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Launch Evolution Across Pharmerging Markets

IMS LEAP STUDY 2010

Headline

The dynamic, high-potential pharmerging markets offer tremendous opportunities for pharmaceutical manufacturers facing mounting pressures in the mature markets. But as more companies embrace these new growth drivers in their longterm strategic plans, they face the challenge of a new and very different environment for launching a global brand; complex, demanding and changing fast.

IMS LEAP Study 2010


Launch Evolution Across Pharmerging Markets
The dynamic, high-potential pharmerging markets offer tremendous opportunities for pharmaceutical manufacturers facing mounting pressures in the mature markets. But as more companies embrace these new growth drivers in their long-term strategic plans, they face the challenge of a new and very different environment for launching a global brand; complex, demanding and changing fast. What guidance can they draw from the historic performance of previous launches in these markets? Where is the greatest potential for product success today? And what does it mean for the launch planning process at the global and local levels? In a major analysis of launch evolution in pharmerging markets, the IMS LEAP Study 2010 brings much-needed answers to these important questions with unparalleled insights into the key dynamics, developing trends, and changing drivers of launch success. Despite the global economic downturn, the paradigm shift in pharmaceutical growth away from the established drivers of old to a group of high-potential pharmerging markets has continued to gather momentum. Collectively, the IMS Tier 1, Tier 2 and Tier 3 pharmerging markets1 have been steadily gaining share at the expense of the U.S. and top five Europe (France, Germany, Italy, UK and Spain), accounting for close to 34% of global growth in 2009 (Figure 1). Traditionally, pharmerging markets have been something of a postscript for global pharma, with many multinationals preferentially launching in the major
1. Pharmerging Shake-up, IMS Health, 2010. Tier 1 (China);Tier 2 (Brazil, Russia, India);Tier 3 (Venezuela, Poland, Argentina, Turkey, Mexico, Vietnam, S.Africa, Thailand, Indonesia, Romania, Egypt, Pakistan, Ukraine).

FIGURE 1: PHARMERGING MARKETS CONTRIBUTION TO GLOBAL GROWTH HAS STEADILY INCREASED

% Contribution from pharmerging (Tiers 1-3)


8% 13% 16% 19% 26% 20% 26% 41% 34% 41% 40% 52% 47% 49%

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010(f)

2011(f)

2012(f)

2013(f)

2014(f)

Tier 1 Pharmerging

Tier 2 Pharmerging

Tier 3 Pharmerging

Rest of World*

Source: IMS Health Market Prognosis March 2010. Market size rankings in constant US$.

* ROW: includes mature markets and other non-pharmerging markets.

IMS HEALTH LAUNCH EVOLUTION ACROSS PHARMERGING MARKETS

mature markets before even considering opportunities in the emerging sector. Today, with eight pharmerging countries among the top 20 world pharmaceutical markets and China on the brink of achieving top three status, (Figure 2), more companies are reassessing the focus of their global launch plans. Some of the worlds leading pharmaceutical multinationals are already achieving more than a quarter of their growth from the pharmerging markets; most have called them out as a key strategic priority; and all of the top 15 players2 are accelerating efforts to strengthen their presence within them either through research investments, licensing deals, co-marketing arrangements, buy-outs, or similar.

Among a flurry of recent announcements in this area are Abbotts acquisition of Piramal Healthcare in India - a deal that could make the U.S. giant the number one player in this country; GSKs and Lillys commitment to double revenue in emerging markets by 2015; Pfizers discountcard system in Russia offering drug price cuts of up to 50%; and the purchase of Medley, Brazils third largest pharmaceutical company, by Sanofi-Aventis, to name but a few. But, as the launch environment has continued to evolve in pharmerging markets, along with the competitor profile,

2. Pharmaceutical companies with sales of more than US$15bn in 2009.

FIGURE 2: THE PHARMERGING MARKETS ARE REDEFINING THE ESTABLISHED WORLD ORDER

2004 Rank
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 United States Japan France Germany United Kingdom Italy Spain Canada China Mexico Brazil Australia South Korea India Netherlands Turkey Belgium Greece Russia Poland
Tier 1 Pharmerging

2009 Rank
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 United States Japan Germany France China Italy Spain United Kingdom Canada Brazil Russia Mexico India Turkey South Korea Australia Greece Venezuela Poland Belgium
Tier 2 Pharmerging

2014(f) Rank
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 United States Japan China Germany France Brazil Italy Spain United Kingdom Canada India Venezuela Russia South Korea Turkey Greece Australia Poland Mexico Netherlands
Tier 3 Pharmerging

Source: IMS Health MIDAS, Market Prognosis March 2010; Market size ranking in constant US$.

IMS HEALTH LAUNCH EVOLUTION ACROSS PHARMERGING MARKETS

have the rules for successful engagement also now changed? What sort of launch trajectory can be expected today? How much time do companies have to get it right? And what does it all mean for their launch plans at the global and local level? A MAJOR LEAP FORWARD To answer these important questions, IMS Health has conducted a major study into the evolution of launch performance across the pharmerging markets. Building on the heritage of our groundbreaking research into the elements of launch excellence across therapy areas in the mature markets3, the IMS LEAP Study 2010 brings unprecedented insights into the changing dynamics, key drivers and evolving priorities for launch success in the critical pharmerging sector. In this first instance, we have focused on the IMS Tier 1 (China) and Tier 2 (Brazil, Russia, India) pharmerging markets1 the four leading emerging economies in terms of absolute GDP and anticipated pharmaceutical market value growth through 2013 (however, this is not to suggest that the opportunity is not just as favorable in Tier 3 markets). Drawing on gold standard, audited pharmaceutical sales data from the IMS Health MIDAS database4, the study evaluated over 260 NCEs and branded generics launched into the Tier 1/Tier 2 pharmerging markets since 1998 and which fulfilled the following key criteria: Minimum global sales of US$250m and US$4m in Tier 1/Tier 2 pharmerging markets in 2009 Launched in at least one Tier 1/Tier 2 pharmerging market and one Top 8 mature market The study considered only products first launched globally post-1998; products launched globally before this date but later on in pharmerging markets have not been analyzed For comparative purposes, products were segmented according to their global launch date into three waves of four years each:
3. Defining Global Launch Excellence, IMS Health, 2007; Achieving Global Launch Excellence, IMS Health, 2008 & Searching For Global Launch Excellence, IMS Health, 2009. 4. The IMS Health MIDAS database includes sales in audited pharmaceutical segments in more than 70 countries, amounting to over 94% of the global pharmaceutical universe. Retail and hospital channels are included where available. Data reported for India are derived from the Secondary Sales Audit (SSA)

Wave I: 1998-2001 Wave II: 2002-2005 Wave III: 2006-2009 The key findings that emerged from the study are discussed in the following sections. GROWING CONTRIBUTION OF LAUNCHES IN PHARMERGING MARKETS New launches are positioned to play an increasingly important role in the expansion of pharmerging markets. Products launched within the last four years (Wave III) were responsible for 19.9% of sales in the Tier 1/Tier 2 pharmerging markets, compared to 15.5% in the Top 8 mature markets. They already account for an average 6.5% share of growth in the sector (10.9% in China) versus 4.1% in the Top 8 mature a contribution that is set to continue rising as more companies recognize the value of these markets as a major source of revenue growth. CLOSING TIME GAP Positive developments in the pharmerging markets, including greater government investment in healthcare, rising demand for drugs to treat typically Western diseases and a strengthening of regulatory and IP requirements in some cases, have increased the ability and willingness of multinational players to launch in pharmerging markets. Many have been quickening the pace at which they do so: for products already launched in at least one mature and one Tier 1/Tier 2 pharmerging country (and which fit the study criteria), our analysis reveals a halving in time to market between first global launch and first launch in a pharmerging market over the last decade, from 2.5 years in Wave I to 1.25 years in Wave III (Figure 3). Notwithstanding this finding, it is important to bear in mind that our analysis considers only products that have launched in at least one Tier 1/ Tier 2 pharmerging market in addition to a mature market, and that overall, only a third of all global NCEs introduced since 1998 have reached the former. Furthermore, in many cases the first pharmerging launch is in Brazil and rarely in the Tier 1 market China, where it can take two years longer to register a product versus some of the mature countries. However, the trend is clear: products are launching earlier in pharmerging markets than they were over a decade ago.
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IMS HEALTH LAUNCH EVOLUTION ACROSS PHARMERGING MARKETS

FIGURE 3: THE TIME TO FIRST LAUNCH IN A TIER 1/TIER 2 PHARMERGING MARKET HAS HALVED IN THE LAST DECADE
Average number of quarters delay in first pharmerging Tier 1/2 launch vs. first global launch Pharmerging Tiers 1-2
9 10 7 5 8 12 5 8 6

Primary Care
12 5 4

Oral Anti-diabetics

Specialist Care
11 4 3

CNS drugs

Source: IMS Health MIDAS 2009

Wave I

Wave II

Wave III

SHIFTING EMPHASIS TO SPECIALIST CARE Not only are companies launching much sooner into the pharmerging sector than they have done in the past (even though no major product has yet launched earlier in a pharmerging market), they are also changing the nature of the drugs that they launch. The traditional strategy of entering these markets with products focused mainly on primary care is giving way to much stronger emphasis on specialist launches5. Our study shows that specialist products now account for 55% of launches in China, Brazil, Russia and India compared to only 47% in Wave I. Furthermore, drugs in the specialist sector have experienced the greatest reduction in time to market versus those in primary care, with an average time lag of only 1.5 years now compared to 3 years a decade ago. The greatest decline overall can be seen among oral anti-diabetics, which are now reaching the first Tier 1/Tier 2 pharmerging market on average 1 year after first global launch compared to 3 years in Wave I; and CNS drugs which have experienced a similar reduction in time to market. The fastest pharmerging Tier 1/Tier 2 launches in these therapy areas have been MSDs Januvia (sitagliptin) in Brazil and J&Js Invega (paliperidone) in Russia - only 2 and 3 quarters, respectively, following the first global launch.
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Overall, we believe this to be a function of improving infrastructure, selective company strategies and the opening up the regulatory environments. CHANGING RULES FOR INNOVATIVE DRUGS To better understand these findings and determine what kind of launch investment has the greatest potential to positively impact the pharmerging markets, we considered therapy classes according to type, using an IMS segmentation6 based on the level of patent protection and an objective measure of innovation to come up with three key market segments:
1. DIFFERENTIATED:

Classes characterized by significant product innovation. There are often no generics available and payers exert little influence on treatment decisions.

2. COMMODITY:

Classes with products that are minimally differentiated, other than by price. Payers, potentially, have a great stake in prescribing decisions.

5. IMS Health definition based on positioning of dynamic market in terms of primary care vs specialist physicians 6. Understanding New Commercial Models in the Pharmaceutical Industry, IMS Health Special Report, 2009. Segmentation covers Top 8 markets (U.S., Japan, France, Germany, U.K., Italy, Spain and Canada).

IMS HEALTH LAUNCH EVOLUTION ACROSS PHARMERGING MARKETS

FIGURE 4: THE BIGGEST DECLINE IN TIME TO MARKET CAN BE SEEN IN DIFFERENTIATED SEGMENTS
Average number of quarters delay in first pharmerging Tier 1/2 launch vs. first global launch Differentiated Transitional Commodity

11

10

Source: IMS Health MIDAS 2009

Wave I

Wave II

Wave III

3. TRANSITIONAL:

Classes that fall between the above two extremes and are likely to undergo significant change.

VARIABLE UPTAKE Despite sharing many similar characteristics, there are significant distinctions both within and across the pharmerging markets that clearly set these markets apart both from each other and from mature markets - in the way they are structured, the way they operate and in the various hurdles to market access they present. These differences are manifested in highly variable uptake curves within the countries studied, compared to those observed in mature markets (Figure 5). Products launched in India, for example, tend to follow a shallow uptake curve that plateaus quite quickly. Here, faster genericization due to poor IP protection and a strong presence of local players has created a fragmented market where a high share is difficult to achieve. Conversely, in Brazil - where launches are often linked with U.S. market entry - rates of uptake are more in line with those of the mature markets in terms of the higher share that products can expect to achieve within their given therapeutic area. It is important to note that Brazil has included many innovative drugs in its reimbursement list.

When time to market is considered within the context of these three market segments, it can be seen that the largest reduction in time to market is apparent in the differentiated category, i.e. products associated with a high degree of innovation (Figure 4). The traditional perception of pharmerging markets as home to tail-end, typically commoditized products, thus appears to be changing, reflecting improvements in access to healthcare, rising demand for innovative medicines, a growing, more affluent middle class with greater purchasing power, and broader public and private healthcare coverage. These markets may still represent largely lower-cost bases with continued relevance for low price primary care products, but government programs and healthcare initiatives are clearly opening up new opportunities for companies to increasingly deploy their specialist and differentiated portfolios.

IMS HEALTH LAUNCH EVOLUTION ACROSS PHARMERGING MARKETS

FIGURE 5: VARIATION OF LAUNCH UPTAKE IS MORE PRONOUNCED IN THE PHARMERGING MARKETS


Average country launch uptake curves Pharmerging Tiers 1-2
20 20

Mature Markets (Top 4 shown)

% Value Market Share

15

15

10

10

0 0 1 2 3 4 5 6 7 8 Quarter After Launch Brazil 9 10 11 12

0 0 1 2 3 4 5 6 7 8 Quarter After Launch Germany 9 10 11 12

China

Russia

India

USA

France

Japan

Source: IMS Health MIDAS 2009, in constant US $

As expected, there are also noticeable variations in launch uptake across the three market segments6: whilst in the mature markets the curves are evenly distributed between differentiated, commodity and transitional products, in China and Brazil the difference between commodity and transitional is negligible, with transitional products more closely resembling the dynamics of commoditized products (shallow uptake curves, longer penetration times, etc). Products in pharmerging markets tend to accelerate through the transitional phase into displaying commoditized characteristics, likely due to poor IP protection and many times strong local companies keen to copy and distribute the drug. More interestingly, and in contrast to observations for transitional products, differentiated products in the pharmerging markets experience a significantly steeper and deeper uptake curve, meaning that companies have a higher chance of success in launching a differentiated product than they would in the mature markets (Figure 6). There are two factors driving this: The first is that differentiated markets are less saturated and under-served in pharmerging than mature countries,
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meaning that companies are able to achieve a higher share on entry (albeit of a smaller pie). The second driver is price. While commodity and transitional products in Wave III were on average 46% and 35% cheaper in the Tier 1/Tier 2 pharmerging than in mature markets respectively, differentiated products were only 15% cheaper4. Companies thus appear less willing to take a price discount for innovative products and in differentiated unsaturated markets are gaining higher shares. The question for pharma then becomes one of whether to target a more premium segment, but only a small proportion of the population, or go for a blanket approach, albeit at a much lower price than that in the mature markets (as illustrated in Diabetes: A Case in Point on page 10). NARROW WINDOW One of the most striking findings from the IMS Launch Excellence studies in the Top 8 mature markets3 was that the vast majority of launches have only a short sixmonth window in which to succeed a conclusion that has not changed over time. Those that do well in that period continue to do so; those that do not are rarely able to improve on their initial performance.
IMS HEALTH LAUNCH EVOLUTION ACROSS PHARMERGING MARKETS

FIGURE 6: VARIATIONS ARE ALSO APPARENT IN THE BEHAVIOUR OF DIFFERENTIATED AND COMMODITIZED PRODUCTS VERSUS THE MATURE MARKETS
Average country launch uptake curves by market segment
40 40

China % Value Market Share


30

Mature Markets % Value Market Share


30

20

20

10

10

0 0 1 2 3 4 5 6 7 8 9 10 11 12

0 0 1 2 3 4 5 6 7 8 9 10 11 12

Quarter After Launch


40

Quarter After Launch


Differentiated Transitional Commodity

Brazil % Vakue Market Share


30

20

10

Companies have a higher chance of success in launching a differentiated product in pharmerging (even steeper & deeper curves vs. mature markets); conversely, commoditized & transitional products fare worse

0 0 1 2 3 4 5 6 7 8 9 10 11 12
Source: IMS Health 2009, in constant US $

Quarter After Launch


S

Overall, fewer than 20% of launches see significant changes to their launch trajectories after these first, critical six months. This window of opportunity is also apparent in the pharmerging markets, where, again, the success (or otherwise) of a launch can largely be determined within the first six months: in Wave I, only 16% of brands were able to improve on their initial launch trajectory (defined as moving up at least one decile six months after launch) (Figure 7). Moreover, it appears that opportunities for a second chance are becoming more scarce: in Wave III only 11.0% of Tier 1/2 brands showed an improvement after the first six months, suggesting a toughening of conditions in these markets. While common to all four countries, this decline was greatest in Russia.

FIGURE 7: THE SIX-MONTH WINDOW OF OPPORTUNITY EXISTS IN PHARMERGING MARKETS


% of product launches able to improve their performance by at least 1 decile 6 months after launch
20% 16.1 16.5 13.0 11.0 10.4 8.3 11.1 12.5 20.9 18.2

Tier 1/2

China

Brazil

Russia
Wave I

India
Wave III

Source: IMS Health MIDAS 2009, in constant US $

IMS HEALTH LAUNCH EVOLUTION ACROSS PHARMERGING MARKETS

WHAT DOES THIS MEAN FOR THE PHARMACEUTICAL INDUSTRY? One clear, overriding conclusion from our analysis is that the rules of the launch game in pharmerging markets have changed. As companies press ahead with their plans to drive growth in this critical sector, the ability to adapt to a fundamental shift in the launch environment with well-planned, fully-integrated strategies for market entry, will be essential for their long-term success. Four key considerations should be placed at the forefront of their decision making:
1. LAUNCH EARLIER IN PHARMERGING MARKETS - POTENTIALLY AHEAD OF MATURE

2. DONT UNDERESTIMATE THE POTENTIAL FOR INNOVATIVE LAUNCHES

Behind the greater variation in the pattern of uptake in the pharmerging markets is the higher probability of gaining significant market share when launching differentiated products rather than those in commoditized or transitional therapy areas. Our findings suggest that it is possible to achieve higher market share with an innovative product in pharmerging markets in differentiated therapy areas. With strong and continued investment in market conditioning, companies may thus have a greater chance of establishing a leadership position than they would in saturated mature markets. All Tier 1/Tier 2 pharmerging markets have stated plans to extend their coverage, either of the population or of the number of drugs reimbursed. Countries like Brazil, which already boasts high coverage of its population, plans to increase the number of drugs covered, with particular emphasis on innovative drugs (the plan is to increase the number of innovative molecules reimbursed from 107 to 144 by the end of 2010), while other countries will focus on extending population cover with more commoditized drugs. It is therefore imperative that the opportunity for innovative drugs is assessed at a country-by-country level, and that this knowledge is used to focus on understanding how to optimize the value of their portfolio and develop strategies that better support the high growth opportunities.
3. PLAN TO MAXIMIZE THE 6-MONTH LAUNCH WINDOW

With a clear trend towards faster launch into China, Brazil, Russia and India, the imperative to address these key growth markets during the creation of initial global launch plans is critical - the long-time strategy of focusing first and foremost on the major mature markets no longer holds good. Global players that do not extend their drug development and launch planning to include early and thorough consideration of opportunities in the Tier 1/Tier 2 pharmerging markets run the risk of leaving significant untapped revenue potential on the table. In certain cases, companies should even consider launching earlier in pharmerging than in mature markets: some branded generics may encounter more attractive markets in the pharmerging sector; even certain innovative products may be able to capitalize on greater growth potential and tap into an unsaturated market early on, creating the chance to achieve higher market share a challenge that is becoming increasingly difficult in mature markets3. This will call for a rebalancing and restructuring of global launch plans to address many new considerations over and above those required for a traditional focus on the U.S., Top 5 Europe and Japan. The impact goes beyond the commercial organizations: R&D need to understand the requirements for launch in pharmerging markets and build capabilities to leverage the opportunity; corporate functions, including regulatory affairs, must develop a clear understanding of market access requirements in pharmerging countries; and local organizations need to power up their operations to meet the demands of this new agenda.
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The extreme importance of the first six months means that strategies for launching into the pharmerging markets must be built well in advance with careful planning of pre-launch activities to ensure optimal readiness across all relevant functions. New capabilities and commercial models may be required to penetrate high growth segments, and early establishment of KPIs will be essential to measuring initial performance against plans. Paramount will be greater and earlier investment in launch preparation at both an international and local level. A compelling example of planning ahead is the launch of BMS Hepatitis-B product Baraclude in China7. 18 months prior to expected approval, BMS carried out detailed pre-launch market research and started building the required infrastructure, including a large and well-trained sales force to help educate physicians. Full alignment across global, regional and local entities allowed BMS to achieve a truly excellent launch that not only became market leader (c.20% share
7. Sowing the Seeds of a Blockbuster Launch in China, IMS Health, 2009

IMS HEALTH LAUNCH EVOLUTION ACROSS PHARMERGING MARKETS

of the whole Hepatitis antiviral market) but also managed to grow the overall Hepatitis-B market in China.
4. ADDRESS THE COMPLEXITIES

The highly variable uptake of launches within therapy areas across the Tier 1/Tier 2 pharmerging countries underscores the extremely diverse nature of these markets and the very different patterns of behaviour that they display. And while healthcare reforms may be creating new opportunities, they are also shaping a launch environment that is becoming increasingly fragmented. Companies need to understand the differences, navigate the complexities and tailor their approaches accordingly. Strategies must be adapted to the specific requirements of each individual country in terms of portfolio, commercial models, business model, systems, structure, and people, with early attention to such key issues as: AFFORDABILITY: With generally lower levels of income and greater emphasis on out-of-pocket or private payment for healthcare, affordability is an important consideration for launching in pharmerging markets. Many multinational companies are implementing discounted price schemes to overcome this potential hurdle. At the same time, our analysis has shown that while many transitional and commodity products are substantially cheaper than in the mature markets, differentiated products appear able to still command a premium price. These factors should be taken into account when sizing market potential and pricing new brands. ACCESS: Healthcare access can be a challenge for populations living outside the major cities in pharmerging markets. Companies that are able to successfully penetrate more rural areas may benefit significantly from being first to market in tapping the potential of large, under-treated populations. Novartis and Sanofi-Aventis, for example, have worked to promote healthcare access in rural India over the past few years to extend their patient outreach, alongside a $19.5bn government program to improve healthcare for over 700m Indian villagers. However, targeting rural areas may not be the optimal approach for all products, particularly in the differentiated/premium segment where affordability and access to specialist care will become an issue (examples of both approaches illustrated in Diabetes: A Case in Point on page 10). LOCAL NUANCES: In addition to fulfilling global launch requirements, companies must adapt their approach to the market conditions of each individual country
IMS HEALTH LAUNCH EVOLUTION ACROSS PHARMERGING MARKETS

and use their knowledge of the anticipated launch trajectory to ensure an early focus on the segments of greatest potential. It is important to remember that many therapy areas are under-developed in these countries, and simply launching a first-tomarket product will be no guarantee of success, even in the face of seemingly considerable patient potential. In many cases, upfront investment in market conditioning and a continuing focus on physician and patient education will be key. In all cases, it will be important to ensure that the critical questions for a successful launch have been addressed. For example: Have you built a comprehensive plan for city/rural rollout? Are you prepared with the right distribution strategy? THE FUTURE MODEL? The Tier 1/Tier 2 pharmerging markets offer major opportunities for launching new drugs and more global players are shaping their long-term strategies to secure a slice of the rapidly expanding pie. As they do so, they will need to be extremely clear about their approach to driving a successful launch. Faced with the challenges and complexities of the changing landscape, the decisions they make on the right portfolio for these high growth markets must be determined not on the basis of todays environment but in anticipation of the one to come. At an international level, early integration of pharmerging markets into global launch plans will be critical, based on a detailed understanding of how to maximize the opportunities within them. Locally, success will be dependent on appropriate adaptation of the full pre-launch strategy. Our study has revealed four key considerations for companies in search of a successful launch in the Tier1/Tier 2 pharmerging markets:
1. Launch earlier in pharmerging markets potentially ahead of mature 2. Dont underestimate the potential for innovative launches 3. Plan to maximize the 6-month launch window 4. Address the complexities

As conditions continue to toughen in the mature markets, optimizing performance in the pharmerging sector will be increasingly important for global success and sustainable competitive edge. Companies planning their global launch strategies with an eye on maximizing growth must do so in the knowledge that pharmerging markets are now an essential front-end priority not an optional late-stage reserve.
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Diabetes: A case in point


Diabetes is today one of the worlds most challenging and costly healthcare problems. A major cause of premature illness and mortality, it is growing to pandemic proportions and is one of several chronic diseases called out by the WHO for global action. Of particular concern is the rise in Type 2 diabetes. Traditionally a disorder of the middle-aged and elderly, this is now affecting people at a much younger age. It is also becoming increasingly common in rapidly developing economies, particularly China and India, fuelled by the combined effect of mass urbanization, increasingly Westernized diets and a general decrease in levels of physical activity. At the same time, additional risks, epitomized by the global rise of overweight and obesity, have become more prominent. EARLIER ENTRY, STRONGER COMPETITION In response to the increased significance of diabetes in developing countries, a large number of global antidiabetics have been launched into the Tier 1/Tier 2 pharmerging markets. The picture is broadly similar to the mature markets we saw twelve years ago, but includes several innovative product classes (GLP-1s and DPP-IVs), higher share of insulins, slightly lower share of traditional products and very low share of glitazones (Figure 9). Overall, competition is increasing and the launch space is changing fast as more multinationals include these markets at an earlier stage in their global launch plans. Of all the leading therapy areas, the newer generation anti-diabetes sector8 has experienced one of the largest reductions in time to market from global to pharmerging launch (in China): in Wave I, Actos (pioglitazone) was on the global market for approx 5.75 years prior to its first pharmerging launch; in Wave III, Januvia (sitagliptin) was launched (in Brazil) just 6 months after its first global entry. STUDIES IN STRATEGIC PLANNING The importance of achieving the steepest and deepest market penetration curve possible within the sixmonth window of each country places heavy demands on the planning and execution of every launch. Two recent examples in the diabetes area illustrate the power of an informed, fully-integrated strategic plan in achieving this goal, albeit by taking a different approach to the market:
TARGETED, PREMIUM, DIFFERENTIATED APPROACH IN THE INDIAN MARKET:

FIGURE 8: VALUE SHARE OF DIABETES BY TREATMENT TYPE


14% 14% 24% 50% 17% 45% DPP-IVs and GLP-1s Glitazones Traditional anti-diabetics Insulins Developed (12 yrs ago) Developed (Today) Pharmerging (Today) 5% 8% 100%

35%

46%

41%

Source: IMS Health MIDAS 2009, in constant US $

One of the greatest pharmaceutical success stories in Indias recent history, is the game-changing launch of Januvia/Janumet (sitagliptin) that revolutionized the local, low-cost diabetes market with a premium price approximately five times greater than that of alternative new-generation anti-diabetics.8 Success was gained through the relentless pursuit of a focused scientific promotional strategy that was based on a highly targeted approach leveraging in-depth knowledge of the Indian market. By positioning the product with targeted doctors/diabetologists in specified geographical

8. Defined as glitazones, DPP-IVs, GLP-1s

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IMS HEALTH LAUNCH EVOLUTION ACROSS PHARMERGING MARKETS

areas the company ensured that marketing efforts were directed at high ROI segments while competitors continued employing a mass market approach. With an accompanying integrated disease management program strengthening the value proposition and an external strategy of pricing Januvia at c.25% of the average price in the Top 8 mature markets (high for India), the Januvia franchise currently boasts a 10.4% share (in quarter 1 2010) among the new-generation anti-diabetics8 in just over a year since launch, compared to only 1.3% share for a key competitor (in the same timeperiod) which discounted its price to as low as 7% of the price in mature markets. In addition, the drug also benefited from Indias recently improved IP protection laws, which is creating an increasingly favorable environment for innovative launches.
MARKET CONDITIONING ACROSS PHARMERGING COUNTRIES:

diabetes portfolio in emerging markets, offering a wide range of product options, building strong physician loyalty with heavy emphasis on education and promotion, and successfully targeting and penetrating areas beyond the large urban centers. Spurred by first mover advantage and continuing high investment, the company has established an exceptional reputation in the diabetes arena in such pharmerging markets as China, where it has secured a high market share within some of the countrys more remote regions, and in India and Russia, where it has achieved major reach with physician and patient disease awareness programs including a diabetes bus and mobile test centers (in Russia). Conversely, lack of investment has reaped poor rewards for some companies. For one major player in the newer generation sector8, a high turnover of reps and middle management, lack of continuity, limited attempts at trust-building and no commitment to continuous investment resulted in recourse to a co-promotional deal in China and a low position/success despite the product being highly successful in mature markets.

An alternative, but equally successful approach by Novo Nordisk has focused on more of a blanket strategy, mostly in commoditized segments in diabetes (e.g. insulins, biguanides) to get access to the vast Tier 1/ Tier 2 market populations. Successful players have launched their entire

IMS HEALTH LAUNCH EVOLUTION ACROSS PHARMERGING MARKETS

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The IMS LEAP Study 2010


KEY FINDINGS
CLOSING TIME GAP: For drugs launched in at least one pharmerging country, the time lag between first global launch and the first entry into a pharmerging market has halved in the past decade, from 2.5 years to 1.25 years. Although the first launch country continues to be Brazil in many cases, the other Tier 1/Tier 2 pharmerging markets are also now rising to the forefront. The decline is greatest for specialistdriven and differentiated products and for the key areas of oral anti-diabetics and CNS drugs. With more companies quickening the pace of their outreach to the pharmerging sector, the need to reprioritze these markets in global launch strategies is more important than ever. Those that fail to do so run the risk of leaving significant untapped revenue potential on the table. CHANGING RULES: There is a noticeable and higher variation in average launch uptake among the different pharmerging markets studied compared to the rates observed in the mature markets. Launches in India typically follow a very shallow uptake curve; those in Brazil are more typically in line with average uptake in the mature markets. Companies looking to expand in the pharmerging sector must focus on understanding how to optimize the value of their portfolio within the context of these variable patterns and invest in market conditioning.

Fewer than 20% of launches in the pharmerging markets are able to significantly improve their launch trajectory after six months a finding that is consistent with the Top 8 mature markets3. It appears hardest to do so in Brazil, where less than 10% of Wave III launches were able to improve on their initial uptake compared to 17.6% in India. Steep and rapid penetration of the pharmerging markets is therefore essential. With such a narrow window available for launches to make their mark, the imperative for early and full launch preparation including contingency planning and the establishment of KPIs is greater than ever.
NARROW WINDOW:

It is becoming increasingly apparent that companies need to conquer the pharmerging markets if they want to succeed globally. The findings of the IMS LEAP 2010 Study point to four key implications for the pharma industry to do this successfully: 1. Launch earlier in pharmerging markets potentially ahead of mature 2. Dont underestimate the potential for innovative launches 3. Plan to maximize the 6-month launch window 4. Address the complexities

Differentiated products have a greater chance of achieving higher market share in China and Brazil, the two largest pharmerging markets, than in mature therefore it may be easier for companies to establish leadership positions in these unsaturated markets. Conversely, the potential benefit from launching a transitional product in some therapy areas is more limited than in mature and the dynamics at launch appear more in line with commoditized products.

FOR FURTHER DETAILS ON THIS STUDY 2010 AND HOW THIS AFFECTS YOUR BUSINESS, PLEASE CONTACT: Yosh Tarapore, Thought Leadership, IMS Health YTarapore@uk.imshealth.com Eva Casal, Management Consulting, IMS Health ECasal@uk.imshealth.com David Campbell, Global Lead Pharmerging Markets, IMS Health DCampbell@uk.imshealth.com

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IMS HEALTH LAUNCH EVOLUTION ACROSS PHARMERGING MARKETS

IMS HEALTH LAUNCH EVOLUTION ACROSS PHARMERGING MARKETS

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Headline
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