monitor pharma prescription launches in emerging markets 083112

Pharmaceutical Prescription Launches in

Emerging MarketsRising with the Emerging Markets

By Pinar Sahin, Marcelo do Ó, and Alex Tolkachev

The Opportunity in Emerging Markets

For pharmaceutical companies, emerging markets such as Brazil, Russia, India,

China, Mexico and Turkey (BRICMT) represent both a strong moral imperative and

a compelling strategic opportunity. The moral imperative springs from the huge

unmet health care needs of the three billion BRICMT residents who too often suffer

needlessly from treatable diseases including diabetes, Hepatitis B and stroke.

The strategic growth opportunities pharmaceutical companies are just as massive.

BRICMT countries averaged 10 percent GDP growth from 2006 to 2007, versus

only 2 percent growth in the United States1. As BRICMT economies expanded,

their health care expenditures rose 46 percent in 2007,2 far surpassing expen-

diture growth rates in mature European markets. Given these trends, it is not

surprising that the World Health Organization (WHO) has projected that emerging

markets will account for nearly 70 percent of global growth in the pharmaceutical

market by 2013.3

Despite these opportunities, many pharmaceutical companies have not invested

sufficient time or resources in developing comprehensive strategies for prescription

product launches in emerging markets in Asia, Africa and the Middle East.

To seize the opportunities in emerging countries, pharmaceutical companies must

overcome a set of significant hurdles to execute successful prescription product

launches in these new markets. In many of these countries, health care infrastruc-

ture and distribution networks are rudimentary or fragmented. BRICMT countries

have only half as many physicians per capita, for example, as in the United States.

Despite impressive GDP growth rates, overall prosperity is still relatively low in

BRICMT countries where GDP per capita is less than 20 percent of the largest

European markets (the EU5: U.K., France, Germany, Spain and Italy) levels4 and

health care expenditures only average roughly 10 percent of the amount spent

in mature markets such as the U.S., Canada, Japan and the EU.5

1 CIA World Factbook (2010)2 World Health Organization Global InfoBase (2010), WHO World Health Statistics 2010.3 IMS MIDAS and IMS Market Prognosis, IMS Health Prognosis, March 2009; Datamonitor. 4 CIA World Factbook (2010), WHO Global InfoBase (2010), WHO World Health Statistics 2010.5 CIA World Factbook (2010), WHO Global InfoBase (2010), WHO World Health Statistics 2010.

PHARMACEUTICAL PRESCRIPTION LAUNCHES IN EMERGING MARKETS 1

There are other differences between emerging and mature markets that pharmaceutical

companies will have to master when designing launch strategies for their prescription

products. Pharmaceutical companies used to selling their prescription products primarily

through government and private insurance payers in the U.S. and EU5 face a dramati-

cally different market in the BRICMT countries where private insurance is a miniscule

part of the market and out-of-pocket payments account for more than 40 percent of

health care expenditures.6 Given the prevalence of out-of-pocket payments, pricing

strategy becomes even more challenging when huge differences between urban and rural

populations are taken into account. In India, for example, only 29 percent of the popula-

tion lives in urban areas, but this population accounts for 58 percent of the country’s

total GDP. In Brazil, urbanites have an average income of 2,227 R$ per month, more

than twice the income of their rural counterparts.

Pharmaceutical companies should recognize the futility of attempting to develop a

monolithic emerging markets strategy, as each emerging market is different and requires

its own prescription product launch strategy. In Brazil, pharmaceutical companies

must figure out how to expedite a patent approval process than can stretch more than

seven years due to a lack of examiners and intragovernmental bureaucratic disputes.

In Russia, multinational pharmaceutical companies must cope with insufficient patent

enforceability, lack of data exclusivity and inconsistent pricing practices while fending off

low cost local competitors. In India, pharma companies have to find a way to manage

prescription product launches through a fragmented and complex distribution system that

includes more than 20,000 wholesale dealers and 500,000 retailers.

Despite the multitude of challenges associated with launching new prescription

products in emerging markets, both the urgent unmet health needs and the immense

strategic growth opportunities impel pharmaceutical companies to take action.

Moreover, by developing clearly defined and localized strategies for launching their

prescription products in emerging markets, pharma companies can build a strong

foundation for commercial success.

6 WHO Health Care Database 2008

2 PHARMACEUTICAL PRESCRIPTION LAUNCHES IN EMERGING MARKETS

OPPORTUNITIES AND CHALLENGES IN CHINA / 在中国的机遇与挑战

GDP per Capita 4,300 USD

Total Health Care Expenditure 249 billion USD

Total Drug Market Expenditure 53 billion USD

Number of Physicians per 10,000 inhabitants

17

Funding Sources for Health Care Expenditures

Government

Private Insurance

Out-of-Pocket

47%

4%

49%

Most Daunting Challenges The country’s intricate approval process can take several years. Intellectual property rights are flouted, leading to a situation in which counterfeit drugs account for an estimated 30 percent of the Chinese pharmaceutical market. Generic Chinese versions of drugs may be

approved and launched at nearly the same time that multinational companies win approval for their branded compounds. The complexity of the Chinese distribution system forces most foreign companies to distribute and market their products through thousands of third-party distributors. Local players with government connections are evolving into strong competitors.

Promising Environment China is on its way to becoming the world’s second-largest health care market. The percentage of the population covered by health insurance should double by 2015. The growing middle class will demand treatments for chronic diseases (such as hypertension and diabetes) that are growing in prevalence. The government aims to reform the system to provide low-cost universal health care to the entire population—more than 1.3 billion people—by 2020. Clinical trials cost only one-third as much as in Western countries, leading several foreign drug makers to set up research centers in Shanghai.


What It Takes to Win in Emerging Markets

The most promising emerging markets prescription product launch strategies are those

that include the following key success factors:

Co-creation between corporate and country teams. Pharmaceutical companies entering

emerging markets should not try to impose a global strategy from the top down. Improve

the odds of a successful emerging markets launch by having corporate and country teams

co-create launch plans from strategy through activation to implementation. Early and

consistent communication helps to minimize “lost in translation” misunderstandings.

Integrated stakeholder management. Use a multifaceted approach to communicate

major patient benefits to Key Opinion Leaders (KOLs), government regulators, physicians,

pharmacists and caregivers. Partner with government and payor stakeholders to help

them achieve their objectives and advance the goals of their public health campaigns.

Consider adding a dedicated Government Affairs Manager to the drug launch team.

Value-based differentiation from local generic competition. Invest in medical educa-

tion upfront to shape the market in ways that are favorable for the new product. Clearly

articulate how the new product improves on the current standard of care or competitive

products. Employ peer advocacy techniques to change existing treatment protocols.

Invest sufficient resources to enable launch success. Give local teams sufficient resources

upfront to ensure the organization is ready to create maximum impact at launch. Where

appropriate (such as in China, which can has a long approval process), develop both

pre-launch and post-launch clinical programs specifically tailored to the local market.

Don’t accept the existing market status quo; look for ways to expand it. Evaluate

existing levels of diagnosis, treatment and adherence to existing treatment protocols, then

go beyond market penetration to address the root causes of patient flow drop-offs. In

certain markets, family members and community organizations may play important roles

in helping patients to obtain treatment, so companies should be prepared to cultivate

relationships with those constituencies. In other cases, companies may need to develop

special patient affordability programs to expand the reach of their products to achieve

maximum market share and meet outstanding patient needs.


FIGURE 7: THE SIX-MONTH WINDOW OFOPPORTUNITY EXISTS IN PHARMERGING MARKETS

% of product launches able to improve their performance by at least 1 decile 6 months a�er launch

20%

16.1

11.0

16.5

13.0

10.4

8.3

20.9

11.1

18.2

12.5

Tier 1/2 China Brazil Russia India

Source: IMS Health MIDAS 2009, in constant US $ Wave I Wave III

Plan to maximize the

6-month launch window.

One of the most striking

findings from a recent IMS

Launch Excellence study is

that the vast majority of

launches in emerging

markets have only a short

six month window in which

to succeed, a result not

unlike to what can be

observed in mature markets.

Those products that do not do well in that period are rarely able to improve on

their initial performance. Overall, fewer than 20% of launches see significant

changes to their launch trajectories after the first, critical six months.

For products launched between 1998 and 2001, only 16% of brands were able to

improve on their initial launch trajectory. Moreover, it appears that opportunities for

a “second chance” are becoming more scarce: for the products launched between

2006-2009, only 11.0% of brands showed an improvement after the first six

months, suggesting a toughening of conditions in these markets.

The extreme importance of the first six months means that strategies for launching

into the emerging markets must be built well in advance with careful planning of

pre-launch activities to ensure optimal readiness across all relevant functions.7

7 Source: IMS, “Launch Evolution Across Pharmerging Markets - IMS LEAP STUDY 2010”


OPPORTUNITIES AND CHALLENGES IN BRAZIL / OPORTUNIDADES E DESAFIOS NO BRASIL





17


Government

Private Insurance

Out-of-Pocket

44%

24%

32%

Most Daunting Challenges Attempts to win approval for clinical trials are stymied by inexperienced regulators and delays in the approval process. Patent applications can take more than seven years to make their way past overloaded examiners. Demand for well-trained university graduates exceeds supply.

Promising Environment An aging population and growing middle class represent an attractive target market. As the Brazilian economy grows, the country’s pharmaceutical market is expected to average 13 percent annual growth between 2005 and 2015. The market is largely open and unrestricted to multinational companies. Intellectual property rights are improving and getting closer to Western standards.


The following examples demonstrate different paths to success by four pharmaceu-

tical companies entering emerging markets.

1. Novartis Raises Diabetes Awareness in Brazil

The health care story: In Brazil, the prevalence of diabetes outpaced awareness.

In 2007, the prevalence of diabetes and impaired glucose tolerance among adults

reached 6.2 percent and 7.3 percent respectively.8 But a substantial share of

people went undiagnosed, as the lack of symptoms associated with early stages of

type 2 diabetes left many unaware. Novartis, the maker of Galvus (vildagliptin), a

DPP-4 inhibitor for type 2 diabetes, sought to raise awareness about the condition

and its pharmaceutical offering.

What Novartis did: Type 2 diabetes represents close to 90 percent of all cases. To

raise awareness of diabetes in Brazil, the company created several communica-

tions initiatives to engage multiple stakeholders. The company provided compre-

hensive clinical data to key opinion leaders (KOLs) and physicians. The company

provided product samples to physicians. It invited medical professionals to attend

the American Diabetes Association congress in the United States, to learn more

about treatment. And Novartis established close relationships with national orga-

nizations in Brazil, including the Associacao Nacional de Assistencia ao Diabetico

(ANAD) to disseminate information to patients on International Diabetes Day in

2006 about diabetes symptoms, disease types, prevention, healthy habits and

glycemic control.

Results: Higher awareness of diabetes in Brazil has coincided with a growing rate

of diagnosis of the disease between 2007 and 2010, with a growing market for

diabetes medications. In 2007, Galvus became the market leader in oral antidia-

betic drugs with a 13.8 percent market share.9

Key takeaway: The experience of Novartis highlights the importance of engaging

multi-stakeholder awareness in emerging markets.

8 International Diabetes Federation.9 Figure cited in article published in Gazeta Mercantil, January 29, 2009.


2. Merck Activates Network of Diabetes Doctors in India

The health care story: The market for diabetes drugs in India is crowded, with

more than 700 brands available.10 And yet, there was great room for improvement

in the quality of care for diabetes patients and their treatment options. Physicians

were seeking an alternative to drugs that provided poor control of glucose levels.

Patients taking medication were interested in options that did not lead to weight

gain. Then there were those who did not receive enough care: patients typically

would go 14 months between visits to their physicians. Very few patients—less

than 4 percent—receive HbA1c monitoring for their blood. India lacked database

management tools to measure patient progress in their treatment.11

Diabetes Care Penetration in India (% of Diabetics)

74%

13%6%

7%

Undiagnosed

Diagnosed but Not Treated

Sub-Optimal Diabetes Control

Achieve Optimal Diabetes Control

Although Diabetes is a growing healthcare

problem in India, there are relevant barriers to

treatment: low disease awareness amongst both

patients and physicians, limited affordability to the

penetration of health insurance and ultimately

limited access to treatment, especially in rural

areas.

A number of strongly interlinked entities on the

market shape and influence decision making for

patients and their physicians, but patients get little

structural support for navigating a complex health-

care system lacking in standards of care, whereas

physicians are chronically ill-equipped and under-

supported for providing the best quality of diagnosis and treatment.

In this challenging context, Merck launched Januvia (sitagliptin) in 2008, an oral

antihyperglycemic of the DPP-4 inhibitor class indicated for type 2 diabetes. It is

usually taken once a day.

What Merck did: Merck launched a concerted effort to activate a network of key

opinion leaders to address the concerns of the market. The company engaged more

than 11,000 physicians in peer group networks, in which physicians discussed

their experiences treating patients with Januvia. Their positive experiences encour-

aged others to adopt the treatment.

10 IMS data11 Saydah SH et al. JAMA. 2004:291: 335-342, Joint Asia Diabetics Evaluation Program Data.


OPPORTUNITIES AND CHALLENGES IN INDIA / अवसर और भारत म ें चनुौति या ं





6


Government

Private Insurance

Out-of-Pocket

28%

8%

64%

Most Daunting Challenges Rural Indians (70 percent of total population) have great trouble affording prescription pharmaceuticals. The prevalence of locally produced “generic generics” pushes

prices down to 10-15 percent of U.S. values. Health insurance coverage is growing, but is still rare and often cumbersome with patient reimbursements taking up to six months. Prices on many pharmaceutical products are decreed by the government. Distribution channels are highly complex and incredibly fragmented.

Promising Environment The pharmaceutical market is projected to achieve 15 percent average annual growth from 2005 to 2015. As spending rises, the growing middle class is driving an expansion in private insurance. Sensing opportunity, all major multinational pharma companies are pursuing growth in India and working through subsidiaries to conduct R&D in the country. Increasing life expectancy should lead to major expansion in the chronic therapy market, especially for lifestyle-related conditions such as diabetes, cardiovascular diseases and cancers.


Physician Programs

Type Reach

Understanding treatment 13 national scientific leaders

Case studies 100 regional scientific leaders

Patient simulations 900 city level leaders

Merck also established a patient identification program to track prescriptions.

It conducted interviews with physicians to understand the typical patient profile

for Januvia, to share with their peers. The efforts built credibility among the

medical community.12

Patient Support Programs

Type Description

Education Counseling over phone by trained diabetes counselors

Covers basics of diabetes, importance of treatment etc

Diet Counseling Information on calorific counts of various Indian preparations

Customized diet charts

Exercise Counseling Approaches to exercise

Do’s & don’ts

Adherence Home Delivery of medicines

System generated Reminder alerts

Monitoring Free monitoring of HbA1c, Lipid Profile, Renal Function

Blood samples collected & reports delivered at home

Risk stratification

Januvia was also launched with a differentiated pricing strategy for India vis-à-vis

developed markets like US and Europe. This strategy was widely appreciated by

physicians, industry experts and patients as being “responsible” and “consultative”.

Results: In 18 months, Januvia became one of the top five brands in the diabetes

market in India. Merck established widespread adoption for the medication among

consulting physicians (51% Januvia uptake versus 30% market average), cardiolo-

gists (22% versus 19%) and diabetologists (18% versus 12%).

Key takeaway: Merck’s experience highlights the benefits of peer advocacy

programs for physicians.

12 Merck Sharp & Dohme (MSD) Company Presentation; News reports and Monitor Search


The company used multiple levers for adoption and compliance through extensive

and well-designed physician and patient programs, seeking to increase discussion

of patient benefits and ultimately influence the treatment choice. Through an India-

appropriate pricing, the company was then able to maximize the addressable market

Merck also realized that care givers are an additional stakeholder and specifically

reached out to them through awareness programs for higher diagnosis and

adherence rates

3. Bristol-Myers Squibb Designs Local Clinical Trials for China

The health care story: Before Bristol-Myers Squibb entered the Chinese market,

Lamivudine, an oral anti-retroviral drug, represented a strong incumbent for chronic

Hepatitis B treatment. Bristol-Myers Squibb makes Baraclude (Entecaviir), and the

company needed to win approval for entering China, gain awareness among medical

professionals and win their acceptance before launching the drug. Adding to the

complexity for any pharmaceutical launch in China is the reliance of health care

practitioners on traditional Chinese medicine. After its launch in 2006, Bristol-Myers

Squibb also had to contend with several competitive entrants to the market.

What Bristol-Myers Squibb did: The company tailored clinical trials for the Chinese

market comparing Baraclude to the incumbent market leader, to investigate the

safety and efficacy of the two drugs in a study of 519 patients in China.13 In the

process, it executed a large-scale trial enrollment for Baraclude before its launch in

China. Between 2001 and 2004, Bristol-Myers Squibb sponsored several global

pivotal Phase III studies14 in preparation for registration filing, which included large

patient enrollments from Asia. During this time, the company launched a similar

trial in China, investigating the safety and efficacy of Baraclude versus Lamivudine

in more than 500 HBeAg+ treatment-naive patients, the most common patient type

in China. Bristol-Myers Squibb was able to shorten the time frame for SFDA (the

Chinese drug approval agency) to nine months after the launch of Baraclude in the

United States, and subsequently received endorsement for use by local health care

providers in China. The company invested in ongoing clinical trials to provide data for

head-to-head comparisons between Baraclude and new Hepatitis B drugs entering the

Chinese market.15

13 Bristol-Myers Squibb website, ClinicalTrials.Gov.14 Bristol-Myers Squibb website, ClinicalTrials.Gov.15 Bristol-Myers Squibb website, ClinicalTrials.Gov.


OPPORTUNITIES AND CHALLENGES IN RUSSIA / ВОЗМОЖНОСТИ И ПРОБЛЕМЫ В РОССИИ





50


Government

Private Insurance

Out-of-Pocket

66%

6%

28%

Most Daunting Challenges Patent law looks good on the books, but enforcement is insufficient. Data exclusivity remains unresolved. Pricing practices are inconsistent and vary unpredictably from

one region to the next. The population is shrinking at a rate of 0.5 percent per year. Low cost, local generic competitors dominate 70 percent of the market volume. The government has a goal of helping domestic firms to capture value in the pharmaceutical sector at the expense of international competitors.

Promising Environment Expenditures in the pharmaceutical market are forecast to grow at an average annual rate of 18 percent from 2005 to 2015. Many local companies are still uncom-petitive from a global standpoint. Both government spending on prescription pharmaceuticals and out-of-pocket spending are growing. Russian hospitals are increasingly willing to spend more on prescription drugs. The country will need to harmonize with European standards if it hopes to boost export of its domestically-produced pharmaceuticals.


On the commercial side, Bristol-Myers Squibb’s launch team started their China

preparation in 2004, almost 18 months before the expected global launch date.

The team surveyed the market, investigated their pricing options and trends in

health care (such as the use of traditional Chinese medicine in disease treatment

strategy). These insights led to a well-informed commercial strategy and an infra-

structure built to cater to market needs across hundreds of Chinese cities.

Results: With its China-specific clinical data, Bristol-Myers Squibb was able to

shorten the time it took to win government approval for Baraclude. The data the

company provided also won it a recommendation as the first line treatment for

Hepatitis B under China Treatment Guidelines. By 2007, Baraclude had replaced

Lamivudine as the leading drug in China for Hepatitis B, with approximately 25

percent market share.16 Baraclude, which was launched in China at the end of

2005 almost at the same time as it debuted in the United States, was one of the

most successful launches in Chinese history.

Key takeaway: Deliberately designed local clinical trials helped Bristol-Myers

Squibb successfully enter the Chinese market.

Top 10 Questions to Answer when Developing Strong Launch Strategies for Emerging Markets

Each emerging market is different in its health care traditions, regulatory and

approval environment, medical community, economy, national health profile and

attitudes toward care and treatment. Pharmaceutical companies must pose the

right questions to assess their approach into each market. Here is a list we have

found essential for evaluating emerging market strategies.

1. Why is it necessary to develop special, distinctive launch strategies just for emerging markets?

There are significant differences between mature and emerging markets in terms

of health care delivery systems, challenges and opportunities. Given these differ-

ences, companies will often struggle to achieve desired results in emerging markets

if they simply attempt to apply global launch strategies tailored to Western-style

business conditions. Just as companies recognize the need to develop distinct

launch strategies for different mature markets (for example, different launch strate-

gies for the U.S. and the EU5), so too will companies maximize their chances for

launch success if they develop separate launch strategies for emerging markets.

16 IMS data.


2. Is one emerging markets launch strategy sufficient or is it necessary to develop different strategies for each emerging market? What is the best time to develop emerging markets strategies?

Each emerging market has its own distinct challenges, needs and opportunities,

but despite this diversity, pharmaceutical companies do not need to start from

scratch by developing completely separate launch strategies for each market.

The most efficient and effective approach may be to leverage the resources of

central marketing and medical departments while then customizing and adapting

tools to suit the specific dynamics present in each emerging market.

These resources can be shared across emerging markets, but pharmaceutical

companies will still need to develop country-specific strategies that take

into account local context and marketing data. For instance, pharmaceutical

companies can use market intelligence showing that the residents of a few

cities contribute a disproportionate percentage of a country’s GDP to focus and

shape their launch strategy.

In terms of the ideal timing for developing emerging markets launch strategies for

prescription products, such strategies should be created immediately after compa-

nies have finalized their launch strategy for the usual primary pharma markets

(U.S., EU5 and Japan).

Rather than being discouraged by the potentially long approval timelines in many

emerging markets, companies should use this time wisely to shape the market

environment and try to align it with the strategic direction of the brand. Companies

can increase the odds that their marketing activities will ultimately achieve success

if they lay the groundwork ahead of time and reach out to patients with unmet

needs while simultaneously offering medical education for prescribers and other

health care personnel.


OPPORTUNITIES AND CHALLENGES IN TURKEY / TURKIYE’DEKI ZORLUKLAR VE FIRSATLAR





14


Government

Private Insurance

Out-of-Pocket

69%

9%

22%

Most Daunting Challenges Problematic enforcement of intellectual property rights and weak protection of undisclosed clinical trial data remain major problems. The Ministry of Health

has insufficient resources to combat a significant counterfeiting problem. Prices have fallen since Turkey began using a reference based in 2004 that regularly picks any lowest-priced country as its point of reference.

Promising Environment As Turkey moves closer to EU accession, its economy is projected to expand dramatically. The country stands to benefit from its location at the intersection of Europe and the Middle East. In the past eight years, Turkey has managed to provide close to 90 percent of its popu-lation with universal health care coverage. Meanwhile, Turkey hopes to attract 10 times as many medical tourists by WHAT YEAR. With the largest number of internationally accredited hospitals of any country in the world, Turkey is well positioned to become a medical tourism leader.


3. Should launch strategies for emerging markets be developed centrally or should local market organizations take the lead?

On the surface, it can seem that local market organizations have the knowledge

and connections to design emerging markets launch strategies on their own. But

giving local emerging markets organizations carte blanche to make strategic launch

decisions can actually cause more problems than it solves. To achieve optimal

results, major prescription product launches must be synchronized across multiple

countries according to a predetermined timetable with each launch campaign

conducted consistently and predictably. Giving too much autonomy to local

organizations can wreak havoc on this process, throwing the launch schedule into

disarray and leading to confusion as headquarters struggles to comprehend and

support actions taken on the ground in emerging markets.

A better approach is to design an inter-dependent process in which headquarters

develops an overall launch strategy and then works with local organizations

to co-create customized launch strategies for each of the most important emerging

markets (typically the BRICMT countries). This co-creation strategy allows both

headquarters and the local market organizations to shape each other’s thinking

through a real-time give-and-take based on a shared understanding of market

dynamics and challenges.

The results of this co-creative process can be synthesized, coded and packaged to

give local organizations in smaller emerging markets the tools to develop their own

launch strategies in a less resource-intensive fashion.

4. Is it possible to justify the investment of time and resources needed to develop co-creative emerging markets launch strategies involving both headquarters and local organizations?

Absolutely. Acting on their own, both headquarters and the local organizations

might underestimate the potential of an emerging market and get trapped in a

vicious cycle where low market value projections from headquarters leads to

underinvestment and underperformance, which in turn justifies even lower expec-

tations, and less investment.


By engaging in a collaborative co-creation approach, headquarters and local

organizations can transform this vicious cycle into a virtuous cycle characterized by

accurate and aligned expectations based on the sort of in-depth market research

regularly deployed in U.S. and EU5 markets. These correct calculations of the

latent value of emerging markets can lead to targeted investments that meet brand

objectives, thereby validating the growth potential of emerging markets and leading

to further investment and additional growth. Having been involved in developing

the launch strategies, the local organizations will feel a sense of ownership that

will impel them to pursue the optimal execution of the launch strategy.

ROI calculations can illustrate the appeal of investing in a robust emerging markets

product launch campaign. In mature markets, many prescription pharmaceutical

products have already reached their utmost potential and would need intensive

investment to generate any additional returns. By contrast, in emerging markets,

accurate market research can double or even triple revenues over initial projec-

tions, thereby justifying the upfront investment in planning the launch campaign.

Successful prescription product launches in emerging markets give pharmaceutical

companies the potential to gain a competitive advantage over rival firms by taking

the lead in activating the market, shaping therapeutic area landscapes and setting

expectations among stakeholders. Given high growth rates in emerging markets,

achieving long-term leadership in a product category can yield impressive returns

on an initial launch investment.

5. How can pharmaceutical companies uncover the true potential value of a brand in emerging markets?

In Monitor’s experience, both headquarters and local organizations tend to consis-

tently underestimate the potential value of a brand in the BRICMT countries and

other emerging markets.

Too many companies trying to predict potential brand values in emerging markets

get bogged down in lengthy forecasting discussions. In reality, it is impossible

to accurately calculate these forecasts without first forming an in-depth research-

based understanding of the behavior and preferences of key stakeholders (e.g.,

prescribers, patients, KOLs and payers) in each market.

Once headquarters and the local country organizations have agreed on the

market opportunity, challenges, stakeholder behavior and preferences, these

shared understandings can serve as the basis for a straight-forward fore-

casting exercise. Without such internal agreement, forecasting exercises are

condemned to contentiousness.


OPPORTUNITIES AND CHALLENGES IN MEXICO / OPORTUNIDADES Y RETOS EN MÉXICO





14


Government

Private Insurance

Out-of-Pocket

47%

4%

49%

Most Daunting Challenges Low-price local manufacturers already control a heavily discounted generics market. Illegal counterfeit pharmaceuticals are a major problem, representing 10 percent of the total market by volume. Regional inequalities persistent, with persistent poverty creating affordability problems, especially in rural areas.

Promising Environment The government has launched an effort to cover all citizens with a decentralized universal health care system by 2025. Companies must establish local plants before registering their products for sale, but a relatively low-cost production environment, growing domestic market and NAFTA have all made Mexican manufacturing an attractive proposition. Intellectual property protection is improving. Medical tourists from the U.S. are fueling rapid growth in the private hospital and clinic sector.


6. What is the best launch strategy for emerging markets with no recent history of diagnostic or therapeutic innovation where prescribers may be hesitant to adopt or promote new treatments?

There is no reason to assume that all prescribers will behave the same, even in

markets where there has been little significant medical innovation in recent years.

Pharmaceutical companies should expect to see different prescriber behavioral

trends according to the specific conditions and realities in each emerging market.

In attempting to predict such behavior and develop plans to encourage new

product adoption, pharma companies should consider the placement of

each emerging market along the following four dimensions:

» Mode and sophistication of health care delivery. In India, for instance, there

are only six physicians per 10,000 inhabitants, whereas there are nearly three

times as many (17) physicians for every 10,000 Brazilians.17

» Level of investment in health care infrastructure. For example, per capita

health expenditures in Turkey (680 USD) were recently twice as high as per

capita Chinese expenditures (330 USD).18

» Established norms of pharmaceutical treatments. The heavy usage of combi-

nation treatment therapies in India is a common phenomenon.

» Sources of funding for health care expenditures. In Turkey, the government

is the primary payer (accounting for 69 percent of expenditures), whereas

private insurance (9 percent) and out-of-pocket payments (22 percent) play

a relatively minor role. Private insurance plays a similarly small role in

India (8 percent of expenditures) but here the government takes a supporting

role (28 percent) while out-of-pocket payments account for a large majority

(64 percent) of all expenditures.19

7. Do pharma companies need to employ a different approach to activate patients in emerging markets?

A typical emerging markets patient operates within a different socioeconomic

context than her U.S. or EU5 peers, lives a radically different lifestyle and receives

health care through a different delivery infrastructure. With a younger median age

17 World Health Organization (WHO); BMI Brazil, Russia, India, China, Mexico, Turkey, EU5, U.S. Pharmaceuticals and Healthcare Reports (Q4 2010).

18 World Health Organization (WHO); BMI Brazil, Russia, India, China, Mexico, Turkey, EU5, U.S. Pharmaceuticals and Healthcare Reports (Q4 2010).

19 WHO Health Care Database 2008.


than mature market populations, the populations of emerging markets typically

have different levels of disease prevalence and different degrees of disease burden

in comparison with their mature market counterparts.

Therefore, it is only natural that pharma companies will need to take a different

approach to create awareness and adherence among patients in emerging markets.

When launching new prescription products in these markets, pharma companies

must consider how to structure the value proposition to appeal to young, active

patients with low incomes who have trouble affording medical treatment and who

therefore are relatively unlikely to adhere to prescribed treatment plans. In some

emerging markets, pharma companies must find ways to engage stakeholders such

as family members and other caregivers who play a major role in financing and

managing patients’ health care needs. As mentioned earlier, Novartis worked with

national organizations like the Associacao Nacional de Assistencia ao Diabetico

(ANAD) to raise awareness about diabetes and lay the groundwork for the success

of its Galvus product that has since captured 45 percent market share of the oral

antidiabetic category.20

Pharma companies accustomed to marketing their products to individuals in mature

markets must understand that health care has a strong community aspect in many

emerging markets. Accordingly, new prescription product emerging

market launch strategies should ideally include special initiatives such as patient

affordability programs, patient monitoring, special discounts and community health

care support. These initiatives are best managed in coordination with local NGOs,

governmental organizations and community partners that can make sure the chosen

initiatives are performing as intended — strengthening communities by improving

patients’ quality of life.

8. What is the best price point for a new product launch in emerging markets where affordability is a key concern and many medications are paid out-of-pocket?

Pricing strategy should be closely tied to a product’s value proposition. In an ideal

world, price and value would be equally matched so that providers feel they receive

value commensurate with the product’s benefits, while pharma companies receive

sufficient compensation to recoup the costs of Research and Development, while

incentivizing further innovation.

In practice, the Marketing department should determine the pricing strategy for a

new product launch based on brand objectives and brand value. Companies with

20 Figure cited in article published in Gazeta Mercantil, January 29, 2009.


independent Pricing departments must ensure that Marketing and Pricing share the

same brand objectives, achieve alignment on key market dynamics and establish

a strong working relationship.

Pricing strategies based on stakeholder surveys can yield misleading results unless

the potential payers have been fully informed about the benefits of the new product

for both patient quality of life and the health care system overall. When payers

have a clear understanding of the total value and beneficial impacts of the drug,

the results of a pricing survey may prove more illuminating.

9. How can pharmaceutical companies expedite product launches in emerging markets where long, unpredictable approval cycles are the norm?

Approval and reimbursement can take up to four years in emerging markets such

as China, but companies should not allow such delays to derail plans to launch a

product in emerging markets.

The establishment of a dedicated emerging markets team at corporate headquar-

ters can give pharma companies the ability to monitor approval processes with

the aim of coordinating launch timelines and ensuring that best practice product

launch procedures are followed. The central emerging markets team can coordi-

nate with local country organizations to develop and support efforts to expedite

the approval process. The team should have responsibility for developing solid and

coherent pre-reimbursement and post-reimbursement strategies for each emerging

markets in which product launches are planned.

These pre-imbursement strategies are particularly crucial in markets like China

where there may be a period of several years between a new product approval

and the start of government reimbursements. Rather than simply waiting out the

pre-reimbursement period, companies should have a strategy prepared in advance

to figure out how to get their product to as many patients as possible who have the

means and opportunity to benefit from the treatment during this pre-reimburse-

ment time frame.

To strengthen the odds of a smooth approval process, pharma companies should

take into account the medical data requirements of each emerging market at the

earliest stages of clinical study design. Local organizations with deep knowledge

of the requirements of local authorities should be empowered and enabled to get

involved with co-designing clinical studies to meet those requirements. (Recall the

efforts of Bristol-Myers Squibb to tailor clinical trials to the Chinese market and


study the benefits of its Baraclude versus the incumbent market leader. The efforts

led eventually to market leadership.)

10. How should pharmaceutical companies redesign their organizational structure to capture the full potential of emerging markets product launches?

By creating a dedicated emerging markets team that reports directly to the Chief

Marketing Officer or even to the CEO, pharmaceutical companies can maintain

visibility on emerging markets business results that might otherwise slip between

the cracks of a large portfolio of mature markets. The emerging markets team can

also maintain oversight of the role that country organizations play in new product

launches, helping to identify and correct any problems early on.

These local country organizations are often located great distances from corpo-

rate headquarters and can feel isolated. To reduce this isolation and foster better

alignment between headquarters and the country organizations, companies should

assign all functional departments (such as Marketing, Medical, Market Access,

Pricing and Reimbursement) the clear responsibility of guiding emerging markets

initiatives. This responsibility will give emerging markets teams the confidence of

knowing they always have sufficient access to the headquarters resources they

need to execute the launch strategies they have helped co-create.

Proven Value — The Impact of a Successful Emerging Markets Product Launch

A pharmaceutical company planning the mature markets global launch strategy

for its new blockbuster drug suspected that the product had significant upside

potential in the BRIC emerging markets. Headquarters wanted to roll out a single

global launch strategy, while the local organizations in these BRIC countries had

entrenched beliefs about their own markets and did not see the need to follow a

comprehensive launch strategy.

Monitor helped bridge this gap by creating a customized strategy for each market

based around a shared global brand vision. Working closely with country teams,

Monitor analyzed the structural, competitive and access differences in each

emerging market, using the results of this research to challenge existing hypoth-

eses and create tailored local emerging markets launch strategies.

Over the course of six months, Monitor helped the pharmaceutical company to


reach an in-depth understanding of relevant market dynamics in each of the BRIC

countries, sharpen brand strategy for these markets and create stakeholder activa-

tion plans to maximize the potential for product launch success. As a result, the

company quintupled its short-term (two-year) net sales projections while doubling

its forecasted long-term (15-year) cumulative net sales.

The case conveys Monitor’s approach to helping pharmaceutical companies

achieve their objectives. Steps include:

Customizing global strategic choices to address local market specifics.

Pharmaceutical companies must understand utilization patterns and evolving

trends in an emerging market to identify key leverage points to change behavior

and address the market opportunity. They must adapt global segmentation

strategies to meet local market needs and prioritize target segments in the

emerging market.

Defining key drivers of success, and key obstacles to overcome in introducing a

prescription drug to an emerging market.

Developing an understanding of key stakeholder groups in the emerging market,

including patients, physicians, payors, caregivers and regulators. It is important to

identify the key drivers, and barriers to meeting their needs, in each group.

Synchronizing actions by global and local emerging market teams during launch

planning. Both must be involved in strategy and execution, in preparing brand

plans and forecasts.

Engaging a diverse team from the pharmaceutical company in the emerging

market launch. Such a group would include a core project team which inter-

acts with both country teams and a steering committee. Detailed interaction

planning ensures that input from all key stakeholders is incorporated into key

project deliverables.

Emerging Markets Represent the Future

For pharmaceutical companies, emerging markets in countries like Brazil, Russia,

India, China, Mexico and Turkey represent the strongest opportunities for growth —

and the biggest opportunities to positively influence the health care quality in these

rising economies. Though each emerging market has its own unique challenges,

and requires tailored approaches and strategies for success, the opportunities for

growth and impact are too large to be ignored.


The Lead AuthorPINAR SAHIN is an associate partner at Monitor. Based in the firm’s Munich

office, Pinar has more than a decade of experience consulting with a wide range of

global private and public clients in various industries including pharmaceuticals,

tourism, national and local government, taxation, logistics, original equipment manu-

facturing, telecommunications, finance, aviation and construction materials. Pinar

has deep expertise in developing marketing and branding strategies for emerging

markets such as Brazil, Russia, India, China, Turkey, South Africa, Tanzania and

Nigeria. Pinar helps organizations find answers to the most important critical busi-

ness questions and guides teams to solve complex problems in elegant ways.

She excels at resolving non-standard, challenging projects and uncovering ways to

create maximum commercial and social impact. Raised in Istanbul, she received

bachelor’s degrees at both the University of Texas at Austin and Bogaziçi Üniversitesi

in Istanbul. Pinar serves on the advisory board of www.placeforpeople.com, a global

online social campaigning platform that helps citizens connect with their community

leaders to ‘influence change in their communities. She can be contacted directly

at [email protected] or +49 175 296 4151.

ABOUT

Monitor works with the world’s leading corporations, governments and social sector

organizations to drive growth in ways that are most important to them. Monitor offers

a range of services—advisory, capability-building and capital services—designed to

unlock the challenges of achieving sustained growth.

Monitor works with many of the world’s largest pharmaceutical companies, helping

them improve their capabilities to develop strategies that lead to commercial success.

In emerging markets, Monitor has a proven track record of on-the-ground working

relationships with clients’ country teams, and a collaborative “co-creative” working

style in support of strong program execution..

Contributing AuthorsMARCELO DO Ó is a Director based in the São Paulo office. His experience

concentrates on competitive strategy development, growth strategy and M&A in the

Pharmaceutical industry. Marcelo has significant pharmaceutical industry experi-

ence and has hold several industry positions as General Manager/Country President

of Brazil, Operations director for Latin America and Head of Emerging Markets.

PARIJAT GHOSH is a Partner at Monitor Group and is based in the Mumbai office.

He has consulted across different issues (including corporate strategy, innovation,

market entry strategy, sales and marketing, investment assessment, supply chain

and retail distribution, capability development etc.) for a variety of companies

across India, Europe and the U.S.

ALEX TOLKACHEV is a Partner of Monitor Group and the Head of Monitor Group

CIS. He has over twenty years of experience in strategic and investment advi-

sory and industry, working for global clients in the United States, Greater Europe

and Russia. For the past 18 years Alexander has served executives of major US,

European and Russian corporations in pharmaceutical, consumer goods, telecoms,

and food and retail, focusing on corporate strategies.

AcknowledgmentsThe authors wish to acknowledge the contributions of Monitor colleagues Mike

Standing, Wayne Nelson, Thomas Croisier and Khushi A Kukadia.

Please visit thestudio.monitor.com for more information and project samples.

Design by:

www.monitor.com

ZurichWAYNE NELSON

+41 44 389 7111

[email protected]

MunichPINAR SAHIN

+49 17 5296 4151 (mobile)

+49 89 25548 0

[email protected]

China

GEORGE BAEDER

+86 21 6145 8924

[email protected]

India RAM KALYANA

+91 22 6658 2000

[email protected]

Brazil MARCELO DO Ó

+55 11 5501 2303

[email protected]

monitor pharma prescription launches in emerging markets 083112

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