Winning in Emerging Markets to Drive Growth in the Life Sciences Industry

Our study shows that life sciences companies may be able to gain a competitive edge in emerging markets with a thorough knowledge of the six primary issues faced with emerging market growth.

By adopting a four-point integrated strategy—think in terms of customer clusters and submarkets, find cross-border customer similarities, build capabilities that leverage global reach and local relevance, and create effective and rapid execution capabilities—life sciences companies can overcome the six primary issues and run a successful market access strategy.

To help life sciences companies plot effective growth strategies in the emerging markets, Accenture has performed an analysis of some of the most important market access issues and trends in Brazil, Russia, India and China—the BRIC countries.

Our study evaluated the current supply chain maturity levels of the life sciences industry, the regulatory environment, overall dynamics around pricing and other challenges that life sciences companies need to overcome to execute successful market access strategies.

In our analysis of current value chain capabilities in the BRIC markets, six challenges emerge important. These include:

• Immature logistics and distribution: The distribution value chain in the emerging markets is often inefficient, inflexible and highly fragmented. For example, the Chinese distribution system is complex and restrictive, with a large number of distribution companies operating at all levels.

• Inadequate manufacturing infrastructure: Different emerging economies have very different levels of maturity in terms of their manufacturing ecosystems. A great deal of fragmentation exists among pharmaceuticals manufacturers. For example, in India, no single company has more than 7 percent of market share.

• Diverse regulatory environments: Companies need to have a comprehensive understanding of different regulatory environments. Gaining approvals for new products typically take longer in the BRIC markets than in developed markets.

• Uncertainty in pricing and reimbursement: Companies must understand how pricing and reimbursement systems work in different regions. Although each market employs some combination of free-market pricing and price controls, the level of pricing controls can vary significantly across markets.

• Complex taxation structures: Taxation and import regulations have critical roles to play in the strategies of large, multinational life sciences companies in the emerging markets. R&D and innovation contribute to the implementation of specific tax incentives. Many local government bodies try to attract investments in their regions by setting up tax-free zones and providing access to better infrastructure and resource pools.

• Shortage of skilled talent: The support structure to provide a consistent stream of skilled talent is being developed but, at the moment, demand is outpacing supply. And emerging markets have many candidates with skills that are not yet industry ready.

Growth strategies in the life sciences industry are increasingly dependent on expansion into emerging markets. A growing middle class in these areas represents an opportunity for life sciences companies to enhance the quality of life, while also improving their own market position.

Companies that are more advanced in areas such as manufacturing infrastructure, logistics, distribution and talent management—and of course, in understanding consumer needs and behaviors—can gain an edge in achieving high performance.

This paper presents an analysis of critical market access challenges that can give life sciences companies the basis for a detailed understanding of the individual value chain components of their growth strategy in order to gain competitive advantage.

Establishing and executing a growth strategy for the life sciences companies in developing nations involves finding commonalities across the markets. Accenture recommends a four-pronged approach:

1. Think customer clusters: Any particular emerging market has some diverse segments requiring differentiated treatment. Our study suggests that customer clusters or submarkets can be identified within a national or regional market based on an understanding of consumers who have common health needs. This can lead to more effective and customer-centric R&D, as well as stronger marketing and sales strategies.

2. Find cross-border similarities: Companies should not be constricted in their thinking by national boundaries when they develop an emerging markets strategy. An approach too focused on nations and regions could mean that customer similarities across markets are not being sufficiently leveraged to create solutions that can move across borders.

3. Establish global reach with local relevance: Whether in an urban or rural market, it can be beneficial for companies to “think globally and act locally” in meeting the needs of consumers in the BRIC markets. A more granular assessment can help companies develop more customer-centric, localized solutions.

4. Create effective and rapid execution capabilities: Life sciences companies must execute the solutions across the markets in a timely and cost-efficient manner. It is important for companies to create a single, coherent strategy instead of trying to coordinate separate supply chain and commercial strategies.