beyondbrics

By Mark Wembridge

With the slowdown in the developed world hitting healthcare spending,  pharmaceuticals companies are redoubling their efforts in emerging markets. Some of the world’s top pharma executives on Monday reiterated their faith in EMs, their blossoming talent base and their expanding healthcare markets.

Speaking at the Financial Times Global Pharmaceutical and Biotech conference in London, Miles White, Abbott chief executive, said that emerging market economies such as China, Brazil and India would become increasingly important revenue drivers for drug and healthcare companies.

“We will be doing more of our R&D in other parts of the world [outside the US],” he told the conference. “You tend to put your investments where your revenues are.”

US-based Abbott, which in October announced that it was splitting up into two separate companies to split its pharmaceuticals activities from medical devices and other products, earns 35 per cent of its revenues in the US and 65 per cent outside the country – a gap that he expects to widen.

“You have to invest early in those economies so that you can ride the wave of that growth,” he said, adding that recent rates of growth in emerging economies had slowed, but was “still very high”.

Michael Rosenblatt, chief medical officer at Merck echoed White’s comments, noting that the strength of innovative talent in some emerging economies such as India was an incentive to gain a foothold.

“We will go where the talent is – it’s bubbling up everywhere now,” Rosenblatt said. “We must draw on local talent and serve local needs. If a country has a talent pool that is rising up then that’s where we want to be.”

Lars Rebien Sorensen, president and chief executive of Novo Nordisk, said that drug companies considering a move into emerging economies should look at the bigger picture rather than seek a quick return.

“You should invest for the long-term or you shouldn’t invest at all, and if you’re going to invest you should make a sizeable investment over time,” he said. “You should bring more than products – you must bring solutions.”

White also hinted that generic pharmaceutical companies in emerging economies would increasingly broaden their focus to include drug development. “We’re looking at a new generation of research-based companies coming from emerging economies,” he said.

“Companies that in the past that we thought of as purely generics will evolve over time to become more R&D–based. US and European companies would be mistaken to underestimate them.”

Related reading:
Drug groups step up emerging markets push, beyondbrics
Big pharma counts the cost of R&D, FT