MIAG 2 Response to Industry -Emerging markets

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MIAG 2Response to Industry-Emerging markets

• Eva M A Ombaka

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EMERGING MARKETS

• China, Brazil, Russia and India.
• Present attractive new consumer markets as well
  as potential research and development hubs.
• New competition, particularly in generics
• Recognition that these are home to millions of
  people who live in great povertyand source of
  generic (inexpensive) drugs for most of Most of
  the world

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Issue

• Business principle Capture market, utilize
  brain, remove competition?
• Going by history, what is to stop these markets
  behaving as the more mature markets once they
  reach their level of technology?
• Whose company?

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EMERGING MARKETS ISSUES

• Complexity
• Affordability and Low Relative Purchasing Power
• Accessibility and Weak Healthcare Infrastructure
• Uncertain Government Relations
• The Social Contract
• Systemic market failure.

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COMPLEXITY

• Small size of the markets (but potential)
  unparalleled geographic, political, cultural and
  linguistic complexities, sheer physical size,
  chronic underdevelopment, rural-urban divide

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COMPLEXITY- issues

• KPI including approximate of sales in emerging
  markets of profits made in emerging markets
  the number of employees in emerging markets the
  average price of key products in emerging markets
  versus developed markets and the percentage of
  RD spent in emerging markets.
• ALL are business indicators, not public health
  indicators. What if not convincing for
  investment? Would there be entry into these
  markets?

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COMPLEXITY- issues

• Concern about the potential impact they may have
  on mature, more profitable markets
• Measure based on profit but the other side of
  equation is human lives. Would a measure of this
  be considered?
• Potential for massive sales volume
• Would the fortune at the base of the pyramid
  (volume-based business models)
• a) be explored?
• b) bought out (generics)

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Affordability and Low Relative Purchasing Power

• The models show how differentiating products for
  markets can work BUT
• The industry and its investors, are wary of
  experiments at least visible ones with
  significantly different pricing models in
  emerging markets

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Equitable Pricing Issues

• In what ways will industry
• Address equitable pricing for treatments of
  chronic diseases (emerging disease pattern)
• Ensure transparency and predictability in pricing
  mechanisms and implementations?
• Make the rationale behind pricing mechanisms open?

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Financing issues

• Financing mechanisms that tap consumer
  willingness and ability to pay
• How to differentiate payment by poor between
  choice and necessity?
• How will promotion on use of drugs be managed?
• Will other costs (open and hidden) covered by the
  PCT industry affect the price?

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Uncertain Government RelationsIssues

• Influencing policy
• Transparency on companies public positions and
  advocacy activities at different levels (global,
  national HQ, country reps and agencies)
• Developed country interventions?
• Research and Development and Patents
• -How transparent are companies in publicly
  stating/and implementing their commitment to
  TRIPS?
• -How to ensure adequate disclosure and
  quantitative data on RD activities?

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Uncertain Government RelationsIssues

• Licensing and technology transfer agreements
• -Clear key performance indicators (KPI) to show
  the effectiveness of these agreements?
• -What areas are these agreements focusing on?
  i.e. real technology transfer.
• -How independent are the licensee? E.g. to
  establish the pricing policy, to sell in a wide
  range of markets, and to co-formulate drugs?

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The Social ContractIssues

• Social enterprises are profit-making businesses
  set up to tackle a social or environmental
  needShould PCT companies be such? Why not?
• Policies to prevent exploitation of the
  locals/poor in the process of RD (and clarity on
  the sharing of rewards/incentives once the
  product goes into the market)

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Human-Centred. Issues

• Places the local consumer, patient or human at
  the centre of the research and product
  development process- High ideal!
• Stakeholder involvement-
• How are these relationships to be set (COI/power
  relations)
• How are the views of stakeholders at the end of
  the supply chain captured
• Whether views influence company strategies

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Human-Centred. Issues

• Drug Development
• Identified need as against market
• Delink RD cost from price
• Treat profit margin as a variable
• Look at other models of business