Asia-Pacific – pharma’s new centre of gravity?
pharmafile | September 18, 2012 | Feature | Business Services, Manufacturing and Production, Medical Communications, Research and Development, Sales and Marketing | Asia-Pacific, AstraZeneca
A high-growth region for the pharmaceutical industry, Asia-Pacific incorporates a vast geography with a $20 trillion economy, and is home to over three billion people.
Today, the five countries in the region – China, Japan, India, Australia and Korea – rank among the Top 15 economies in the world.
The pharmaceutical market in the region has been growing robustly, producing a compound annual growth rate (CAGR) of around 9% over the 2006-2011 period to approximately $242 billion in 2011.
“This is expected to maintain a healthy growth of about 8% a year – or 13%, excluding Japan – to reach approximately $333 billion by 2015,” says Mark Mallon, regional vice president Asia-Pacific and president China, AstraZeneca.
Mallon adds: “The Asia-Pacific region will be the single largest contributor to global pharmaceutical market growth, accounting for approximately 46% of value growth through 2015.”
The Asia-Pacific market is far from homogenous, however. It indicates highly differentiated market growth across the region, ranging from markets with strong double-digit growth potential – such as China, Vietnam, India, Indonesia – to more mature markets with growth in the low single digits, which include Japan, Australia and Taiwan.
Key drivers
Today, the two key drivers for emerging market growth are economic development and growing demand for healthcare from the populations of the countries that make up this diverse region.
“People in emerging markets are living longer, facing more chronic diseases and have a higher expectation for access to medical care,” Mallon says. “Together, these factors should keep growth strong in many markets for the next few years. Elsewhere around the world, all markets have their own sets of challenges, including the impact of generic entries, government price controls and the ongoing global economic crisis. And, while emerging markets are still growing, we are not seeing the 15-20% growth that they enjoyed in years past,” he adds.
At present, the region’s pharma market is being shaped by powerful demographic tides, including urbanisation, changing lifestyles, and an ageing population, as well as improvements in medical infrastructure and an increased ability to pay for care.
In addition, governments in several countries are investing significantly to expand access to healthcare. “For example, China has undertaken healthcare reform aiming to provide universal coverage and improve patient access to care,” Mallon adds.
Looking to the future, the demand for better healthcare should continue to grow in the region, even if the double-digit market growth seen in years past is no longer commonplace.
Competition in the region has also intensified as major pharma companies continue to grow their investments in Asia-Pacific across sales and marketing, research and development and manufacturing. “Competition from generic firms has also increased, both in established and emerging markets,” Mallon notes.
The sector now sees Asia-Pacific as the key growth opportunity in the short-medium term, leading to an increase in investments by companies eager to capture that growth. “At the same time, the growth in the pharma sector is putting payors under pressure to increase adoption of cheaper generic alternatives, and to reduce prices through a variety of measures,” he adds.
Asia-Pacific is different
Given the Asian market’s continuing growth, sales and marketing is a consistent focus area. As the likelihood of intensifying competition across the region increases, sales and marketing is expected to play a vital role in coming years.
Marketing in Asia-Pacific differs from the west in terms of both know-how and marketing styles, however, say industry experts.
“There are certainly cultural differences, plus differences in sales and marketing delivery and healthcare environments – but the basic objective remains the same: it is still about developing and maintaining great relationships that exceed customer needs for the benefits of their patients,” Mallon says.
Mallon was previously the global head of marketing and sales operations at AstraZeneca, and has brought this experience with him to his role in China and the wider Asia-Pacific region. The aim is for sales people to develop relationships with physicians, rather than them being visited by a large number of different reps.
“I can’t stress enough the importance of innovation; innovation is not only limited to new technologies and channels, but there is a tremendous amount of innovation in developing the kind of content that exceeds customer needs,” he says.
While some innovation developments have been borrowed from the west, creative minds in the Asia-Pacific region are leveraging new technology tools. At AstraZeneca, these range from expanded iPad apps to interactive detailing, improved patient guidelines and more robust information channels for physicians.
Sales and marketing challenges
Sales and marketing in this industry also varies, depending on the size and development of the location. “Outside of main hubs such as Shanghai, it is about face-to-face detailing, which comes at a huge cost,” says Susan MacDonald, general manager, Singapore, for life science executive search specialists RSA.
Prices are also being squeezed in China, MacDonald says, noting that this indicates that the margins to support massive sales force infrastructures are unlikely to exist long-term. Finding sales and marketing talent is another challenge, given the tendency for job-hopping in the region.
“There’s a great demand for staff, because people tend to move through roles quite quickly,” she says. “Attrition rates are still a challenge for companies not only in China, but also in Singapore and Hong Kong.”
Shanghai, Singapore and Hong Kong are also no longer the hardship posting that they might have been considered to be some 10-15 years ago, nor are they locations where green expatriates can cut their teeth on strategic marketing roles. “Today, they are absolutely key markets in regional headquarters.”
One growing pool of candidates consists of Asians who initially studied at home before moving overseas to complete further degrees, and set their foot on career ladders in locations such as the US, before returning to their home countries to advance their careers.
According to MacDonald, this makes them very attractive to employers, especially those in Singapore and Hong Kong. “China has changed so rapidly, however, that someone who has been away for 10 years will have challenges integrating as it has changed so much.”
Ultimately, Asia offers opportunities for pharma marketing professionals to be creative, she says. “It’s recognised that the markets are different – and that they are not ‘one size fits all’.”
Continuing employment openings
Overall, employment opportunities within the Asia pharma sector are strong thanks to continuing market growth, particularly in the key hubs of Shanghai, Hong Kong and Singapore.
The market has, however, levelled off from its previous meteoric growth, with Asia starting to feel the effects of the economic slowdown in North America and Europe. That said, the pharma industry remains focused on investing and scaling-up its presence throughout Asia-Pacific, says Gregory Lovas, partner for recruitment specialists CT Partners’ life sciences practice in Asia-Pacific. “Many organisations, even large global players, are entering markets such as China or Taiwan for the first time,” he says.
Individuals with experience in medical and regulatory affairs, or with the ability to register products and initiate approval process, are in strong demand.
“For organisations to have the opportunity to start developing a greater presence, they have to invest a lot of money in bringing in talent to get products on the market themselves…and then worry about commercialising from there,” Lovas says.
This has contributed to the tremendous need for strong market-facing talent, particularly in China. “China is the dominant player, given the size and market potential of this market,” he adds.
Another significant trend to emerge over the last three to five years is for global pharmaceuticals to move significant, sizeable R&D resources to locations such as Shanghai.
“This is because China is or soon will be the largest market in the world,” Lovas says. “Developing products in China, and having as deep and close an understanding of how to work within and develop that market, can only be helped by being in the market itself.”
Local strengths in demand
For local roles across the board, the demand for languages is high as organisations are looking for individuals with an established network within the local market in their product area.
Within Hong Kong, for example, fluency in Cantonese is a must, while a knowledge of Putonghua is highly desirable. “For pharmaceutical sales roles this is particularly the case,” says Sharmini Thomas, the regional director of recruiters Michael Page International. “This audience is averse to engaging with a sales force lacking local knowledge and experience.”
In addition, the market is highly specialised, with clients also demanding talent with previous experience within a particular pharmaceutical niche area. “Medical devices sector experience similarly does not translate,” Thomas adds.
Fewer expatriate openings
As far as expatriate hires are concerned, pharmaceuticals remain open to this idea at leadership level in Asia. Senior leadership roles continue to be dominated by expats in strategic areas such as leadership or market research. However, these solutions are unlikely to be sustainable long-term, given the 100 to 200% increase in costs that ensues when an expatriate is placed in a role.
At a more junior level, for example, recruitment specialists say that ever more companies are putting a large emphasis on bringing in local talent, leaving fewer options for same-level expatriate talents hoping to make their mark in the region.
In China, for example, the vast majority of roles are now filled by local candidates. “Expatriates are used only as a last resort or for functions that are very new to the Chinese market, such as product design or early-stage R&D. It is also in the plan for most of these roles to be localised as soon as possible,” says Simon Lance, regional director, China, for recruitment experts Hays.
Attractive opportunities for expatriates do exist elsewhere in the region, such as in the established hub of Singapore. According to Chris Mead, regional director of Hays in Singapore and Malaysia, the biggest growth sector where this can be witnessed is in the biomedical area.
“Singapore has become the number one destination of choice for biomedical sciences professionals,” Mead says. “This, in large part, is due to government investments to build the biomedical sciences industry into a world leader. We are constantly bringing expats from all over the world to come and work here.”
A cautionary note
Despite the strong growth and demand for talent, no-one should imagine that Asia-Pacific and other emerging markets represent a panacea for the sector.
In recent weeks, leading industry executives have tried to temper expectations about the growth potential from these emerging regions.
Speaking about the difficulties of gaining market share in emerging markets, Pfizer’s chief executive Ian Read told the Wall Street Journal recently: “The majority of the growth is going to local companies [that sell low-price generics].”
He added: “It is difficult for multinationals to keep up with that growth because we don’t have the products there.”
This is also illustrates the need for pharma to change its business model, and possibly its portfolio, in order to gain greater traction in these markets. What is clear is that for companies who can’t do this, growth based on established markets will prove very elusive.
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