting and eliminating counterfeiting when coupled with a mobile authentication app – a growing trend.
5. Create shared value
Cross-sector partnering can be a powerful way to build broader access to the low-income and middle class categories. These segments make up the majority of the market, but can be difficult to reach.
In order to connect with them, partnerships with government and civil society are needed to open grassroots channels. Private sector companies and development organisations share a fundamental goal: to increase access to medicines, driving both business growth and global health impact.
In summary, being visible to the local patient is crucial for penetrating worldwide markets and improving shareholder value. An access to medicines strategy makes healthcare products more available, affordable and accessible to developing and emerging world populations. It can drive business performance and growth as well. There are diverse reasons why some partnerships are successful and others are not. A lot of the time it comes down to a specific skill set, so be aware that new ones may be needed and adapt accordingly.
I Accenture Analysis, World Bank 2013, Syreon Research Institute 2012. http://www.ispor.org/research_pdfs/40/pdffiles/php44.pdf
ii Accenture Analysis, IMS Health Market Reports 2012, Life Science Leader 2014.
iii Life Science Leader 2014.
About the authors:
William Kammerer is managing director in Accenture's Life Sciences Supply Chain practice. He has more than 24 years of experience helping clients develop and implement supply chain strategies across retail, consumer products and life science organisations. Prior to joining Accenture, William worked in management consulting and in the transportation and logistics industry. He specialises in logistics management, supply chain network design and integrated planning and fulfillment operations.
Anastasia Thatcher is the global lead for Health within Accenture Development Partnerships, a non-profit business unit dedicated to international development. She has significant experience in partnership strategy, supporting more than 25 cross-sector initiatives across South Asia, Latin America and sub-Saharan Africa. Anastasia helps bring together civil society, United Nations organisations, donors and business to create holistic, integrated solutions for access to health. Outside Accenture, she teaches a graduate course in Private Sector and International Development.
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