Emerging and trailblazing
The breadth of content in this first edition of the Scrip Asia 100 reflects the diversity of Asia itself. From afar, the region might appear to be a bloc of similar countries and cultures. But anyone even superficially familiar with this part of the world knows that it cannot be viewed as a homogenous whole.
Fortunately, the smart pharma and biotech companies, be they small and privately held or huge publicly listed conglomerates, have come to recognise as much. They know that to do successful business in Asia means being a polyglot, flexible operation able quickly to meet the varying demands of a highly diverse set of languages, cultures and healthcare needs and systems.
For example, the comprehensive reimbursement coverage provided by the national health insurance schemes of Japan, South Korea and Taiwan creates a vastly different set of considerations and possibilities compared with the predominantly out-of-pocket healthcare systems of places like Indonesia.
Practically, this might mean that your new and expensive targeted oncology drug could be widely adopted in one market, but face a severely limited opportunity in another. Portfolios and marketing practices - and sometimes prices - therefore need to be adjusted accordingly.
The attractions of Asia - which for the purposes of this analysis excludes the Indian subcontinent and Australia/New Zealand - are nothing new to the R&D-based pharma industry, of course. Most multinationals have had subsidiary operations throughout the region for many years, and some are now reaping considerable rewards from a long-standing presence and local knowledge in larger markets such as China.
But there has nevertheless been a marked increase in interest in Asia over the past few years, as part of the "pharmerging markets" mantra which seems to be heard ever more loudly throughout the prescription drugs sector. The region forms a critical part of efforts to build up sales in the non-traditional, but fast-growing, markets of the world, as patent protection and sales of blockbuster drugs dry up in the west.
Hard evidence of this shift has come in many forms, including the now near simultaneous development of many new drugs in Asia with the US and Europe, and several $100 million dollar level investments in R&D facilities in China over the past few years. While this may not be a huge amount in the grand scheme of big pharma and is often spread over several years, one can only assume that publicly held companies do some serious homework before committing such substantial amounts.
The region has also seen a sharp increase in the amount of clinical development work being carried out. This not only allows parallel global programmes, but also reflects the cost and patient availability advantages offered by many sites in Asia, and the support being provided by governments to develop clinical infrastructure.
In terms of future prospects, China remains the big prize in the region, outside of Japan of course, with IMS predicting that the country will become the third-largest pharma market worldwide next year. China was still down in eighth position only four years ago, its meteoric rise helped by phenomenal growth rates that reached 26% in 2008.
Difficult choices
But despite all the promise, the region still presents some tricky choices for senior management. How on earth can you effectively manage such a large and varied part of your global operations? How can medical needs be met and sales optimised across such a broad variety of needs and medical systems?
The serious political instability seen recently in Thailand, increasing upward pressure on base wage rates in China, and moves to restrict promotional practices in South Korea have also shown that nobody should expect things to be straightforward when it comes to the wider operating environment.
There have been many approaches to managing the region, some more successful than others. In my many years of covering Asia for Scrip I've heard more than a few horror stories from local managers having to cope with a regional head based thousands of miles away, who they can't even talk to half of the time because of the time difference.
While some have tried to manage from afar, others have attempted to lump Asia together with other, very different, parts of the world, such as the Middle East or Africa.
Fortunately, many have now settled on a model which usually includes a regional head based in Asia, often in Singapore, while splitting off and managing separately one or two other major markets. Japan has always been an outlier in this respect because of its size and stand-alone nature, and the signs are that China is now going the same way.
Naturally, Asia is not all about big pharma, and the Scrip Asia 100 also profiles several interesting bioventures, in an attempt to reflect the increasingly vibrant innovative R&D being conducted around the region.
The Scrip 100 itself has recognised Asia as a hotbed of pharmaceutical research since its launch in 2005. Indeed, innovation in emerging markets, including those in Asia, was a recurring and powerful theme running throughout the 2010 Scrip 100, as we illustrated on its front cover and again on this one. Here, the set of questions is obviously very different: how can we best tap into locally available expertise to discover and develop new molecules? How can we improve the quality of our APIs to increase exports to developed markets? What government incentives are available to help us develop our business?
What is certainly clear is that the opportunities for partnerships and alliances across Asia are vast. This applies equally to the multinational looking to build up its products in a particular market, or to an Asian start-up looking to do a global deal for its lead pipeline candidate.
Our hope is that the Scrip Asia 100 will play its part in helping to improve understanding of this critical part of the world, and maybe even prompt some discussions between potential partners.
Ian Haydock is the Asia editor of Scrip, for which he has just started a new fortnightly column, Asia Beat.
