Emerging markets series Benchmarking key countries Brazil, Russia, India, China and Turkey

CHAPTER 1 EXECUTIVE SUMMARY 4
Scope of the report 4
IMS caveat 4
Scorecard for analyzed countries 5
Patient potential in key emerging markets 6
Socioeconomic trends and business environment in key emerging markets 6
Health system dynamics 6
Pricing and reimbursement environment 7
Regulatory environment in key emerging markets-uncertainties exist but do not present major hurdles 8
Pharmaceutical market dynamics 8
CHAPTER 2 THE PHARMACEUTICAL MARKET IN BRAZIL 13
Tight pricing control is a downside but the overall environment and healthcare provision is improving 13
Demographic trends in Brazil 15
Disease burden is similar to the Western countries 17
Socioeconomic environment in Brazil - a land of inequality 18
Political climate is stable 18
Brazilian economy is growing at a moderate but steady level 19
Regional differences are great 21
Mercosur-the common market of South America 21
There is an abundant semi-skilled and unskilled workforce but the educational level is low 223
Business environment in Brazil-regulation and bureaucracy are considerable 22
Business entities 22
Taxation system is complex 23
Foreign direct investment in Brazil is growing 24
Importation is costly and laborious but export is incentivized 25
The healthcare system in Brazil is based on a public-private mix 26
Healthcare expenditure in Brazil 27
The public sector - the Unified Health System (SUS) 27
The private sector is restricted to the rich 28
After years of focus on hospital care, primary care is now predominant 30
Regulatory issues in Brazil 32
Intellectual property protection: long delays exist 32
Compulsory licenses on HIV/AIDS drugs were used only as a threat until May 2007 33
Registration of drugs-regulatory requirements are tightening 34
Imported pharmaceuticals have to be registered with ANVISA 36
Counterfeit drugs present a problem but a crackdown has started 36
Pricing and reimbursement of drugs in Brazil 37
Multiple mechanisms ensure tight price control on pharmaceuticals 37
Prices of marketed pharmaceuticals are controlled through price freezes and increases 38
Anti-retroviral drugs are priced low 40
Reimbursement is limited but is expected to improve 41
Patients are turning to courts to ensure they receive new treatments 45
Pharmaceutical market dynamics in Brazil 47
Distribution: a highly fragmented market 49
Brazil has a high number of pharmacies 50
Top manufacturers on the Brazilian retail market 51
Top ATC groups by sales value on the Brazilian retail pharmaceutical market 52
Top brands on the Brazilian retail market 54
Hospital sales of pharmaceuticals in Brazil 55
Advertising, marketing and sales of drugs 56
Major foreign pharmaceutical companies in Brazil 56
Sanofi-Aventis 57
Novartis 57
Bayer Schering 57
Pfizer 58
Boehringer-Ingelheim 58
It is difficult for multinational companies to enter the generics market 59
Major domestic pharmaceutical companies in Brazil 59
The generics market is dominated by a small number of leading companies 59
EMS 60
Medley 60
Eurofarma 61
Group Castro Marques (Biolab) 61
Ache Biosintetica 61
Drug manufacturing in Brazil 62
Multinational companies are ramping up export of drugs from Brazil but domestic companies are lagging behind 63
State-owned drug manufacturing is focused on antiretroviral drugs for HIV/AIDS 63
Investment in R&D in Brazil is growing 65
Phytopharmaceuticals-a new opportunity for Brazilian companies? 66
Clinical trials in Brazil 66
CHAPTER 3 THE PHARMACEUTICAL MARKET IN RUSSIA 68
The new reimbursement system and growing out-of-pocket spend have resulted in fast growth of the Russian pharmaceutical market 68
Demographic trends in Russia 71
Basic facts 71
Life expectancy is surprisingly low 71
Ageing and depopulation are resulting from declining birth rates 72
Disease burden in Russia 73
Socioeconomic environment in Russia 74
Political climate in Russia 74
Russia remains a centralized country with the center of power in Moscow 74
Economic environment in Russia: GDP and disposable income are growing 75
The Russian economy is trying to break away from overdependence on natural resources and is diversifying 76
Large regional differences exist 76
Accession to WTO is expected to bring positive changes 77
The labor market in Russia 78
The population is highly educated but the output is low 78
Looming labor shortage 78
Business environment in Russia-corruption and lack of transparency create difficulties 79
Foreign direct investment in Russia is mostly in the natural resource industry 79
Corruption is widespread 80
Excessive bureaucracy-red tape 80
Registration of a legal entity in Russia is a long and costly procedure 80
Taxation differs for foreign companies 81
Pharmaceuticals are subject to a reduced VAT rate of 10% 82
Customs duties are slowly becoming in line with the WTO 82
Healthcare system in Russia 84
Mandatory health insurance was introduced in 1991 85
Certain diseases have become a priority of the Russian government 87
The healthcare reform of 1991 signaled the privatization of healthcare 88
Healthcare expenditure is below the level of Western EU countries 89
Increased funding for healthcare is one of the priorities of the government 91
Primary versus hospital healthcare in Russia-focus on hospital care 91
'Under the table' expenditure is high in Russia 92
Access to healthcare is especially problematic for the poor population 93
Companies offering private health insurance are scarce and focus on the top end of the market 93
Regulatory issues in Russia 94
Intellectual property protection-several key issues remain unresolved 94
Patents ( insufficient enforceability of patent laws is a problem 94
Data exclusivity remains an unresolved issue 95
Drug counterfeiting in Russia 96
Registration of drugs in Russia 97
Certification of drugs is cumbersome but is used to detect counterfeit drugs 98
A large proportion of drugs are sold without prescription 99
Pricing and reimbursement of drugs in Russia 100
Pricing of drugs-few restrictions exist 100
Reimbursement-federal and regional lists exist 101
Certain drugs used in hospitals are funded by regional health budgets 102
Introduction of the federal reimbursement system DLO was a major change 102
The DLO program ( growing pains? 103
Drug price cuts and changes to the reimbursement list failed to keep DLO spending within the allocated budget 105
Insufficient planning for demand is putting a strain on the DLO program 107
State is becoming a bigger purchaser of drugs 108
The future of DLO program 108
DLO will be split into two programs in 2008 110
Pharmaceutical market dynamics in Russia 111
The distribution sector is fragmented but is consolidating 112
Foreign investment in the sector is increasing 113
The pharmacy networks sector is fragmented 114
Global pharma lead the Russian pharmaceutical market by sales value 117
Generics dominate the market in volume terms but account for only a fraction of the sales value 118
The retail market segment is growing at a steady rate 119
Top brands in the retail market segment in Russia 119
Top ATC groups by sales in the retail sector in Russia 121
Top manufacturers on the Russian retail market 123
The hospital market segment in Russia 125
Multinational companies dominate the hospital segment 125
Systemic antibacterials are the best selling therapeutic class 127
Consumption of expensive medicines is increasing in the hospital segment 128
The DLO program is one of the major growth drivers of the Russian pharmaceutical market but faces stagnation 130
Antineoplastic and immunomodulating agents were the best selling group in the DLO program in 2006 131
DLO has failed to increase the share of domestic producers and foreign manufacturers dominate 133
The top brands list in the DLO segment in 2006 is dominated by foreign brands 136
The establishment of the DLO drove the growth of the oncology sector 137
The DLO segment faces stagnation in 2007 139
Drugs can be imported into Russia through different channels 140
Top ATC groups of imported drugs 144
Top imported brands in Russia 145
Top foreign manufacturers by sales of imported drugs 147
The Russian pharmaceutical market will continue to grow 148
Export of pharmaceuticals from Russia is low 148
Launch, marketing and branding in Russia 149
Branding is important in Russia 149
Advertising of pharmaceuticals in Russia 150
Merck's co-marketing deal with Otechestvennie Lekarstva ( a first of its kind 151
Innovative drugs have the best market potential in Russia 151
Market entry strategies: acquiring a domestic producer? 151
Major foreign pharmaceutical companies on the Russian market 152
Sanofi-Aventis is the top foreign pharmaceutical company in Russia 152
Novartis's presence in Russia is growing 152
Servier 152
Roche 153
Gedeon Richter 153
Nycomed 154
Eli Lilly 154
Novo Nordisk 154
Bayer Schering 155
Actavis has strengthened its position in the Russian market through the acquisition of ZIO Zdorovie 155
Stada has increased its presence in the Russian market through three different entities 156
Major domestic pharmaceutical companies on the Russian market 156
Pharmstandard 159
Veropharm 159
Domestic producers will grow 160
Innovation is lagging behind the West 160
Manufacturing drugs in Russia 161
Clinical trials in Russia: a growing opportunity 162
CHAPTER 4 THE PHARMACEUTICAL MARKET IN INDIA 166
Improved patent protection environment fails to deliver on its promise but economic growth keeps the potential alive 166
Demographic trends in India: a trend toward ageing and urban population growth 169
Disease burden in India 170
Socioeconomic environment in India 172
Political climate in India - open to economic liberalization 172
Economic growth is steady and is concentrated in mid-sized and small urban centers 173
Poverty is declining for the first time since independence 174
Middle class income population is booming 175
Inadequate infrastructure is a major obstacle to faster growth 176
India is a member of the World Trade Organization 177
India has a high number of educated scientists 178
Business environment in India 178
India is opening up to Foreign Direct Investment 178
Legal entities in India 179
Corporate taxes in India are high but R&D incentives are given 180
Indirect taxes are very high in India and create a barrier for foreign companies 181
The central excise duty charging system was changed in 2005 181
Value added tax (VAT) was introduced in 2005 in India 182
Import tariffs are high in India 183
Export is encouraged through subsidies and special economic zones 183
Transparency and corruption in India 184
Healthcare system in India 184
Public health expenditure is low in India 185
Alternative medicine-AYUSH 186
Only a small fraction of the population has social security or private health insurance 188
Access to healthcare is poor especially in rural regions 190
Public health programs in India 192
Regulatory issues in India 193
Intellectual property protection in India is insufficient 193
Case study: Glivec was refused patent protection on the basis that incremental innovation is not patentable 194
Case study: AstraZeneca's patent application for Iressa was also rejected 195
Pfizer's maraviroc patent was granted - a change of tide for IP environment 196
India is benefiting from compulsory licenses for HIV/AIDS drugs in other countries 196
India is a major source of counterfeit drugs 197
Registration of drugs in India is straightforward 197
Importation of pharmaceuticals into India 200
Pricing and reimbursement of drugs in India 201
Control on drug pricing is getting tighter and is threatening to reduce the growth of the Indian market 201
Prices of certain pharmaceuticals in India are subject to price controls 201
Prices of drugs not subject to price control are being increasingly monitored and capped 204
Only a small number of drugs in India are reimbursed 205
Pharmaceutical market dynamics in India 205
The distribution sector in India is highly fragmented 206
Retail pharmacy chains are starting to appear 208
Top manufacturers on the Indian retail market-domestic companies dominate 209
Anti-infectives and gastrointestinal drugs hold almost 50% of the total market 211
Top brands on the Indian pharmaceutical market 214
Export of drugs from India is growing 215
Major foreign pharmaceutical companies in India 215
GlaxoSmithKline 216
Sanofi-Aventis 217
Abbott Laboratories 218
Pfizer 218
Major domestic pharmaceutical companies in India 219
Ranbaxy 219
Cipla 220
Nicholas Piramal 220
Zydus Cadila 221
Sun Pharma 221
Alkem Laboratories 222
Lupin 222
Dr Reddy's 222
India is a major hub of drug manufacturing activity 223
India is developing its capacity for development and manufacturing of biosimilars 224
R&D activities are increasing in India 225
Clinical trials in India - a growing opportunity 227
CHAPTER 5 THE PHARMACEUTICAL MARKET IN CHINA 231
A growing economy is fuelling demand and its R&D potential is attracting investment 231
Demographic trends-the world's most populous country is ageing 233
Disease burden in China 234
Socioeconomic environment in China 235
Political climate-stable and supporting economic growth 235
China's economy continues to grow but remains over-reliant on exports 236
Fast economic growth has fueled China's energy demand 238
China's middle class is growing 238
China - a good education system 239
Business environment in China 239
Foreign direct investment is contributing to economic growth 239