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Article: Beyond BRIC, Into MIST: Setting sights on pharma’s next-tier terrain

Rachel Howard, February 2020

Emerging markets Director Rachel Howard was recently interviewed by Julian Upton from Pharmaceutical Executive about the BRIC and MIST pharma markets, and what to look out for over the next few years.

MexicoBeyond BRIC, Into MIST Setting sights on pharma’s next-tier terrain
For Rachel Howard, Director at global healthcare market research and consulting agency Research Partnership, Mexico is “perhaps the most challenging of the four markets to predict what will be happening 12 months from now.” Much of this uncertainty is down to the “wild ride” of changes to the healthcare system that have characterized the first year of President Andrés Manuel López Obrador (commonly referred to as AMLO)’s six-year term, following his election in December 2018. AMLO’s plans to disband Seguro Popular, the health administration system set up in 2003 to provide access to healthcare for the uninsured population, and create a unified, nationalized health service “has not proven easy to achieve,” says Howard, not least because of strong resistance from the unions. Instead, AMLO founded INSABI (the Institute of Health for Welfare) to replace Seguro Popular and absorb state-run systems, covering over 60 million citizens. However, “the finances to run this system are severely lacking, meaning there is huge pressure to contain costs.”

Moreover, notes Howard, the AMLO government has empowered an office of the Ministry of Finance to get involved in the procurement of pharmaceuticals for all of the state institutions in an attempt to constrain expenditure. But “tender conditions are aggressive and unfavorable to manufacturers, leading to instances of suppliers withdrawing from the market,” she told Pharm Exec. The government has also recently circumvented the Mexican regulatory body, COFEPRIS, to purchase unregistered drugs from overseas, leaving COFEPRIS’s future uncertain and the pathway to market access in Mexico “increasingly less transparent.” At the same time, says Howard, Mexico’s private sector has “enjoyed a healthier trajectory, benefiting from a significant rise in the number US medical tourists seeking treatment across the border.”

Indonesia’s Healthcare and Social Security Agency (BPJS), launched in 2014 to administer a universal healthcare program (JKN) across the country, continues to struggle, says Howard. The system now covers 30%–40% of the Indonesian population but is running at a deficit exceeding USD$1 billion. From January 2020, the government will double participants’ monthly premiums in an attempt to overcome the shortfall. However, fearing the scheme’s slow repayment process, many private hospitals have resisted joining the program, and “those providers that have joined have shifted their focus to cost control rather than quality—meaning that biopharma sales growth has stalled in recent years,” explains Howard.

She adds: “Although Indonesia has opened up to allow foreign private healthcare providers to establish themselves in the market, the country’s infrastructure is not yet sufficiently developed to accommodate medical tourists. Rich Indonesians instead tend to travel to other Asia-Pacific destinations in search of quality healthcare.” The number of private hospitals is growing but they are still concentrated on the islands of Java and Sumatra, with areas outside of the main islands remaining underserved.

South Korea
South Korea’s place within the MIST grouping is contentious as it is “by far the most advanced of the markets” and, “arguably not ‘emerging’ at all,” says Howard. South Korea was the first country in Asia to consider pharmacoeconomics data, have a well-established and transparent health technology assessment program for pharmaceuticals and medical devices, and the country already enjoys a thriving medical tourism market. “With South Korea pushing to position itself as one of the world’s leading medical hubs, we expect to see continued year-on-year growth through 2020,” observes Howard. “The government is actively investing in biopharma innovation and is making rapid progress with the consolidation of hospital medical data into a form that seamlessly supports digital health initiatives. We can expect state of-the-art techniques to become increasingly commonplace as the country pioneers the latest technologies in healthcare.

“Turkey has long been considered a challenging market for innovative pharma due to its aggressive implementation of external price referencing, which means prices tend to be the lowest in Europe,” says Howard. In addition, she notes, the country’s volatile exchange rate has been a source of uncertainty for international players. Economic recovery could be faster than expected, however, and “Turkey has growth potential, with its universal healthcare system now well established through the Health Transformation Program.” The proportion of GDP allocated to healthcare remains low at 5% and the current pricing environment is restricting access to innovation, but there are “positive signs of progress,” adds Howard. “The Turkish government’s ambitious ‘Vision 2023,’ announced back in 2013, sets out improving healthcare as a priority area, with goals of increasing the number of physicians per 100,000 people, stimulating the domestic biopharma industry, and establishing the country as a medical tourism hotspot.

Given South Korea’s advancement compared with the rest of MIST, some analysts think Nigeria fits more comfortably in the group, hence another O’Neill acronym, “MINT.” While Nigeria is the smallest of the MINT economies, it was two years ago the fastest growing. But a long list of factors continues to make Nigeria problematic from a pharma perspective. It is dogged by the lack of standardization of many drugs of herbal origin; the government’s inability (or unwillingness) to deal with the illegal importation, manufacture, and sale of fake medicines; and poor research support from the government and private companies. The scale of Nigeria’s infrastructural, political, and fiscal challenges means that its potential will take longer to realize than in other MINT markets, says Howard.

Emerging from 'emerging'
If South Korea is rising above MIST, China looks to be breaking out of BRIC. Howard has seen the China market “hugely opening up” in 2019, where Brazil has continued to be dogged by political questions, India still has challenges with patent protection, and Russia has “dropped off the radar a bit.” The 2019 agenda was “overwhelmingly dominated by biopharma wanting to keep up with China,” says Howard. “It is now the number-one must-win. And as global pharma still has a lot to learn about how to win in China, it will continue to be a big area of concern in 2020.” China and South Korea underline the arguably increasing redundancy of the term “emerging markets.” But if the term fails to accurately reflect the diversity of the countries or their varying levels of advancement, it at least remains, says Howard, “good shorthand for the markets outside the US, Europe, and Japan.” As we enter a new decade, however, it will be interesting to see how the changing pharma fortunes of BRICS and MIST—as well as those of Colombia, Vietnam, Bangladesh, Egypt, Iran, Pakistan, and the Philippines— prompt a wholesale rethink of how we manage our expectations of these disparate countries.

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