Emerging markets growth: The critical role of operations in driving competitive advantage

March 2013
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Emerging markets growth: The critical role of operations in driving competitive advantage

At a glance

Biopharmaceutical companies are expanding into emerging markets, sometimes without involving supply chain operations. The operational function (operations) should play a strategic role in emerging market expansion planning.

Facing slow growth in developed markets, biopharmaceutical companies increasingly are expanding into promising emerging markets. Yet too often companies plan emerging market entry and expansion without involving supply chain operations.

A study by PwC indicates that the operational function (operations) should have a deeper strategic role in emerging markets, a role that is new for companies with a developed market bend.

Three emerging market operating models

Model Investment requirements Considerations for deployment
Import Low investment:
Distributing products locally through distributers, logistics providers, and other transactional suppliers.
Appropriate for companies with innovative product portfolios—typically small molecules under exclusivity, select specialty products, and complex biologics; a low-capital method for companies to launch molecules in a specific emerging market.
Local/Regional Medium investment:
Manufacturing, packaging, and quality testing in an emerging market country for local and/or regional distribution.
Typically represents the initial emerging market operational investment to establish regional controls (for example: country-hub-and-regional-spoke model). Considerations include sharing regional regulatory requirements and using existing investments to supply additional regional markets.
Originate/Global High investment:
Assets, formulation, and differentiated technology invested in an attractive emerging market to manufacture or package products for global supply
Appropriate for market-driven portfolios—typically small-molecule products with limited remaining exclusivity or a strategic manufacturing asset to support global demand. This model can combine global API manufacturing with regional or local drug product manufacturing and distribution.