Regulated Markets: US, Germany, France, Japan, UK

The healthcare status of populations in these countries is markedly better than the rest of the world. People tend to live longer and lead healthier lives. Communicable diseases are in check, but non-communicable and lifestyle-related diseases are on the rise, a result of affluence.

The regulated markets are typically high-value markets and account for a significantly large share of global healthcare spends. The latest generation of drugs and services are freely available. The thrust for people to remain healthy as opposed to treating illness has resulted in new market opportunities for healthcare service providers. Geriatric health is another focus area as the population’s age. Most of these markets have health systems that are either state-sponsored or paid for by insurance with or without a co-pay mechanism.

Although countries like the US have a high incidence of innovator medicines, they have also embraced generics in a big way in a bid to contain runaway costs.

The regulated healthcare markets are at the highest levels of maturity. Many of the provisions governing market access pertain to stringent quality checks that apply to the entire continuum from manufacture to the consumption of medicines. It includes detailed raw material specifications, a highly documented process for manufacture and checks for process and final product reliability. The regulators are active, watchful and severe in implementing damages and punitive action for any shortfalls. Drug manufacturers need to conform to a rigorous system of checks and balances. Competencies and compliances are carefully monitored by the regulators and in some cases may even form effective non-tariff barriers.

Although the European Union has now created a centralized licensing agency, the European Medicines Agency (EMEA), also enjoys extensive legislative powers to determine the ‘regulatory pathway’ for authorizing the marketing of new products in accordance with strict criteria of safety, quality, and efficacy, it has less direct influence on what can be termed the commercial or ‘market pathway’ –the prices and conditions under which products are purchased by national healthcare providers, insurance companies and patients. On the one hand, the extensive level of harmonization and centralization of the rules governing product licensing or marketing authorization allows the European-based industry to register and market their products across all twenty-seven Member States of the European Union. On the other hand, national rules and regulations on price and profit controls and marketing more generally have a major impact on the competitiveness of the industry. The approval process to allow drugs tend to be detailed and lengthy because the stringency of the system of checks and balances ensures that only products that conform to the highest quality standards are allowed market entry.

Non-Tariff barriers like those resulting from patent longevity and frivolous patents, insistence on over-specification, onerous documentation, overly tough norms for product approvals, country-specific customization of dosage forms, packaging and dispensation, restrictions on e-trade, the extent of penetration of permitted generics may sometimes be the reason for the higher costs in these markets.

Principally in the regulated markets, Patents pose another barrier to entry because patented drugs are protected. However, as innovation pipelines dry up and existing products reach the end of their patent lives, a patent cliff has become all too real. With fewer new discoveries, there are attempts by companies to evergreen existing patents through the creation of multiple surround patents, to extend their monopolistic sway over the market.

On a parallel front, there is a greater dependence on distribution and the emergence of consolidators and pharmacy chains, that provide deep market penetration. There is also thrust at allowing e-pharmacies, that are currently restricted from expanding beyond their immediate geographies, with the potential to be country agnostic.

Thus there may be a case to consider viable alternatives that not only focus on preserving the high-quality standards essential for the sector but also have the twin objective of bringing down costs that are also sustainable and so important in conserving the ballooning healthcare budgets in these countries.

Other market access practices include the creation of specific formulations as approved by the country regulator. Personalized medicines, Biologics and high-end medication at the cutting edge of research are the future.

All these factors require the best minds to rethink paradigms in a bid to expand access and make healthcare more affordable.

Expansion Markets: Brazil, China, India, Indonesia, Russia & Turkey

A majority of these markets have inched up from their earlier emerging status and now offer better healthcare solutions than were previously available. They are however far from achieving their goal of universal health coverage. Impediments are related to the large populations that are required to be served, the extreme disparities in their economic status, inadequate government infrastructure, poor institutional support and insurance coverage. These markets simultaneously display the needs of both the expansion and emerging markets. While communicable diseases continue to exist because of relatively poor sanitary conditions, lifestyle diseases are fast emerging as major concerns in keeping with the growing prosperity of the nations.

There is a requirement of basic low-cost medication and therapies. Equally, there is a high demand for innovative, complex therapies and medical care albeit at a reasonable price point. Market access is therefore regulated by the governments to meet these challenges. Patented Prescription drugs, Generic Prescription drugs and OTC medicines are all present with the latter two categories growing at a robust rate.

The medical regulatory framework often has to play, catch-up, to the current medical and economic realities of the day. It is invariably stretched and under-equipped to meet the onerous demands of growth. Aggressive price controls, a push towards bulk genericisation, encouragement for domestic manufacture, encouragement to multiple players who provide the playground for intense competition, benign patent regimes governed by convenience, compulsory licensing of drugs to meet medical exigencies and other similar initiatives characterize these markets.
Companies that have adapted to these conditions have not only gained market access but have been successful.

In spite of the above challenges the expansion markets are deep and offer scope for huge volumes. The task at hand and the humanitarian upside to alleviating pain and suffering are a huge bonus and a worthy cause that the industry has committed to.

The intense competition has been instrumental in pushing up the quality of local manufacturers to international standards. Their endeavour to serve a vibrant local market that demands high quality and complex medicines at affordable price points has allowed them to scale the value chain and develop critical mass with product quality matching international standards. The capability of these companies today, for high-quality frugal manufacture is exemplary and impressive. This has allowed them to export globally and play an increasingly bigger role in meeting the needs of the most developed and demanding markets of the world.

Emerging Markets: Africa, Middle East & Latino Nations

The medical challenges in these countries are huge and the solutions limited because of economic compulsions (barring the Middle East). Access to basic medication, largely for communicable diseases remains the biggest challenge. Tuberculosis, HIV-Aids are major problems in Sub Saharan Africa. Medical infrastructure and resources like doctors, nurses and paramedics are hopelessly inadequate and likely to remain so, in the visible future.
In this scenario, availability and access to affordable medication is a priority The Governments too are inviting investors to build local infrastructure but have been slow in attracting interest.

These markets are nascent and represent a huge opportunity for the industry to play a worthy role, especially as the extent of medical problems is huge. Regulation is largely non-existent but for the specifications instituted by the purchasers. As such, the opportunity to help governments to develop robust systems from scratch exists and consultancy to do this is the need of the hour.

South Africa and the Middle East are somewhat different in their challenges as their problems are partially assuaged because of their economic strength. South Africa presently imports HIV AIDS drugs from India and China due to monopolistic positions that have been investigated by the competition commission in a bid to lower prices.

In Latin America, there is a high penetration of OTC and Generic medications. As such the role of this Committee will be to provide advice to its members on how they can enter new markets, advocate positive changes and navigate regulation and policy guidelines, to expand their product portfolio and presence in different markets.