Across the global pharmaceutical industry, there is a sense of urgency when looking at the pharmerging markets, says David Campbell, senior principal at IMS Consulting. "We're starting to see a lot of movement and interest from companies wanting to enter pharmerging markets or, for those companies already in the pharmerging markets, to expand their opportunities in those markets," he says. "The challenge is that these markets are very complex and the opportunities are different for each BRIC [Brazil, Rusia, India, and China] nation. We're going to see companies rethinking business models—their market strategy and their commercial models—to ensure they remain competitive against entrenched and local competitors in pharmerging markets, while also being able to return value to various stakeholders."
Several multinational companies have already laid this groundwork in Central and Eastern Europe (CEE) and Commonwealth of Independent States (CIS) countries by establishing official emerging-market strategies. Sandoz (Holzkirchen, Germany), the generic-drug division of Novartis (Basel), got in early and now leads the CEE market for generic pharmaceuticals with a presence in nearly every CEE country, excluding Montenegro and Slovenia, as well as in Belarus, Ukraine, and Uzbekistan. The company's acquisition of Slovenian generic-drug manufacturer Lek (Ljubljana), which operates all over the CEE and CIS regions, in 2002 provided a major stepping stone into the region. Today, Sandoz is the second-largest generic-drug company in the world based on sales (1) and Novartis is the primary player in Eastern Europe with 2007 sales of $1.5 billion (2).
Another European major, sanofi aventis, is also gaining ground in CEE and the CIS. "Most companies are already announcing strategies to get away from small molecules in the rich countries. We're already there. We're already the leader in emerging markets," said sanofi aventis CEO Chris Viehbacher in an April 2009 video presentation (3). These markets are undergoing major economic growth, which means their consumers are spending more on healthcare, he explained in the presentation.sanofi aventis' focus has been on Russia, where its retained a presence since 1970. Today, the company has two offices in Moscow and 31 sourcing plants throughout the country. sanofi aventis' 2008 sales in Russia grew 34.4% to EUR 380 million ($541.5 million) according to a company investor-relations seminar on Emerging Markets in July 2009 (4). Looking ahead, the company aims to be a leader in Russia's prescription generic-drug market and its over-the-counter drug market. sanofi aventis wants to expand its vaccines business to other CIS countries as well (4). The company's recent acquisition of Zentiva in the nearby Czech Republic and Sanofi Pasteur's 20% share of Russia's vaccines market (GSK, Novartis, and Merck have smaller but significant shares) should help in this regard (4).
Looking ahead, Viehbacher hopes that 64% of sanofi aventis's volumes will be sold in emerging markets this year and that sales in those markets will double between 2008 and 2013 (4).
Pfizer (New York) reorganized in 2008 to create five major business units, one of which is Emerging Markets (5). The new unit is focused on capturing greater revenue, particularly in Latin America, Asia, and Eastern Europe (6). The company wants to add $3 billion in annual sales by 2012 from emerging markets, namely, the BRIC countries plus Mexico and Turkey (6,7). Glaxo-SmithKline (London) also established a strategy in spring 2008 to "unlock the potential of emerging markets" by placing a priority on investments in capacity and regulatory expertise in those counties (8,9). And in August 2009, as a result of its recent merger with Schering-Plough, Merck & Co. (Whitehouse Station, NJ) announced a new structure that includes an Emerging Markets group. The group is being established under the company's Global Human Health division—the largest of five divisions in the newly merged company—and is charged with, among other things, identifying ways to take advantage of significant growth opportunities in emerging regions, including Eastern Europe, according to an Aug. 31 company release.