Opportunities for Pharma in BRIC markets assessed by Espicom

A new report from Espicom Business Intelligence notes that many are concerned that a potential global economic downturn could blunt the rapid growth in the BRIC countries (Brazil, Russian, India and China). It asks: 'Is this a time of exciting opportunity or commercial danger for pharmaceutical manufacturers? This report claims to separate the fact from the fiction and is essential in making sound, impartial business judgments.

Highlights from the report

BRAZIL
Due to the depreciation of the US dollar, the Brazilian pharmaceutical market is experiencing high growth in dollar values. The Brazilian pharmacy sector was valued at $9.8 billion in 2006, well ahead of the pharmacy sector in Mexico, valued at $9.6 billion. Drug prices continue to increase in spite of generics competition. Excluding ICMS and other taxes applicable to drugs, FEBRAFARMA estimated the annual pharmaceutical market at $10.9 billion and 1.7 billion units in 2006. Including ICMS and other taxes, Espicom estimates the market to reach around $13.6 billion in 2007, equal to $72 per capita.

The generics sector is dominated by local producers, restricting the market entry for foreign producers. In 2006, generics sales amounted to $1.1 billion, equal to 10.7% of the overall pharmacy sector. Generics sales will continue to outperform the pharmacy sector, fuelled by generics production of oral contraceptives & hormones and blockbusters losing their patents.

RUSSIA
In 2008, the Russian market for pharmaceuticals was estimated at $11,128 million. Per capita spending is low, at $78. It is expected that the pharmaceutical market will continue to expand at a rate of 17.0% per annum, taking it to $21,878 million by 2013, or $157 per capita.

Around 74% of the market is supplied by imports. Germany and France were the leading suppliers in 2006, accounting for over 30% of imports. The value of imports reached US$6.1 billion in 2006, an increase of 43.4% over 2005. Many importers are CEE generic companies such as Gedeon Richter, Krka and Lek.

INDIA
India has a huge population in excess of one billion people and a growing middle class with access to high quality healthcare. Conversely, in this geographically vast country plagued by natural disasters, the majority of the population is both rural and poor and western style pharmaceuticals are not even an issue for millions of people.

India has an established domestic industry, responsible for around 8% of world pharmaceutical production. The larger domestic companies are striving to compete in the global market for both generics and original products. The market is dominated by low priced, domestically-produced generics and relatively low per capita expenditure on pharmaceuticals.

The introduction of patent protection for pharmaceutical products from January 1, 2005 makes India a more attractive proposition for the international research-based industry, albeit in a highly competitive market. The highly skilled domestic workforce offers good opportunities for outsourcing both research and production.

CHINA
China, in terms of both its health care system and medical device market, is a nation of contradiction. As the world's most populous country, and one in possession of the fastest growing major economy in the world, the nation offers a vast array of opportunities for overseas investors, complemented by a massive potential workforce and consumer base. The SARS (severe acute respiratory syndrome) crisis of 2003 forced the government to examine the Chinese health infrastructure in great detail and healthcare has become a priority of the present government.

Other priorities addressed by the government include the standard of rural health care which for many years has differed markedly in its quality to that in urban areas. In particular, the more basic practices of 'barefoot doctors' are being phased out, and medical personnel in these impoverished regions are now required to pass a more advanced series of qualifications in order to be recognised by the government. Increased investment from overseas in the form of a range of projects continues, and the HIV/AIDS epidemic in China has assumed greater significance, with the establishment of various programmes aimed at attempting to combat the disease.