AstraZeneca banks on emerging markets sales - Telegraph

By Rachel Cooper
Published: 9:33PM BST 24 Apr 2010

Emerging markets are the fresh battleground for pharmaceutical companies as Western drug sales stall and last month AstraZeneca revealed its strategy to increase sales in this arena, including providing more detail on revenue in the markets.

Britain's second-biggest drugmaker is targeting double-digit growth in emerging economies and hopes to garner a quarter of its sales from these markets by 2014.

AstraZeneca expects that some of this growth will come from the sale of branded generics e_SEnD cheap off-patent medicines sold in high volumes in emerging markets under a multi-national brand name.

But first it plans, to focus on around 100 medicines and branded generic drugs that are expected to account for just 10pc to 15pc of total emerging market sales by 2014.

In a sign of the scale of growth expected in these markets, healthcare industry intelligence group, IMS Health, last week said emerging nations were expected to push global spending on pharmacueticals through the $1 trillion barrier over the next five years.

IMS expects drug sales in developing nations to grow at between 14 and 17pc over the next five years, overshadowing Western markets that will expand at between just 3pc and 6pc.

Commenting on AstraZeneca's emerging markets strategy, a company spokesman said: "The rapidly expanding middle class, government action on healthcare and the increasing disease burden reinforces our view that emerging markets will provide the lion's share of the pharmaceutical industry's growth over the next five years."

He added that this quarter they were planning to provide more detailed analysis of product revenue by region to help analysts model the growth opportunity in these areas.

"For the first time this quarter, in addition to worldwide and US sales by brand, we are planning to provide that same data for Western Europe, Other Established Markets and Emerging Markets," he said.

Analysts at Bank of America-Merill Lynch said it was this week expecting further visibility on emerging market sales, but added: "Our analysis suggests that AstraZeneca has one of the lowest emerging market exposures of its peers with its 25pc 2014 target below the 40-45pc and 35-40pc we expect for Sanofi-Aventis and GlaxoSmithKline respectively."

GlaxoSmithKline, which has made a deliberate move away from "white pill/Western markets" to focus on emerging economies, will report its first-quarter results on Wednesday.

Analysts at Deutsche Bank said the company will benefit from the tail-end of the pandemic flu scare as the majority of 2010's expected £800m of sales from H1N1 vaccines are likely to have been booked in the first-quarter.

But the broker said the outlook for the rest of the year could be tougher as the estimated £1.5bn of pandemic flu-related sales garnered in the second half of 2009 "at this point looks unrepeatable".'

Shire, Britain's third-biggest drug maker, will update the market on its sales over the last three months on Thursday. Analysts said they were expecting another strong quarter.

"We believe Shire is likely to continue to outperform its peer group due to its above-average growth profile, strong free cash flow and lack of a significant earnings cliffs," said the American broker, Summer Street.

via telegraph.co.uk

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