Exploring emerging markets

Two key emerging markets were the focus of in-depth features on The Pharma Letter this week. Both India and Russia are poised to become increasingly important to the global pharmaceutical market in the coming year, yet they both come with associated risks and challenges.

Indian spending to reach $1 trillion

The Indian government has decided to continue with the policy of allowing 100% foreign direct investment (FDI) in existing pharmaceutical firms. It means foreign firms are free to invest up to 100% in greenfield units in India, giving them wider access to the Indian market. Pharmaceutical is the seventh largest sector of FDI inflows and $7.9 billion has come into India since 2000. Despite this level of investment, the focus has been on moving clinical trials and production to the country, instead of developing new drugs there. For domestic companies the focus is still on producing generic equivalents of major drugs in order to keep the cost down for the populous country. But India’s economy is continuing to grow and increasing access to medicines for the middle classes is making it an exciting prospect for companies looking to invest. Spending on medicines is expected to reach the $1 trillion threshold this year. The combination of relaxed FDI regulations with increased spending power means that global drug companies are expected to head to India this year – possibly to research potential acquisitions. What this will mean for the future of the county’s economy, pharma sector and health care remains to be seen.