Global pharma venturing beyond the US

No one can ever completely write off the US generics market. This is despite the intense competition there. After all, it is still the world's largest pharma market. And the opportunities in terms of drugs going off patent are huge. But most global players have realised that cannot entirely bank their fortunes on this highly competitive market. Opportunities elsewhere have to be explored. And in this quest for greener pastures, emerging markets and even Europe have caught the fancy of quite a lot of players. This is true of both innovators and generic companies alike.

The lure of emerging markets (or semi regulated markets)
Emerging markets have attractions for Indian and global pharma players for several reasons. Domestic companies earn revenues from branded generics in India and unbranded generics in the developed markets. But other emerging markets namely Asia, Russia, CIS, Africa and the like offer the best of both the worlds. Unlike in the US or Europe, generics here can be branded. In that respect, the environment is similar to that in India. But unlike India, medicines there are not subject to price control. And thus, the generics sold in the semi regulated markets have the potential to earn higher revenues and profits.

For innovators, emerging markets offer them the chance to shore up their sagging business. Most of their blockbuster drugs are set to lose patents over the next few years. And their pipelines are not filling up fast to counter the decline in sales. The approval process has also become tougher. Thus, not many new patented drugs are expected to hit the markets in the future. Little wonder then that venturing into emerging markets has turned out to be the obvious solution.

What are global players upto?
Global innovators are entering the emerging markets especially India. This is either through acquisitions or partnerships. For instance, Daiichi Sankyo has acquired a majority stake in Ranbaxy. GSK Plc has allied with Dr. Reddy's to sell generic products in the semi regulated markets. Pfizer has entered into a partnership with Aurobindo Pharma.

Not just innovators, top generic companies such as Teva, Mylan, and Watson have also made acquisitions in the last few years. All with the purpose of reducing their dependence on the US. Take the case of Teva. The Israeli generics player recently acquired the second largest generics company in Germany i.e., Ratiopharm. What is more, Teva plans to spend US$ 15-20 bn on acquisitions through 2015. The company aims to reduce the proportion of sales in the US from more than 60% at present to less than 50% by 2015.

Thus, while the US will continue to form an integral part of the revenues and profits of global players, the sheen now lies elsewhere, in the less explored and less regulated markets that are Asia, Africa, Russia and to some extent Latin America.