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Big Pharma is not yet deeply enough invested in faster-growing markets outside the developed economies
What a difference the past three years have made. When IMS Health first segregated what it calls “pharmerging” markets—developing countries with fast-growing economies—in late 2006, it projected that seven countries would constitute 12% of the world market by 2011, and would fuel 20% of the growth during the 2006-2011 period. China was expected to sustain compound growth of 14% during the period; instead, it grew by 26% in 2008 alone. Now, IMS projects that those countries (Brazil, Russia, India and China—the BRIC countries—plus Mexico, Turkey and South Korea) represent 29% of global growth during 2009. The changes are a combination of the slowdown in developed world markets (US growth has been consistently at or below 5% for the past few years), along with the sustained growth in China, and continuing progress in the other BRIC countries.
To capture the full picture of future growth, IMS Health has now subdivided pharmerging countries into three tiers. China is in its own tier, with a projected doubling through 2013 and adding $40 billion in incremental growth to the world market (2009 figure: $773 billion). Brazil, India and Russia constitute a second tier, with each contributing $5-15 billion to world growth by 2013. IMS Health puts 13 countries in a third tier, led by Venezuela, Poland and Argentina, and Ukraine at the bottom, each contributing $1-5 billion to 2013 growth. (South Korea could be called a victim of its own success; its growth and per capita wealth now make it act like a developed nation as regards pharma growth.)
If markets evolve as IMS Health predicts, China will become the No. 3 market (behind the US and Japan) in 2011, jumping ahead of Germany and France. Brazil will surpass the UK in 2011.
Big Pharma falls behind
Perhaps the most significant finding in the study is that the top multinational biopharma firms are not keeping pace with pharmerging growth—especially US-based firms. In 2009, the world’s top 15 manufacturers derived 9.4% of their combined sales from the pharmerging countries, even though they represented 17% of the world market. With faster growth occurring in those nations, the multinational giants will have to “focus their time and energy on re-evaluating their priorities [and] building the necessary organizational competencies,” the report concludes. PC