Pharmaceutical Technologist - September 2007 - (Page 16)

Van Liedekerke // overcome. There are few specialized venture capital funds to support start-up biopharmaceutical companies in Asia. These companies do not have access to a supportive stock market environment, such as in a junior market similar to London’s Alternative Investment Market. While domestic pharmaceutical companies in the region are hungry for investment, particularly for R&D, more than a third (36%) of them would consider selling all or part of their company to foreign investors to raise funds. Many are also looking towards initial public offers (IPOs) as a fundraising route and 36% have plans to raise capital from foreign capital markets. Key factors for market entry Market studies. It is essential to assess the size of the market, both now and in the future, in terms of volume, value, key product characteristics, growth rates, share of major players and product evaluation. Understanding the regulatory framework. Understanding the regulatory framework is crucial for Asian companies looking towards the EU, North America, Australia or Japan as it is for MNCs expanding in Asia. Companies need to understand key points of influence, as well as the operational impact of regulation. Competitor and target assessment. This involves mapping the performance of current players, profiling them, understanding their competitive strengths, interviewing their customers, and channelling partners to probe their strengths and weaknesses, assessing them as potential acquisition targets, and analysing their ownership and financial performance. Industry competition structure. Understanding capacity issues, cost structure issues and identifying the key success factors for market entry is paramount. Supply assessment. It is also essential to identify the availability of materials needed for supply, assess import alternatives, evaluate suppliers to understand the robustness of the future supply chain and understand the consequences of the associations being entered into. Location studies. This involves gathering and analysing data to select the optimal location, including analysis of the macroeconomic environment, the supplier base, any tax and incentive packages offered by development zones, and developing a shortlist of preferred locations. Risk reduction There are continuing concerns regarding intellectual property rights (IPRs), corruption and pricing. However, MNCs and domestic companies report progress towards risk reduction in the region. Three quarters (74%) of MNCs and 79% of domestic companies say they have seen improvement in IPR protection during the past 5 years, primarily as a result of introducing new IP laws underpinned by a stronger government emphasis on IPR protection and more rigorous applications of existing laws. More than half of domestic companies are worried about unfair competition from generic brands. Corruption is regarded as inescapable with 67% of companies saying that it is an endemic part of the landscape and they do not expect it to be eliminated soon. A changing business model Competition from generics and pricing pressures in the healthcare market continue to create pressures for cost reduction in all parts of the pharmaceutical value chain. Outsourcing to lower cost, but highly effective companies in Asia has become a common response to these pressures. A majority of companies (56%) said that most of the industry still does not see outsourcing in a sufficiently dynamic way and are missing opportunities for shared development, learning and improvement. So far, much of the focus has been on outsourcing drug manufacturing, but increasingly, companies are turning their attention to R&D and clinical trials. A new business model for MNCs is to focus on sales and marketing with other activities outsourced. As the industry moves to this future model, strategic partnerships or long-term partnerships are the preferred route, favoured by 82% of the multinational pharmaceutical companies we surveyed who outsource. Conclusions The demand for drugs in the developing world is continuously growing and, as countries in the region grow wealthier, Asia will become the biggest pharmaceuticals market in the world. A presence in these markets today gives companies market knowledge and the opportunity to adjust to the environment and the opportunity to adjust to the environment. Each market is at a different stage of development, has different needs, and requires different company approaches and tactics. Companies that use outsourcing in the right way, and at the right pace, look set to get ahead of the game. Some are already moving towards setting up a 16 September 2007 l pharmaceutical technologist

Table of Contents Feed for the Digital Edition of Pharmaceutical Technologist - September 2007

Contents Editor’s Comment News Morpheus Market Watch CPhI Worldwide 2007 Compliant Pharmaceutical Labelling Q&A

Pharmaceutical Technologist - September 2007

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.