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The E7 economies represent increasing opportunities for pharmaceutical companies constrained by maturing markets in the west.
Huge potential in E7 markets
The emerging E7 markets represent the best prospect for growth. The potential of these countries is huge: they have a combined population of over three billion people, and their economies are performing well. One consequence of this increasing wealth is a growing financial capacity to treat previously unmet health needs. Another is increasing incidence of 'affluence' diseases, as people live longer and have more sedentary lifestyles.
7 KEY MARKETS COVERED
Highly detailed analysis providing comprehensive regularly updated reports for leading markets in the region:
Highlights from the reports...
Local companies are aiming to position themselves in the biological sector. In May 2012, Cristália, Biolab, Eurofarma and Libbs announced the launch of OrygenBiotecnologia, a new company specialised in biological and biosimilar medicines. This followed the launch of BioNovis, a company specialised in biological medicines, founded by EMS, Aché, Hypermarcas and UniãoQuímica in March 2012. Initial investments in BioNovis amount to R$200.0 million (US$107.0 million) but total investments over a five-year period are projected at R$500.0 million (US$267.5 million). BioNovis will operate a manufacturing plant and an R&D centre.
Espicom projects that the pharmaceutical market will grow by a high CAGR between 2012 and 2017. China will be the largest pharmaceutical market in the Asia Pacific region, overtaking Japan in 2016. China will represent more than a third of the Asia Pacific region’s total pharmaceutical market in 2017. The top 25 local pharmaceutical manufacturers had combined revenue of around US$16.0 billion in 2010. There were 14 companies that had annual revenues of over US$500.0 million, and 33 companies that had annual revenues of over US$100.0 million. The top 10 local pharmaceutical manufacturers had collective revenue of around US$10.0 billion. Four companies, Harbin Pharmaceutical Group, North China Pharmaceutical, Shanghai Pharmaceuticals and China Pharmaceutical Group, reported annual revenues of US$1.0 billion or more in 2010.
The need to maintain low prices for essential medicines has been addressed in the government’s draft National Pharmaceutical Pricing Policy (NPPP), released in 2011. The proposed NPPP focuses on the National List of Essential Medicines (NLEM), which is periodically revised. The headline major change is a move from the principle of cost-based pricing to a market-based pricing model. The Department of Pharmaceuticals argues that market-based pricing would result in more transparent and fair pricing, as well as increasing competition in the marketplace. Price regulation will encompass all drugs listed in the NLEM, as well as formulations containing combinations of drugs listed in the NLEM; this will include combinations comprising listed drugs and unlisted drugs. If the NPPP is implemented, around 60% of the drugs currently available in India will come under price control.
Due to the sheer size of the population, Indonesia cannot simply be dismissed. The Indonesian pharmaceutical market is projected to grow at a high single-digit CAGR in US dollar terms during the forecast period, and it will be the sixth largest pharmaceutical market in the Asia Pacific region by 2017. In 2010, there were around 250 pharmaceutical manufacturers, with the vast majority located in Java. However, despite the country possessing huge manufacturing capabilities, the complete lack of R&D in local companies could affect the market, especially if IPR regulations were tightened. Although multinationals will be unhappy at the legislation requiring all drugs in the Indonesian market to have been manufactured in Indonesia, it could potentially reduce costs in the long term for both the manufacturer and the consumer.
Mexico aims to become a regional leader in the regulation of biological and biocomparable medicines. The guidelines for biocomparable medicines were published in the Official Gazette on 19th June 2012; Mexico has opted to use the “biocomparable” term rather than the most commonly used “biosimilar” term to define off-patent biologicals “comparable” with innovative biologicals. The guidelines establishing the Committee of New Molecules and the Sub-committee for the Evaluation of Biological Products were published in the Official Gazette on 23rd February 2012.
Russia is by far the largest market in Central Eastern Europe (CEE) and is five times larger than Ukraine. In per capita terms, the market is similar to Serbia. The market is projected to expand at a moderate CAGR between 2012 and 2016. The market is driven by strong import growth; imports rose by a CAGR of around 20% in US dollar terms over the 2007-11 period. A heavy reliance on imports has resulted from the lack of locally-manufactured innovative pharmaceuticals, although the government is working on a plan to help boost domestic production of original drugs.
Foreign companies continue to consolidate the Turkish pharmaceutical market. There have been a number of recent acquisitions by foreign pharmaceutical companies. In April 2012, the American company Amgen announced the acquisition of 95.6% of MN Pharmaceuticals for a value of around US$700.0 million. In September 2011, the Italian company Recordati successfully concluded its acquisition of Dr F FrikÝlaç, headquartered in Istanbul. This was Recordati’s second acquisition in Turkey, following the procurement of YeniÝlaç in 2008. In May 2011, the Polish company Polpharma acquired a majority of shares in Cenovapharma. In April 2011, the Swiss company Nycomed entered into several agreements with various local pharmaceutical companies to replace BiomeksÝlaç as the marketing authorisation holder and distributor for the majority of the company's product portfolio in Turkey.
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