Mar. 17 – A recent report by U.S.-based research group IMS Health has said that major pharmaceutical companies like Pfizer, Merck, and Eli Lilly are in danger of losing out as emerging markets start to outpace the West in pharmaceutical sales.
The report indicated that drug sales in China are set to outpace those of France and Germany next year with other emerging economies, including India, not far behind.
The IMS group categorizes what they term the “pharmerging” markets into three tiers based on their in-house estimates for pharmaceutical market growth from 2008 to 2013.
With an expected value of more than US$40 billion, China claims tier one for itself, with no other competition in sight. In the second tier, the IMS report places the rest of the BRICs – India, Russia, and Brazil – with their estimates that each will add between US$5-15 billion to the pharmaceutical market by 2013. The third tier is made up of 13 other emerging nations including Thailand, Indonesia, Vietnam, and Pakistan which are expected to contribute between US$1-5 billion over the next three years.
While there is no doubt of an emerging pharmaceutical market within these economies, what has prevented large-scale entry by foreign companies like Pfizer, Merck, and Eli Lilly is not a lack of interest, but more likely a lack of ability. This is at least true in China where, according to an article by Andrew Browne and Jason Dean of the Wall Street Journal, the State Government is making conditions for multinational companies less-friendly and more competitive on the local level.
In particular, the article discusses the new patent rules implemented on February 1st which threaten to increase innovation costs in an industry already dominated by state-run companies. The new restrictions also let Chinese authorities force multinational drug companies to license production to local companies at government approved prices.
So while there is enormous potential in China’s pharmaceutical market, safer and healthier alternatives exist elsewhere.
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