The growth of the pharmaceutical market in the emerging BRIC countries (Brazil, Russia, India and China) continues to outpace expectations. According to IMS Health, “pharmerging” countries will grow by $120 to $140 billion in the next five years, and China will become the world’s third-largest market by 2011. Yet, despite seemingly vast opportunities, the world’s top 15 pharmaceutical companies derived just .9% of their combined sales from China in 2009, and 2.9% from Brazil, India and Russia. (Source: IMS)
Pharma’s slow entry into these markets is a direct result of their complexity. Significant challenges range from a lack of clinical standards and guidelines, to complicated regulatory and approval processes, to competition from copycat generics and low-cost biosimilars, to fragmented geographies where income levels, education, attitudes and access to healthcare vary dramatically from region to region. Given the potential obstacles, what strategies should pharma companies employ to increase their chance of success as they expand into these emerging markets?
Customize Product Portfolios and Commercialization Strategies to Local Markets
Virtually all large pharmaceutical companies have made strategic investments in representing the emerging markets at the operating committee level during the past two years. As they now prepare for further expansion into the markets, it will be important that they not view or manage all emerging markets as one. Each market has its own regulatory, infrastructure, cultural, and disease state needs that are truly unique. Pharmaceutical manufacturers need to customize their infrastructure and product portfolio, and consider the services they could offer these attractive but complicated markets.
There are vast cultural differences on how the populations of emerging markets consume healthcare. For example, Russia and Brazil are both cash-based pharmaceutical markets, yet they are culturally very different. In Russia, individuals turn to traditional family remedies when they are sick because doctors are not widely revered or trusted. However, in Brazil, going to the doctor is much more culturally acceptable; the bigger hurdle is whether patients can afford to go to a physician. Thus, the two markets would require vastly different commercialization approaches.
In addition to having unique healthcare needs to be satisfied, each emerging market has unique regulatory rules resulting from its governments’ efforts to rein in healthcare expenditures. As a result, manufacturers need to be very entrepreneurial about tailoring their portfolio of products to the local markets. They also should be open-minded about how they will work with generic manufacturers, as most governments in emerging countries favor the use of generics. Finally, manufacturers should think about developing “home-grown” marketing talent over the long-term by collaborating with local universities to establish healthcare marketing curriculums. These investments could produce great rewards in 5 to 10 years.
Focus on Training and Development of Sales Representatives
Much has been written and discussed regarding challenges pharmaceutical companies face regarding entry into emerging markets. Intellectual Property concerns, reimbursement issues, regulatory, political and economic environments to name a few. However, it has not prevented companies from taking on these challenges as the emerging markets offer significant revenue growth versus established markets for the foreseeable future.
A key challenge area not often mentioned that should rank as high as any above and planned for before emerging market entry is how to sustain a quality sales force. The boom of sales force creation and expansion in the emerging markets has created a competition for experienced reps as well as high quality new candidates. Turnover will be high and quality of new reps low as companies coming into the market continually raise the salary bar to entice quality reps to join them and dilute the new candidate pools.
One way to combat this is to proactively develop, fund and put in place market-tailored, high quality internal training and career development programs. Robust training will help to counteract the quality issues while ongoing aggressive development will not only help retain employees but enable a company to be better prepared to replace key field personnel in areas such as field management and key accounts quickly from within.
Companies investing the time and money into training and development upfront will be in a better position to deal with some of the key challenges they will face with their sales force in these new markets.
Partner with BRIC Governments to Align Regulations with Major Markets
Not only do BRIC countries make up more than 40% of the world population, they have higher GDP growth rates than developed markets and a fast-growing middle class with high purchasing power demanding the standard of care found in the developed world. As a result, pharma companies are quickly boosting their presence in the BRIC regions by boosting sales of innovative drugs and medical devices.
Local clinical research data is required in order to obtain marketing approvals in some BRIC countries. Yet, the number of clinical trials in the BRIC countries is not growing at the same pace as their economies. As pharma companies expand clinical research efforts in these markets, the following strategies may increase their chance of success:
1. Work with BRIC governments and regulatory bodies to ensure that their regulations become more aligned with the major markets. This may include a focus on:
- Patent protection and enforcement to promote innovative research,
- Patient data handling and protection, and
- Import/export of study drug and samples.
2. Design clinical trials to be adaptable at the local level to match local health standard practice, needs and constraints.
3. Optimize investigative sites by:
- Standardizing training/global accreditation of investigative sites,
- Increasing the number of investigative sites, and
- Focusing on transparency and ease of negotiating site contracts
4. Develop operational teams by:
- Improving communication between on-shore (staff located in BRIC countries) and off-shore (located at the HQs) clinical operations teams,
- Ensuring that local level study designs and milestones are achievable within the planned time-windows,
- Providing off- and on-shore teams interpersonal (training) skills to ease internal communication and to potentially overcome cultural misperceptions
In addition, local BRIC governments should facilitate better clinical research in their countries by aligning regulatory requirements, documentation evaluation and approval timelines; making regulatory procedures more transparent; increasing the number of audits; and enlarging the pool of local auditors trained and accredited by global independent organizations. Pharma companies can have a strong influence in driving these regulatory and quality enhancements.
