Pharmaceutical Prescription Launches in Emerging Markets

Rising with the Emerging Markets

By Pinar Sahin, Marcelo do , and Alex Tolkachev

Copyright 2011 Monitor Company Group Limited Partnership. All rights reserved. Reproduction in whole or in part is prohibited without permission.

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 expenditure 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 infrastructure 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 2 3 4 5

CIA World Factbook (2010) World Health Organization Global InfoBase (2010), WHO World Health Statistics 2010. IMS MIDAS and IMS Market Prognosis, IMS Health Prognosis, March 2009; Datamonitor. CIA World Factbook (2010), WHO Global InfoBase (2010), WHO World Health Statistics 2010. 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 dramatically 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 population lives in urban areas, but this population accounts for 58 percent of the countrys 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.

WHO Health Care Database 2008

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OPPORTUNITIES AND CHALLENGES IN CHINA/

GDP per Capita Total Health Care Expenditure Total Drug Market Expenditure Number of Physicians per 10,000 inhabitants Funding Sources for Health Care Expenditures Government Private Insurance Out-of-Pocket 47% 4% 49% 4,300 USD 249 billion USD 53 billion USD 17

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 worlds secondlargest 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 populationmore than 1.3 billion peopleby 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.

Most Daunting Challenges The countrys 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

PHARMACEUTICAL PRESCRIPTION LAUNCHES IN EMERGING MARKETS 3

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 education 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. Dont 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.

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

% of product launches able to improve their performance by at least 1 decile 6 months a er launch
20% 16.5 13.0 11.0 10.4 8.3 11.1 20.9 18.2 16.1

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.

12.5

Tier 1/2

China

Brazil

Russia
Wave I

India
Wave III

Source: IMS Health MIDAS 2009, in constant US $

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

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

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OPPORTUNITIES AND CHALLENGES IN BRAZIL/OPORTUNIDADES E DESAFIOS NO BRASIL

GDP per Capita Total Health Care Expenditure Total Drug Market Expenditure Number of Physicians per 10,000 inhabitants Funding Sources for Health Care Expenditures Government Private Insurance Out-of-Pocket 44% 24% 32% 10,100 USD 174 billion USD 20 billion USD 17

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 countrys 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.

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The following examples demonstrate different paths to success by four pharmaceutical 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 communications initiatives to engage multiple stakeholders. The company provided comprehensive 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 organizations 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 antidiabetic 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 9

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

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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 patientsless than 4 percentreceive 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)

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.

74%

6% 7%
Undiagnosed

13%

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 healthcare system lacking in standards of care, whereas physicians are chronically ill-equipped and under-

Diagnosed but Not Treated Sub-Optimal Diabetes Control Achieve Optimal Diabetes Control

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 encouraged others to adopt the treatment.
10 11

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

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OPPORTUNITIES AND CHALLENGES IN INDIA/

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.

GDP per Capita Total Health Care Expenditure Total Drug Market Expenditure Number of Physicians per 10,000 inhabitants Funding Sources for Health Care Expenditures Government Private Insurance Out-of-Pocket

3,100 USD 62 billion USD 19 billion USD 6

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

PHARMACEUTICAL PRESCRIPTION LAUNCHES IN EMERGING MARKETS 9

Physician Programs
Type Understanding treatment Case studies Patient simulations Reach 13 national scientific leaders 100 regional scientific leaders 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 Education Description 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 Dos & donts 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--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), cardiologists (22% versus 19%) and diabetologists (18% versus 12%). Key takeaway: Mercks experience highlights the benefits of peer advocacy programs for physicians.
12

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

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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 Indiaappropriate 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 14 15

Bristol-Myers Squibb website, ClinicalTrials.Gov. Bristol-Myers Squibb website, ClinicalTrials.Gov. Bristol-Myers Squibb website, ClinicalTrials.Gov.

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OPPORTUNITIES AND CHALLENGES IN RUSSIA/

GDP per Capita Total Health Care Expenditure Total Drug Market Expenditure Number of Physicians per 10,000 inhabitants Funding Sources for Health Care Expenditures Government Private Insurance Out-of-Pocket 66% 6% 28% 15,100 USD 99 billion USD 21 billion USD 50

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 uncompetitive from a global standpoint. Both government spending on prescription pharmaceuticals and out-ofpocket 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 domesticallyproduced pharmaceuticals.

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

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On the commercial side, Bristol-Myers Squibbs 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 infrastructure 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 differences, 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 strategies 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.
IMS data.

16

PHARMACEUTICAL PRESCRIPTION LAUNCHES IN EMERGING MARKETS 13

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 countrys 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 companies 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.

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OPPORTUNITIES AND CHALLENGES IN TURKEY/ TURKIYEDEKI ZORLUKLAR VE FIRSATLAR

GDP per Capita Total Health Care Expenditure Total Drug Market Expenditure Number of Physicians per 10,000 inhabitants Funding Sources for Health Care Expenditures Government Private Insurance Out-of-Pocket 69% 9% 22% 11,400 USD 39 billion USD 11 billion USD 14

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 population 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.

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

PHARMACEUTICAL PRESCRIPTION LAUNCHES IN EMERGING MARKETS 15

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 others 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 expectations, and less investment.

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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 projections, 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 Monitors experience, both headquarters and local organizations tend to consistently 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 researchbased 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 forecasting exercise. Without such internal agreement, forecasting exercises are condemned to contentiousness.

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OPPORTUNITIES AND CHALLENGES IN MEXICO/OPORTUNIDADES Y RETOS EN MXICO

GDP per Capita Total Health Care Expenditure Total Drug Market Expenditure Number of Physicians per 10,000 inhabitants Funding Sources for Health Care Expenditures Government Private Insurance Out-of-Pocket 47% 4% 49% 13,200 USD 63 billion USD 14 billion USD 14

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.

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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 combination 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). World Health Organization (WHO); BMI Brazil, Russia, India, China, Mexico, Turkey, EU5, U.S. Pharmaceuticals and Healthcare Reports (Q4 2010). WHO Health Care Database 2008.

18

19

PHARMACEUTICAL PRESCRIPTION LAUNCHES IN EMERGING MARKETS 19

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 products value proposition. In an ideal world, price and value would be equally matched so that providers feel they receive value commensurate with the products 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
Figure cited in article published in Gazeta Mercantil, January 29, 2009.

20

20 PHARMACEUTICAL PRESCRIPTION LAUNCHES IN EMERGING MARKETS

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 headquarters 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 coordinate 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-reimbursement 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

PHARMACEUTICAL PRESCRIPTION LAUNCHES IN EMERGING MARKETS 21

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 corporate 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 ValueThe 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 hypotheses and create tailored local emerging markets launch strategies. Over the course of six months, Monitor helped the pharmaceutical company to

22 PHARMACEUTICAL PRESCRIPTION LAUNCHES IN EMERGING MARKETS

reach an in-depth understanding of relevant market dynamics in each of the BRIC countries, sharpen brand strategy for these markets and create stakeholder activation 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 Monitors 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 interacts 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.

PHARMACEUTICAL PRESCRIPTION LAUNCHES IN EMERGING MARKETS 23

ABOUT
Monitor works with the worlds leading corporations, governments and social sector organizations to drive growth in ways that are most important to them. Monitor offers a range of servicesadvisory, capability-building and capital servicesdesigned to unlock the challenges of achieving sustained growth. Monitor works with many of the worlds 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..

The Lead Author

PINAR SAHIN is an associate partner at Monitor. Based in the firms 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 manufacturing, 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 business 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 bachelors degrees at both the University of Texas at Austin and Bogazii niversitesi 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 Pinar_Sahin@Monitor.com or +49 175 296 4151.

Contributing Authors
MARCELO DO is a Director based in the So Paulo office. His experience concentrates on competitive strategy development, growth strategy and M&A in the Pharmaceutical industry. Marcelo has significant pharmaceutical industry experience 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 advisory 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.

Acknowledgments
The authors wish to acknowledge the contributions of Monitor colleagues Mike Standing, Wayne Nelson, Thomas Croisier and Khushi A Kukadia.

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

Zurich
WAYNE NELSON +41 44 389 7111 Wayne_Nelson@Monitor.com

Munich
PINAR SAHIN +49 17 5296 4151 (mobile) +49 89 25548 0 Pinar_Sahin@Monitor.com

China
GEORGE BAEDER +86 21 6145 8924 George_Baeder@Monitor.com

India
RAM KALYANA +91 22 6658 2000 Ram_Kalyana@Monitor.com

Brazil
MARCELO DO +55 11 5501 2303 Marcelo_doo@Monitor.com

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