Dr. Mike Schäfers, West Pharmaceutical Services
Dr. Mike Schäfers, West Pharmaceutical Services, stresses the importance of “local insight” when establishing a presence in new growth markets.
Emerging markets have played an increasingly important role in global pharmaceutical business strategies for the past decade. For many leading companies in the industry — ranging from drug manufacturers to packaging and administration systems providers — these markets have already proven to be an important area of growth. Market forecasts predict rapid growth rates for these regions for the coming years, providing significant sales opportunities for the predominantly Western-based pharmaceutical industry.
Drug manufacturers’ plans to expand into emerging markets — such as China, India, Brazil, MENA and Eastern Europe — have been executed upon to varying degrees of success. While many pharmaceutical companies have already established sales and manufacturing subsidiaries in these regions of growth, others are less determined and shy away from the immediately apparent hurdles. However, with the global scope of today’s pharmaceutical companies, expansion into newer economies seems almost inevitable.
While economies in North America and Europe show moderate demand increases, there is tremendous growth potential in pharmaceutical packaging from emerging markets across the globe. Beyond the sales potential, emerging markets are also experiencing an increase in highly educated talent, which will become an asset to pharmaceutical companies’ research and development strategies in the near future.
Furthermore, chronic diseases like diabetes are on the rise across the world and are creating demand for new, innovative therapeutic treatment options. This need is especially prevalent in India and China, which have the highest number of people with diabetes in the world. With greater numbers of patients affected by chronic diseases, pharmaceutical sales for those treatments (and their corresponding packaging and delivery systems) are expected to rise even further.
In order to benefit from the increased demand, it is important for companies to carefully plan and execute their global expansion strategies, otherwise cultural and administrative challenges can potentially lead to frustrating drawbacks. Every emerging market has unique characteristics to be managed — including product and quality requirements, product registration requirements and local competition —among others. Additionally, regulations in emerging markets are changing faster and more unpredictably than in North America and Europe, requiring a high level of specialised experts to ensure compliance.
Most emerging markets have, however, one thing in common: the demand for good product quality at an affordable price. With improved patient health and better access in mind, governments are working to make it easier for Western companies to establish a presence in their countries.
In order to avoid some of the pitfalls often related to emerging markets, it is essential to establish a network that helps you gain local insights. If possible, work with a local partner that can navigate the business culture of a given country. Also, rather than trying to ramp up business in different countries simultaneously, choose one subsidiary with a short-term plan for further presence in neighbouring countries. The learning curve can be steep, but with the right planning and a willingness to learn, an incremental approach is usually the most beneficial.
West established its first Asian manufacturing plant in 1983 in Singapore. From there, we gradually, step-by-step, expanded our network throughout the Asia-Pacific region with the help of local teams. Over the past three decades, we established sales offices in Australia, China and India, created two manufacturing plants in China and, most recently, opened a manufacturing facility in Sri City, India. The key to our successful expansion was the composition of the project teams, which were tasked with locating and establishing our new facilities in Asia. The team for the Sri City plant, for instance, consisted of West’s subject matter experts from India, Singapore, Germany and the US, reflecting the global strength and knowledge of our business.
In a global world it is important to transfer knowledge and competence across borders and learn to adapt to local circumstances. The knowledge transfer should not be a one-way street, but instead a two-way dialogue. Now, and in the decades to come, there will be a great deal for Western companies to learn and gain from working both in and with emerging markets.