From the perspective of active ingredient- and finished-dose manufacturers based in the United States and Europe, players from emerging markets, especially India and China, often seem to pose threats. The availability of low-cost active pharmaceutical ingredients (APIs) from India and China has had a big impact on the Italian and Spanish API manufacturers. Today, 29 India-based groups and 16 China-based groups are considered "established" by Thomson Reuters, meaning that they have many years of experience with supplying a number of APIs to regulated markets such as the US and European Union (see Figure 1). Meanwhile, the emergence of a new crop of backward integrated Indian generic-drug manufacturers has changed the market dynamics in Europe and the US. Both the number of abbreviated new drug application (ANDA) filers and filings from India have increased dramatically over the past 10 years (see Figure 2).

With double-digit growth rates and a lower cost base, emerging markets also provide regulated market players with several opportunities. For instance, these markets can serve as bases for conducting clinical trials, research and development (R&D), and manufacturing activities, in addition to providing regulated market players with opportunities to sell finished-dose products and APIs into those markets.

Each emerging market comes with a unique set of opportunities and challenges. This article focuses on some of the opportunities and challenges in the four BRIC (Brazil, Russia, India, and China) countries faced by API and finished-dose manufacturers based in regulated markets.

Brazil. Brazil is the second largest pharmaceutical market in Latin America after Mexico. Its $11 billion pharmaceutical market has been growing at double-digit rates (1). It is no surprise that this rapidly growing market would be of interest to big pharmaceutical manufacturers, despite the country's price controls, frequent changes in rules, and willingness to issue compulsory licenses, as seen in the case of Merck's (Whitehouse Station, NJ) "Stocrin" (efavirenz). In May 2007, the Brazilian Ministry of Health issued a compulsory license for efavirenz after Merck refused to lower the price of this antiretroviral treatment to levels acceptable to the Brazilian government.

Major pharmaceutical companies such as Eli Lilly (Indianapolis) and Novo Nordisk (Bagsværd, Denmark), have also set up manufacturing facilities in Brazil, both for local sale and export purposes. Five years ago, Eli Lilly refurbished its oral-solids plant in Saõ Paulo and today, several of its brands are produced locally. Last year, Novo Nordisk announced that it had invested $200 million into an insulin- production facility in Montes Claros. Meanwhile, it is speculated that Novartis (Basel, Switzerland) will be setting up an antimeningitis vaccine plant in Singapore rather than in Brazil due to latter country's lax attitudes toward patent protection.

Despite these moves, the Brazilian generics market has proven difficult to enter and succeed in for most foreign companies. Four local generics companies—EMS (Hortolândia), Medley (Campina), Eurofarma (Saõ Paulo), and Ache/Biosintetica (Guarulhos)—control 80% of the generics market in terms of sales. Of foreign generics companies, only Sandoz (Holzkirchen, Germany) has so far succeeded in working its way into the top. Meanwhile, Apotex (Ontario) is looking to sell its facility in Saõ Paulo and will no longer market products directly in the Brazilian market, citing fierce competition as the main reason for these moves. Other regulated market players, among them Germany's Ratiopharm and Stada Arzneimittel AG, also have so far had limited success in Brazil.

We at Thomson Reuters anticipate that as "similars" (products that have not gone through bioavailability and bioequivalency testing) are gradually being phased out in Brazil, the market share of generics will increase, and additional foreign generics companies, among them Teva (Petah Tiqva, Israel), will try their luck in the Brazilian market. We also speculate that Teva will attempt to enter the Brazilian generics market by acquiring one of the local players, possibly Medley, which was put up for sale this summer. This would allow Teva to take advantage of a local manufacturing base and established relationships, both of which have proven to be extremely valuable in the Brazilian market.