AstraZeneca has joined the fray of big pharma companies betting on emerging market growth as a key area of future success, saying it expects to generate double-digit growth in countries such as Brazil, Russia, India, and China, ultimately generating a quarter of its growth from such markets by 2014. Astra's emerging market sales have grown substantially in the last decade, to 13 percent in 2009 from 6 percent of its total healthcare revenue in 1999.

 

Sanofi-Aventis, Pfizer and GlaxoSmithKline have all made major pushes into emerging markets recently, spending billions of dollars to buy up generics companies in emerging markets or expand relationships with those companies they already did business with.

 

In 2009, mature markets in the United States, Europe, and Japan represented 70 percent of global sales, according to Burrill & Company's Biotech 2010—Life Sciences, Adapting for Success. The healthcare markets in emerging countries,  such as China, India, and Brazil are on pace to rapidly overtake the U.S. and European markets in coming years.

 

The most recent expression of how seriously AstraZeneca is taking the strategy is a March 11 deal, in which the company laid out a new marketing partnership with India's Torrent Pharmaceuticals, from which AstraZeneca will license 18 products to sell in nine countries under the AstraZeneca brand.

 

“In markets where consumers and physicians have a strong preference for trusted brands, we believe AstraZeneca’s long-standing reputation for quality is a sustainable competitive advantage,” says Tony Zook, head of Astra’s global commercial organization.

 

Astra expects emerging markets to contribute around 70 percent of pharmaceutical industry growth in the next five years, it says, with branded generics representing about 50 per cent of that growth by value.

 

“Such initiatives among large pharma companies reflect a strategic attempt to position themselves in high-growth regions, although this puts pressure on operating profitability,” says Britta Holt, the director of Fitch Ratings' EMEA corporate healthcare team.