PharmExec Blog

Emerging Markets: Looking Beyond the Heady Growth Numbers

A sweet helping of “Turkish delight” for local generic producers amounts to harsh medicine for foreign innovator firms…

Emerging markets remain the ace in the card deck for big pharma seeking alternatives to the global slowdown in demand for medicines.  The “pharmerging 17” are dealing a strong hand, with a consensus for continued double-digit growth in drug sales from these markets as their overall economic performance surges at par or even above potential. Suggestions from the International Monetary Fund [IMF] that China may surpass the US to become the world’s largest economy earlier than anticipated – i.e by 2020 – indicates just how profound the potential is for a recalculation of the profit stream for big pharma going forward. 

But as Pharm Exec has noted repeatedly, metrics and numbers don’t always tell the true story – particularly when local governments intervene to shape the market and distort this potential in line with short-term industrial policy objectives.   There is growing evidence of this in the four BRIC countries, all of which are implicitly following a more discriminatory stance on investment linked to performance requirements aimed at foreign-based drug makers.

One of the more interesting case studies on this approach is taking place in Turkey, which is relying on non-tariff barriers [NTBs] to benefit domestic generic companies by slowing local distribution of foreign-made medicines.  Specifically, the government is requiring that all such medicines undergo a separate GMP certification inspection, creating an enormous backlog of applications that has enabled the generic firms to build domestic market share effectively without competition from innovator drugs developed largely by the foreign firms.

According to the Association of R&D-based companies [AFID] in Turkey, 300 applications for the mandated GMP inspection are pending 13 months after the new GMP rule went into force, including 61 novel therapies for CVD, 40 for cancer and 33 anti-infectives.   Despite the backlog, the Ministry of Health has been willing to assign only a handful of multilingual inspectors to certify GMP compliance, a task that can also require visits to sites outside the country and for which few government funds have been allocated.

While these originator products languish in the queue, the average waiting time for a NCE to gain all the registration approvals necessary to go to market in Turkey has stretched to 772 days, or more than two years, an eternity in today’s era of crimped product life cycles.  According to AFID, this compares to about 200 days in the neighboring EU.

The lesson?  Enjoy all that talk about double-digit revenue growth, but also get used to more novelty in the tools emerging market governments use to discriminate. And as this taffy-like thicket of Turkish bureaucracy reveals,  NTBs are one emerging tool for emerging markets interested is helping move that growth curve back to local industry.

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