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The Scope For Pharma Companies In Emerging Markets
What is pharma’s next challenge in emerging markets? What scope do Pharma Companies have?
To be successful in emerging markets is a big challenge for multinational pharmaceutical companies, but how to thrive? Well, by adopting an end-to-end model for emerging markets in pharma.
Initially, there was rapid growth economy for multinational pharma companies in Europe and the United States in emerging markets. But sooner the picture changed with emerging markets, they either suffered a decline in an economy or weaker growth as commodity prices lowered. Even the MNCs often found it difficult to rise in emerging markets, with challenges in the global pharma industry, be it in talent recruitment, or organizational setup.
On a contrary, developed markets like the US did rather well. Pipelines were refreshed and novel drugs showing big promise. So should the MNCs away from the emerging markets?
Though tempting in a short run, the market experts say that the emerging markets are following a predictable cycle that will likely return with a positive outlook. In other words, emerging markets would see a doubling of pharmaceutical revenues for the top 20 markets in coming years.
To get opportunities for growth in emerging markets, MNCs must take a long-term view, invest in emerging markets, and take some calculated risks.
Some pharma companies capture opportunities in emerging markets, without any clear outline of the role of emerging markets in their strategy. Others are more with expectations and resetting aspirations for a longer-term and also identify how to achieve vast business goals from the presence of emerging-market.
The successful MNCs have broadly used emerging-market activities to chase 3 strategic objectives:
Growth and expansion of patient access. With several lesser diagnosed and not well-treated diseases, emerging markets provide an attractive growth prospect for pharmaceutical companies. Moreover, operating in emerging markets needs MNCs to make their medicines available to lesser income countries and patients.
Create innovations. The emerging markets could be at the forefront of innovation of business models and technologies.
Risk diversification. Emerging markets help companies to protect against top-line risk by offering an income stream to aid counterbalance disappointing launch performance or any loss.
Undertake the business model
Successful companies not only replicate their business model but adapt it to the challenges of emerging markets. The below-mentioned lessons say it all:
Your portfolio must be prioritized. Products which are very successful in developed markets might not do well in emerging markets, due to many factors, price in one of the major reasons. This indicates a careful mapping of products in emerging markets.
Find novel commercial models and channels. Creating partnerships can help the companies shape the market and address unmet requirements in emerging markets in areas like screening, diagnostics, and supply. In simple words, companies must adapt their channel mix to local requirements.
Hinge from conventional commercial approaches. Multinationals must rethink their market access approach by creating strong local relationships with the governments, developing market-access talent, deploying novel approach to pricing, and entering creative access partnerships.
Adjust to the needs of various markets. To capture opportunity, companies must be more systematic in knowing patient pools that meet certain affordability criteria; focusing on the cities with the largest pools, including new emerging urban centers with growing middle classes; and at the same time focussing on a wider population at a lower price.
Think about the limits of the commercial model. In chasing opportunities to differentiate themselves, companies must look beyond sales and pharmaceutical marketing. R&D is organized worldwide, it can adapt to local conditions. Local manufacturing also can act as an important differentiator, though not a need for entry. And supply-chain can provide a competitive edge in markets like sub-Saharan Africa, where reaching of drugs to patients via pharmacies remains a challenge.
Create an agile organization
To earn opportunities in pharmaceutical market development, multinationals must carefully design their organizations to support strategies of emerging-market and stand volatility.
Successful pharma companies tend to practice the following:
Arrange emerging and developed markets separately. This strategy helps to adapt to each type of market, gives emerging markets its voice in R&D and at the industry level, makes an easy rotation of local talents and share best practices among markets, and allows flexibility in balancing activities with an occurrence of volatility.
Set the right balance between global and local capabilities. This includes good market mapping related to pricing; digital and channel capabilities; support in marketing; and distributor management. Keeps in mind the capabilities that create a difference in engaging stakeholders in a market mainly sales, market access, and government affairs must be organized locally, as they are key to building relationships and partnerships.
Improved agility in foundations. To have an idea of maintaining a long-term view of market prospects while adjusting rapidly to short-term volatility, companies require flexible organizational structures supported by right governance.
Instead of recent turbulence, emerging markets yet represent an important value source for multinational pharmaceutical companies. But only being present in emerging markets not enough earn a good return. Rather companies should recognize the differences between emerging and developed markets, adapt the approach to these markets’ characteristics and needs, long term commitments, adopt a new business model, and build a vigorous organization suitable for capturing growth from new opportunities, as they appear.
With this, we conclude for now.
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