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MIAG 2 Response to Industry -Emerging markets

MIAG 2 Response to Industry -Emerging markets. Eva M A Ombaka. 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

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MIAG 2 Response to Industry -Emerging markets

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  1. MIAG 2Response to Industry-Emerging markets Eva M A Ombaka

  2. EMERGING MARKETS • China, Brazil, Russia and India. • Present attractive new consumermarkets 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 poverty…and source of generic (inexpensive) drugs for most of “Most of the world”…

  3. 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?

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

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

  6. 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 R&D 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?

  7. 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)

  8. 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

  9. Equitable Pricing Issues • In what ways will industry • Address equitable pricing for treatments of chronic diseases (emerging disease pattern) • Ensuretransparency and predictability in pricing mechanisms and implementations? • Make the rationale behind pricing mechanisms open?

  10. 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?

  11. Uncertain Government Relations……Issues 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 R&D activities?

  12. Uncertain Government Relations……Issues 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?

  13. The Social Contract…Issues • Social enterprises are profit-making businesses set up to tackle a social or environmental need…Should PCT companies be such?Why not? • Policies to prevent exploitation of the locals/poor in the process of R&D (and clarity on the sharing of rewards/incentives once the product goes into the market)

  14. 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

  15. Human-Centred…. Issues Drug Development • Identified need as against market • Delink R&D cost from price • Treat profit margin as a variable • Look at other models of business

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