Bangalore, March 13, 2008: Faced with falling growth rates in the US and Europe, pharmaceutical companies are turning their attention towards emerging pharmaceutical markets whose double-digit growth is fuelled by their recent economic booms. However, although the patient potential of the emerging market countries is enormous, foreign pharma companies are currently tapping into only a fraction of the consumers, due to fairly poor access to drugs in countries like India and China, and to an extent in Russia, Brazil and Turkey. Nevertheless, many companies are keen to get a foothold as the purchasing power of the booming middle class and the countries as a whole is rising, and is driving the pharmaceutical market growth.

 

According to a new report by independent market analyst Datamonitor, the new middle class wants better healthcare and is willing to pay for it. The governments are improving public provision of healthcare, more individuals can pay for drugs out of pocket and Big Pharma are there ready to bank on it and compensate for lower growth of the mature markets of the West, said Datamonitor senior pharmaceutical analyst Dr Tijana Ignjatovic.

 

Emerging pharmaceutical markets are growing at double-digit rates. With slowing growth rates in Western pharmaceutical markets many pharmaceutical companies are turning towards the fast growing emerging markets as new sustainable sources of revenue growth. Some of the countries that have attracted the most attention are Brazil, Russia, India, China and Turkey. Although the current pharmaceutical market values in these countries are not impressive compared to more mature markets, most are experiencing tremendous growth rates compared to the modest four to six percent growth seen in the US and Europe.

 

The Brazilian retail pharmaceutical market was worth $8.4 billion in 2006 and growing at a rate of 24 percent. Russian market research company Pharmexpert puts the value of the Russian pharmaceutical market at $10.7 billion in 2006, noting a record 27 percent growth from 2005. China and India both grew at 15 percent, bringing the hospital market value in China to $10.7 billion, compared to India’s retail market sales of $5.5 billion. Turkey’s total market value in 2006 was $7.3 billion with five percent annual growth.

 

Although the Russian market has demonstrated tremendous growth over the last few years and Brazil and Turkey’s healthcare systems are more mature, it is China and India that have attracted the most interest from pharma companies, Ignjatovic said, “The key attraction of India and China is obvious their huge populations. Even if only a fraction of the population has access to modern drugs, this still represents a sizeable number of consumers.” 

 

The increase in the elderly population compounded with an increasingly westernized lifestyle is also resulting in epidemiological trends in emerging market countries becoming more similar to the major markets. A shift in therapeutic focus is evident: sales of anti-infectives that traditionally dominate emerging markets are slowing down and are being taken over by drugs targeting the nervous system, cardiovascular, gastro-intestinal and metabolic diseases such as diabetes. Although sales of oncology drugs are still low compared to the major pharmaceutical markets, they are growing at a fast rate.

 

Recent rapid economic growth seen in the emerging market countries is one of the key drivers of the growth of their pharmaceutical markets. Growing disposable income, particularly of the new middle class, and the resulting increase in out-of-pocket expenditure on drugs, combined with the investment into public health provision seen in some countries is resulting in increased drug consumption, particularly modern western drugs. However, this makes these markets vulnerable to any downturn in the economy: China economy’s over-reliance on exports to the US makes it vulnerable to economic turmoil in the west, while Russia’s economy is over-reliant on the natural resources industry, making it vulnerable to fluctuations in oil and gas prices. India’s booming middle class created by the growth of the services industry on the other hand accounts for only a tiny proportion of the total population and still has significant growth potential.