How to succeed in emerging markets

Christopher Viehbacher
Christopher Viehbacher

Sanofi announced on March 29 that it was pouring $75 million into a Vietnam manufacturing plant. “This investment,” says Sanofi CEO Christopher Viehbacher, is part of the company's drive to “further strengthen Sanofi's leadership position  in emerging markets.” Overlaid with a recent study by Booz & Co, it also signals what it takes to convert emerging markets from potential revenue sources into financially sustaining markets.

Hint: it takes more than a local storefront and sales force.

Citing Sanofi as an emerging-markets sales leader and Novartis as a smart investor in local clinical trials, Booz & Co. interviewed execs from more than 25 brand and generics companies.

According to the study, 52% of respondents expect emerging markets to account for more than 30% of sales within five years. And with the patent clock also running in those markets, strong relationships are critical.

What this means commercially depends on where the industry is looking, be it BRICMT (Brazil, Russia, India, China, Mexico, Turkey), Second Tier (former Soviet Bloc, Southeast Asia) or Africa. Booz boiled down the key levers into three categories: local operations (research and manufacturing), local sales forces and government collaboration.

The term “emerging markets” is a bit misleading, because drug makers aren't pioneers in loose marketplaces. Instead, these markets have adopted, or are creating, payment infrastructures which may offer access to large populations, but with limited pricing latitude. For example, Booz expects Vietnam's recent price caps will lower drug prices by around 30%.

The African market's considerations are unique for reasons including the types of drugs that are expected to lead. In contrast to the BRICMT and Second Tier economies, which are expected to see growth in “lifestyle” conditions like diabetes and cancer, in many African markets, communicable diseases like AIDS, together with maternal conditions and nutrition, account for two-thirds of the immediate health needs. Researchers said a lack of health infrastructure and economic conditions make relationships with NGOs and local distributors crucial.
You must be a registered member of MMM to post a comment.

Next Article in Features

Email Newsletters

Specialty medicines continue to be a hot category, one in which spending has surged behind products that treat medicine's most complex diseases. This eBook lays out the needs and hurdles along the specialty drug pathway, explaining how stakeholders are working to get meds into patients' hands and ease their experience. Click here to download.