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.
Labels: Biotech, business models, developing world