Is ATM Delivering Cash in Emerging Markets?

The recently published Access to Medicines Index (ATM) has revealed interesting trends which support the fact that while most companies tend to rush to reduce price when thinking of achieving greater access in the emerging markets (EMs), transparency in pricing (even at the level of corporate and brand level pricing strategy, as well as list price levels) is equally important to ensure investments in the EMs result in the revenue growth so many companies expect.

CBPartners’ Emerging Market Centre of Excellence reviewed the recent ATM Index, along with the top-line revenues generated by five companies with publicly disclosed EM market share over 20%: ASTRA ZENECA ($AZN, 28%), SANOFI ($SNY, 26%), NOVARTIS ($NVS, 25%), ROCHE ($ROG, 24%) and PFIZER ($PFE, 20%), to understand if revenue growth is related to improvement in index achievement.

Among these companies, $AZN, $SNY, $NVS, and $ROG demonstrated similar or improved ATM ranking over the 2014-2016 period, which was to a large extent correlated with their EM revenue performance (as indicated by publicly disclosed EM revenue share growth during 2014 and 2015).

While $AZN climbed eight steps in the most recent ATM index, and also demonstrated the highest improvement in EM revenue growth during the 2014-2015 period, $ROG lagged behind in both dimensions, losing seven ATM positions since 2014. Similarly, while both $SNY and $NVS improved in a similar fashion over the 2014-2016 period (both in the EM revenue share growth and the index), $PFE’s relatively low ranking in 2014 has remained almost unchanged, which was in line with its steady EM performance in over the 2014-2015 period (Figure 1). The same picture can be seen if we analyse the absolute figures of EM revenues over the 2014-2015 period: $ROG (pharmaceutical division) and $PFE have demonstrated a decline in this dimension as opposed to $AZN, $SNY and $NVS.

EM ATM

Companies’ rankings were largely informed by their degrees of pricing exposure, and transparency. Both $ROG and $PFE remained relatively non-transparent in their EM policies and scored the lowest, as opposed to the other three companies with regard to “Pricing” (a scale of ‘equitable tailored pricing approach’). However, when we look to the $AZN example, the positive effect that EM investment has on the growth of EM sales can largely be attributed to a new affordability-based pricing strategy and improvements in stakeholder engagement processes that transpired over the two year period.

There is an increased demand to do business differently in EMs. With new launches approaching, many of which in the specialty / oncology therapeutic areas, combined with the resulting pricing pressure in these countries, the importance of tailoring pricing and market access policy rises substantially.

CBPartners advises biopharmaceutical clients for their affordability-based pricing strategy, guidance around ATM index improvement and for strategic communication around pricing in emerging markets. For additional information, please contact Sandeep Duttagupta, PhD, Vice President & Principal at sandeep.duttagupta@cbpartners.com.

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