Pharma’s Common Commitment to Emerging Markets
For all the things that are unclear about pharmaceutical companies, one thing is certain: More of their future profits will come from emerging markets.
To be sure, drug markets outside North America and Europe have very different characteristics. For instance, in potentially huge pharmaceutical markets such as India and China, consumers are gravitating toward so-called branded generics — generic versions of drugs that are no longer patent protected but that carry the imprimatur of a trusted manufacturer, such as GlaxoSmithKline PLC or Abbott Laboratories.
“It’s important for us to be in the top five in branded generics in some emerging markets,” says Miles White, CEO of Abbott, who spearheaded the company’s 2010 acquisitions in this area, of Solvay Pharmaceuticals and Piramal Healthcare of India, and who will cede the management of them to another Abbott executive, Richard Gonzalez, when Abbott’s planned split becomes effective in 2012. White adds that Abbott’s investment in emerging markets is a long-term play, and that it will take “a decade or two” for those markets, as a whole, to “reach a scale and size” similar to that of the United States.
Novartis AG is building a vaccine plant in Brazil and a pharmaceutical and generics plant in Russia, says its chief executive, Joseph Jimenez. In addition, the company is setting up a biomedical research center in China in the belief that local R&D work will give its scientists better insights into local patient needs.
“The incidence of chronic diseases like diabetes, obesity, and cardiovascular disease is rising dramatically in China,” Jimenez says. “I’ve seen this firsthand from my own travels and talking with government officials.
“The work we’re doing in China,” he adds, “is going to give us a strong lead in enabling us to address the population’s rising demand for healthcare and significant unmet medical needs.”
—A.K. and V.G.
Reprint No. 00095
- Alex Kandybin is a partner with Booz & Company in New York who works with clients in the consumer healthcare and life sciences industries to develop strategies and capabilities that help them achieve competitive advantage.
- Vessela Genova is a senior associate with Booz & Company in Los Angeles. She works with clients in the consumer healthcare, life sciences, and media industries to help them develop capabilities-driven strategies to grow competitively and enter global markets.
- Also contributing to this article was consulting editor Robert Hertzberg.