Ithaka Life Sciences - Blog

Ithaka Life Sciences Ltd (Ithaka) is a provider of business advisory and interim management services to the life sciences sector.

Friday, 24 May 2013

Marketing biotech products in the developing world

It has been interesting over the last decade to follow the changing attitudes of pharmaceutical and life science companies to emerging country markets. At one time we saw pharmaceutical companies creating lots of bad press for themselves by apparently threatening to use their patents to prevent HIV patients in Africa and Asia from receiving low cost versions of their drugs. More recently there has been a sea change in perceptions as the recent economic crisis has forestalled revenue growth in the main pharmaceutical markets and emerging countries have become a principal opportunity for business growth.

GlaxoSmithKline (GSK) has been at the forefront of developments, presumably because the current CEO, Andrew Witty, spent much of his earlier career building business in the developing world. Some innovative approaches to developing business models in the emerging markets have been deployed. A recent example is the agreement with the UN-backed Global Alliance on Vaccines and Immunisation (Gavi) for GSK and Merck and to sell their competing cervical cancer vaccines, under a pioneering discounted bulk purchase deal.

In the first round of purchases Merck will provide an initial 2.4m doses of its human papillomavirus (HPV) vaccine Gardasil to be given to teenage girls, at $4.50 a dose. GSK will provide a further 180,000 doses of its Cervarix HPV vaccine at $4.60 per dose, compared with prices in richer countries of $100 or more. Initial supplies will go to Kenya, followed by Ghana, Laos, Madagascar, Malawi, Niger, Sierra Leone and Tanzania, and then Rwanda next year. Gavi hopes to vaccinate 30m girls in 40 countries by 2020.

 The deal reflects growing efforts to provide the world’s poor with more rapid access to innovative vaccines and drugs, reducing a historic lag of many years before they gain access to life-extending and life-saving health products.

Creative deals are also being done in the clinical diagnostics area. For example, in 2012, Cepheid reached agreement with Unitaid, the US Agency for International Development, and the Bill & Melinda Gates Foundation, to reduce the price of its Xpert MTB/RIF diagnostic test for multi-drug-resistant tuberculosis in resource-poor areas of the world. Unitaid is providing $30 million in funding to subsidise the price of the TB test. The price reduction will allow an "accelerated roll-out" of the test, and the agreement will apply to more than 145 purchasers in low- and middle-income countries, including those with a high burden of multi-drug-resistant TB.

The World Health Organization and the Stop TB partnership will administer the Unitaid grant and will help distribute Cepheid's test in approximately 20 countries. The programme generated revenues for Cepheid of $35 million in 2012.

There are lots of opportunities for biotech companies to develop business in emerging countries but it will require innovation in business models as well as in the products themselves. I’ve seen this myself at first hand on a recent business trip to India where I met pharmaceutical and diagnostics companies that are adopting very creative approaches to growing their businesses by providing products and services at prices that allow them to be accessed by huge numbers of low income families.

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At 17 September 2013 at 12:41 , Blogger Unknown said...

Thanks for sharing your views. Great blog here Marketing biotech products in the developing world .. It’s hard to find quality writing like yours these days. I really appreciate people like you. I would like to thank for the efforts you have put in writing this blog. I am hoping the same high-grade blog post from you in the upcoming days as well.
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