A Focus on Emerging Markets - Pharmaceutical Technology

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PharmTech Europe

A Focus on Emerging Markets
The power of emerging markets is reflected in the pharma's sales and production positions.


Pharmaceutical Technology
Volume 35, Issue 3, pp. 70-76

In an EuroBusinessMedia interview in February 2011, Chris Viehbacher, CEO of sanofi-aventis, emphasized the importance of emerging markets. "Emerging markets really [are] becoming a strength of the company. Imagine a business: EUR 9 billion, it's growing at double-digit rates, we got close to 19,000 reps, close to 40,000 employees, there are 38 plants that can produce at lower cost, there are businesses where we have been for decades, so we have got depth of management, understanding of customers, we have a product portfolio that manages that," he said in a transcript posted on sanofi's website. "And what no other company in this industry can say, in 2010, we sold more in emerging markets than either of the US or Europe."

In 2010, Novartis reported pharmaceutical sales of $30.6 billion, an increase of 6% in constant currencies year over year. Europe remained the country's largest pharmaceutical market, as sales increased 7% in constant currencies to $10.9 billion. US sales increased 5% in constant currencies to $10.0 billion. In 2010, pharmaceutical sales (excluding sales from its recent acquisition of the ophthalmic drug company Alcon) in China, Russia, Brazil, India, South Korea, and Turkey were $2.9 billion, a 9% gain compared with 2009 sales, led by double-digit growth in India, Russia, South Korea, and China, which offset cost-containment measures in Turkey. Pharmaceutical sales to Latin America and Canada were $2.9 billion, up 14% year over year.

Emerging markets are part of Glaxo-SmithKline's (GSK) strategy to improve its return on investment and capital allocation and to decrease its dependency on what the company terms "white pills/Western markets," said GSK CEO Andrew Witty, in a Feb. 3, 2011, company press release. White pills/Western markets refers to sales of tablets and simple injectables (excluding biopharmaceuticals and vaccines) in North America and Europe. Sales generated from these markets and products have decreased from 40% of overall revenues in 2007 to 25% in 2010, according to the GSK release.


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In 2010, GSK's pharmaceutical sales from emerging markets increased 22% to 3.6 billion ($5.8 billion), led by 20% sales growth for Valtrex (valacyclovir), a drug to treat shingles and herpes, and the antidiabetes drug Avandia (rosiglitazone). In contrast, European pharmaceutical sales declined 6% to 6.5 billion ($10.5 billion), primarily due to lower sales from pandemic-influenza products, generic competition for Valtrex, and lower sales of Avandia. US pharmaceutical sales fell 11% to 7.6 billion ($12.2 billion) due to generic competition for Valtrex and lower sales of Avandia and pandemic influenza-related products. On a therapeutic basis, GSK's strongest sales to emerging markets were vaccines (927 million, or $1.5 billion), respiratory drugs (616 million, or $992 million), and antibacterials (609 million, or $980 million). As might be expected, operating margins for pharmaceutical sales in emerging markets were lower compared with those from developed markets. GSK had an operating margin of 35.7% for pharmaceutical sales in emerging markets compared with a 65.9% operating margin for US pharmaceutical sales and a 57.2% operating margin for European pharmaceutical sales.


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