Access to medicines have persisting and systemic differences across the globe and within countries. It is estimated that nearly two billion people globally do not have access to essential medicines.1 The issue of access to medicines is addressed as part of the United Nations Sustainable Development Goals, with the objective to “provide access to medicines for all.” To achieve this aim, a multi-stakeholder approach is required, in which the pharmaceutical industry has a pivotal role to play. In this article, we will identify risks and opportunities associated with improving access to medicines in emerging countries and explore strategies that can be implemented by pharmaceutical companies.
Traditionally, pharmaceutical companies have not prioritized emerging markets as part of their access strategy. In its 2022 edition, the Access to Medicine Foundation report2 analyzed the access strategy of 180 products across the top 20 pharmaceutical companies, of which 102 are on the WHO essential medicine list. The report found that two-thirds of these products lack an access strategy for any low-income country and only half of these products have regulatory registration plans in at least one low-and-middle-income country.
A Complex and Challenging Environment
When companies consider launching medicines in emerging markets, it might be tempting to suggest to simply lower the prices to reflect local affordability. Unfortunately, lowering prices is not always a sustainable business practice and may result in negative externalities and long-term consequences. Therefore, companies must take a holistic approach when designing their launch strategy in emerging markets and consider the following challenges:
- parallel trade
- international reference pricing
- dilution of profitability
- exposure to protectionist policies
- compulsory licensing.
To illustrate, let’s take the example of protectionist policies. In 2017, Algeria imposed importation restrictions on medicinal products that could be manufactured domestically, forcing manufacturers to establish local manufacturing facilities or to work with a contract manufacturing organization (CMO). However, many manufacturers found it difficult to find CMOs that meet international production standards, forcing companies that could not afford to make a significant local investment to exit the market.
Another example of a challenge to launching in emerging markets is the dilution of profitability, where lower medicine prices in emerging markets dilute the overall global product profitability. This can result in shareholders’ resentment, negatively impacting the valuation of the manufacturing company.
Expanding Opportunities for Pharma Companies in Emerging Markets
Despite these challenges, pharmaceutical companies have excellent reasons to launch their products in emerging markets. Firstly, entering new markets and increasing sales should boost revenue. This can be especially important in the current global economic climate, where competition for market share is fierce, and access to new customers is critical for growth.
Secondly, by improving access to medicines in emerging markets, pharmaceutical companies can play a role in improving health outcomes globally. This is particularly important in emerging markets, where access to affordable and effective medicines is limited, and communicable diseases remain significant public health concerns. This is also relevant as, in recent years, environmental and social issues have become increasingly important for companies. As shareholders and consumers demand greater transparency, accountability, and ethical behavior from corporations, pharmaceutical companies are expected to play a role in addressing these issues. This includes ensuring access and affordability of their products, which can positively impact their environmental social governance (ESG) score and reputation.
By having a better ESG score, pharmaceutical companies can attract and retain talent in a strained labor market. They can also tap into growing talent pools in emerging markets, where a skilled workforce is often available at a lower cost. Additionally, a better ESG score can help companies raise and access new capital from responsible investors who prioritize sustainability and social responsibility.
For example, the Access Accelerated initiative was launched by 22 pharmaceutical companies in 2016 to help improve access to non-communicable disease medicines in emerging markets. In a shareholder meeting, Merck & Co. noted that its participation in Access Accelerated had helped to improve its ESG score in several areas, including access to healthcare and affordability, patient safety, and ethical marketing practices.
Finally, expanding operations in emerging markets can create opportunities for pharmaceutical companies to develop new partnerships and collaborations. These partnerships can be with local governments, healthcare providers, local startups, and non-governmental organizations. Such collaborations can help to strengthen healthcare systems, allow companies to benefit from local innovation and talent, and improve local health outcomes, benefiting both the companies and the communities they serve.
Strategic Initiatives for Pharma Companies in Emerging Markets
To reap the benefits of launching in emerging markets while minimizing risks, pharmaceutical companies can implement business-oriented strategies such as:
- innovative affordability programs
- equity-based pricing
- emerging market branding
- patient access programs
- product licensing and technology transfer
- sustainable healthcare system strengthening
- public-private partnerships.
For instance, emerging market branding is an effective strategy that can benefit both patients and pharmaceutical companies. This strategy was recently implemented by Sanofi, which launched the non-profit Impact brand to make 30 medicines available in 40 low-income countries at affordable prices. The advantage of the Impact brand is that it insulates the sales and prices of the 30 medicines through a dedicated brand, limiting the risk of parallel trading or international reference pricing backlash.
All of the strategies listed above have their advantages and disadvantages and should carefully be tailored to the product and countries involved. We hope this article will push companies to systematically include emerging markets in their product access strategy.
References:
1. WHO. (2017). “Access to Medicines: Making Market Forces Serve the Poor”: link
2. Access to Medicine Foundation. (2022). “Access to Medicine Index 2022”: link
