These leading emerging economies represent a combined pharmaceutical market of US$132.2 billion. How have they emerged from the economic downturn? Where do commercial opportunities exist for pharmaceutical companies over the 2011-16 forecast period?
Putting things in perspective...
With strong economic growth, a combined population of 2.9 billion people and significant unmet healthcare needs, challenges and opportunities remain in BRIC pharmaceutical markets. Their combined market, including pharmacy and hospital sales, is valued at US$132.2 billion at retail prices. This market is collectively lower than the USA and just higher than Japan, but impressive growth rates mean that pharmaceutical companies ought to have long-term interests in these markets. China, in fact, is expected to become the second leading worldwide pharmaceutical market by 2016.
Sizeable opportunities exist …
There are wide regional health expenditure differences within the BRIC markets, far more than in developed countries where health systems provide a more uniform coverage level. These four countries, however, have a relatively wealthy urban population with a far greater spending power than their respective national average. In the case of China and India, these urban populations have grown rapidly, and number hundreds of millions. The challenge for these countries is to extend this level of wealth to the rest of the population, so that better levels of healthcare become affordable. China, for instance, plans to create a solid platform for universal healthcare access for all by 2020.
A long haul...
Pharmaceutical market growth has been impressive in recent years. Market change, however, is expected to be incremental. Short-term opportunities exist to meet the health demands of the burgeoning middle classes, whilst future prospects are bright, fuelled by strong economic performance. A high pharmaceutical market growth projected in BRIC markets is expected to erode some of the commercial differences with the established, but more sluggish, pharmaceutical markets in North America, Japan and Europe. Only Brazil is expected to have a low market CAGR in US dollar terms over the 2011-2016 period, as the Economist Intelligence Unit projects a strong exchange rate of the US dollar against the local currency.
Current and accurate decision support intelligence is vital
Effective planning is vital and that is why Espicom, the leading provider of pharmaceutical market intelligence, has issued this report collection The Outlook for Pharmaceuticals in Brazil, Russia, India & China. For each country there is a comprehensive examination of the pharmaceutical market that covers all aspects of the operating environment, from the regulatory situation through health provision/expenditure to domestic production. Importantly, each market evaluation includes five-year growth forecasts and SWOT analysis. An additional benefit – and at no additional cost – is that these reports are updated and issued quarterly and include an annually updated statistical report packed with hard-to-source health market facts and figures.
HIGHLIGHTS FROM THE REGION...
The government aims to encourage the development of biosimilar drugs. In 2012, ANVISA is expected to publish specific guidelines for the development of biosimilars of monoclonal antibodies. In October 2011, ANVISA published four guidelines for biosimilars. Along with these guidelines, ANVISA created a technical chamber for biologics and posted the main regulations, including those for the registration and post-registration, on its website in 2011. The Ministry of Health is very keen to encourage the local production of biosimilars. As part of these efforts, for instance, the Ministry of Health and the government of Sao Paulo signed an agreement with Instituto Butantan in December 2011. Local companies also consider the biosimilar sector very attractive, therefore a number of initiatives are in the pipeline. Foreign companies have also shown interest. Amgen, for example, acquired the local producer Bergamo in April 2011, and reacquired a number of products previously licensed to Mantercorp, which was acquired by Hypermarcas in January 2011. Novartis has confirmed its plans to build a plant for the production of vaccines against meningococcal B within three years.
The Russian pharmaceutical market is the largest in Central & Eastern Europe (CEE) and accounts for two-fifths of the total CEE pharmaceutical market, due to its large economy and population. However, Russia has one of the smallest per capita pharmaceutical spending, comparable to Romania. The Russian pharmaceutical market is projected to expand at a double-digit CAGR in US dollar terms between 2011 and 2016. It will continue to be driven by import growth; imports registered a double-digit CAGR between 2006 and 2010. In fact, a heavy reliance on imports has resulted from the lack of locally-manufactured innovative pharmaceuticals. A strategy for encouraging growth in the Russian pharmaceutical industry for the period up to 2020 envisages the government helping local producers to cover the costs of the R&D that is required to boost production of innovative pharmaceuticals.
The need to maintain low prices for essential medicines has been addressed in the government’s draft National Pharmaceutical Pricing Policy (NPPP), released in 2011. The proposed NPPP focuses on the National List of Essential Medicines (NLEM), which is periodically revised. The headline major change is a move from the principle of cost-based pricing to a market-based pricing model. The Department of Pharmaceuticals argues that market-based pricing would result in more transparent and fair pricing, as well as increasing competition in the marketplace. Price regulation will encompass all drugs listed in the NLEM, as well as formulations containing combinations of drugs listed in the NLEM; this will include combinations comprising listed drugs and unlisted drugs. If the NPPP is implemented, around 60% of the drugs currently available in India will come under price control.
The Ministry of Health (MoH) has made lowering drug prices a top priority for health authorities in 2011. The National Development and Reform Commission (NDRC) implemented two rounds of drug price reductions in 2011, one in March and the other in September. Most of the drugs reduced were manufactured by multinationals, which had previously not been subject to pricing controls. In terms of regulatory developments, the SFDA started to inspect overseas manufacturing facilities in November 2011, as the agency seeks to align its practices with international standards. In July 2011, the MoH revealed that it may introduce mandatory licensing policy to secure cheaper drugs for HIV/AIDS patients, as part of the country’s universal health coverage programme. In January 2011, the MoH announced that the Essential Drugs List would be further expanded to cover nearly all government-sponsored grass-roots health institutions.
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