■ Demographic forecasting

■ Asia’s OTC power base

■ Private equity for India
■ Views from the region

the market partner

Issue 37 | July 2007
contents letter from the chief executive officer

We live in exciting times in Asia.

As the region grows ever-more
management. The article outlines
how pharmaceutical companies

3 In the news
Recent events and people making
news at Zuellig Pharma Asia Pacific
significant within the global eco-
nomic context, many industries
have recognized that the drivers
can optimize their marketing
resources and produce higher
returns – of key importance
of future market growth lie with to companies in the face of
the vibrant, emerging countries regulatory challenges, increasing
and large, increasingly affluent competition, and the globalizing

5 Private party
Foreign private equity investors
are pouring money into promising
Indian firms
populations that live in this part
of the world. The healthcare
product sector is one of the key
market.
In our regular article from
OTC experts Nicholas Hall &
players in this regard. Company, the importance of East
However, difficulties often and South-East Asia in driving
arise in locating reliable data and OTC increases is examined. The
methodologies to understand the potential in China looks particu-

9 China holds the key

Trends reveal an OTC power
base is emerging in East and
South-East Asia
different dynamics at work in the
contrasting cultures of Asia and
larly promising, while markets in
India and South Korea are contin-
uing to flourish. The first interna-
tional merger and acquisition
activity in China is also underway
with Bayer out to capture the
OTC cough and cold business of

12 Looking ahead
Demographic forecasting offers
insights for the pharmaceutical
Topsun subsidiary Qidong
Gaitianli Pharmaceutical
Company.
industry India comes further under the
spotlight with an analysis by the
Economist Intelligence Unit
examining the boom in foreign

16 Promotional planning
Can scientific research similar
to that used to develop brands
private equity funds in the coun-
try. The surge in investment has
been fuelled by the expanding
be applied to promotional
economy and the huge profits that
strategies?
can be made from fast-growing
domestic firms. The Indian phar-
to accurately assess the future maceutical industry, which has
needs and direction of Asian soci- proved such a success story in
in house 19 Views from the region eties, individually, collectively and recent years, is among the most
Our country managers in Asia in comparison with each other. In popular sectors drawing attention
Pacific speak out on the issues this issue of The Market Partner, from outside investors.
that concern them the most we look at different ways to assist In Zuellig Pharma news, I am
such strategic planning. delighted to report that we have
23 & Company In our Feature Story, health- now got our corporate team large-
Information about Zuellig Pharma care demographics specialist Dr. ly in place in our latest country
Susan Ward highlights in the first office in Bangladesh, with new
of a two-part series some of the members of staff introduced in
Issue 37, July 2007. Entire contents © Copyright, 2007. Zuellig Pharma Asia Pacific. All rights ways that pharmaceutical compa- our People to Watch section. As
reserved. Reproduction in whole or part without express written permission is prohibited. It is nies can benefit from demographic
hereby expressly stated that neither Zuellig Pharma Asia Pacific nor any of its subsidiaries,
always, all the latest on Asian mar-
affiliates or their respective directors, employees or representatives makes any representations or forecasting data and the insights kets and Zuellig Pharma moves
warranties, expressed or implied, with respect to any information or materials contained in this
publication. No liability whatsoever, whether in contract, tort or otherwise and including liability for
such information provides for from our country managers can be
negligent misstatement, is accepted by any member of Zuellig Pharma Asia Pacific for accuracy or more accurate therapy forecasts found in Views From the Region.
completeness of any of the information provided or opinions expressed by or on behalf of Zuellig
Pharma Asia Pacific or for any errors, omissions or misstatements. and decision-making within Wishing you a happy and prof-
The Market Partner is published by Zuellig Pharma Asia Pacific Corporate Office. countries and across the Asian itable summer.
Editor: Mr. Joshua Leung, [email protected] region as a whole.
Design: Minick Jiao Design, Hong Kong
Meanwhile, IMS focuses Fritz Horlacher
Please address any comments to our office: Zuellig Pharma Asia Pacific, Corporate Office, 13th Floor on the need for a more analytic
Shui On Centre, 6-8 Harbour Road, Wanchai, Hong Kong, Tel: +852 2845 2677, Fax: +852 2877 5647
Chief Executive Officer
www.zuelligpharma.com/ip approach to promotional Zuellig Pharma Asia Pacific
 COMPANY DEVELOPMENTS
| in the news

Avian Flu Update

Our initiatives to fight bird flu around the region

Zuellig Pharma Thailand During the workshop, Dr. Jose

Miguel Curameng of the Zuellig
completes software Foundation gave an overview of avian
infrastructure upgrade influenza, its symptoms, manner of
April was a busy month for Zuellig transmission and the risks involved,
Pharma Thailand which upgraded its including the flu’s epidemiology and
software infrastructure to SDS Version stages of development. The film Fatal
8, the latest version of Zuellig Pharma Contact, which dramatizes the impact
Asia Pacific’s corporate ERP system. of an avian flu pandemic, was also
A team of more than 10 IT specialists screened.

the market partner

went to Thailand from Zuellig Pharma To ensure business continuity in
Asia Pacific’s regional Information the event of a catastrophic event,
Services Group (ISG) in the Philippines to such as an avian flu pandemic,
carry out the upgrade, which had been a Ms. Elsa A. Velasquez, Assistant
year in the planning and involved invest- Vice-President, Logistics & Projects,
ment of close to US$2 million. Zuellig Pharma Philippines, led work-
The upgrade is in line with Zuellig shop participants through business
Pharma Asia Pacific’s continuity planning beyond disaster
drive for continuous recovery, going through the process
development of its of identifying risks and developing 2 |3
cutting-edge contingency plans for the different
technology operational functions of our business.
systems and Ms. Velasquez stressed country readi-
facilities ness through the implementation of
throughout its regional templates and policies,
network of country personnel backup training and crisis
offices in order succession planning. She also
to provide superior Avian flu has fortunately been closely after farm outbreaks and a introduced Crisis Management Team
services to both relatively quiet in April and May, case of human infection. members and their backups.
principals and although Indonesia is still struggling A workshop on Avian Influenza In the latter part of the workshop,
customers. with its bird flu Pandemic Preparedness and participants worked in groups to
Disaster Response was also con- prepare continuity plans for different
ducted recently for officers and scenarios using what they learned.
staff in our Distribution and Human Zuellig Pharma Asia Pacific would
Resources divisions at Zuellig like to thank all who participated and
manage- Pharma Philippines. made presentations at the workshop.
ment. At
Zuellig Pharma,
our preparations for
a possible pandemic
continue with our
country offices keeping
up their testing and drill
exercises on a regular
basis. Our Indonesian
office is in the process of
updating procedures to
align with current develop-
ments. Meanwhile, our team
in Vietnam is monitoring the
situation in the country
in the news | PEOPLE TO WATCH

appointed Finance Officer. Previously, Manager. Aloysius has had 10 years’

Mokarram worked at Hoda Vasi experience in HR. He has been actively
Chowdhury & Co., the professional firm involved in training and development in
associated with Deloitte the retail field, as well as
Touche Tohmatsu. As a manpower planning and
senior member of the formulating staff policies
audit team, he gained and procedures. Aloysius
experience in accounting, majored in Human
taxation, audit and advisory services. Resources with a Bachelor of Commerce
Mokarram has a Bachelor of Commerce degree from the University of Tasmania,
from Dhaka National University and Australia.
completed his Chartered Accountant Ms. Barbara Lin, has been appointed
articleship with the Institute of Business Development Manager.
Chartered Accountants of Bangladesh. Barbara brings with her adver-
He reports to Finance Manager Mr. Md. tising, communications,
Zahid Hossain. promotions, and market-
Ms. Umme Sharmeen Hyder has ing experience, essential
become Supply Chain Officer. in helping to expand busi-
Sharmeen has completed internships ness. Barbara was previously
with GlaxoSmithKline Bangladesh in our Assistant Product Manager at
quality assurance and Consumer Healthcare. She has a Bachelor

On the Move Shinepukur Ceramics Ltd.

as a research and devel-
opment analyst in the
Quality Control Department.
of Economics (Business Administration)
from the University of Malaya, Malaysia.
Both Aloysius and Barbara report to
Ms. Doreen Yew, Director of HR and
The new Market Partner talents who are responding to She has a Bachelor of Science in Business Development, Zuellig Pharma
Chemical Engineering from Bangladesh Malaysia.
the demands of our ever-expanding businesses University of Engineering & Technology.
She reports to Mr. An-Nurul Masud, Philippines
Operations Manager. Ms. Lourdes (Des) R. Aguila, was
Bangladesh affiliate of the SingTel group of compa- Ms. Humaira Tubassum has joined appointed Information Technology
Mr. An-Nurul Masud has been appoint- nies. As Human Resources Operations the company as Administration Officer. Director for Zuellig Pharma Philippines.
ed Operations Manager at Zuellig Manager at Pacific Humaira has studied at North Des joined Zuellig Pharma in
Pharma Bangladesh. Masud previously Bangladesh Telecom, he South University, taking a April 2004 and brings over
worked at GlaxoSmithKline Bangladesh was responsible for HR Bachelor of Business 18 years’ IT experience to
Ltd., where he gained more than 20 planning and services, Administration majoring this position. She graduat-
years’ experience in the pharmaceutical resource organization, in Finance and ed cum laude with a degree
industry. Work areas included sales, recognition and remuneration, relation- Accounting. She reports to in Computer Management from the
marketing, and more recently, ware- ship management, and administration Mr. Brett Marshall, General Manager, Polytechnic University of the Philippines.
housing and distribution, purchasing of and community relations. Ashfaq also Zuellig Pharma Bangladesh. She is a member of the Executive
locally manufactured and spent 10 years with Nestle Bangladesh Committee and reports to Zuellig Pharma
imported finished prod- Ltd. He reports to Mr. Brett Marshall, Indonesia Philippines President and Chief Executive
ucts and MIS in his role General Manager. Mr. Wong Pao Njan has been appointed Officer Mr. Mike Becker.
as Commercial Services Mr. Md. Mashiur Rahman has Vice-President Information Technology
Manager. Masud will play a become Information Tech- and Management Information Systems Taiwan
key role in managing the transition of nology Officer. Mashiur at Zuellig Pharma’s Indonesian Zuellig Pharma Taiwan has appointed
GlaxoSmithKline’s distribution opera- joins from the Bay Group distribution company Mr. Joseph Lai to the position of Vice-
tions in 11 branches around the country where he was a Systems Anugerah Pharmindo President Sales and Marketing. Joseph
to Zuellig Pharma. He has a Bachelor of Administrator, involved in Lestari (APL). Pao has brings sales management skills and
Pharmacy from Jahangirnagar network and desktop support and instal- extensive experience in extensive knowledge of the pharmaceuti-
University in Dhaka and a Master of lation and IT security policy documenta- general and sales manage- cal market in Taiwan, having worked at
Business Administration from Dhaka tion and implementation. Mashiur has a ment, ERP system implementation, and MSD, Novartis and GlaxoSmithKline.
University. He reports to Mr. Brett Bachelor of Science (Hons) in Computer B2B application service provider design Prior to joining the compa-
Marshall, General Manager. Information Systems from Daffodil and development. He reports to Mr. ny, Joseph was an
Mr. Ashfaq A. Chowdhury has joined Institute of Information Technology Christian Stoeckling, President Director. Associate Director and
the company as Human Resources under the London Metropolitan Sales Head of the Chronic
Manager. Ashfaq was formerly Human University. He reports to Mr. An-Nurul Malaysia Care Division at MSD. At
Resources Operations Manager at Masud, Operations Manager. Mr. Aloysius Chan has joined Zuellig Zuellig Pharma Taiwan, he reports to
Pacific Bangladesh Telecom Ltd., an Mr. Md. Mokarram Hossain has been Pharma Malaysia as Human Resources General Manager Mr. Yves Hermes.
Private Party
Foreign private equity investors are pouring money into promising Indian firms,
many of which are seeking to expand overseas
By A U Sekhar

Opportunities beckon
India’s expanding economy is providing an
ideal setting for firms to grow rapidly, making
it easy for private equity funds to locate
promising companies. A key factor in India’s

the market partner

extraordinary economic growth in recent years
– which is estimated to have hit 9.2% in fiscal
year 2006-07 and averaged 8.6% per year since
2003-04 – has been the vigorous expansion of
the industrial and service sectors. (India’s man-
ufacturing and services sectors grew by 11.3%

Despite a phenomenal rate of

4 |5
growth, there is likely to be no
shortage of tantalizing
opportunities for private equity
firms in India for years to come

and 11.2% respectively in 2006-07.) The

impressive performance of these sectors has
created a cycle of corporate growth: the efforts
of Indian firms to expand their scale and
enhance productivity boost the economy, while
the buoyant economy presents them with more
and more growth opportunities.
Indian firms have been chasing three types
of opportunities in particular. The first is to
meet global sourcing needs by leveraging
Indian strengths, especially low-cost skilled
Private equity funds have flooded into India in Investors have been especially drawn by the labor and raw materials. Outstanding examples
the past few years, attracted by an abundance outstanding success of India’s IT, business-
of opportunities to profit from fast-growing process outsourcing (BPO), telecoms and phar-
Table 1 Private equity in India
domestic firms. According to data compiled by maceutical companies. Although buying equity
Venture Intelligence, a Chennai-based consul- in Indian companies is no longer cheap, private Year Investments (US$ m)
tancy, private equity investments in India more equity firms continue to enter the market, con- 2003 507
than tripled between 2005 and 2006, reaching fident of spotting lucrative deals. While
2004 1,629
nearly US$7.5 billion. Despite this phenome- investors are lured by the prospect of high
2005 2,200
nal rate of growth, there is likely to be no returns, many Indian firms welcome private
shortage of tantalizing opportunities for private equity as a way to gain expertise and finance 2006 7,460
equity firms in India for years to come. their own overseas expansions. Source: Venture Intelligence
 large number of small and medium-sized compa-
nies listed on the Indian stock market. In many
industrialized countries, it would be considered
premature to list such relatively small companies.
However, in India, these small firms were forced
to raise equity through the capital market several
years ago when there were few venture capital or
private equity firms to provide risk capital.

Huge profits have been made by

a number of private equity
funds in recent years
Although many of these small companies
have been listed for many years, their share
prices do not necessarily reflect their potential
value, particularly if growth capital was utilized
to expand their operations. As a result, consider-
able potential for raising the valuation of these
companies remains and private equity firms
have been drawn to investing in many of them.
Indeed, these so-called “private investment in
public entity” (PIPE) investments are now a
major form of private equity investment in
India.
Economic reforms and growing competi-
tion have spurred many Indian firms to
implement corporate restructuring strategies,
enhancing their international competitiveness.
Partly as a result, Indian entrepreneurs and
firms have become much more confident and
ambitious. This is strikingly reflected in the
burgeoning number – and increasing value –
of foreign acquisitions by Indian companies.
The value of such acquisition deals rose by
Table 2 Private equity investment in India: top sectors in 2006
131% in 2006. To implement such global
Number of deals Total value (US$ m) % of total forays and their ambitious domestic expansion
IT and IT-enabled services 87 1,470 20 plans, Indian entrepreneurs require enormous
amounts of growth capital. Although other
Manufacturing 55 962 13
funding options are also available, many
Total 299 7,460 100
entrepreneurs have turned to private equity.
Source: Venture Intelligence

© The Economist Intelligence Unit Limited 2007

Adding value
are India’s IT, BPO and pharmaceutical sec- phone connections embody these trends. (The Many Indian companies have opted for
tors. In 2006, the IT and BPO sectors account- telecoms sector accounted for 18% of private funding from private equity firms because, in
ed for 21% of total private equity investments equity investment in 2006, according to Grant addition to the money they bring and their
in India, according to Grant Thornton India, a Thornton India.) The third opportunity arises financing skills, they offer expertise in a num-
corporate advisory firm. from India’s acute need for a wide variety of ber of beneficial areas. One is their network-
The second opportunity follows from the intermediate products and, especially, for more ing capabilities, through which private equity
rapidly expanding local markets for a growing and better infrastructure. firms can open doors for the firms in which
variety of goods and services, combined with they invest, for instance, to gain access to new
the rising purchasing power of local con- Big numbers of small companies customers or potential collaborators. Another
sumers. The spread of organized retailing and Private equity firms in India have little trouble is their expertise in mergers and acquisitions
the dramatic growth in the number of mobile- identifying promising investments given the (M&A), which enables them to find suitable
candidates for their target companies to
acquire, and to help in implementing M&A
strategies. As a result, private equity firms can
provide vital assistance in globalizing the
company’s operations.
Private equity firms have also often been
instrumental in improving corporate gover-
nance standards and transparency within the
companies in which they invest. This in turn
can help improve performance considerably,
especially in the case of small and medium-
sized firms, which often have relatively limited
experience. Private equity firms can also add
value in many other ways, for instance, by
providing strategic advice and recruiting top
managers.
The fundamental business model of private

the market partner

equity firms is to invest in a company, raise its
valuation through expanded scale and better Success stories: leading firms and landmark deals
performance, and then sell off the stake for
high returns. As a result, exit opportunities, A large number of Indian and foreign private equity office operations in Gurgaon (near Delhi), India’s
firms are active in the Indian market. Even in the case nascent BPO industry consisted only of some small
either through the capital market or sales to of the Indian firms, a large proportion of their funds captive back-office operations run by multinationals.
strategic investors, play a key role in defining are sourced from foreign investors. The leading firms ChrysCapital partnered in the new venture, investing
the attractiveness of a market. Private equity include: US$10 million.
firms have found India appealing in this regard, With the subsequent tremendous growth in
ICICI Venture, a subsidiary of ICICI Bank, India’s outsourcing by firms in industrialized countries,
given the existence of a relatively mature and second-largest bank, is the largest private equity firm
well-functioning capital market.
Spectramind’s operations grew by leaps and bounds 6 |7
in India, with over US$2 billion under management. – the company had an employee strength of 2,700
Indeed, huge profits have been made by a It is also one of the oldest private equity firms in within a couple of years. Leading Indian software
number of private equity funds in recent years India. Its origins can be traced to the setting up of a companies also began diversifying into the BPO
venture capital firm, TDICI, in 1988 by two large Indian sector, attracted by its enormous potential. When
through their exits. Many of the leading funds financial institutions, ICICI and UTI. UTI’s stake was Wipro, a giant Indian software firm, acquired
have had no problem generating an internal then acquired by ICICI in 1998 and TDICI was renamed Spectramind for about US$100 million in 2002,
rate of return of over 30%, which is typically ICICI Venture. ChrysCapital sold its stake for US$60 million.
the minimum expectation of their investors. Mumbai-based ICICI Venture manages four funds Warburg Pincus, a global private equity firm with
and has invested in about 50 companies. The firm has an Indian portfolio of 12 companies, has been active
This not only reflects the successful efforts of proven adept at spotting the potential of sunrise in the country since 1999. The Indian operations of
entrepreneurs and their private equity partners industries in India, investing in several companies Warburg Pincus have been extremely profitable.
in raising the company’s valuation, but also the that have developed into leaders in these sectors. Indeed, the returns from its investment in India’s
boom in the Indian capital market since 2003. In the retail sector, for example, ICICI Venture invested top mobile-services company, Bharti Airtel (known
in companies such as Pantaloon Retail and Shoppers’ earlier as Bharti Tele-Ventures), are nothing short
The high returns being earned by some private Stop in the late 1990s. These companies – particularly of legendary. Warburg Pincus invested US$292m
equity firms in India have naturally attracted Pantaloon – sparked the retailing revolution in India in Bharti in 1999-2001, when Bharti was a young,
others to enter the market. and are now giant success stories. unlisted company (established in 1995) attempting
ICICI Venture also began investing in the emerging to take advantage of the liberalization of India’s tele-
biotechnology sector in 2000. One of its investee coms policies. With Warburg Pincus’s support, Bharti
The value of foreign acquisition companies, Biocon, has grown rapidly to become the
leading biotechnology firm in India. Biocon had a suc-
was able to expand its mobile-services operations
rapidly, establishing a national footprint through
cessful initial public offer (IPO) in 2004, with its mar- acquisitions of other mobile-service providers.
deals by Indian companies rose ket value crossing US$1 billion on the day of listing. In 2002, Bharti went public and was listed on the
ChrysCapital was founded by two young Indian stock exchange. Warburg Pincus sold its stake in
by 131% in 2006 investment professionals, Ashish Dhawan and Raj
Kondur, who returned from the US to set up the com-
Bharti in 2004-05, partly in the stock market and
partly through a strategic sale to Vodafone of the
pany in 1999. ChrysCapital has since grown rapidly to UK. The returns of Warburg Pincus from these sales
Constraints become the second-largest private equity firm in totaled a gigantic US$1.6 billion, making this the
India, managing about US$1 billion. The company has most profitable exit in the history of private equity
Despite these attractions, there are several four funds with global investors and has made around in India.
constraints on private equity firms operating 40 investments. Other private equity firms with large operations in
in India. Ironically, although rising valuations One of ChrysCapital’s success stories has been India include Actis (UK), Baring Private Equity
have helped existing private equity investors Spectramind, a business-process outsourcing (BPO) Partners, Citigroup Venture Capital International
company which played a pioneering role in the cre- (US), General Atlantic (US), IL&FS Investment
earn high returns, they are now making it ation of India’s huge third-party BPO industry. When Managers (India), Intel Capital (US), SAIF Partners
more difficult to locate promising new invest- Spectramind was set up in 2000 by Raman Roy, an (Hong Kong), Sequoia Capital (US) and Temasek
ments. This is because many Indian firms Indian heading US-based General Electric’s back- Holdings (Singapore).
being chased by private equity funds are
demanding a high valuation at the outset,
making them less attractive to the funds.
Another constraint has been the strong
state-owned firms has offered rich opportuni-
ties for private equity investors. However, in
India, progress with privatization has been
billion – or nearly one-third of the value for
the whole of 2006. mp .
attachment of many Indian entrepreneurs to halting, providing far fewer opportunities for
Queries can be sent to David Line, Senior Editor,
their ventures, which makes them reluctant to private equity funds. Economist Intelligence Unit, [email protected]
sell their stakes and accept minority ownership Nevertheless, there is likely to be no The Economist Intelligence Unit is the world leader in
– even when it is clear that the ventures would dearth of opportunities to locate promising global business intelligence. It is the business-to-business
arm of The Economist Group, which publishes The
be managed better by new owners. For this firms and take them up the growth ladder.
Economist newspaper. The Economist Intelligence Unit
reason, the incidence of private equity buy- India’s growth story is well established, and provides geopolitical, economic and business analysis on
outs has been much smaller in India than in the continuous influx of new private equity more than 200 countries, as well as strategic intelligence on
many developed countries. firms into the Indian market is evidence of key industries and management practices. With over 300
full-time professionals in 40 offices around the world, sup-
The relatively slow pace of reform in their strong belief in this potential. In the
ported by a global network of more than 650 contributors,
India’s state sector is also a limiting factor. In first two months of 2007 the value of private the Economist Intelligence Unit is widely known for its
many emerging markets, the privatization of equity deals had already reached US$2.2 unparalleled coverage of major and emerging markets.

Table 3 Private-equity financed deals involving pharmaceutical and biotechnology firms in India Mar 31 2004-April 1 2007

Acquirer name Acquirer country Target name Target country Deal value US$m Deal status
Carlyle Group US Claris Life Sciences India 20.00 Completed
Sequoia Capital US Paras Pharmaceuticals Pvt India 12.00 Completed
New Vernon Private Equity India JB Chemicals & Pharmaceuticals India 9.86 * Completed
Westbridge Capital Partners LLC Mauritius Dr Lal PathLabs Pvt India 9.62 Completed
Citigroup Venture Capital UK Nectar Lifesciences India 8.21 Announced
ICICI Venture India Metropolis Health Services India 7.79 Completed
Financierings-Maatschappij voor Ontwikkelingslanden NV Netherlands Avestha Gengraine Technol. Pvt India 6.00 Completed
Actis Venture Capital UK Paras Pharmaceuticals Pvt India 5.37 Completed
IL & FS Venture Corp India Arch Pharmalabs India 4.57 * Completed
Aureos Capital UK Accutest Research Labs Pvt India 3.94 Completed
Goldman Sachs US Fulford (India) India 2.79 Completed
Swiss Technology Venture Capital Fund Mauritius Arch Pharmalabs India 2.06 Completed
Xenox US Grandix Pharmaceuticals India 2.02 Completed
Citigroup Venture Capital UK Nectar Lifesciences India 1.77 Announced
Kerala Venture Capital Fund India vFortress Network Security Pvt India 0.44 Completed
ICICI Venture India Ranbaxy Animal Health Division India n.a. Completed
ICICI Venture India Ranbaxy Diagnostics India n.a. Completed
ICICI Venture India Ranbaxy Fine Chemicals India n.a. Completed
Malladi Drugs and Pharmaceuticals Ltd India Novus Fine Chemicals LLC US n.a. Completed
MBO team - Germany Germany Lubrizol Corp’s pharma ingredient & Germany/India n.a. Completed
intermediate compounds business
Actis Venture Capital UK Paras Pharmaceuticals Pvt India n.a. Completed
Source: Zephyr, Bureau van Dijk Electronic Publishing * estimated value
 EYE ON ASIA
| future trends

China holds the key

An OTC power base is emerging in East and South-East Asia
By Sarah Toms ■ [email protected]

the market partner

8 |9

Japan apart, Asia drives growth recaptured its position as the largest region with dereimbursement again the main con-
In a repeat of its performance in 2005, the globally with a 27% share, compared to 26% tributing factor to a 3% fall in OTC sales. In
global OTC market generated an upturn of for North America. Germany, Europe’s March 2006, over 150 semi-ethicals (particular-
4.2% in 2006. Declining sales in Japan and largest market, remained flat in 2006 and still ly cough, cold & allergy and derma brands)
France were offset by excellent performances has much ground to recover before it match- were struck off the reimbursement list by the
from emerging markets such as Brazil and es pre-2004 levels before the wide-scale government, causing categories such as circula-
South Korea, maintaining a positive picture dereimbursement that dealt a severe blow to tory aids to register double-digit declines.
overall. OTC sales. In fact, sales in Germany have However, industry observers remain positive
Owing to the appreciation of the euro declined 6% over the past four years. that the situation could lead to a change in
against the dollar in 2006, Western Europe France had an even worse year in 2006, marketing strategy for some companies, with
 fast-paced development of the smoking control
Global OTC market sales & growth 2002-06 category and various Rx-to-OTC switches. As
(US$bn) 2002 2003 2004 2005 2006 for Latin America, strong advances in Brazil
Global sales 64.6 67.2 69.2 72.2 75.2 and Mexico – which combined account for over
two-thirds of regional turnover – were driven
% growth 4.0 3.1 4.2 4.2
largely by price rises, while 15% growth for
Russia was at the heart of a continued upturn in
more focus on consumer-oriented promotion status means it is only sold in pharmacies and Central & Eastern Europe.
of OTCs. is not available for self-selection. However,
Other major European markets produced thanks to the rising trend of in-store clinics in M&A activity still vibrant
better results, with Italy leading the way due to major retail outlets such as Wal-Mart, advisory Since 2004, the emphasis behind many high-
strong gains in gastrointestinal and analgesic OTCs such as Plan B look set to thrive. profile mergers affecting the OTC industry
sales and the hope of better returns in the Other key Rx-to-OTC switches in the US has changed from those driven by Big Pharma
future thanks to the opening of the mass mar- in recent months point to a likely improvement concerns to more OTC-specific deals. Given
ket in 2006. in the market’s performance in 2007. Principal that OTC has long been notorious as a frag-
Both the UK and Spain witnessed a slow- among these is GlaxoSmithKline’s weight-loss mented field, many top players are in search
down in sales compared to 2005. However, aid Alli (orlistat 60mg). This is expected to go of more critical mass – a trend highlighted by
growth in both countries was better than the on OTC sale in summer 2007, available in a the key deal in 2006, Johnson & Johnson’s
regional average. Some key switches in the starter pack that includes a step-by-step guide acquisition of Pfizer Consumer Healthcare.
UK in 2006 helped account for its positive to starting a weight-loss program. In Canada, Valued at €12.6 billion ($16.6 billion), the
performance, for example, sumatriptan in the nicotine lozenges were granted an Rx-to-OTC deal is characteristic of the high multiples
form of Imigran Recovery (GlaxoSmithKline), switch in July 2006. now being paid in the OTC industry, a trend
although Germany got there first with the Rx- Outside North America and Western that some see as unsustainable and a diversion
to-OTC switch of naratriptan in January 2006. Europe, the emerging power base is East & from the real need for organic growth.
Switch was also partly behind modest South-East Asia, driven by double-digit However, Johnson & Johnson will take plea-
growth in North America, with Prilosec OTC increases in China and South Korea. Two fac- sure from seeing its number one position
once again responsible for driving antacid sales tors in China’s dynamic progress are the grow- enhanced enormously in 2006.
in the US and generating a 7% upturn in gas- ing affluence wielded by an expanding urban
trointestinals turnover. However, that was offset
Global Top 10 OTC companies 2006
by a 1% decline in cough, cold & allergy sales
caused principally by pseudoephedrine restric- Per capita OTC spends remain Rank Marketer 2006 sales Index
tions. Canada still outpaces the US but its US$bn 06/05
growth slowed again in 2006 falling to just 3%. very low in China, indicating 1 Johnson & Johnson 5.8 102
In the US, the Food and Drug 2 Bayer 3.0 106
Administration showed signs of a shift away the vast potential for a market
3 GlaxoSmithKline 2.7 102
from the conservative stance it has adopted
over recent years, which could see the estab- that looks set to overtake Japan 4 Wyeth 2.5 101

lishment of a long-awaited “third class” of 5 Novartis 2.5 105

OTC medicines. After numerous delays, in 2008, due to increasing 6 Procter & Gamble 1.8 111
emergency hormonal contraceptive Plan B 7 Boehringer Ingelheim 1.6 104
(Barr Laboratories) was finally approved for affluence and the penetration
8 Sanofi-Aventis 1.4 106
OTC sale in August 2006. Crucially, Plan B
became the first medicine in the US to have of rural areas 9 Taisho 1.3 93

dual status – available OTC to women aged 18 10 Reckitt Benckiser 1.2 105
and over, but Rx to under-18s – and its unique middle class and the increased penetration of
OTCs into rural areas. Per capita OTC spends Bayer also consolidated its position as the
Global OTC sales by region 2006 remain very low in China, indicating the vast number two marketer with the acquisition of
potential for a market that looks set to overtake Schering AG in 2006 in a deal costing €86
Rank Region 2006 sales Index
US$bn 06/05
Japan in 2008. Two Asian markets that are ($113) a share. Although most of the merger’s
showing continued signs of rejuvenation are focus was on Rx synergies, it will enhance
1 Western Europe 20.5 101
India and South Korea, the latter boasting one Bayer’s UK portfolio by adding OTC emer-
2 North America 19.8 102 of the highest per capita OTC spends outside gency hormonal contraceptive Levonelle to its
3 East & South-East Asia 10.8 110 Japan and now ranked among the Top 10 OTC already dynamic women’s healthcare range,
4 Japan 6.8 99 markets globally. fronted by Canesten. Hemorrhoid treatments
5 Latin America 5.6 111
Although Japan remains in decline, there Ultraproct and Scheriproct will be two other
were signs of growing stability in 2006 and even key OTC brands inherited by Bayer.
6 Central & Eastern Europe 4.6 108
hope of a return to growth in 2007, given the The German company is also involved in
 the market partner
10 | 11

the first ever international merger and acquisi- movers in 2006, moving up two places to sev-
Global OTC sales by major category 2006
tion activity in China’s OTC industry and enth after buying the US OTC rights to Zantac
stands to capture the OTC cough and cold Category 2006 sales Index from Pfizer in October 2006, after the latter was
US$bn 06/05 obliged to make certain divestments following
business of Topsun subsidiary Qidong Gaitianli
Pharmaceutical Company Ltd. All the brands Analgesics 12.0 106 its OTC deal with Johnson & Johnson. This fol-
involved in the deal, including White & Black Cough, cold & allergy 16.8 103 lowed the news in August 2006 that Boehringer
cold & flu remedy, are western-style in formu- Ingelheim would divest popular vitamins, miner-
Gastrointestinals 10.6 106
als & supplements brand Pharmaton to

.
lation. Once complete, the deal will catapult
Vitamins, minerals & suppl. 19.6 103
Bayer into the Top 10 in China. Meanwhile, a Ideasphere, although that deal collapsed in the
Dermatologicals 9.6 103 final stages in February 2007.
return to growth in the US, on the back of a mp

revival for analgesic brand Aleve, helped make Others 6.6 106
Bayer the top-performing OTC company
among the global Top 5. of key analgesic Panadol, helped stabilize DB6 2007 contains five years’ annual global OTC sales
data through to full year 2006 and is subjected to a rigorous
Global number three GlaxoSmithKline GlaxoSmithKline’s performance. In October
validation process. It is accessible online and also available
fared less well in China in 2006 as its local sub- 2006, GlaxoSmithKline enhanced its OTC in disk format. To find out more information about
sidiary Tianjin SmithKline & French declined standing with the $566 million acquisition of the range and scope of DB6 services, please contact:
by 12%, partly the result of senior personnel US company CNS, manufacturers of Breathe [email protected]; +44 1702 220218 (tel);
+44 1702 430787 (fax). Sarah Toms is Researcher/Writer,
changes over the past year. However, dynamic Right nasal strips and FiberChoice laxative.
Insight Asia at Nicholas Hall & Company. She can be
growth in emerging markets such as Brazil Further down the global rankings, contacted at [email protected] and +44 1702
and Russia, and the continued steady upturn Boehringer Ingelheim was one of the biggest 220216 (tel); +44 1702 430787 (fax).
 F E A T U R E S T O R Y

LOOKING AHEAD
The first of a two-part series on the insights that demographic forecasting offers the
pharmaceutical industry, focuses on therapy forecasts in Asia

By Dr. Susan Ward ■ [email protected]

n 2005, China was the second, fastest- This article shows three of the many ways

I growing pharmaceutical market (at 22% –

IMS) and some analysts have forecast it
will be the world’s largest by 20501. India’s
demographic forecasting can help to determine
the size of therapeutic markets and their
prospects within and across countries. It does so

the market partner

market share of close to US$7 billion is grow- by illustrating the importance of:
ing at 10% per year compared to 7% for the
world market overall 2. These are exciting fig- (i) Looking at a population’s age profile
ures and as the Asian pharmaceutical market not just its total size
rapidly rises in global prominence, the need for (ii) Examining the age profile trend over
greater understanding of the multi-faceted time
region’s markets and future healthcare needs is (iii) Focusing by age, gender, geography
taking on fresh significance for industry deci- and prevalence rates to obtain optimal
sion-makers. results.
However, fast-moving Asia can be a chal-
12 | 13
lenge to unravel and managers at both head- Market size
quarters and country offices may find they lack The two rising giants of Asia are China (1.289
detailed, reliable, data with which to comple- billion people) and India (1.1 billion people).
ment drug sales information and build and Both have large populations, but in many
defend forecasts. respects this is where their similarities stop.
One key way to shed further light on the Once the age profile is examined, for example,
Asian landscape and improve the accuracy of major differences emerge (Chart 1). China has
therapy forecasts (also sometimes referred to as over 240 million more people over the age of 40
epidemiology or patient dynamics) is to utilize Collecting the data than India. While China has a large, middle-
the population insights provided by demo- aged population, India has a large, young popu-
graphic forecasting. In doing so, executives can Forecasts used in this article are drawn from the lation. Some 50% of people in India are under
Global Demographics Healthcare database, which
gain valuable assistance in formulating projec- the age of 25 and 75% in India are under the
is sourced primarily from the demographic, socio-
tions, planning product launches and allocating economic and epidemiology data published by age of 40. Indeed, India has 140 million more
resources to achieve maximize return on the government of each country and international children than China.
investment. medical journals. Information is also collected from Why is this important? The different age
other agencies to check the consistency of the inter-
profile determines the different types of disease
Chart 1 pretation of the data. Governments engage in a
census and by-census at regular intervals. This data areas that will be more prevalent in the popula-
is supplemented with information from inter-year tion. With its youthful population, India will be
Age India samples, annual labor force studies, annual house- a large volume market for childhood immuniza-
60+ China hold income expenditure surveys, and health and
tion whereas in China with 140 million less
nutrition surveys, among others.
people under the age of 14, this therapeutic area
Global Demographics Healthcare Ltd.

40-59 To check the overall voracity of data from a gov-

ernment, certain headline relationships, such as is going to be significantly smaller. Instead,
water consumption per capita, are examined to China, with its older age profile, is going to
25-39 ensure the reported levels of population etc make
have a different disease burden given that the
sense. Consistency of relationships across countries
15-24 of similar affluence and education levels are looked older a person gets, the more likely they are to
for and where there are differences the possible rea- suffer from degenerative diseases, such as can-
0-14 sons are investigated. cer, hypertension and diabetes.
The database is harmonized as much as possible
In Chart 2, the impact of the age profile on
0 100 200 300 400 to facilitate modeling and hence consistency of the
forecasting process. prevalence is clearly shown. Looking at the
Persons Mns
prevalence rates alone for urban diabetes in
India shows that the rate is triple that of Death rates are predicted to drop in
China in all age groups over 30 years. both as more people become affluent.
When taken together with the two coun- However, the projected birth rates up
tries’ similar population sizes, it might to 2025 for the two countries show
be assumed that the number of people marked differences (Chart 3).
with diabetes in India would also be China’s one-child policy instituted
three times higher than in China. in 1979 has already had a major effect
However, this is not the case. on birth rates. From 1995-2005 the
Why? India is a youthful country birth rate dropped from 17.7 million to
with more people falling into younger 12.1 million. Other factors are also now
age groups where the prevalence rate is at work. The reduction in the number
significantly lower. In China, the age of females combined with the prefer-
profile is much higher and many more ence for males means that after 2013
people are over 40. Thus when the the number of women of child-bearing
prevalence rate is applied to the age pro- age will start to decline. This together
file of both countries, it shows urban with rising education levels and afflu-
diabetes prevalence is actually only one- ence – which across countries have been
third higher in India than China. shown to have an important impact on
By looking only at the population contraception – suggests that even if the
size and not the age profile, the diabetic one-child policy was stopped, birth
market might be overestimated in India rates may not rise significantly. By
and underestimated in China. Similarly, 2025, the birth rate in China is forecast
without taking the age profile in China to be 6.6 million, half that of 2005.
into consideration, the market for child- In India, on the other hand, the total
hood vaccinations may be overestimated. number of births remains high over the
next 20 years, with a slight drop from
25-26 million to around 23 million.
Chart 2
Although the birth rate declines during
One key way to shed further this time as a result of the affluence/education
40000 effect, which reduces the propensity among
light on the Asian landscape women to have children, this is offset by the
Diabetes Prevalence (000s)

35000
increase in the number of women of childbear-
30000
and improve the accuracy of ing age.
25000 These different trends show that by 2025
20000
therapy forecasts is to utilize the India will have become larger than China, with
15000 China India 1.407 billion people compared to 1.316 billion
population insights provided by people. China will clearly have become an older
10000
society. More than 50% of its people will be
5000 over the age of 40 and in some places, such as
demographic forecasting
0 Shanghai, it will be 69%. Compared to India,
2005
China will have 330 million more people over

Therapeutic future
40 The current market picture is not the only sce- Chart 3
India Male
Urban Diabetes Prevalence Rate %

35 India Female nario that needs to be considered. When con-

ducting business planning for an existing India
China Male 2025 China
30 product or planning a new drug launch, for
China Female
25 example, managers need data that can usefully
assist in both short and long-term market pro- 2015
20
jections. This can be provided through examin-
15 ing the age profile over time, tracking how it 2005
changes, how that affects the numbers of peo-
10
ple with a particular disease and, subsequently,
5 how the demand for therapy will alter. 1995

0 Age profiles in countries are determined by 0 5 10 15 20 25 30

30-39 40-49 50-59 Age birth and death rates. Currently the popula- Births per annum (millions)
tions of India and China are of similar size.
 40 years, greater than the total size of south, 22.9% of males have high blood
the US population which is today’s top pressure while in the north it is 35.7%.
pharmaceutical market. India will essen- This approach can also be used to
tially remain a young population. It will compare individual prefectures. For
have 224 million more children than example, Harbin (3.149 million males)
China and 75% of the people will be in the north and Guangzhou (2.793 mil-
under 40 (Chart 4). lion males) in the south, have similar-
In an older society, the main health sized male populations. However, when
burden becomes degenerative disease. the prevalence rate is applied, this
This is especially so in an affluent popu- shows that in the 45-54 age group more
lation that has been exposed to toxins, than double the number of males in
smoking and changes in traditional diet Harbin suffer from hypertension than
and lifestyle, factors which often lead to in Guangzhou.
conditions such as hypertension and dia- Simply applying the hypertension
betes. As a population can only focus on prevalence rate to all cities or consider-
a certain number of issues at one time, it ing all cities equal in terms of allocating
tends to concentrate on those affecting sales representatives might therefore

the market partner

the most people. Thus, in China, there lead to less than optimal use of
will be larger focus on the population of resources. In reality, it is necessary to
over 40s and the health conditions to look at how each geographical area is
which they relate. In India, although the affected in relation to others to gain a
number of people over 40 increases, it more exact picture and be able to start
does not rise in terms of proportion of to prioritize resources.
the population. India is still a youthful In looking at the insights revealed
society and will concentrate more on by applying the age profile, age profile
health issues related to young people, trends and focus by geographical differ-
14 | 15
which include infections and childbirth- ence, the value of demographic fore-
casting for therapy forecasts can readily
When conducting business be seen. However, this is just one example of
Chart 4 how demographic forecasting can assist phar-
planning for an existing product maceutical executives. The second article in this
70+ series, to appear in the next issue of The Market
65-69

60-64
India
China
or planning a new drug launch,
managers need data that can
Partner, examines patient access to treatment in
emerging markets, with a focus on China. mp .
55-59 Dr. Susan Ward is CEO of Global Demographics
usefully assist in both short and Healthcare, which combines demographic, epidemiology
50-54 and socio-economic parameters in over 50 countries to pro-
duce reports and forecasting models for the pharmaceutical
45-49
long-term market projections sector. She can be contacted at [email protected]

1 Cited in Unmasking China’s Pharmaceutical Future,

40-44
Ernst & Young, 2005
2 Quoted in The Indian Pharmaceutical Industry:
35-39 related health conditions. Such a picture assists
Collaboration for Growth, KPMG, 2006
managerial decisions on which main therapeu-
30-34 tic areas to pursue in particular countries.
25-29
Resource allocation Chart 5
20-24 Within a country, one key issue facing man-
Global Demographics Healthcare Ltd.

China North-South Difference in

agers is how to accurately determine where to
15-19 Hypertension Prevalence Rate in Males
focus resources. In this case, it is important to
55-64
10-14 apply the forecasted prevalence rate of a disease South
to the age and gender forecast by geography in North
5-9 45-54
order to optimize allocation of sales and mar-
0-4 keting resources. Chart 5 highlights the signif-
35-44
icant difference between prevalence rates of
0.0% 5.0% 10.0% 15.0% 0% 10% 20% 30% 40% 50% 60%
hypertension in northern and southern prefec-
Proportion of total population in 2025 Prevalence
tures in China. In the 45-54 age group in the
 market watch | STRATEGIC THINKING

The ‘Science’ of
Promotional Planning
Pharmaceutical brands are developed through rigorous scientific research. Can a similar
approach be applied to promotional strategies?
By David Gascoigne, IMS Health ■ [email protected]

trate this concept and show how taking a more

analytical, evidence-based approach can opti-
mize promotional investments and generate
more effective – and at times economical –
sales and marketing strategies.

Optimizing a channel within a portfolio

Managing a brand’s promotional mix is funda-
mental to pharmaceutical marketing. While
achieving the right balance between personal
and non-personal promotion may seem like a
simple objective, the myriad promotional tactics
that can be deployed across each of these
options bring great complexity to the task at
hand. Marketers often build plans based on
prior-year activities, with little insight as to how
changes to the mix can yield significant increas-
es in brand performance. Building greater ana-
lytics into the planning process can uncover
new growth opportunities and eliminate the
risks and uncertainties inherent in change.
Background: A top pharmaceutical compa-
ny wanted to understand the impact of key
promotional activities on brand performance
From the very first testing of a novel com- planning. These techniques incorporate rigor- and to optimize the impact of the promotional
pound, pharmaceutical companies use informa- ous scientific methods to assess promotional budget. The marketing team also wanted to
tion derived during the meticulous clinical strategies and their impact on return on invest- determine whether their revenue target was
research process to make pivotal decisions. ment (ROI) at the brand, portfolio and market achievable given their planned spend and pro-
The value of this information is unquestion- levels. posed allocation. The brand in question was in
able, as it will determine the success or failure In each scenario, marketing managers are a relatively new drug category, yet a late entrant
of the compound. Similarly, for pharmaceutical able to capitalize on rich information, includ- in the US market – lagging the market leader
marketers, launching a new drug or managing ing benchmarks, analogs, and an array of detail by nearly four years. All drugs in the category
a mature brand can exceed or fall short of regarding physician preferences, sales volume had used branded and disease awareness direct-
expectations based on a single key element – and performance drivers, to support more to-consumer (DTC) marketing over the past
accurate, comprehensive information. effective promotional planning throughout the several years. The company sought to apply
For the pharmaceutical marketer, it is product lifecycle. Whether marketers are evidence-based analytics to determine the opti-
essential to obtain, prioritize and act on the focused on a single brand, an overall portfolio, mal DTC budget within the context of the total
best available information. Fortunately, today’s or multiple countries across a region or around promotion mix for the brand.
professionals have advanced techniques avail- the world, there is evidence that highly scien- Approach: The analytical approach inte-
able to them for analyzing information about tific methodologies can be applied to produce grated a comprehensive research design that
the marketing environment for promotional higher returns. Real-world case studies illus- utilized diverse yet rich data sources, prescriber
preferences and attitudes, and analog brand compare and analyze the impact of detailing,
Chart 1
behavior. Both branded and unbranded samples and DTC given that the brands were
programs were examined, with a focus on Modest budget increases yield revenue in different phases of the product lifecycle.
ROI and impact on product performance. gains of US$58 million Outcome: Findings demonstrated there was
A rigorous process was employed. This includ- Mix analysis determined that, given the current
opportunity for substantial reallocation of the
ed evaluating measures for modeling based on response to promotional activities and market total promotional budget across the portfolio.
business objectives, examining trends and dynamics, brand performance would fall consider- Scenarios suggested that incremental revenue
analogs in the market category, developing ably short of its target. By increasing the budget growth of up to $300 million could be achieved
by only US$10 million as much as US$58 million in
models to assess the impact of promotions, incremental revenue can be gained. This budget
with the current budget – depending on the
using these to analyze ROI, developing key increase could be used to expand the current DTC degree of reallocations of funds across brands
conclusions, and identifying implications for program to include prime-time television and and the optimization of the promotional chan-
future professional and DTC promotions. greater emphasis on print advertising, which typi- nel mix within brands. This substantial gain
cally generates a higher ROI than television spots.
Outcome: The analysis pinpointed the demonstrates the power of evidence-based
impact of promotional practices and brought Promotional Revenue analytical approaches and has significant
important strategic insights: given the current Spend ($mm) ($mm) implications for franchise leaders, who often
response to promotional activities and market $140 $1,000 make difficult trade-off decisions without being
dynamics, brand performance would fall con- able to predict the short and long-term impact

the market partner

siderably short of its target. However, modest $900 these choices will have on their portfolios.
$120 $805mm
increases in the promotional budget would in $747mm $800
turn drive significant increases in revenue – as $712mm $100mm
Optimizing the mix across countries
$100
much as US$58 million with only a US$10 $700 Cross-geography planning presents similar
$90mm
million budget increase. This increase could be opportunities for enhancing promotional effi-
$600
used to expand the current DTC program to $80 ciencies and effectiveness. Optimizing the
include prime-time television. In addition, the $68mm $500 promotional spend for pharmaceutical products
company learned that it should focus more on $60 is a process that entails examining the level of
print advertising, which, contrary to what mar- $400 promotion required to achieve brand sales goals
keters and promotion management experts in a specific region; determining the optimal
16 | 17
$40 $300
often think, typically generates a higher ROI allocation of investment across a market that
than television spots. This strategic realloca- $200 encompasses many countries; and leveraging
tion projected a 25%-plus increase in overall $20 the most efficient mix of promotion channels in
$100
ROI for the brand. (Chart 1) each country’s market. Disparate data sources,
$0 $0 geographic differences, and pricing and payer
Optimizing the mix across the portfolio 2004 2005 Optimal influences make cross-country/cross-region
Spend Planned Mix
More rigorous analyses can also refine the comparisons particularly challenging, but
overall promotional mix, which includes detail- Print Samples Details advanced analytic techniques illuminate areas
ing, e-marketing, sampling, meetings and
TV M&E — Revenue of marketing and promotional opportunity.
events, public relations, and journal-related Background: A vice-president of marketing
activities. This “mix” serves to enhance the promotional strategies and budgets for each for a major pharmaceutical company wanted to
overall performance for a pharmaceutical com- brand individually. However, it couldn’t make meet an expected level of promotional ROI for
pany’s portfolio from new products to more promotional effectiveness comparisons across a new drug launch. The drug was in a highly
mature ones. By developing scenarios that can brands, nor was it able to pre-determine what competitive class that included varying levels
predict incremental revenue growth, compa- brand – and overall portfolio – performance of promotion across the region. Uptake of the
nies can establish appropriate budgets – and would be given various promotional budget drug class was known to be generally slow due
more effectively allocate funds across various levels and allocations. to payer-imposed restrictions. Additionally, it
promotional channels. Modeling the ways in Approach: The analysis incorporated mod- was acknowledged that breaking through to a
which different funding scenarios affect rev- els built according to physician specialties and more standardized use of the drug class would
enues and portfolio performance over time product form/strength and demonstrating the require concentrating promotion against the
yields critical information that ultimately percentage of annual prescriptions written by primary prescribers of the class. Comprehen-
improves ROI and strengthens a company’s physicians that were contributed by each major sive analysis of 22 markets was used to create
competitive edge. promotional channel. These models were sup- analogs that would help establish – and opti-
Background: A major pharmaceutical com- plemented with additional promotional data. mize – promotional budgets in the first three
pany wanted to look at its promotional invest- Response curves and marginal ROI curves years. Such comparisons to historical references
ments across a nine-brand portfolio to identify were subsequently developed to support provided an invaluable business context to
major spending inefficiencies and to use the multiple optimization scenarios, which demon- make optimal allocation decisions.
findings to maximize the impact of the compa- strated the ways in which shifts in funding and Approach: Analyzing 22 diverse markets
ny’s promotional investment across the nine channels impacted brand performance. In addi- presented numerous obstacles, so local factors
brands. Traditionally, the company established tion, numerous benchmarks were utilized to such as retail vs non-retail, GP vs specialist
prescribing mix, market size and potential, and weight, US$68 million in incremental revenue
Performance pointers
pricing and market access factors were exam- could be realized set against that projected
ined and clustered based on their similarities. under the original planned budget. (Chart 2)
Primary research and secondary data provided
further inputs to the creation of predictive pro- Analytical rigor drives better results
motion response models, which drew heavily Multi-dimensional approaches to building and
on promotional benchmarks to test the reason- applying analogs illuminate important strategic
ableness of spending in each country. In this insights for promotion optimization, and are
manner, the ideal promotional budget by major a clear input to achieving a truly optimized
channel for selected markets was identified, promotional mix. Advanced techniques are
along with additional insights on the merits of available today, but remain largely unexploited
personal and non-personal promotion. by pharmaceutical companies, which may lack
Outcome: For the launch brand, the share the expertise, resources or access to analogs
of the expanded drug class was estimated by and benchmarks required to fully apply them.
using extensive analog analysis. Market share Increased competition, regulatory challenges
was projected which related Year 3 exit volume and a rapidly globalizing market make infusing
share to three-year average promotional share greater analytical rigor into promotional plan-
of voice. This methodology generated recom- ning a strategic imperative. By taking a more ■ Many pharmaceutical companies assume that
mendations for the optimal promotional bud- evidence-based, analytical approach, pharma- bigger brands require arbitrarily larger budgets
than smaller brands. IMS analysis across multiple
get and provided specific guidance for ceutical companies of all sizes and specialties
managerial consideration. Interestingly, the
major competitors in the class appeared to
have underspent on personal promotion for
can gain a significant competitive advantage
and enjoy greater commercial success. mp . brands and therapy areas suggests that, in many
instances, promotional programs for larger brands
deliver diminishing returns and are over-funded.
Smaller brands often deliver higher returns on
promotional investment, a key consideration when
collective market launches. Further analysis
David Gascoigne is Vice-President, Global Promotion establishing budgets and promotional plans for a
indicated that greater emphasis on personal Management at IMS, where he oversees new offerings franchise or portfolio. Companies can achieve
promotion across the EU compared to what development, ensures global consistency and alignment of greater gains for the same level of overall invest-
was originally planned for the brand would offerings and spearheads thought leadership initiatives for ment, potentially breathing new life into languish-
the company’s promotion management information, analyt- ing brands or capitalizing on competitive dynamics.
generate additional revenues. By optimizing
ic and consulting services on a worldwide basis. He can be
both the mix of promotion as well as the contacted at [email protected]. ■ Promotional plans and budgets are often estab-

lished based on historical activities and spending.

IMS analysis suggests that significant revenue
Chart 2 gains are achievable within 12 months if these
100%
17% 19% 33% 19% 31% plans are re-examined and optimized. The gains
Country-level analyses uncover represent untapped growth opportunities and are
Budget Allocation

80%
US$68 million in incremental revenues particularly significant in crowded markets where
60% multiple brands compete for market share and
To execute effective promotional planning across share of voice.
multiple countries, local market dynamics were 40% 83% 81% 67% 81% 69%
examined and factored into subsequent channel ■ IMS analysis of nearly 100 brand-specific studies
and brand analyses. After extensive analog model- 20% on direct-to-consumer (DTC) advertising, including
ing the optimal weight and mix for both personal the impact of both branded and unbranded cam-
and non-personal promotion was established. 0% paigns across print and television shows that,
Through this iterative approach, an additional $68 France U.K. Italy Germany Spain under the right circumstances, and using
million in incremental revenue opportunity was appropriate planning and measurement models,
identified versus what was projected under the MARKET DTC delivers a positive return on investment (ROI)
original budget. Non-Personal Promotion that is, on average, 2:1. Further analysis across
Personal Promotion (Sales Force Only) IMS’ normative database of DTC campaigns and
related ROI suggests that there are three often-
$80 related brand and market characteristics that
Planned budget $73
influence the ROI for DTC advertising:
Optimal budget
$60 - Size of the brand and marketplace
- Level of persistency (refill rates)
$40 - Price of the brand
$25.3
Millions

$22.2 ■ Too often, pharmaceutical companies overempha-

$20 $16.5 $15 $16.1
$10.9 size new patient starts as the primary means of
$7.3 $4.7
$1.2 -$13.7 -$23.1 achieving performance targets. IMS consultants
$0 have found that patient compliance and
persistency represent an area of significant –
-$20 and underutilized – opportunity when it comes to
France U.K. Italy Germany Spain Top 5 EU setting brand strategy and meeting or exceeding
-$40 brand goals.
 views from the region
needed on a wide range of fronts.
A round-up of reports from our offices around the
In his election pledges, Mr. Tsang Taiwan
region outlining the news and events that are shaping included bringing about democratic
reform, maintaining Hong Kong’s Elections likely to hold
their businesses and redefining the healthcare industry competitiveness, dealing with pollu- up legislative reforms
tion, combating poverty, strengthen-
ing education, and reforming the
initiatives include: new packaging health service. National elections will ensure that parti-
requirements mandating a more Mr. Tsang’s next term of office san politics continue to dominate the
China prominent display of chemical starts in July and, in May, he unveiled political scene in 2007-08. Official cam-
Fast-paced GDP compound name; requiring hospi- his restructuring plan for the new paigning will start mid-year ahead of the
growth continues tal prescriptions to be in com- government. The current system of parliamentary election (Legislative Yuan)
pound rather than brand name; policy bureaus, created in 2002 when scheduled for December 2007. The presi-
and the proposed hospital stocking the first Chief Executive, Tung Chee- dential election will follow in early 2008.
Gross domestic product expanded by limit of only two brands for a given hwa, launched the ministerial sys- Due to partisan polarization and the
10.8% in Q1 2007 with predictions for pharmaceutical compound. These tem, took policy-making out of the focus on corruption scandals affecting
much the same for the full year. While initiatives are now being rolled out hands of top civil servants and gave both the ruling DPP party and the

the market partner

inflation was on target at 3.3% in so the impact of these changes it to political appointees. Some opposition KMT, there is not much
April, this was still the highest con- remains to be seen. bureaus had too wide a brief, such as hope of progress on much-needed
sumer inflation rate for the past 25 The less severe than expected the Health, Welfare and Food Bureau. legislative reforms.
months. However, it will probably 2006-07 influenza flu season is The new set-up will see a re-distribu- Latest estimates for 2007 GDP growth
not trigger the central government to over. Vaccine manufacturers are tion of portfolios among policy- range from 4.1%-4.5%. This is almost in
take significant measures to cool the now busy managing the vaccine making bureaus and the creation of a line with the 2006 growth rate of 4.6%,
economy. China’s trade surplus returns process, with returns aver- Development Bureau. The intention thanks to a recovery in domestic demand
expanded 60% in April year-on-year aging about 15%. The lack of harsh is to enhance policy implementation (although not as strong as expected as
with export volume increasing 25.7%, weather, no acknowledged credible and rationalize the distribution the sector is still plagued by the con-
outpacing import growth of 19% for avian flu threat, and lack of gov- of responsibilities, while keeping sumer credit storm, according to the
18 | 19
the first four months of the year. The ernment-sponsored vaccination changes to a minimum. The realign- Taiwan Institute of Economic Research)
European Union remains China’s programs all contributed to the ment will also free Mr. Tsang from and a better-than-expected export per-
largest trading partner, followed weak uptake. the structure he inherited from his formance which is still the major source
closely by the US and Japan. Eric von Zwisler predecessor. of growth. Taiwan dropped one place to
Fundamental changes in China’s [email protected] Under the reorganization, welfare 18th in the latest IMD global competitive-
economic policy, including exchange will be separated from health and ness report while China moved up to
and interest rates, are unlikely in ✱ Fast Fact food. Instead it will form part of a 15th from 18th last year.
the lead-up to the National Party New pharmaceutical cost-contain- Labour and Welfare Bureau leaving On the healthcare front, the investiga-
Congress later this year. However, as ment initiatives are creating fresh the new Food and Health Bureau to tion launched by the Tainan Prosecutors
the United States enters its presiden- challenges. concentrate on food safety and Office in November 2006 and the subse-
tial election cycle, US demands for health policy. The revamp of policy quent complete re-submission to the
basic changes in China’s trade policy bureaus illustrates the policy priori- Bureau of National Health Insurance
are sure to create increasing friction ties and political imperatives of the (BNHI) of all drug purchase transaction
between the two countries.
Hong Kong next administration. During Mr. data have not yet resulted in an outcome
Preliminary pharmaceutical industry Chief Executive Tsang’s election campaign, he also as BNHI said it needed more time to ana-
results for Q1 2007 indicate a strong unveils government pledged to increase healthcare lyze the data. This has left all stakehold-
sales rebound with many multination- restructuring plan spending from 15% of government ers wondering about future implications
als growing in excess of 20% year-on- expenditure in 2007 to 17% by 2012. for the healthcare system.
year, marking the return to growth The outcome of the election for Annual spending will rise from HK$30 BNHI announced on April 4 that it had
rates last seen in the first half of Hong Kong’s Chief Executive in billion (US$3.8 billion) to an estimat- applied for a NT$160 billion loan (US$4.8
2005. Tendering activity around the March was never in doubt. It had ed HK$40 billion (US$5.1 billion). billion) to cover the growing deficit of the
country in Q1 2007 was also signifi- long been known that the current This could be a sign of the determi- healthcare system. The premium hike,
cantly below 2006 levels. National Chief Executive, Donald Tsang, with nation of the next administration to one of the key measures proposed by
Reform and Development Commission the support of the Chinese govern- undertake the badly needed radical BNHI to help to improve its financial
centrally mandated price reductions ment behind him, would win a reform of Hong Kong’s health service. position, continues to be opposed in the
appear to be slowing as well. This is second term by a comfortable Frederick Tsang Legislative Yuan. This resulted in Health
welcome news for an industry racked margin. The hope now is much [email protected] Minister Hou Sheng-mou eventually
over recent years by constant and more will be accomplished in announcing there will be no premium
serious price pressures. Mr. Tsang’s second term than in his ✱ Fast Fact hike until the drug price black-hole issue
However, several new pharmaceuti- first. This time he will have the full Annual healthcare spending is due is solved.
cal cost-containment initiatives are five years. However, there are many to increase from US$3.8 billion to BNHI also said that the first stage of
creating additional challenges. These challenges to be faced and action is US$5.1 billion. the Diagnosis-Related Group (DRG)
views from the region
would be introduced starting from 2008 the government, tipping growth this 3.1% in February 2007, while DBS biggest seizure of a single drug in
with full implementation by 2011. This year to be a sparkling 7%. Research expects inflation to remain Malaysian history. It is believed that the
is a payment system establishing a uni- Continued growth has also generated around 2.8% as the impact of the pills were for the Malaysian market while
versal reimbursement price for treating strong employment gains in Q1 with previous oil price hike dissipates. some could have been for Thailand.
the same medical condition, regardless preliminary estimates showing that As the US is Malaysia’s largest export In Brunei, with global energy demand
of treatment methods, drugs and length total employment grew by 48,000. market, slower growth in the US econo- slowing down, GDP is forecast to ease to
of hospitalization. The new system will This is higher than the gains of 45,000 my will have a negative impact on local 3% in 2007, according to the Asian
eventually replace the current “fee-for- in the same period a year ago, but production and domestic and external Development Bank. Although petroleum
service” payment system. seasonally adjusted is lower than orders. On balance, the GDP forecast for products still account for more than half
Yves Hermes 51,500 in Q4 2006. 2007 moved up slightly to 5.6% from the of the economy, banking, insurance, trans-
[email protected] Eli Lilly has joined GlaxoSmithKline previous forecast of 5.2%, although this portation and the food-retailing sector
and Novartis by committing a sizeable is still below the government’s 6% target have increased their contribution to GDP
✱ Fast Fact investment to Singapore for research and 2006’s growth. growth in recent years and will likely
The first stage of the Diagnosis- activities over the next five years. Lilly On the pharmaceutical market front, assume a larger share of economic output
Related Group payment system will will invest US$150 million to triple the the Pharmaceutical Association of in the years ahead. Inflation remains low at
start in 2008. size of its research center and bring the Malaysia (PhAMA) reported total partici- about 0.5%.
total number of researchers to 150. pating pharmaceutical company sales of As part of its e-health program initiative,
The new S$400 million Yishun hospi- RM535 million in the first four months of Brunei’s Ministry of Health signed a leasing
agreement for personal computers and
Singapore tal, due to open in December 2009, has
experienced delays as have many other
2007, posting overall growth of 7.6%.
Zuellig Pharma Malaysia recorded over- peripherals with Komputer Wisman Sdn
Healthy economic construction projects. The Indonesian all growth of 13.3%. In terms of ethical Bhd, which will lease 1,380 units of IT
growth on track ban on sand exports and the disruption growth, PhAMA posted growth of 10.5% equipment for distribution to all govern-
to granite supplies has created concern in the first four months, whilst Zuellig ment hospitals, health centers, clinics,
and is not only delaying projects but Pharma’s principals recorded growth treatment centers and health-related
The construction boom has provided also pushing prices higher. of 10.1%. offices. The project hopes to improve the
sufficient impetus in Q1 to help Finally, Singapore has been chosen Negotiations on the US-Malaysia distribution and provision of quality health-
Singapore’s economy continue to by the Association of Southeast Asian Free Trade Agreement (FTA) continue. care through utilizing the latest develop-
expand at an impressively strong 6%. Nations (ASEAN) as the region’s center However, industry observers are doubt- ments in information and communications
Weaker manufacturing growth was for stockpiling antiviral drug oseltamivir ful that negotiations will be concluded technology.
tipped as the Achilles heel, but buoyant in case of a bird flu pandemic. before July, putting the entire FTA in Jessie Tang
activity in construction offset that fragili- Singapore was considered the most doubt. [email protected]
ty and continued strength in the ser- appropriate location because of the lack The Malaysian government is still
vices sector made the overall picture of H5N1 cases and its ability to react to making the country’s healthcare industry ✱ Fast Fact
rosier than the market had expected. an outbreak within the region. one of its top priorities and is striving to The Malaysian government is still seek-
Singapore’s economy is likely to grow Giuseppe Leo implement new schemes to help boost ing to boost the country’s medical sector.
at the top end of the official 4.5%-6.5% [email protected] the country’s medical sector. About
growth estimate this year, according to US$9.7 million (RM37 million) has been
Minister Mentor Lee Kuan Yew, as long ✱ Fast Fact allocated to the newly launched Health Thailand
as the United States’ economy holds up. ASEAN has made Singapore the Promotion Board to provide funding to
Mr Lee’s optimism was mirrored by the region’s center for stockpiling health-related NGOs and professional Economy slows as
Monetary Authority of Singapore (MAS), oseltamivir. health associations to act as catalysts to political uncertainties
which said that the local economy is on promote the culture of healthy living remain
track for a fourth consecutive year of Malaysia among Malaysians. Organizing health-
robust growth. However, the central promotion activities is one of the strate- The interim government announced that it
bank is sticking to the official growth & Brunei gies of the Ministry of Health in would only be managing the country up to
estimate as it notes that the US econo- Projects under 9th managing health-related diseases such the end of the year. It plans to hold a
my is slowing and the global electronics Malaysia Plan gain as strokes, which are on the rise each national election this year but has yet to
sector is sputtering. momentum year. A total of 350 health clinics will be announce a date. The government is also
Growth of around 6% this year is well built in rural areas nationwide under the drafting a new constitution although cer-
above Singapore’s medium-term growth The Malaysian economy will continue to 9MP to cater for the healthcare needs of tain issues are still pending.
potential of 3%-5%. But is still a signifi- expand moderately given the increasing the poor. Mobile clinics are also in the Thailand’s economy during Q1 2007
cant slowdown from last year’s 7.9%, momentum in implementation of 9th national health plan, with such facilities slowed due to persistent weakness in
which was the third straight year of Malaysia Plan (9MP) projects, faster provided for areas that lack land for con- domestic demand and political uncertain-
healthy growth for the local economy, investment approvals, policy initiatives struction. ties. The country was also included on the
which increased by 6.6% and 8.8% to relax foreign exchange trading rules In March 2007, a whopping US$3.7 US 301 Watch List for trademark infringe-
respectively in 2005 and 2004. and scrapping of the Real Property Gains million (RM14 million) worth of counter- ments, dampening market sentiments fur-
However, economists at Nanyang Tax (RPGT). Recent monthly indicators feit sex stimulant pills closely resembling ther. Consumers were more cautious in
Technological University (NTU) are far reveal inflationary pressures declining Viagra were seized in Penang in the spending and credit card default pay-
more upbeat about the economy than from a high of 4.8% in March 2006 to northern part of Malaysia. It was the ments increased. This is expected to have
an effect on public hospitals’ ability to the stable 8,900-9,200 range in recent early June, Indonesian officials had per US$, despite market jitters and
meet short-term payment obligations. months. Indonesian shares have recorded 16 further deaths. massive spending in the run-up to the
Compulsory licensing announced a also reached record highs, with the Minister of Health Siti Fadilah Supari May elections. In response, the cen-
few months ago by the Ministry of Jakarta Stock Exchange Composite has launched cheap, unbranded generic tral bank liberalized selected forex
Public Health has affected three phar- Index breaking through 2,000 follow- medicines as part of the Ministry of transaction rules in an attempt to
maceutical companies in Thailand, two ing feverish growth in other Asian Health program called Obat Serba temper the peso appreciation. The
HIV treatment drugs and one heart dis- markets. Seribu (All One Thousand Medicines). inflation rate through April remained
ease drug. The issue is still being widely Meanwhile, Bank Indonesia (BI) has The program consists of 20 kinds of moderate (less than 3%).
debated and no satisfactory solution is lowered the BI rate from 9% to 8.75%. medicines worth 1,000 rupiah each The Supreme Court recently
within close reach. Though the Thai This decision was based on an evalua- (around US$0.11). These medicines are sustained a prior injunction on the
government believes it has acted in the tion of progress toward the inflation produced by PT Indofarma, a state- Department of Health, restraining
best interests of Thai patients, it is diffi- target, set at 6%+1% and 5%+1% for owned pharmaceutical manufacturing the government from enforcing
cult to follow many aspects of the issue. 2007 and 2008, identification of vari- company, and will be distributed proposed restrictions on advertising,
Thailand is the 21st richest country in ous risks, and assessment of current gradually all over the country. Eleven marketing and the promotion of
the world. In 2004, it spent US$93 mil- economic conditions. were distributed in May and the rest infant milk formula and other breast
lion on AIDS/HIV (as per the last pub- Economic growth projection for are due to be made available next year. milk substitutes.
lished figures in the UN AIDS report) 2007-08 is still on track to meet earlier Medicines will be labeled to ensure The Philippine International Trading

the market partner

while the new government increased forecasts of 6% for 2007 and 5.7%- their authenticity. Corporation (PITC) continued to
military budget spending in 2006 by 6.7% for 2008. The slow rate at which Christian Stoeckling promote its parallel drug importation
US$1.1 billion. private consumption has been gather- [email protected] plans and announced it will increase
In addition to compulsory licensing, ing momentum in 2007 is expected to its annual imports from P115 million
the current administration is also set be compensated by the substantial ✱ Fast Fact to P400 million. PITC also announced
to revamp the financing and benefit increase in government spending. The Health Minister has launched a plans to increase the number of low-
schedule for healthcare spending, tak- Government efforts to improve program distributing cheap, unbranded cost brands imported from 30 to 70
ing away most of the benefits for civil the investment climate and the accel- generic medicines. brands.
servants and their families. How the erated infrastructure development The pharmaceutical industry grew
government will communicate these program are expected to push invest- over 10% in the first quarter to an
20 | 21
changes to the public without wide- ment growth to higher levels. industry size of almost P100 billion
spread unhappiness remains to be seen. A new investment law has been
Philippines (US$2 billion or €1.56 billion). Ethical
Due to problems in Thailand’s south- approved by parliament one year after National mid-term products grew 13% and proprietary
ern region, the government will spend the draft was submitted. Key elements polls held products grew 6%. The drugstore
over US$11 million on nursing scholar- of the law include equal legal status, channel grew 11% and the hospital
ships to address a shortage of medical investors’ protection, dispute resolu- channel grew 5%.
care. Scholarships will be given to tion, negative list, property rights, The Philippines held national mid-term
3,000 high-school students living in immigration procedures, tax incentives elections on May 14 for positions in the Zuellig Pharma Philippines
Yala, Narathiwat and Pattani provinces, and reporting requirements. Senate, Congress, and local government In March, Zuellig Pharma welcomed
together with students of districts Bird flu has largely flown off the (governors and mayors). Election results two new principals: Novartis and
in Songkhla province affected by the radar of the western world but people should be available by the end of June. Mead Johnson. Separately, the Cebu
violence. are still dying from it nearly every The government missed its budget Distribution Center upgraded storage
Patrik Bruhlmann week in Indonesia. Since the first case deficit target of P46 billion for the first capacity for “cool” and “cold” product
[email protected] was reported two years ago, govern- quarter, posting instead a deficit of P52 storage.
ment officials have reported 79 deaths billion. Government revenues were P19 Mike Becker
✱ Fast Fact from the H5N1 strain in Indonesia, billion short of target. Finance officials [email protected]
The government’s compulsory more than a third of the world’s total. admitted the revenue goal is unattain-
licensing of drugs is still causing The country is also struggling to able and have reduced it by 13%. Metro Drug Inc
debate. ensure that poor nations get their fair Minimal improvement in collection effi- In early June, MDI completed its ware-
share of any new vaccine developed to ciency and the absence of new tax mea- house extension project. We have
stem the spread of a possible global sures have further limited revenue rented an additional 1,500-square-
flu epidemic. Indonesia has refused to growth. Nonetheless, the government is meter warehouse directly adjacent to
Indonesia share its samples of bird flu virus with projecting a full year budget deficit of our current facility to handle return
Parliament approves the World Health Organization (WHO) P63 billion or 0.9% of GDP. Government goods and samples. In the main facili-
investment law since January. Jakarta fears a vaccine spending, particularly on much-needed ty, we upgraded the air-conditioning,
produced from its specimens would be infrastructure, may need to be curtailed improved the flooring and added addi-
out of reach for its own citizens – too in order to achieve this goal. tional racking thus increasing capacity
Due to numerous natural catastrophes expensive and controlled by wealthy Strong net inflows, including remit- and improving the workflow. In this
earlier this year, the government has nations. WHO has not counted any tances of overseas Filipino workers and new setup we have a capacity utiliza-
estimated a 0.1%-0.2% drop in GDP. Indonesian bird flu cases since the portfolio investment, have helped sus- tion of around 80%. Should the need
Nevertheless, despite all the disasters, country stopped sending samples, tain a stronger peso against the US dol- arise there is an option of an addition-
the rupiah exchange rate has been in keeping its official count at 63. By lar. The exchange rate fell below P48 al 4,500 square meters for further
views from the region

expansion within the same compound. Government Statistics Office published moved from 30 takas (US$0.4) in June
Welcome on board and thank you for data in May showing that the overall 2006 to 65 takas (US$0.9). The rise Korea
your trust, Alcon Laboratories Inc, Consumer Price Index increased by 7.2% aimed at addressing the growing debt
Lundbeck and Roche Diagnostics in the January-April period compared to position of the Bangladesh Petroleum Free Trade Agreement
Philippines! the first four months of 2006. Increases Corporation. The flow-on effect to com- with US concluded
Chris Eberle for medical products and healthcare modity prices, together with a shortage
[email protected] stood at only 4.1%, while food, for of some food commodity items, has
example, rose by 14.3%. seen the increase contribute directly to The biggest news in the first half of
✱ Fast Fact The Ministry of Health launched the rise in inflation to 7.43% in March 2007 has been the successful negoti-
The Philippine International Trading an investigation into the pricing of phar- from just below 5.98% in January. A ation of the US-Korea Free Trade
Corporation (PITC) continued to maceutical products and as a result a slowdown in the growth rate of GDP is Agreement. Although there are still
promote its parallel drug importation number of companies that had increased also anticipated. substantial hurdles to overcome in
plans. prices were asked to reduce them back to Avian influenza was first detected in the months ahead, this development
previous levels. The Ministry of Health is the country on March 22 in six farms to paves the way for major change with-
expected to issue new guidelines on the north of Dhaka. The virus has since in the healthcare industry. The most
Vietnam pharmaceutical pricing in Q2.
Stefan Heitmann
spread to nine districts and resulted in
the culling of 107,000 chickens. The
aggressive estimates indicate that
two-way trade will increase by about
Growth puts pressure [email protected] poultry industry represents an invest- US$20 billion per annum.
on staff and office ment of nearly US$1.5 billion for During this time, the Association of
resources ✱ Fast Fact Bangladesh, directly or indirectly Southeast Asian Nations Free Trade
Pricing of pharmaceutical products is employing almost five million Agreement, which was ratified on
in the spotlight. people. The government’s response has April 2, also took effect. While
The first four months of 2007 resulted in been limited so far to culling, a public Thailand held out due to rice being
the continued growth of Vietnam’s econ- awareness campaign, and recently con- excluded from the agreement, it is
omy and exports. Exports grew by 22%
to US$14.5 billion over the same period
Bangladesh sidering enforcing the use of masks and
gloves for poultry workers. No cases of
expected that Thailand and Korea will
sign an agreement at a later date.
last year, an increase attributed in part to
Electricity shortage human infection have been reported. The Ministry of Health and the
new export opportunities created by
is causing concern The local pharmaceutical market con- Health Insurance Review Agency
Vietnam’s World Trade Organization tinued a growth rate averaging 15% (HIRA) have announced the formation
entry. Total imports into Vietnam grew through Q1 2007, despite early concerns of a new information center to raise
even faster at 32.8%, which marks a The caretaker government completed its over the large number of outlets dam- the transparency of pharmaceutical-
change from 2006 when imports and first 90 days in office and continues to aged or removed as local governments related transactions in Korea. The
exports were nearly at the same level. govern under the Emergency Powers moved against illegal structures or con- center, to be run by LG CNS, is
Foreign direct investments (FDI) grew by Rules with heavy restrictions on all forms struction beyond legally designated scheduled to begin a trial period in
a staggering 55% in the same period of political activity. An election is expected property boundaries. April looked less October. It is anticipated that the
which means that the annual FDI goal of before the end of 2008 with work under- promising for the industry as companies database will contain such informa-
US$12 billion looks well within reach. way to secure the landscape for credible reported a reduced rate of growth and tion as production and other impor-
Economic growth also appears to be on polls. Reforms include transparent ballot sales below that for April 2006 on the tant statistics, the state of supply,
track to reach the government target of boxes and voter identity cards. back of a reduction in inventories by the as well as consumption data. The
8.5% GDP growth for 2007. On the down- Peak electricity generation capacity of trade. The concern is that this may information will be submitted
side of such rapid growth is an increasing 3,812 megawatts in financial year 2006 reflect reduced spending power resulting regularly by industry partners includ-
shortage of A and B class office space, compared with peak demand of 4,693 from commodity price increases. ing manufacturers, distributors, and
especially in Ho Chi Minh City, with corre- megawatts resulted in load-shedding of However, the underlying reasons have wholesalers.
sponding increases in rental prices. More 1,312 megawatts on 347 days. Growth of yet to be identified. HIRA has notified some multina-
and more companies also face difficulties both the manufacturing sector and con- Zuellig Pharma Bangladesh Limited tional pharmaceutical companies of
in recruiting qualified employees. sumer demand has seen this gap has officially opened its new corporate reductions in their reimbursement
April saw a large number of articles increase in 2007. Prices for urban users office in the Gulshan area of Dhaka and prices although these products are
in the Vietnamese media about pharma- rose 5% in March, and a further increase is nearing the end of recruiting its under patent. It remains to be seen
ceutical product price changes. is likely, to help redress significant losses vibrant corporate team. The Dhaka office what action these firms will take:
Pharmaceutical pricing is regulated to government finances in this area. The will support the operation of 11 branches litigation against the government or
under the Pharmacy Law, which per unit tariff remains below prices in nationwide and deliveries to over 10,000 patent suits against the registrants
requires both the importer and product both the West Bengal area of India, and customers for its first client, of the generic substitutes.
registration owner to notify the Drug Nepal, from where Bangladesh is looking GlaxoSmithKline Bangladesh Ltd. David Ames
Administration of Vietnam (DAV) about at electricity import options to meet its Brett Marshall [email protected]
prices changes on the import price generation shortfall. [email protected]
and/or price to trade. However, market An increase in the price of fuels in April ✱ Fast Fact
prices – especially those in wholesale represented the tenth price rise since ✱ Fast Fact A new information center seeks to
markets – fluctuate independently from June 2006, and saw prices jumping over The country has experienced its first increase transparency in pharma
prices registered with DAV. The 15% per liter. For petrol alone, the price outbreak of avian influenza. transactions.
Corporate office Country offices
Hong Kong Zuellig Pharma
Bangladesh Philippines
Zuellig Pharma Mr. Brett Marshall Mr. Michael Becker
Asia Pacific General Manager President & Chief Executive
1303, Shui On Centre Zuellig Pharma Bangladesh Ltd. Zuellig Pharma Corporation
No. 6-8 Harbour Road Tel: +880 (2) 988 4454 Tel: +63 (2) 845 7252
Wanchai, Hong Kong [email protected] [email protected]
Tel: +852 2845 2677
Fax: +852 2877 5647 China Mr. Chris Eberle
Mr. Eric von Zwisler General Manager
Contacts Chief Executive Metro Drug Inc.
Zuellig Pharma China Tel: +63 (2) 837 8661
Mr. Fritz Horlacher
Tel: +86 (21) 5306 0001 [email protected]
Chief Executive Officer
[email protected] [email protected]
Singapore
Mr. Rolf Steffen Mr. John Woo Mr. Giuseppe Leo
Regional Director, South East Asia General Manager General Manager
Region, Zuellig Pharma Local Wholesaling Division Zuellig Pharma Pte.Ltd.
[email protected] Zuellig Pharma China Tel: +65 6546 8188
Tel: +86 (21) 5306 0001 [email protected]
Mr. Roland Bruhin [email protected]
Regional Director, North Asia Region, Taiwan
Zuellig Pharma Hong Kong & Macau Mr. Yves Hermes
[email protected] Mr. Frederick Tsang General Manager
Chief Executive Zuellig Pharma, Inc.
Mr. Eric von Zwisler Zuellig Pharma Ltd. Tel: +886 (2) 2570 0064
Regional Director, China Region, Tel: +852 2856 3632 [email protected]
Zuellig Pharma [email protected]
[email protected]
Thailand
Mr. Mike Hampton Indonesia Mr. Patrik Bruhlmann
Business Development Manager Mr. Christian Stoeckling Chief Executive
South Asia President Director Zuellig Pharma Ltd.
[email protected] P.T. Anugerah Pharmindo Lestari Tel: +66 (2) 656 9800
Tel: +62(21) 345 6008 [email protected]
Mr. John Dickson [email protected]
Chief Information Officer Vietnam & Cambodia
[email protected] Korea Mr. Stefan Heitmann
Mr. David Ames General Manager
Ms. Elaine J. Cheung President Zuellig Pharma Vietnam Ltd.
Chief Financial Officer Zuellig Pharma Korea Ltd. Tel: +84 (8) 910 2650
[email protected] Tel: +82 (2) 2006 0600 [email protected]
[email protected]
Mr. Douglas Stanton
Regional Human Resources Director Regional
[email protected]
Malaysia & Brunei Mr. Joe Davies
Ms. Jessie Tang Regional Logistics Manager
Chief Executive Zuellig Pharma
Mr. Joshua Leung
Zuellig Pharma Sdn.Bhd. Tel: +63 (2) 752 6458
Editor, The Market Partner
Tel: +60 (3) 7985 6688 [email protected]
Zuellig Pharma Asia Pacific
[email protected]
[email protected]

For information about Zuellig Pharma

Asia Pacific or any of its business entities,
please contact the Corporate Office:

Zuellig Pharma Asia Pacific

1303 Shui On Centre
No. 6-8 Harbour Road
Wanchai, Hong Kong
Tel: +852 2845 2677
Fax: +852 2877 5647
Email: [email protected]
The Market Partner: company background

Zuellig Pharma Our world-class facilities Affiliated Company Associated Company

Asia Pacific operate in strict accordance
With a history of more than with rigorous quality man-
60 years in Asia, Zuellig agement standards, setting
Pharma has forged a reputa- industry benchmarks of
tion as the leading provider excellence. We continuously Pharma Industries has a PharmaLink is a leading
of distribution solutions for refine and implement the long-established history in pharmaceutical and health-
the pharmaceutical industry latest technological advances providing contract manu- care marketing specialist in
in the region. Our cutting- in our on-going drive to facturing services to the the Asia Pacific region. The
edge services cover end-to- offer the best services to our Asian pharmaceutical
company is a wholly owned
healthcare industry through
end supply chain principals and clients. subsidiary of Asia Pacific
its operations in Thailand
management, including Pharmaceutical Holdings,
and the Philippines. With
inventory management, For more information about
a client base of over 50 a joint venture between
warehousing, distribution Zuellig Pharma Asia Pacific, multinational companies, Interpharma Investments
and customer order man- please contact: and over 1,200 formula- Ltd, Quintiles Transnational
agement, among others. [email protected] tions currently in produc- Corp and Temasek
Taking advantage of tion, the Philippines plant Holdings (Private) Limited.
our extensive expertise, of Pharma Industries is
pioneering technological the largest, most advanced
innovations and state-of- contract manufacturing
the-art facilities allows facility in Asia. The group’s
manufacturers to focus on zip-online® is our regional Thai operations are certi-
their own core expertise. A principal information fied to the same top GMP
standards, providing manu-
scalable infrastructure sup- platform offering timely
facturing services to over 30
ports the marketing drives sales and inventory
research-based companies
of our principals and our information, best practices
from around the globe.
collection services reduce in analysis and reporting,
country risks for individual and diverse forms of
principals. benchmarking.
We provide the largest
direct account coverage in
all healthcare channels in
Asia Pacific, employing over AsiaRx® is our exclusive
1,000 sales representatives regional Internet-based
to support the activities of pharmaceutical marketplace
our principals in the trade that connects customers
channel. Advanced informa- and principals in innovative
tion technology tools, such ways. For principals, it is a
as zip-online, an innovative new connection to cus-
sales and inventory tool, tomer behavior, integrated
give principals full trans- with other channels and
parency for all transactions. offering complete supply
chain information. For cus-
tomers, it saves them time
and money, and gives them
the control necessary to run
their businesses better.