As the traditional markets of the USA and Europe decline, drugmakers are looking to the emerging states as new areas for growth despite “tapping into only a fraction of the consumers” in those countries, says a new study.

Datamonitor senior pharmaceutical analyst Dr Tijana Ignjatovic says that although the current pharmaceutical market values in Brazil, Russia, India, China and Turkey are not impressive compared to more mature markets, “most are experiencing tremendous growth rates compared to the modest 4%-6% growth seen in the USA and Europe. She adds that while the Russian market has come on leaps and bounds over the last few years and Brazil and Turkey’s healthcare systems are more mature, it is China and India that have attracted the most interest.

Dr Ignjatovic claims that the “key attraction of India and China is obvious – their huge populations. Even if only a fraction of the population has access to modern drugs, this still represents a sizeable number of consumers.” Furthermore, the report notes that “growing disposable income, particularly of the new middle class”, combined with the investment into public health provision seen in some countries is resulting in increased modern, western-type drug consumption.

There are, however, downsides to dealing with emerging markets and insufficient patent protection and low public funding of drug consumption are two of them. Since India’s Patent Act was passed in 2005, patent applications for Eli Lilly’s Forteo (teriparatide), Astra Zeneca’s Iressa (gefitinib) and most recently Novartis’ Glivec (imatinib) were rejected on the grounds of prior known use or incremental innovation that is not recognised in India. However, in December, Pfizer’s maraviroc became the first HIV/AIDS drug to get a patent in India and this may signal a change in the tide for patent protection in India, though China and Brazil, which issued a compulsory licence for Merck & Co’s AIDS drug Sustiva (efavirenz) in May last year, are still off-message when it coms to intellectual property.

Dr Ignjatovic also says that another major obstacle to higher uptake of branded drugs in emerging markets is poor access to pharmaceuticals through public health provision, but as their respective economies grow, many of these countries are investing in improving access and quality of healthcare. However she noted that they are also implementing strategies of price cuts on reimbursable drugs.

This practice is leaving the big drugmakers with a choice of opting out of price cuts “and losing the reimbursable status that would reduce their market penetration, or sticking to their reimbursable status, albeit with lower margins, with a hope that the pricing environment will improve and that drug consumption will grow”, Dr Ignjatovic said, noting that Russia is an exception.

She concluded by saying that the preference for foreign brands exhibited by the rising middle class in many emerging market countries enables branded companies to compete with generics in certain market segments. They therefore present “new opportunities for mature drugs whose sales are declining in the major markets of the west,” which Dr Ignjatovic says is “a highly attractive option especially at the time when many drugs are at the edge of the patent expiry cliff”.