Over the next five years, biopharma executives expect about one-third of total sales to come from emerging markets—regions whose challenges threaten to hold back planned growth, biopharma executives and others agreed in a new report.

Among these challenges are rapid changes in disease patterns, which will increasingly shift toward “lifestyle” diseases more common in the U.S., Europe, and other established markets, Booz & Co. concluded in “Pharma Emerging Markets 2.0: How Emerging Markets are Driving the Transformation of the Pharmaceutical Industry.”

According to the report, based on a survey of executives from 12 of the top 15 global biopharma giants, almost half (49%) of respondents named diabetes as the therapeutic area they expect will grow more than 20% over the next five years, followed by oncology (33% of respondents), anti-infectives and antivirals (25%), cardiovascular (23%), and central nervous system (16%).

Emerging markets themselves will expand by 2018, the report added. In addition to the “BRIC” cluster (Brazil, Russia, India, and China), plus Mexico and Turkey, Booz identified a second tier of “emerging” nations with potential for faster growth. Second-tier markets include Southeast Asia (Vietnam, Thailand, Indonesia, and South Korea); the Middle East (Saudi Arabia, Egypt, Pakistan), and African nations with pharma markets exceeding $1 billion (Algeria, Nigeria, and South Africa).

Increases in chronic diseases don’t necessarily mean fewer incidences of acute diseases such as malaria and tuberculosis. Even if they did, pharma giants would not likely benefit since many such treatments are generic or produced by domestic drug developers.

“It’s the growth of chronic meds that has them excited, not the continued growth of some of the developing-country issues,” Rick Edmunds, senior partner and global health practice leader with Booz, told GEN.

The excitement, Edmunds said, stems from the opportunity to expand the market for products. He said drug developers will need to change their go-to-market strategies and operating models to best capitalize on emerging-market growth.
Survey respondents expected biopharma giants to build up local R&D, manufacturing, and sales operations in the largest emerging markets through 2018, while establishing and maintaining partnerships with domestic companies for these operations in second-tier markets. That will mean continued big pharma cutbacks in Europe and the U.S., Edmunds said.

Also growing in emerging markets, respondents predicted, will be marketing approaches emulating established regions. In the year ending March 2012, biopharma giants grew their Chinese sales workforces 17%, while shrinking their U.S. counterparts 8%—explaining why in 2012, for the first time ever, more sales reps worked in China (80,000) than the U.S. (72,000), according to Cegedim Strategic Data.

“We’ve also seen an explosion in things to support patient access and availability, although it’s not through broad-based media as much as through commercial trade channels” such as pharmacies, Edmunds said.

While pharmas have long had some presence in second-tier markets, he added, “they realize that to grow to scale, they can’t do it themselves. That’s where partnering is increasingly important.” Partnering occurs with nongovernmental organizations and disease foundations, and especially with governments, which in most cases control healthcare systems, the Booz report noted.

Survey respondents identified several barriers to growth in emerging markets: lack of infrastructure such as doctors and top-tier hospitals, leading to undiagnosed cases and providers unfamiliar with chronic diseases; patent-cliff loss of protection for drugs; and increasing pressure by governments to contain drug costs, reflected in lack of reimbursement and public funding.

More than half (52%) of executives surveyed believe emerging markets will account for more than 30% of revenues by 2018, while 15% foresee them generating more than 45% of total sales.

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