A blip or stark reality? Pharma companies re-evaluate emerging markets

Pharmaceutical companies, which have previously been allaying the growing fears and concerns of their investors regarding the seemingly inevitable reduction in revenues upon patent expiry, may want to slow down and avoid making unrealistic promises, suggests a new report from GlobalData.

They believe that, by virtue of their rapid growth and industrialization, emerging markets, including China, India, Brazil, and Russia, are the “go-to” places in terms of offsetting revenue loss due to the introduction of generic variants. However, recent reports from Wall Street indicate that actual drug sales in these countries could fall short of forecasts as a result of decelerating economies, intense local competition and stringent government measures aimed at controlling health care costs and supporting domestic companies.

GlobalData believes the recent wave of austerity in Europe could also have contributed to this development as governments are now unwilling to pay as much for pills. In some cases, new laws are pressuring companies to prove the efficacy of their drugs or risk having them dropped from the coverage list, or covered at a lower rate. Consequently, this has a ripple effect on emerging markets as their governments refer to prices set in Europe to determine their own. Analysts believe that as much as a $47 billion gap could exist between what drug makers expect to make in emerging markets, and the actual realizable revenue.