The two markets of South Asia and Africa which have a massive potential for growth holds huge untapped opportunity for global pharma to rake in mega bucks. Especially the growing disease burden which fuels a sustained demand for finished formulations is increasingly luring Indian pharma industry.
The two countries are at the core of the emerging markets where Russia together with the CIS Nations, Eastern Europe, Brazil and other Latin American countries of Argentina, Mexico and Chile generate a large chunk of sales for Indian pharma.
These markets, similar to the Indian market, have branded generics and high entry barriers that leads to less competition and higher profitability. The future growth opportunity in the emerging markets is likely to be driven by a series of socio-economic factors such as increasing per capita incomes and rising levels of disposable income, growing demand for high-quality healthcare infrastructure and improved healthcare spending, according to KPMG-CII report.
While South Asia region covers India, Afghanistan, Bangladesh, Bhutan, Nepal, Pakistan, Maldives and Sri Lanka having a pharmaceutical manufacturing base, the continent of Africa is quickly keeping pace with the production and sales. While Indian pharma is looking for expanding marketing opportunities in South Asia, as far as Africa is concerned, Indian companies are looking to invest and grow the business.
There had been couple of acquisitions in the Africa by Indian pharma majors. For instance in 2006, Ranbaxy’s South African operations acquired Be-Tabs in South Africa which is the largest penicillin manufacturer and the fifth largest generics player for US$ 70 million. This was followed by Zydus Cadila in June 2008 where it went on to hold a 70 per cent share in Simayla Pharmaceuticals which is a generics player in South Africa.
In the South Asian market, India is at the forefront of biotech and pharma research, manufacture and marketing. More over leading pharma majors are positive on the new stringent regulations enforced by the USFDA, EMA, ANVISA and TGA.
According to The Asian Pharmaceutical Industry report 2012 by Tectura Lifesciences, Asia-Pacific is the third largest pharmaceutical market globally after North America and Europe, with many leading Asian pharmaceutical companies becoming successful due to their ability to retain their cost advantage.
South Asia is emerging as a powerhouse of contract research and manufacturing services (CRAMS) besides clinical studies. There is infrastructure, skilled manpower as well as access to labour at affordable wages besides a naïve patient pool suffering from life style disorders and infectious diseases. Hence all global pharma majors are eyeing this region.
Particularly in South Asia, India, Bangladesh and Sri Lanka are showing robust growth. Pharma and biotech majors here are proving their mettle with not just high quality and adherence to Good Manufacturing Practices but also by developing products for oncology and psoriasis. A case in point is Biocon which introduced a novel biologic Itolizumab, a 'first in class' anti-CD6
monoclonal antibody, introduced as Alzumab(TM) for psoriasis in India and CytoSorb(R), a novel therapy for the management of sepsis in 2013 besides CANMAb(TM) (150 mg/ 440 mg), a trastuzumab for the treatment of HER2-positive metastatic breast cancer in India and INSUpen EZ, a second-generation insulin-delivery pen device, developed by Germany's Haselmeier in 2014. Now these drugs are far more affordable for patients in South Asia and Africa.
The South Asia and African markets cannot be ignored owing to the promising revenue generation potential they hold , aver pharma companies like Aravind Remedies, Dr. Reddy, Bal Pharma, Elder Pharma, Glenmark, Micro Labs, Biocon Torrent, Cipla, Zydus Cadila, Aurbindo Pharma, and RL Fine Chemicals.
The market outlook of these regions indicate higher consumption of both patented and generics medicines, they add.
According to PwC, by 2016, the global pharmaceutical industry is expected to generate an estimated 30 per cent of its total sales in emerging markets. But these expectations will be met only if the industry moves toward more bespoke market strategies.
The market of Africa are highly populous but have relatively smaller market sizes at the moment but are known for its future potential. Although Africa does not yet play a significant role in pharmaceutical sales, it is South Africa, Egypt, Algeria, and Nigeria which are the only markets in the region where the volume of the pharma market exceeds $one billion. However, in the coming years, as sub-Saharan Africa develops economically, the long-term potential offered by this vast continent will be huge.
But PwC also states that in 2014, companies need to devise novel strategies to tap the opportunities in South Asia and Africa. “For most pharma industry executives, bolstering topline growth in emerging markets is the number one priority and best achieved by progressive penetration of their existing markets and channels. Yet, since traditional strategies have often failed to deliver, executives are now turning old thinking on its head. The companies foresee that, in the future, fully fledged models with local operations ranging from manufacturing and R&D to marketing and sales will be implemented for the region.”
Therefore the strategic priorities in these two emerging markets would be based on three-pronged approach. First is the focus on local operations: local research, local development, and local manufacturing. Second is on sales excellence via local sales force. Third is the close collaboration with governments, according to the PwC report.