It is no surprise that as emerging markets, like China and India, continue to grow at a record pace, that drug makers all over the world need to wake up to the fact that the future of their business may depend on markets outside of the United States and Europe. As these emerging markets in China and India, as well as Brazil, continue to grow full speed ahead, it is becoming more evident to the pharmaceutical industry as a whole, that they better start paying more attention to these parts of the world. But what is behind this recent economic boost? Why is it so important for the pharmaceutical industry to start taking notice of it? Could these emerging markets like China and India really surpass the US and Europe as the key players in the pharmaceutical marketplace of the future?
Because of this uninhibited growth in emerging markets all over the world, the pharmaceutical and life sciences industry is beginning to pay attention. However, as many pharmaceutical consultants are beginning to notice, the same strategy that has worked in large, super-industrialized countries such as the US and Europe, may not be as effective in emerging markets such as Brazil and India. Many of these consulting firms are recommending completely different strategies when it comes to being successful in these emerging markets such as differential pricing.
Differential pricing is a tactic that most pharmaceutical companies might not try in larger, more developed countries, but might be a good tactic in emerging markets such as India and Brazil. Differential pricing takes into account the per capita income,when setting prices. For example, the middle-class income rate for Indians or Brazilians is far lower than that of those who reside in the United States and Europe. By differentiating their pricing structures, this could lead to a widespread increase in business abroad. However, not everyone is convinced this will be good for business.
Some critics have argued that under the price differential plan, pharmaceutical companies would suffer major loses unless propped up by large demand or government subsidies. Others have argued that many will just take these cheap branded medicines and resell them in the black market, to other parts of the world for substantially higher prices. Regardless of the best method to price these drugs, no one disagrees with the importance of forward-thinking drug companies tapping into these untouched emerging markets. It seems that whichever company figures out the best plan first to how to successfully tap into these emerging drug markets, will lead the global pharmaceutical marketplace well into the 21st century.
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