Drug prices will be under pressure as emerging markets understandably have limited appetite for being ripped off – especially by western drug companies. That said, in economies where piracy and legitimacy of products is often called into question, consumers are still willing to pay more for western-branded drugs, as they are viewed as higher quality – for a while.
In these new markets, companies that have better access to medicines strategies will gain a competitive advantage over their more reactive peers.
Firms identified as having the highest exposure to the key future therapeutic growth areas in emerging markets, as well as having developed better access to medicines strategies, are GlaxoSmithKline, Merck, Novo Nordisk as well as Roche.
The company that appears to have made the most progress on both of these issues, albeit from a low base, is Pfizer.
Mike Appleby is SRI analyst at Alliance Trust Investments
