Wall Street Journal Reports On Pharma’s Growing Interest In Emerging Markets

“Abbott Laboratories will soon acquire the biggest share of India’s pharmaceuticals market, about 7%, when the company closes as early as next month on a $3.7 billion takeover of the drugs business of Piramal Healthcare Ltd.,” the Wall Street Journal reports in an article that examines how pharmaceutical companies are tapping into emerging markets as a way to bolster sales.

“Not long ago, many health-care giants like Abbott all but ignored the developing world and focused almost exclusively on the big U.S. and European markets for sales and growth. But struggles to replace aging product pipelines, generic competition and cost-conscious government and commercial payers have stalled growth on their home turf,” the newspaper writes. The piece describes how a rise in health care spending and an uptick in chronic diseases among consumers in emerging markets has captured the attention of pharmaceutical groups looking to develop partnerships with companies in such markets, and the ways that companies, such as Abbott must “learn to make profits without charging Western-level prices” that people in emerging markets “can’t afford.”

The newspaper writes, “Last year, drug sales in 17 ‘pharmerging markets’ were $126 billion, up from $42.7 billion in 2000, IMS Health said. Sales in the countries are growing three times as fast as in developed markets, and should account for 70% of global growth over the next five years, according to Credit Suisse. … The result is a kind of pharmaceuticals gold rush in Asia, Eastern Europe and South America.” The article describes how India, in particular, is attractive to pharmaceutical companies, where “PricewaterhouseCoopers says pharmaceutical sales will triple to $30 billion by 2020, compared with $11 billion last year.”

The article describes how the drugmakers Pfizer and GlaxoSmithKline are luring “emerging-market customers at lower-than-Western prices,” and the recent history of Abbott’s efforts to expand in India, which dates back to 2001. The piece includes comments by Abbott Chief Executive Miles White, Merck President Kenneth Frazier and Peter Tollman of Boston Consulting Group. The Wall Street Journal also features a graphic on the recent acquisitions of Indian health-care companies (Rockoff, 8/26).

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