BRIC healthcare markets are still an opportunity, but slowing growth and diverging healthcare policies mean pharma needs to employ nuanced, country-specific strategies.
Economists started grouping Brazil, Russia, India and China (BRIC) together in the early 2000s based on predicted GDP growth rates.
The idea was to illustrate the growing importance of emerging economies relative to developed markets and to encourage the G7 to factor them into policymaking.
Since then the BRIC grouping has evolved a more political dimension and expanded to include South Africa (BRICS).
Despite these changes, the pharmaceutical industry has continued to focus on the original BRIC countries, with healthcare spending being the defining metric.
According to a recent study, although per capita healthcare spending is still highest in G7 nations, the percentage share of global expenditure coming from developed countries has fallen from 65% in 1995 to 53.2% in 2013.
In contrast, the share of global healthcare spending from Brazil, Russia, India and China (BRIC) has increased from 10.7% in 1995 to 20.2% in 2013.
For the drug industry, the increase has proved to be an important revenue driver in recent years. Primarily this is because pharmaceuticals account for an increasingly large proportion of healthcare spending.
According to a 2018 study, average revenues generated by the pharmaceutical industry in BRIC markets have increased 13% a year since 2012, compared with just 2% in mature markets.
BRIC pharmaceutical growth slowing
More recently, however, the dynamics have changed. Research by the IQVIA Institute for Human data science suggests spending on medicines in BRIC nations has slowed down.
For example, while spending on medicines in China continues to increase, the rate of growth has slowed over the past ten years from the double- digit rates seen before 2014 to 4.5% in 2018.
And the authors say growth in China could fall to as low as 3% by 2025. Likewise in Brazil, Russia and India, growth has fallen from 10.8%, 9.9% and 11.2%, respectively between 2014 and 2018 to 5-8%, 7-10% and 8-11% last year.
But, despite the slowing growth rates the BRIC markets still hold potential, according to Michael Kleinrock, IQVIA lead research director.
“Growth is slowing, but they are still growing. In most of the BRIC markets the healthcare coverage and the provision of medicines is suboptimal, so there are opportunities.
He added: “The hype about BRIC markets is cooler than it used to be. The BRIC markets were considered to be a gold rush but now the multinational pharmaceutical industry is more sanguine about the opportunities.”
Similarities and differences
Understanding what unifies the BRIC nations’ healthcare dynamics is important. But knowing how they differ is vital, particularly for pharma companies hoping to increase revenue.
Victor G Rodwin, Professor of Health Policy and Management at Wagner, New York University, said: “Healthcare systems in BRIC countries are similar in that they all proclaim to assure universal health coverage. They do so, more or less, in very different ways.
“The Russian Federation has good coverage for primary care but quality is extremely uneven and access to specialty services and prescription drugs is a problem,” he continued.
“Brazil has a great system of universal coverage for basic primary care (SUS) but there are enormous gaps between what the upper middle class is able to get from the system and what poorer and rural populations are able to access beyond primary care.”
India’s healthcare system, in contrast, is relatively underdeveloped according to Rodwin, who said: “India is behind the other three nations in its coverage, level of public expenditure and population health indicators.
“And China is furthest ahead in that it has achieved universal coverage but the population still has to pay about one-third of aggregate healthcare costs, and rural populations and migrants are at a great disadvantage.”
The view of healthcare coverage in China is shared by Michael Kleinrock, who said the country has sought to improve healthcare.
“Ten years ago only around 40% of the Chinese population had healthcare coverage, now around 95% have coverage.”
Drug reimbursement lists
All the BRIC nations have lists of medicines reimbursed at government level. However, again there are differences in how the lists function and how regularly they are revised.
Michael Kleinrock said: “China has had a national reimbursement drug list since 2001, which was updated in 2004 and then again in 2009, but then was not updated again until 2018.
“The list enables the government to negotiate lower prices for medicines on the list in return for greater access to patients. Drugs that aren’t listed may maintain a higher price and the lack of access may not necessarily be a negative for them.”
He added: “Manufacturers looking at China need to balance lower prices against the likely increase in patients as a result of their product being included on the list.”
Russia also has an essential medicines list. According to a 2018 study the reimbursement system in Russia consists of a few programmes: reimbursement for specific categories of citizens, vital and essential drug list, list of 24 orphan diseases, list of seven nosologies, and other programmes, depending on region.
In addition the authors wrote: ‘Financing for drug provision in Russia is divided into two levels: federal and regional. There is still a lack of transparency and equality in healthcare as well as huge differences in access to healthcare, depending on region.’
Kleinrock explained that, in effect, Russia “has two supplementary reimbursement systems on top of general healthcare coverage, each covering more complex or costly medicines”.
Market access
Access strategies are also evolving. Initially multinational pharmaceutical companies entered BRIC markets by teaming up with local manufactures.
Kleinrock said: “The early entry strategy for multinational pharmaceutical companies seeking to access a BRIC market was to seek to partner with a local supplier.
“Another common market entry approach was to try and develop a presence in BRIC markets using older portfolio products. Older lower priced medicines stood a better change of growing market share.”
But now things have started to change. According to Kleinrock: “The challenge now for multinationals that want to enter BRIC markets is that most of the major local manufacturers have already signed partnership agreements.”
Globalisation
Looking forward, it is important to keep in mind that the BRIC markets do not operate in isolation.
Issues that shape the pharmaceutical and healthcare markets in developed economies will also have an impact in developing economies.
Michael Kleinrock said: “The dynamics of the BRIC healthcare and pharmaceutical markets are also impacted by developments in more mature markets in Europe and North America.”
He cited ongoing efforts by the US government to reduce pharmaceutical prices as an example, explaining that the impact of such measures are likely to be felt elsewhere, including in Brazil, Russia, India and China.
“US drug prices are often used as a direct or indirect reference for products sold in BRIC markets. As a result US government efforts to reduce pharmaceutical prices is likely to have an impact.”
And in future some BRIC countries are likely to have an impact on the pharmaceutical and healthcare markets in developed countries, according to Klein, citing China as an example.
“China is emerging as a drug R&D hub and it represents about 10% of the global R&D pipeline. The country is attracting increasing amounts of venture capital funding and we are going see some novel medicines developed in those labs being sold in international markets,” he concluded.
