The world’s emerging markets now account for a fast-rising share of global pharma sales, and this rate of growth will accelerate faster to 2020. However, these markets can be perilous for companies which look to them simply for a quick and easy profit, an industry conference has heard.

The world pharmaceutical market will grow 5%-6% this year to a value of over $735 billion, according to Murray Aitkin, senior vice president, Healthcare Insight at IMS Health. Seven markets which IMS has identified as “pharmerging” – China. Brazil, Mexico, South Korea, Turkey, India and Russia – will grow 12%-13% this year, compared to low single-digit growth in the mature markets of the USA and the five leading European nations, where growth will be no more than 4%-5%, plus just 1%-2% for Japan. In 2008, for the first time, these mature markets will contribute less than 50% to global market growth, Mr Aitkin told The Economist’s annual pharmaceuticals meeting in London this week.

In 2007, the pharmerging countries’ share of the global market totaled 17%, up from 13% in 2001. By 2020 it is expected to reach 21%-22%, by which time these seven markets will be contributing over 50% to global market growth, at $70-$90 billion, from 13% ($48.1 billion) in 2001 and a forecast 33% ($50-$60 billion) in 2011, he said.

Many of the leading pharma multinationals are already seeing good growth from these markets, whose fast-expanding middle classes increasingly seek western-style health care. However, Mr Aitkin stressed the need to be aware of the important differences which still exist between these nations and the traditional western markets. For example, many pharmerging markets are overwhelmingly generic, so a western drugmaker’s portfolio and business model may not match with the nation's needs and requirements. Moreover, while increasingly western lifestyles are creating some convergence in therapy areas, the treatments for which there is large demand in these markets remains very different from the top-sellers in Europe and the USA. Nor should a western firm underestimate the domestic competition’s strengths, which are well-entrenched and built on strong relationships with stakeholders.

Moreover, intellectual property rights – compulsory licensing, patent recognition, etc - are still an issue, and it cannot be assumed that IP is safe, nor are these issues likely to be have been resolved by 2020, he warned.

However, health care systems worldwide are all having to deal with issues of access, cost and quality, and companies can achieve prosperity in pharmerging markets if they become part of the solution, and not the problem, of health care advancement, for example by investing in, using and communicating health outcomes and pharmacoeconomics studies. Also, he advised companies to adapt their business model to the local market needs – generics will certainly have to be part of the portfolio – and show commitment, by appointing nationals to management positions, for example.

Finally, said Mr Aitkin, be aware of the importance of flexibility – success has to be measured in the long-term. Interruptions to the rate and pace of growth must be expected, with ups, downs and “unexpected detours,” all of which means that investment decisions can be mistimed.