The BRIC nations (Brazil, Russia, India and China) encompassing over 25 per cent of the world's land coverage and 40 per cent of the world's population and having a combined GDP of $15.435 trillion is poised to play a greater role in the global pharma sector in the coming days.
Pointing out the vast changes taking place in the global pharmaceutical market, pharma business consultancy IMS in its revised forecast talks about a new world order which is already emerging with China and India providing huge new markets. Despite the current economic difficulties, the Chinese government has committed to spending $23 billion on its healthcare market and IMS has predicted that by 2013 China will become one of the top three markets. At the same time India is investing to become the world's largest biopharma market, it says.
According to some other estimates, China could become the fifth largest drug market by 2010-11 and the largest by 2050 overtaking the US.
The emerging pharmaceutical markets, termed as "pharmerging" markets - Russia, Brazil, China, India, South Korea, Turkey and Mexico - are set to see better growth than the traditional markets, but at a lower rate than in recent years, it is pointed out
Earlier according to a PricewaterhouseCoopers report, while the global pharmaceutical market will more than double in value to $1.3 trillion by 2020, Brazil, China, India, Indonesia, Mexico, Russia and Turkey could account for one fifth of global pharmaceutical sales.
IMS also forecasts that global pharma growth in major developed markets will slow further than previously predicted in 2009. Already facing the lowest growth prospects ever, the economic downturn has led IMS to drop its 2009 forecast by a further couple of per cent and it expects all of the mature markets to be in recession this year.
According to IMS forecasts, further contraction or flat results in the top five traditional markets (US, Japan, Canada, Germany, France) in 2010, with only the emerging markets is likely to present good future growth. The US market is forecast to have a negative growth rate of -2 to -1 per cent in 2009. The top five European markets are forecast to see a meagre two to three per cent growth and Japan only four to five per cent growth.
Looking ahead to 2013, the US market is predicted to remain flat; Europe's growth is forecast to be anywhere between 3-5 per cent and Japan's 1-4 per cent, while the emerging markets continue to make double figures.
The short term forecast for all the emerging markets is favourable and IMS is confident that growth 'will remain strong and the markets will almost double in size in the next five years'. It predicts that out of the seven emerging markets, China, India, Turkey and Russia will see double-digit growth in the next five years.
In terms of emerging pharmaceutical markets, Brazil remains one of the most attractive to multinational pharmaceutical companies operating in the Americas. The Business Environment Rankings for Q309 places the country fifth among the 10 countries covered in this region, with Mexico the only 'emerging' market ahead of Brazil. The strength behind this score is the country's dynamic growth, which the report forecasts will expand at a compound annual growth rate (CAGR) of 11.2 per cent in US dollar terms through to 2013.
In addition to the country's dynamic growth, overall market size remains large - although eclipsed by the US - with per capita spending up by nearly 130 per cent since 2004.
The pharmaceutical industry in Brazil is gearing up to capture a significantly greater portion of the global pharmaceutical market in the near future. According to a market research report titled 'Generic Drugs Market in Brazil (2007-2011)' by a leading market research company RNCOS, in terms of sales value generics occupy nearly 11.8 per cent of the Brazilian pharma market (as of 2007). At present, Brazil is the largest generic drugs market in Latin America and due to its strong growth potential, the country is expected to become one of the world's largest generics market by 2011, accounting for 23 per cent share in the total Brazilian pharmaceutical market. Because of this strong growth, many international players are positioning themselves to leverage from the soaring Brazilian generics market, which is currently dominated by the domestic generics manufacturers.
Brazil actively encourages new entrants into its generic market by offering preferential purchase options in public tenders and special financial investment conditions through state finance organisations.
On the research and development (R&D) front, the domestic as well as multinational companies witnessed substantial increases in the activity after the new patent law was introduced in 1997. The government is fostering R&D programmes and mergers and alliances in the local industry to create bigger local producers, which can compete with multinational subsidiaries.
The pharmaceutical market is one of the most dynamic sectors in Russia. With a population of around 140 million, Russia is a potentially vast market. The Russian pharmaceuticals market is estimated to grow at 18 per cent compound annual growth rate between 2007 and 2011, reaching over $20 billion by 2012/13. However, in comparison with Western countries, spending on health is low in Russia. Though Russia can boast of a sizeable domestic generic industry, it has no large companies.
Russia is one of the most attractive export destinations for Indian pharma companies. The Indian pharma companies are now dominating the Russian and CIS market with a major presence in all therapeutic areas. The growth of the Russian pharmaceutical market faces quite a few challenges. The poor state of the healthcare system encourages the use of generics. Thus generic pharma market occupies around 80 per cent of the market. Amidst all the challenges, the Russian pharmaceutical market projects a potential future. The Russian pharmaceutical market has witnessed a steady growth for the past five years. The market is likely to grow in double digits during the next five years.
The government has proposed various changes in the healthcare system such as improving primary care, efficient implementation of insurance and increasing the healthcare funding. Apart, the Russian soil is transforming to be a conducive environment for clinical trails. The market attractiveness for clinical trials is luring many pharmaceutical companies to launch their R&D centres in the region. The Russia market offers great opportunities for growth and in future significant mergers and acquisitions are expected to take place in the Russian pharma industry
The pharmaceutical industry in India is rapidly transforming. By 2010, revenue for the industry is estimated to be more than $10 billion, nearly double the revenue in 2005. The transformation includes not only growth in quantity, but improvement in quality as well. By 2006, India had 75 FDA approved plants, compared to only 55 in Italy and 27 in China. While the United States currently dominates the market for high quality APIs, both India and China are rapidly catching up and may soon surpass the United States. According to Newport Horizon Premium, the number of future corporate groups available to produce high quality APIs is 76 in India, compared to zero in the US and four in Brazil. In combination with advancements in technology and the quality yet inexpensive work-force, this has created boundless opportunities for outsourcing.
India has a huge population in excess of one billion people and a growing middle class with access to high quality healthcare. India has an established domestic industry, responsible for around eight per cent of world pharmaceutical production. The larger domestic companies are striving to compete in the global market for both generics and original products.
The market is dominated by low priced, domestically-produced generics and relatively low per capita expenditure on pharmaceuticals. The introduction of patent protection for pharmaceutical products from January 2005 makes India a more attractive proposition for the international research-based industry, albeit in a highly competitive market.
The highly skilled domestic workforce offers good opportunities for outsourcing both research and production.
The Indian pharmaceutical industry currently is one of the world's largest and most developed, ranking fourth in volume terms and 13th in value terms. The country accounted for eight per cent of global production and two per cent of world markets in pharmaceuticals in 2008.
The Indian pharmaceutical industry will see tremendous growth in the coming years as consumer spending on healthcare is increasing in India. Consumer spending on healthcare is expected to increase from seven per cent of GDP in 2007 to 13 per cent of GDP by 2015.
While China was receiving most of the Pharmaceutical outsourcing as of 2007, India holds promise as a future destination of pharmaceutical corporations looking to acquire good yet inexpensive talent, high quality standards, and excellent manufacturing facilities.
China is one of the largest pharmaceutical producers in the world. The Chinese pharmaceutical industry has increased in value with an annual average growth rate of 16.72 per cent over the last few decades. China's entry into the WTO, in December of 2001, opened the door to a lucrative market for foreign companies, and especially for pharmaceutical manufacturers and distributors.
Despite global economic downturn, China's pharmaceutical market is developing fast. Growth is mainly driven by ageing population, rising incomes, improving drug regulation by the State Food and Drug Administration (SFDA), maturing intellectual property rights (IPR), increasing medical insurance coverage of urban & rural residents and growing consumer demand for quality health care.
The output value of China's pharmaceutical industry gained 26.81 billion RMB during the first four months this year, up by 18.29 per cent against that of the last year. The overall export of medicines increased by 33.5per cent, and imports rose by 30.57 per cent in 2008.The Chinese hospital pharmaceutical market in 2008 was valued at $20.3bn, registering a y-o-y growth of 37.8per cent, and is forecast to grow at a CAGR of 11.9 per cent during 2008-14 period reaching $39.9bn in 2014.
This April, the Chinese government has also released the long-awaited blueprint on health care reform in an attempt to turn a profit-obsessed medical system into a public service. The reform includes some new policies such as the essential medicine system. The essential medicine system, which will be set up within three years by the Chinese government, is aimed to drive down prescription costs and ensure public accessibility to a range of basic medicines. In order to cut costs, the manufacturers of the basic drugs will be appointed by provincial governments through public bidding. The governments will make a buying plan of the basic drugs every three to five years. China's central government will set the price range of basic drugs, and provincial governments will fix prices within the ranges.
The Chinese pharmaceutical market has shown impressive growth in recent years, in tandem with the country's rapid economic expansion. The influx of foreign multinationals in recent years has offered continued investment, and production plants and R&D facilities are being expanded all the time.