Global Pharma: is the "Emerging Market" a Dated Concept? (Part 4 of 5)

by Ben Comer, for Pharnaceutical Executive

Putting Risk in a Basket

One of the crucial aspects of selling in the pharmerging space is the assets in a company's portfolio, and how it changes from market to market. "The opportunity in each of the individual pharmerging markets is very different depending on portfolio," says Campbell, adding that GlaxoSmithKline, and several other companies, have a "very localized portfolio in India versus their global portfolio," a strategy primarily due to the prevalence of out-of-pocket payment from patients. "The opportunity depends on whether you're trying to sell high-priced innovative products ... or branded or unbranded generics."

Aside from portfolio customizing for specific markets, industry must also prepare itself for some volatility in how countries see this squaring with their own priorities. "Companies are essentially realigning their definitions to match this [emerging markets] basket approach, which mitigates some of the risk," says Kleinrock. "We've seen growth performance swings in China of 10 percent or 12 percent in a single year. Companies are increasingly talking about putting these countries together, to curb variable growth trends. That's helpful in terms of investment return." Nevertheless, marquee growth rates among local players in emerging markets can drum up artificially high performance expectations at headquarters, and some of the multinationals fail to achieve similar growth rates, adds Kleinrock. A long-term perspective and tolerance of the occasional launch failure is the best way that HQ can overcome this trend. It is also important to agree on just where HQ should set benchmarks for progress—measuring performance against local firms is not always the right indicator to chart success.

Leveraging the portfolio successfully should also recognize rates of disease morbidity and mortality unique to a given market, since disease prevalence can vary dramatically between countries. In Russia, for instance, cardiovascular disease and metabolic disorders represent the most pressing health concerns; in India, infectious diseases are top of mind; and in Brazil, China, and Mexico, neuropsychiatric disorders represent the largest healthcare costs.

Leading a Best Practices Culture

So, how is the C-suite responding to growth opportunities in emerging markets? "Most companies start out with a legacy footprint—countries where the parent organization has been strong in the past—but now the local affiliates are saying, 'Okay, we are beating the competition in Brazil so can we launch in other Portuguese-speaking markets?' Or, 'We're in Asia; are there other markets in Asia that have similar demographics and disease profiles that we can move into?'" says Campbell. "Everyone is chasing China," but beyond that, it depends on the company and its management.

In terms of organization, many companies have elected to combine the emerging markets into a single entity that reports up to the CEO, taking leadership out of the regions, says Benoff. "But a lot of the tier 3 pharmerging countries still stay in the regions, and to me, that's a signal of where efforts are the most focused." In this scenario, "you're seeing the four BRIC countries, plus maybe Turkey or Mexico, getting most of the attention" from top brass, he says. Chris Nickum, vice president, IMS Consulting Group, says companies are still configuring internal reporting structures for the smaller emerging markets. "I think all companies have good intentions of trying to take commercial best practices from around the globe and putting them into use in those markets," says Nickum. "They're still working out accountability for some of the Tier 3 markets: Who makes what decision, in what order, and under what workup for allocating resources?"

In terms of expertise on the ground, "the local general manager is going to know the most about the market," according to Nickum. "But they may not see everything else the company is doing commercially, around the rest of the world. What we see a lot of times is that the GM is doing one thing, headquarters is doing another, and they don't meet in between." If global multinationals are serious about maintaining a long-term presence in emerging markets, they will need to start incorporating local talent in to the executive ranks. Much like politics, all business is local.

In summary, for a successful launch in an emerging market, Nickum says organizational alignment is No. 1, followed by a clear value proposition, which may include pharmacoeconomic data and CER, patient assistance programs, and a commitment to diagnostic testing. It is equally important to use the asset provided by a distinct offering through the portfolio to build currency with local stakeholders.

Big Pharma leadership has demonstrated a desire to learn about new markets, and to do their homework, says Campbell, but they haven't yet shown a "desire to innovate in terms of the commercial model." Nickum says true innovation often requires "new systems and capabilities;" some of these are beginning to get rolled out. "You're starting to see some of the big multinationals roll out global centers of excellence for things such as e-detailing or tele-detailing," he says.