PM360 May 2010

COVER STORY

BY ANGELA MICCOLI PRESIDENT, AMERICAS, CEGEDIM DENDRITE

AS EMERGING COUNTRIES LIKE BRAZIL, RUSSIA, INDIA, AND CHINA (BRIC) ZOOM into providing their populations with more efficient and effective healthcare, it is evident these countries exhibit opportunities for local and global life sciences companies. While each country has a different set of challenges based on cultural and economic differences, BRIC countries often share similar challenges when it comes to how medical care is offered locally. For example, for life sciences companies, education and an increased focus on preventive medicine showcases the opportunity for growth, as well as a trend toward increasing medical care and drug access for all citizens. Shared challenges for life sciences companies also include inaccurate contact data for stakeholders, healthcare infrastructure inefficiencies, high sales representative turnover, and a lack of qualified talent to serve as sales representatives and Key Account Managers.

Currently, global life sciences companies are working through the challenges and rewards of operating in BRIC countries. Many companies have made a significant monetary and time investment in these countries to ensure they understand, and can quickly react to, any rising issues. As a result, these companies become entrenched in BRIC, learning about the requirements of local governments and fully understanding what is needed to reach regional stakeholders to ensure they are aware of drugs that can make a difference in patients’ lives. This article examines each BRIC country and discusses the trends and opportunities available today.

BRAZIL
Unique to Brazil, life sciences companies are governed by ANVISA (Brazil National Health Vigilance Agency), which presents a strong boundary related to pricing. Life sciences companies must obey the price limits set forth by ANVISA, which is becoming stricter on pharmaceutical regulation. ANVISA is also responsible for controlling all product positioning, which creates another challenge for companies to manage. Key decision makers such as the government, pharmaceutical companies, and health insurance companies are constantly working to stay ahead of the curve and provide superior healthcare to the Brazilian community. Pharmaceutical companies— large and small—working in Brazil are achieving success if they develop good negotiating terms with big drug distributors. It is a common practice for Brazilian patients to heed the advice of pharmacists regarding prescription drugs, as opposed to that of the prescriber. The only restriction in place prohibiting this practice is for psychiatric drugs prescribed by mental healthcare specialists.

In addition to having strong relationships with drug distributors and pharmacists, pharmaceutical sales reps must also maintain strong relationships with physicians. No particular credentials are required to be a sales rep in Brazil, although many are physicians, as is the case in other emerging markets. There are no restrictions on the number of visits a sales rep can make to a doctor’s office, and doctors appreciate the visits because of the samples they receive. Physicians may not accept material gifts or trips from pharmaceutical sales reps, as was the custom in the past. Doctors are well respected in Brazil, although many need to work in multiple facilities to make a satisfactory income. Only the previously wealthy can afford to operate private practices.

Similar to the population of the United States, Brazilians are increasingly suffering from hypertension and diabetes—both complications of obesity and lack of patient education. Therefore, the Brazilian government, with the help of healthcare providers and pharmaceutical companies, has created two education programs offering education and preventive medical care to consumers. To help bolster this movement toward preventive healthcare and reliance on prescribers, the Brazilian government has removed OTC medicines from consumers’ reach. To obtain any drug with or without a prescription, patients must ask a pharmacist. It’s up to the pharmacists to help educate the patients.

RUSSIA
Like many other emerging countries, Russia deals with high instances of government dependency and an escalating death rate. The low life expectancy can be attributed to cardiovascular disease, where death from heart failure occurs four times more often than in Western Europe. As a result, there are opportunities for life sciences companies to increase research, development, and access to prescription drugs, as well as education in regard to dietary measures patients can take prior to the onset of heart disease.

The Russian government has increased healthcare spending in the past three years and is expected to increase it again during 2010. Forty percent of Russia’s healthcare expenses are out-of-pocket, resulting in opportunities for growth in the retail market.

There are not enough drugstores to serve the population effectively because of the vast geographic size of Russia and the population’s disbursement in rural areas. Additionally, drug formulas are not strictly protected by patents. This causes a domino effect. First, it is not easy to sell new, innovative products in most therapeutic categories due to the lack of patent protection and because patients would likely have to pay out of their own pockets. As a result, at least 60% to 70% of all drugs on the market are sold as generics. This is compounded by the fact that local drug production is not well developed. Therefore, Russia imports at least 70% of its prescription and OTC drugs, creating the opportunity for a healthy growth for these products. For example, nonprescription drug sales consist of 50% of retail sales, which is much higher in comparison to the EU. However, there is a government initiative called Pharma 2020 that aims to have at least 50% of drugs made in Russia and 25% made by a Russian company.

Continuing medical education needs some improvements. Physicians are not receiving the most current information on new techniques and procedures. Depending on the type of practice, most physicians work at state hospitals or private clinics. Many physicians have left the profession altogether due to the extremely low compensation for this important role, and they generally become medical representatives for pharmaceutical companies. In fact, 98% of all sales reps in Russia are former practicing physicians. This creates a highly educated talent pool that understands the need for patient education and relationship development with stakeholders. Medical representatives make 10 to 12 calls per day visiting eight physicians and two to four pharmacies. The representatives also travel a lot due to having responsibility for large territories and try to employ smart targeting to make their routes more effective. Physicians prefer to speak to medical reps as many of them were colleagues at one point and their bonds are strong.

INDIA
Since 2005, India has gone through a major shift in relation to the access, variety, and abundance of prescription and OTC drugs that are available to its one billion inhabitants. The learning curve for the government and citizens is starting to flatten and the realization that lifesaving therapies are more widely available has opened this market to the world. Many initiatives impact the local market, including:

• Entry of new Multi-National Companies (MNCs)
• Launch of patented products by existing MNCs
• A growth spurt in in-licensing activities, both among Indian companies and MNCs
• Increased R&D investment by local companies
• Fundraising conducted by local companies through Global Depository Receipts (GDR) or Foreign Currency Convertible Bonds (FCCB) to finance investments
• Emergence of the hospital sector

Currently, there are many challenges within the Indian pharmaceutical market. Looking at it by the numbers, according to the McKinsey report India Pharma 2015—Unlocking the Potential of the Indian Pharmaceuticals Market:

• There are approximately 60,000 unionized distributors and wholesalers
• There are approximately 4,500 unionized chemists in India
• Between 18,000 and 20,000 hospitals account for just 12% of the total market
• There are only 600,000 doctors to serve the entire population

On the flip side, the apparent trend for the government to increase healthcare access is on track to reach 80% of the entire population in the next 15 to 20 years. Currently, there are more than 100 million untreated patients in rural India, according to the McKinsey report.

Opportunities are bright. The local market has received a massive supplementary boost from the rise of India’s new prosperous consumers who lead more Western-style lives and are seeking modern drugs to take care of persistent sicknesses that haven’t been treated in the past. Additionally, pharmaceutical companies are realizing that brands sold to treat ordinary ailments like the common cold are increasingly being acquired over the counter. Therefore, pharmaceutical companies are taking advantage by developing these brands into household names and expanding their support straight to the consumer.

A large (top 10) pharmaceutical company in India could easily have a field force of 3,000 to 4,000 reps and managers. Sales reps are responsible for servicing both doctors and channel partners (distributors, wholesalers, and pharmacists). They visit 12 to 15 private practice physicians, as well as channel partners and in-hospital physicians, as part of a daily tour plan. As in other countries, India’s physicians are trending toward giving less and less time to sales calls, leading to a degree of frustration for sales reps and an attrition rate as high as 30% per year.

Sales forces are also dealing with manual and cumbersome administrative systems and processes that do not facilitate optimal efficiency levels in sales teams. For example, there is an absence of analysis on the amount of time invested on profitable and not-so-profitable customers and lack of time-share planning toward developing a customer base for future markets. Furthermore, the pharmaceutical industry as a whole faces challenges with respect to ethical marketing and promotional practices.

CHINA
As China’s pharmaceutical market advances, its global footprint and influence become clearer. It’s expected that China will be the world’s third-largest pharmaceutical market within five years. For many MNCs, China is becoming the leading overseas market. While China is dealing with a medically underserved rural population, the Chinese Ministry of Health is working to bridge the gap in the healthcare sector by opening more avenues for domestic production and competition, while providing increased access to education. At the same time, the government has welcomed a mix of foreign investment and encouraged the combination of local industry with international companies. Therefore, China has adopted industrial and regulatory policies that favor research-based MNCs and large domestic enterprises.

For a pharmaceutical company to sell a drug in China, that drug must earn a spot on the essential drug list, or EDL. The sales reps responsible for making this happen are actually Key Account Managers who build relationships with the government and hospital officials responsible for making the decision. The skill of influencing institutional key decision makers is one that requires extensive training and practice, often taking years to master.

In addition to Key Account Managers, pharmaceutical companies doing business in China have teams of traditional sales reps who detail physicians. Turnover of sales reps is high—by some estimates 30%—due to the rapid growth of the industry and the ensuing large number of “better” opportunities. Yet because of the sheer size and population of China, it’s estimated that only 3% to 5% of the country’s physicians are detailed by pharmaceutical sales reps. Chinese physicians prefer face-to-face inter- action, particularly during the introductory phase, but may be open to other forms of communication once the relationship has been established. As in other countries, there are restrictions on where and how frequently sales reps can visit physicians. Some hospitals do not permit sales reps to detail physicians on premises.

Pharmaceutical sales reps in the rural sections of China also fill the role of educator or Medical Science Liaison (MSL). Many physicians in remote areas have had only a few years of formal medical training, so they look to sales reps for valuable information on therapies. With increased Internet availability, some of these physicians can communicate electronically with sales reps and can participate in online medical training courses.

In an effort to provide quality healthcare through- out the country, the Chinese government tries to rotate physicians between the Tier 1, Tier 2, and Tier 3 cities (large, midsize, and remote, respectively), sometimes offering financial incentives to the doctors. For this reason, it is difficult for pharmaceutical companies to maintain an accurate database of physicians. This situation of rotation also requires great flexibility on the part of sales reps, who must deal with individuals with diverse customs and practices.

CONCLUSION
One constant remains clear for life sciences companies building opportunities everywhere. Accurate contact data opens the door to building long-lasting and trusting relationships no matter where you are. Cegedim Dendrite provides up-to-date healthcare professional databases, as well as flexible and scalable Customer Relationship Management (CRM) solutions, in all the BRIC countries and nearly every region of the world, giving both MNCs and local life sciences companies an advantage in commercializing their products.

As life sciences companies navigate the challenges of the BRIC countries, they need partners and tools to help them realize their goals in these exciting new markets. Cegedim Dendrite is in the business of facilitating opportunities to grow and succeed. With global reach and local knowledge, the company is proud to be involved in improving healthcare in these regions.

Angela Miccoli is the President, Americas, for Cegedim Dendrite, the world’s leading provider of Customer Relationship Management, Regulatory Compliance, and Marketing and Data solutions for the Life Sciences industry. Miccoli has been with the Cegedim Group for more than 16 years in senior sales and business development positions. She most recently led global CRM sales activities, delivering a growth rate of 10% for 2009. She can be reached at angela.miccoli@cegedimdendrite.com