January 2008
	Latin America, Here We Come! My colleagues at GfK headquarters in Germany recently informed me that, along with being responsible for their three U.S. health care companies, my preaching about the PricewaterhouseCoopers prediction that pharmaceutical industry sales would double by 2020 largely from developing countries that could not afford premium pricing on drugs for their millions of patients had led GfK to make me and my colleague, Bart Weiner, responsible for increasing our health care marketing research business in Latin America and Canada. While flattered, Bart and I were also somewhat flabbergasted, since we know nothing about health care delivery, pharmaceutical marketing, etc., in these countries except what we learned by viewing “Sicko,” the enlightening Michael Moore movie on which I have already written. Where to start? After some initial discussions, we developed a strategy I would like share with you, since as I have previously written I genuinely believe that the pharmaceutical industry is going to explore such business opportunities in the future to replace our declining revenues in the United States. We have taken several steps to get this initiative moving. First, based on my firm belief in the importance of the interaction between a country’s pharmaceutical industry and the economics of the country in which it operates, I commissioned my friend and colleague, Jane Sarasohn-Kahn of THINK-Health, to conduct an Internet-based review of the major countries in Latin America (we’ll get to Canada in our next initiative), and to determine how the region’s health care systems and pharmaceutical industries work at the present time and what trends are driving their futures. I have just received Jane’s as-always brilliant report on these issues, and if you and your company would like to learn what we now know about Brazil, Argentina, Venezuela, etc., you should give me a call. But I’ll give you an overview here. In brief, and not surprisingly, a country’s approach to pharmaceuticals is deeply embedded in its approach to health care, with all of that being intensely impacted by the economic circumstances of the country. The poorer the country, the tighter the controls on the use of pharmaceutical products. Relatedly, generics are increasingly being pushed, if not mandated, by the governments of these countries in order to provide health care to a broader segment of their populations at an affordable price. In fact, in some countries, by law, physicians must write their prescriptions using the generic rather than brand name. A second and less than surprising phenomenon is that in the more progressive countries there is a strong interest in having patients consume medications made in that country, rather than elsewhere, and preferably by a company that is incorporated in that country. As for the global companies housed in the United States and other developed countries, the remaining opportunities appear to be in specialty pharmaceuticals, e.g., those employed in the treatment of cancer, that are not available generically or manufactured locally. Again, the 60,000-foot view outlined above was generated through Internet research. Our next move, from 60,000 feet to feet-on-the-street, is to hold a summit meeting next month of representatives from our sister GfK companies in each of the key countries in Latin America to determine the answers to such questions as: How does health care delivery work in their countries? How are pharmaceuticals currently marketed in their countries? Are their companies, which in most cases primarily conduct general research in other markets, currently conducting pharmaceutical marketing research? If they are, what kinds and how much? If not, why not? In either case, what other marketing research companies constitute the competition in this space in their countries? How much more opportunity is there to conduct pharmaceutical marketing research in each of these countries, and what will we have to do to realize these opportunities? At the completion of this summit meeting, we will assemble the information, add it to the voluminous secondary data summarized above and develop a plan that will: Prioritize the countries in Latin America in terms of their pharmaceutical marketing, and thus their pharmaceutical marketing research potential. Identify and construct the strategies and tactics needed to optimize these opportunities. Construct a template that can be employed in other developing countries, e.g., those in Eastern Europe, to accomplish the same purpose. In summary, it is our strong belief that if the PricewaterhouseCoopers vision of a doubling pharmaceutical industry top line by the year 2020 is to be realized and converted to profitability at the bottom line, this result will come from paying careful attention to countries that we had previously paid little or no attention to, and from developing new marketing and marketing research techniques that will permit us to do so in a highly efficient manner. On a similar note, for further details on conducting revolutionary marketing research for an evolutionary pharmaceutical market, please read the related article in this month's Topline. Richard B. Vanderveer, Ph.D. Group Chief Executive Officer GfK U.S. Healthcare Companies