In my work developing and analysing our database of global drug prices, I frequently come across interesting pricing trends – particularly in the current economic climate. Recently, I looked into drug prices and trends in three emerging countries: Brazil, Russia and Turkey.
While pharmaceutical market values in developed countries are slowing down, an opposite trend is seen in emerging countries, and in this post I wanted to identify those countries presenting the strongest opportunities for pharmaceutical companies.
Drug Access in Emerging Markets
Unlike most developed countries - which provide universal health coverage – a limited part of the population in emerging countries has access to health services, including drug access. For instance, drugs are provided for free only for certain groups of the population in Brazil and Russia — mostly people living below the poverty line, the elderly, or people suffering from serious or chronic diseases. The rest of the population — the largest part — must purchase drugs privately. The situation is quite different in Turkey though, where universal health coverage is in place.
Comparing Innovative Drug Prices in Brazil, Russia, and Turkey
In the bar chart below, you’ll see I’ve compared prices of 10 innovative drugs available in the three countries (either prices of the same presentation were directly compared, or prices per unit per mcg or mg were used).
It was interesting to see that prices were lower in Turkey (9 out of the 10 cases studied) and usually higher in Brazil (8 out of the 10 cases). This tells us that when governments have to pay, stronger pressure is added on prices.
Source: PharmOnline International (POLI)
Drug Price Changes Next I looked at the price changes — another significant factor when assessing the opportunities — of all marketed drugs across the three countries. For instance, in Brazil, not only are prices of innovative drugs higher, but price increases are also common. Between January 2011 and January 2012, 94% of the drugs available during this period experienced a price increase at an average of 9%.
The situation is different in Russia even if patients there too have to purchase drugs privately: the government ensures that price increases are limited. In Turkey, price increases occur for a limited number of drugs — a trend that was quite different a couple of years ago. The bar chart below gives you the full picture:
Source: PharmOnline International (POLI)
Strong Pharma Market Opportunities in Brazil and Russia
As I’ve shown in the table below, overall I would say that general conditions are more favorable in Brazil and Russia, despite the fact that drug coverage is limited to a certain part of the population. Still, public health coverage is expanding and improving, bringing opportunities to drug companies. In Brazil notably, private health insurance is increasingly affordable to the middle and upper classes, improving drug access in the county. Additionally, prices in this country are higher and price increases are not only possible, but account for a large part of the drugs on the market.
Russia Drug Prices: High but Constant
Russia can also bring opportunities, notably in terms of innovative drugs, which are relatively highly priced in the country. Nevertheless, the government is adding pressure on prices: prices mainly remain constant and the government has recently implemented price controls in pharmacies (prices cannot exceed those set by the ministry of health).
Turkey: Low Prices and Fewer Opportunities
Finally, Turkey is the least attractive market despite the fact that most drugs are funded by the government. Drug prices are low, not only in comparison with the other markets studied, but also in comparison with the European markets. Additionally, discounts are applied to a drug price list, which means that prices are actually even lower. For many companies those discounts are becoming business critical.
The data from this research was taken from IHS PharmOnline International: a pharmaceutical pricing data and analysis tool providing coverage of all branded and generic drugs in over 36 developed and emerging markets.