Mihir Pandit [PC-09]Bhakti Shethia [PC-20]Sneha Agarwal [QA-17]

Jigar Raval [PA-08]Vipul Patil [PA-20]

Trends in Pharma Emerging Markets: Today and Tomorrow

TAKING A FRESH LOOK AT EMERGING MARKET

Growth patterns in developed markets continue to flatten Firms are shifting more of their focus- new sources of revenues and profitability in emerging markets Reason for hope: Driven by increasing wealth and a growing awareness of the advantages of good healthcare and healthier lifestyles, emerging markets are developing into sources of significant growth. “Promised land” HELP:• Stagnation of mature markets• Patent expirations• Increased regulatory hurdles.

Cluster 1 Cluster 2 Cluster 3

BRICMT economies Second-tier countries Southeast Asia

Africa

PHARMACEUTICAL POTENTIAL OF EMERGING MARKET AND MATURE MARKET

Source: IMS Health Market Prognosis; Global Insight; Booz & Company analysis

PHARMACEUTICAL MARKETSPHARMA MARKET GROWTH (2011–12) VS. PHARMA MARKET SIZE (2012)

The population of the individual countries is depicted by the size of the bubbles.

Fastest emerging markets

Developed markets

Volume market share by product class (Standard units): BRICS

% of patients in BRIC countries who could afford high cost therapies in 2011 and 2015

Source: IMS MIDAS Q411 based on ethical market only.

BRAZIL

STATE OF THE HEALTHCARE SYSTEM• Health care spending around 9% of GDP• Free or reduced cost medicines for patients with chronic diseases by SUS• All the drugs to be kept behind the counter

PHARMA MARKETS• 3rd largest pharmaceutical market in the Americas, after the US and Canada• Demand for pharmaceutical products growing by 10% per year• Expected to reach US $27 billion by 2015• MNCs moving in- Eg. Amgen, Sanofi, Pzifer, Valeant• Local drug makers- massive detailing, opening up new R&D units

Source: http://www.regulacao.gov.br/noticias/2013/07/research-and-markets-public-vs-private-healthcare-in-brazil-realities-of-drug-charges

• Generics are an increasing market

• Medicine prices are regulated by CMED

• ANVISA- grants marketing approvals to new drugs

• Alternative channels to communicate with physicians include- remote

detailing and special attention dedicated to physicians websites.

• Sales representatives can make unlimited visits to doctors’ offices

• Material gifts and trips from reps are prohibited

• Promotion at point of sales

THREE KEY TRENDS AFFECTING BRAZIL’S MARKET LANDSCAPE

• Innovation is declining in the retail segment

• Outpatient therapies addressed by

commoditized drugs, mainly branded

generics

• Generic players growing stronger

• Innovators focus on niche markets or turn

to careful investments with strong brands

eg.Sanofi, Novartis, Pfizer

• On the public side, creation of an

economic evaluation agency

(CITEC), caused a barrier to product

inclusion in funding programs

• On private side, payers tending to

avoid over-expenditure on complex

therapies

• Unmet medical needs in complex

diseases favors innovative non-

retail drugs

• Migration of MNCs to non-retail

arena

• Technical differentiation of new

products prevails over commercial

aggressiveness of local companies

Source: IMS Health, Pharmerging-Brazil

RUSSIA

CURRENT SCENARIO

The Russian healthcare system is fully subsidized

Spends 4.5% GDP on healthcare

Doctors are among the lowest paid professionals

The market is very volatile and lacks a highly developed infrastructure

Foreign manufacturers dominate

Most large pharmaceutical companies are localized with the help of a state program

Up to 70% of the pharmaceutical market is paid for out-of-pocket by consumers

Source: Cegedim Relationship management-Emerging market today & tomorrow

CURRENT SCENARIO

Local manufacturers currently produce outdated, low cost drugs, and many do not meet GMP standards

Market distribution:• Innovative products makes 20% of the market• Generics accounting for 60% • Traditional drugs 20%

Prescription drugs have a 60% market share

Most essential drugs are foreign, and the prices of everything on the EDL are regulated by the state

Concerning compensation, pharmaceutical companies cannot accept gifts

The only money they can accept is payment for clinical trials, educational activities,and scientific activities

FUTURE TRENDS

Plans to let go of assets dragging down the budget figures

The Ministry of Health will develop and approve standards for treatment

Limited pharmaceutical sales reps’ access to doctors

Market growth is expected to be within 15% in 2015

FUTURE TRENDS

Defining patient registers

All Russian manufacturers must comply with GMP standards

Want to reduce its dependence on imported drug so international companies need to

localize their effect

Pharma 2020, whose goal is to have at least 50% of drugs made in Russia and 25% madeby a Russian company

STRATEGIES

For OTC, patients awareness through programs and ads seen on television, web sites,

magazines, brochures, and educational stands for patients in outpatient clinics

For registering drugs in Russia is very time-consuming, strategy of using several

distributors

Working with district managers and having qualified key account managers can

smooth the difficulty of working with a government that is less accessible and less

transparent

INDIAINDIA

India’s Healthcare System

Indian healthcare sector is expected US $280 billion industry by 2020.

Estimated to grow 14% annually.

Struggling to meet the needs of its vast population, but government programmes and reforms in the health insurance industry should improve the situation.

Rural India contains more than 100 million untreated people.

Government is successfully pursuing its goal of providing 80% of the population with healthcare access in the next few years.

last five years - addition of 15,000 health sub-centers & 28,000 nurses.

No. of primary health centers has increased by 84%, taking the total number to 20,107.

The Pharmaceutical Market

Third largest volume in the world.

Ranks 14th in terms of value.

Expected to reach US$55 billion in 2020.

Key Challenges to Further Growth in Emerging Markets

Lack of healthcare infrastructurePrice pressureLocal competitionLack of IP protectionChallenging/nontransparent contracting and tendersTalent issues (e.g., recruitment, development, and retention)Compliance challengesLengthy product registration processesRegulatory requirementsSupply chain and distribution issuesCompetition from multinationals

Source: Booz & Company analysis

Future Trends & Strategies

Global pharma players can take advantage of a variety of options to maximize their investment in India.

OTC sales are on the increase, offering opportunities to achieve high volumes and enhance pharma brands in India.

Expertise in contract manufacturing & scrutiny around quality issues is driving significant improvement in manufacturing standards.

Phase III trials are now strongest, Phase II and IV trials are expected to grow, as more companies start offering end-to-end services.

Weak intellectual property laws.A clause that disallows patents for treatments that are not more efficacious than those already on the market.

Global Pharma’s evolving business models and options in India

CHINA

CURRENT SCENARIO

Healthcare spending : Below 5%Great Economic disparity Ambitious goal in 2009 : 90% insurance coverage in 3years

China as imperative sales market:• Internal booming market• A strategic logistic location near Asia Pacific emerging markets• Market for delocalization of raw materials(antibiotic ,cephalosporins• a platform for research programme and innovative drugs.• Largest patent application country after USA .

Annui model :Centralize the purchase of drugs to reduce price abuse and consequential costBeijing allowed Annui province to introduce its blind bid and tender process.Prescribing institution allow 0% markup on drugs listed in EDL and purchase of this pharmaceuticals through two enveloped centrally controlled bid1st envelope: Ensures technical and quality.2nd envelope: Price focus.

Shanghai model attempts to balance price quality and benefit. MNC and domestic impacted on profitability.(Decreased in 30% profitability)

CURRENT SCENARIO

MNC expanding presence in china : But Domestic industry growth is fasterEssential Drug List: Requires key account manager a skill to build relation with hospitals and government takes years

Pharma Sales Rep very few are detailed , high turnover , frequency of visit is regulated

Sales rep as educator or medical science liason

Greatest challenge is rotating system of physicians by government hence no accurate data base

FUTURE TRENDS

Pharma markets:2nd Largest market by 2015

1. Aging population.2. Increased incidence of chronic disease.3. Significant investments.

Branded generics less lucrative to MNC’s

Chinese physicians will loose bonuses.

Slashing of whole sale price of drugs .

STRATEGIES

China evolves without stability .

Flexibility is vital in china.

Diversification is key in china

Doctor education assures long term success.