Emerging Markets – The Answer for Big Pharma

 

With ProcureCon Pharma around the corner, we wanted to take a deeper dive into the shifting pharmaceutical landscape and explore some of the changes over the past few years. Of course, the first thing that came to mind was the big patent cliff. There was once a time when patent-protected products ruled the marketplace.  Many pharma companies profited from this structure, but as the economy and legal system changed, so did the industry.

Though we are at the tail end of the patent expiry, pharmaceutical companies are still dealing with the fallout. These patent cliffs have had a huge impact on revenues, and that will only increase as more low-cost generics come to market. It actually has been suggested that from 2012 to 2018, more than $290 billion of sales would be at risk from patent expirations. (1)

However, with a healthy pipeline of new innovations and strategic focus on reducing robust categories of spend, some pharma companies have a bright future ahead. In fact, most pharma companies look to sourcing to help consolidate the supplier base, which in turn reduces cost and administrative burden. Many pharmaceutical companies find this more efficient, working with a preferred selection of suppliers who provide strategic insight as well as goods and services.  Spanning across categories such as Marketing, IT, and Professional Services, this supplier strategy creates stronger, more collaborative relationship constructs.

Even more so, the growth in emerging markets has been a tremendous impact on pharma companies’ bottom lines.  In fact, one healthcare strategist was quoted on saying, “If you go back a decade, emerging markets contributed very little to the overall growth of the pharmaceutical industry. If you fast forward to today, you’re looking at emerging markets contributing close to 20% — or over 20% — of top-line sales.” (2)

With emerging markets making up a sizeable amount of the world’s population, it is easy to understand why pharmaceutical companies are looking to Brazil, Russia, India and China for growth opportunities. According to some, these emerging markets will be, “30% of global pharmaceutical spending by 2016.” (3)

However, these markets are not without troubles of their own. For example, bribing doctors in China has become prevalent, and many are seeing kickbacks from major pharmaceutical companies. In Africa, cases of testing dangerous products on children have come to light. Though profitable, the loose governance around pharma in these emerging markets could easily push companies into unethical territory.

So as we began to gear up for ProcureCon Pharma, we understand that the conversations about supply chains may shift to globally sourcing suppliers. These emerging markets offer a great opportunity for pharmaceutical companies to rebound from the patent cliff crisis. However, it is clear that as these roles develop in other countries, the need for international ethical processes should be established.

 

1. C. Harrison, Nature Reviews Drug Discovery 12, 14-15 (2013).

2. http://www.forbes.com/sites/wallaceforbes/2014/06/18/emerging-markets-offer-a-new-channel-of-demand-for-pharmaceutical-products/

3. http://www.industryweek.com/emerging-markets/how-big-pharma-can-win-emerging-markets

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