Emerging Market for Medicines

Wednesday, August 5, 2009

When Haruo Naito, chief executive of Eisai, the Japanese pharmaceutical company, signalled his continued interest in western markets by inaugurating his company’s European headquarters in the UK last month, his mind was already elsewhere.

“We have already finished our investments in all major areas in the US and Europe,” he says. “Now we are thinking about new areas. We are very interested in emerging markets, especially China, India, the Middle East, Turkey and north Africa.”

Mr Naito’s comments reflect the increasingly ambitious geographical diversification plans adopted by a number of international pharmaceutical companies in recent months. They reflect ambitious plans to boost sales, but also to manufacture, research and develop medicines in emerging markets.

The necessity to develop new markets is urgent. The latest forecasts from IMS Health , the consultancy, suggest that global sales in the pharmaceutical industry will grow by just 2.5-3.5 per cent this year, the lowest expansion it has yet recorded. The US – which still accounts for two-fifths of all revenues – will decline by 1-2 per cent.

But the figures also highlight one source of optimism. The seven countries IMS Health dubs “pharmemerging markets” – China, Brazil, Mexico, Turkey, India, South Korea and Russia – will expand by 13-14 per cent in 2009, accounting for half of all global growth. IMS forecasts similar growth over the coming five years, as rising incomes and expanding health insurance cover combine with a growing desire to seek treatments for an ever broader range of chronic as well as infectious diseases.

Source: Financial Times (link opens in a new window)