Launch evolution across pharmerging markets

David Campbell

IMS Health

The dynamic, high-potential “pharmerging” markets offer tremendous opportunities for pharmaceutical manufacturers facing mounting pressures in the mature markets. But as more companies embrace these new growth drivers in their long-term strategic plans they face the challenge of a new and very different environment for launching a global brand, complex, demanding and changing fast.

The paradigm shift in pharmaceutical growth away from the established drivers of old to a group of high-potential pharmerging markets has continued to gather momentum. Collectively, the 17 pharmerging markets have been steadily gaining share at the expense of the US and top five Europe (France, Germany, Italy, UK and Spain), accounting for close to 34% of global growth in 2009 (Figure 1).

Figure 1: Pharmerging* markets contribution to global growth has steadily increased. Source: IMS Health Market Prognosis March 2010. Market size rankings in constant US$. *Pharmerging Markets: China, Brazil, Russia, India, Argentina, Egypt, Indonesia, Mexico, Pakistan, Poland, Romania, South Africa, Thailand, Turkey, Ukraine, Venezuela, Vietnam.

Traditionally, pharmerging markets have been something of a postscript for global pharma, with many multinationals preferentially launching in the major mature markets before even considering opportunities in the emerging sector. Today, with eight pharmerging countries among the top 20 world pharmaceutical markets and China on the brink of achieving top three status, (Figure 2), more companies are recognizing the need to reassess the focus of their global launch plans.

Figure 2: The pharmerging markets are redefining the established world order.

Source: IMS Health Market Prognosis March 2010. Market size rankings in constant US$.

Some of the world’s leading pharmaceutical multinationals are already achieving more than a quarter of their growth from the pharmerging markets, most have called them out as a key strategic priority, and all of the top 15 players are accelerating efforts to strengthen their presence within them – either through research investments, licensing deals, co-marketing arrangements, buy-outs, or similar.

"Some of the world’s leading pharmaceutical multinationals are already achieving more than a quarter of their growth from the pharmerging markets..."

A major ‘leap’ forward

IMS Health has conducted a major study into the evolution of launch performance across the pharmerging markets. In this first instance, we have focused on the IMS Tier 1 (China) and Tier 2 (Brazil, Russia, India) pharmerging markets – the four leading emerging economies in terms of absolute GDP and anticipated pharmaceutical market value growth through 2013.

The study evaluated over 260 NCEs and branded generics launched into these four pharmerging markets since 1998. For comparative purposes, products were segmented by local country launch into three waves of four years each:

• Wave I: 1998–2001

• Wave II: 2002–2005

• Wave III: 2006–2009

New launches are positioned to play an increasingly important role in the expansion of pharmerging markets. Products launched within the last four years were responsible for 19.9% of sales in these markets, compared to 15.5% in the Top 8 mature markets. They already account for an average 6.5% share of growth in the sector (10.9% in China) versus 4.1% in the Top 8 mature – a contribution that is set to continue rising as more companies recognize the value of these markets as a major source of revenue growth.

Closing time gap

Positive developments in the pharmerging markets, including greater government investment in healthcare, rising demand for drugs to treat typically Western diseases and a strengthening of regulatory and IP requirements in some cases, have increased the ability and willingness of multinational players to launch in these regions. Many have been quickening the pace at which they do so: for products already launched in at least one mature and one pharmerging country, our analysis reveals a halving in time to market between first global launch and first launch in a pharmerging market over the last decade, from 2.5 years in Wave I to 1.25 years in Wave III (Figure 3).

Figure 3: The time to first launch in a Tier 1/Tier 2 pharmerging market has halved in the last decade.Source: IMS Health MIDAS 2009.

Shifting emphasis

Not only are companies launching much sooner into the pharmerging sector, they are also changing the nature of the drugs that they launch. The traditional strategy of entering these markets with products focused mainly on primary care is giving way to much stronger emphasis on specialist launches. Our study shows that specialist products now account for 55% of launches in China, Brazil, Russia and India compared to only 47% in Wave I.

Furthermore, drugs in the specialist sector have experienced the greatest reduction in time to market versus those in primary care, with an average time lag of only 1.5 years now compared to 3 years a decade ago.

Variable uptake

Despite sharing many similar characteristics, there are significant distinctions both within and across the pharmerging markets that clearly set them apart – both from each other and from mature markets - in the way they are structured, the way they operate and in the various hurdles to market access they present. These differences are manifested in highly variable uptake curves within across market segments in the countries studied, compared to those observed in mature markets (Figure 4).

"Not only are companies launching much sooner into the pharmerging sector, they are also changing the nature of the drugs that they launch."

Products launched in India, for example, tend to follow a shallow uptake curve that plateaus quite quickly. Here, faster genericization due to poor IP protection and a strong presence of local players has created a fragmented market where a high share is difficult to achieve. Conversely, in Brazil – where launches are often linked with US market entry – rates of uptake are more in line with those of the mature markets in terms of the higher share that products can expect to achieve within their given therapeutic area.

Figure 4: Variation of launch uptake is more pronounced in the pharmerging markets.Source: IMS Health MIDAS 2009, in constant US$.

Narrow window

One of the most striking findings from the IMS Launch Excellence studies in the Top 8 mature markets was that the vast majority of launches have only a short six-month window in which to succeed – a conclusion that has not changed over time.

This “window of opportunity” is also apparent in the pharmerging markets, where, again, the success of a launch can largely be determined within the first six months: in Wave I, only 19% of brands were able to improve on their initial launch trajectory (Figure 5).

Figure 5: The 6-month window of opportunity exists in pharmerging markets.

Source: IMS Health MIDAS 2009, in constant US$.

What does this mean for the pharmaceutical industry?

One clear, overriding conclusion from our analysis is that the rules of the game in pharmerging markets have changed. As companies press ahead with their plans to drive growth in this critical sector, the ability to adapt to a fundamental shift in the launch environment with well-planned, fully-integrated strategies for market entry will be essential for their long-term success.

"One clear, overriding conclusion from our analysis is that the rules of the game in pharmerging markets have changed."

Four key considerations should be placed at the forefront of their decision making:

1. Launch earlier in pharmerging markets - potentially ahead of mature

With a clear trend towards faster launch into China, Brazil, Russia and India, the imperative to address these key growth markets during the creation of initial global launch plans is critical - the long-time strategy of focusing first and foremost on the major mature markets no longer holds good.

2. Don’t underestimate the potential for innovative launches

Behind the greater variation in the pattern of uptake in the pharmerging markets is the higher probability of gaining significant market share when launching differentiated products rather than those in commoditized or transitional therapy areas.

3. Plan to maximize the 6-month launch window

The extreme importance of the first six months means that strategies for launching into the pharmerging markets must be built well in advance with careful planning of pre-launch activities to ensure optimal readiness across all relevant functions.

4. Address the complexities

The highly variable uptake of launches within therapy area across the pharmerging countries underscores the extremely diverse nature of these markets and the very different patterns of behavior that they display.

About the author:

David Campbell has extensive experience in the pharmaceutical and consulting industry in the USA and Europe. He is the global lead for IMS’ Pharmerging Markets Platform, coordinating and strengthening the company’s expertise in these fast growing and dynamic markets.

IMS Health is the world’s leading provider of market intelligence to the pharmaceutical and healthcare industries.

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