The Outlook for Pharmaceuticals in Brazil, Russia, India & China

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These leading emerging economies represent a combined pharmaceutical market of US$132.2 billion. How have they emerged from the economic downturn? Where do commercial opportunities exist for pharmaceutical companies over the 2011-16 forecast period?

Putting things in perspective...With strong economic growth, a combined population of 2.9 billion people and significant unmet healthcare needs, challenges and opportunities remain in BRIC pharmaceutical markets. Their combined market, including pharmacy and hospital sales, is valued at US$132.2 billion at retail prices. This market is collectively lower than the USA and just higher than Japan, but impressive growth rates mean that pharmaceutical companies should have long-term interests in these markets. China, in fact, is expected to become the second leading worldwide pharmaceutical market by 2016.

Sizeable opportunities exist …

There are wide regional health expenditure differences within the BRIC markets, far more than in developed countries where health systems provide a more uniform coverage level. These four countries, however, have a relatively wealthy urban population with a far greater spending power than their respective national average. In the case of China and India, these urban populations have grown rapidly, and number hundreds of millions. The challenge for these countries is to extend this level of wealth to the rest of the population, so that better levels of healthcare become affordable. China, for instance, plans to create a solid platform for universal healthcare access for all by 2020.

A long haul...Pharmaceutical market growth has been impressive in recent years. Market change, however, is expected to be incremental. Short-term opportunities exist to meet the health demands of the burgeoning middle classes, whilst future prospects are bright, fuelled by strong economic performance. A high pharmaceutical market growth projected in BRIC markets is expected to erode some of the commercial differences with the established, but more sluggish, pharmaceutical markets in North America, Japan and Europe. Only Brazil is expected to have a low market CAGR in US dollar terms over the 2011-2016 period, as the Economist Intelligence Unit projects a strong exchange rate of the US dollar against the local currency.

Current and accurate decision support intelligence is vital

Effective planning is vital and that is why Espicom, the leading provider of pharmaceutical market intelligence, has issued this report collection The Outlook for Pharmaceuticals in Brazil, Russia, India & China. For each country there is a comprehensive examination of the pharmaceutical market that covers all aspects of the operating environment, from the regulatory situation through health provision/expenditure to domestic production. Importantly, each market evaluation includes five-year growth forecasts and SWOT analysis. An additional benefit – and at no additional cost – is that these reports are updated and issued quarterly and include an annually updated statistical report packed with hard-to-source health market facts and figures.

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BRAZIL

The Brazilian pharmaceutical market is the third largest in the Americas region, behind the USA and Canada; it ranks first in the Latin American region. Pharmaceutical demand will continue to rise, fuelled by increasing disposable income, therefore the market outlook is positive for the 2011-2016 period. Competition among the five leading pharmacy chains is fierce, and the sector has been consolidated by a recent wave of mergers. In September 2011, Drogaria Sao Paulo, the leader in the state of Sao Paulo, and Drogarias Pacheco, the leader in Rio de Janeiro, announced a merger, creating what will be the largest pharmacy chain in Brazil, DPSP. This merger took place after the merger between Drogasil and Droga Raia, announced in August 2011, creating the second largest pharmacy chain, Raia Drogasil.

RUSSIAThe presence of foreign manufacturers is increasing in Russia. A number of agreements have been made in 2011 between domestic and foreign companies that will benefit the Russian pharmaceutical market. These include a joint-venture between India's Aurobindo Pharma and Russia's OJSC Diod; a licensing agreement between Norgine and Nycomed that gives the latter exclusive rights to commercialise MoviPrep in Russia; investment by Rusnano, Russia's government investment company, in Cleveland BioLabs' new subsidiary, Panacela Labs, which will develop a portfolio of new preclinical drug candidates in Russia; Pfizer and ChemRar High Technology Centre signing a memorandum of understanding to explore a collaboration focused on the research, development and commercialisation of innovative drugs in Russia; and the launching of Pro Bono Bio as a new international pharmaceutical company, as a result of a three-year Anglo/Russian project.

INDIA

The Indian pharmaceutical market is highly competitive and remains dominated by low priced, domestically-produced generics. Despite having the second largest population in the world and a growing middle class with high healthcare expectations, India accounts for less than 2% of the world pharmaceutical market in value terms. In one of the world's better performing economies, spending on pharmaceuticals accounts for less than 1% of GDP and average per capita spending remains one of the lowest levels in the region. India's biopharmaceutical sector is currently experiencing double-digit growth and this is expected to continue, driven by the vaccines market. Growth drivers include education and increased awareness of disease prevention, higher disposable income and government participation in immunisation programmes. Continued growth is also expected in the diagnostic and therapeutic segments, including cancer and diabetes.

CHINAThe Ministry of Health (MoH) has made lowering drug prices a top priority for health authorities in 2011. The National Development and Reform Commission (NDRC) implemented two rounds of drug price reductions in 2011, one in March and the other in September. Most of the drugs reduced were manufactured by multinationals, which had previously not been subject to pricing controls. In July 2011, the MoH revealed that it may introduce mandatory licensing policy to secure cheaper drugs for HIV/AIDS patients, as part of the country's universal health coverage programme. In January 2011, the MoH announced that the Essential Drugs List would be further expanded to cover nearly all government-sponsored grass-roots health institutions.

To order this report:Pharmaceutical Industry: The Outlook for Pharmaceuticals in Brazil, Russia, India & China

Nicolas Bombourg

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