For the life sciences industry, like many others, emerging markets promise great opportunities for growth, if certain difficulties can be overcome. These markets are characterized by large, growing populations, increasing prosperity and greater longevity – exactly the mix that pharma companies are looking for as they seek growth outside of mature markets. But, operating in emerging markets poses unique challenges and most companies have already run into complications, such as Novartis, Bayer and Roche in India. To succeed, companies must develop a flexible partnering strategy that adapts to each country and opportunity’s needs. Read on to learn more.
Opportunities worth the challenge
In a recent report, Strategy& interviewed executives from over 25 pharmaceutical and generics companies, including 12 of the top 15 pharma companies, to get their take on the promise and pitfalls of emerging markets. The consensus was that while emerging markets have great potential, companies must proceed cautiously and deliberately to maximize their chances of success. The opportunity for profit clearly exists: by 2016 emerging markets are expected to make up 30% of pharma’s sales, up from 20% in 2011. Judging by movements in the market today, that estimate is on track. For example, GlaxoSmithKline’s 2012 Annual Report shows significant growth in Latin America (11%), China (17%) and India (10%) in addition to 61% growth in the world’s 50 poorest countries. For comparison, overall turnover was flat. To continue growing in emerging markets, companies must learn from previous mistakes. In Strategy&’s study, pharma execs indicated that their biggest previous mistake was insufficiently adapting their approach to local needs.
Leveraging flexible partnering strategies
A quick look at pharma’s recent activities in emerging markets indicates that they are taking their previous experiences to heart, leveraging flexible partnering strategies according to local needs. GSK, for example, has brokered a deal with the Brazilian government, transferring knowledge and technology in exchange for dictating pricing/volume levels, while at the same time opting for joint ventures in India and China. Pfizer has similarly diversified its tactics, pursuing joint ventures in China but a co-manufacturing partnership in Russia, which includes a technology and expertise exchange. For a slightly different perspective, check out the video below featuring Novavax, a clinical-stage biopharmaceutical company, as its then Senior VP of Business Development, John Trizzino, explains their diverse partnering activities.
Although Novavax is small biotech, the diversity of their partnering activities is impressive. They are simultaneously partnering with the U.S. government through a BARDA contract, forming a joint venture in India, engaged in a licensing agreement in South Korea and actively looking for opportunities in other BRIC(K)-M countries. A flexible partnering strategy such as this optimizes the chances of success.
Even beyond emerging markets, McKinsey & Company found that innovative partnering and financing abilities greatly increase pipeline access to promising drugs. However, it is complicated to manage diverse partnering activities and all of the relationships and details that come with them.
Deploying powerful partnering tools
The ability to scout, evaluate and pursue diverse opportunities spread all over the globe requires a flexible, responsive and informed global business development team. To support the GBD team and to combat the immense amount of data generated by scouting efforts, organizations need an enhanced, asset-centric PRM (Partner Relationship Management), where information can be stored, explored and put into action. The asset-centric PRM serves as a central repository of information, securely maintaining all documents and information related to an opportunity, molecule or company. With all of this information in the same place, there is no need to track it down again or to ask partners for lost papers, saving time and embarrassment.
Additionally, with global operations it is difficult to keep diverse teams on the same page. Providing consistent information across the organization prevents teams from duplicating efforts or providing inconsistent responses to the same offer. The insights stored on this repository are especially relevant, providing depth and context to basic information. For example, users know not only that a deal was previously refused but also the reasoning behind the decision. Strategies change quickly, an opportunity that was previously declined may be of interest today. Finally, real-time reporting instantly provides decision-makers with the status of every project, enabling them to easily analyze projects from different angles. Although emerging markets present significant challenges, with a flexible partnering strategy and the tools to support it, life science companies can capture the best opportunities for growth.