Deirdre Coleman talks to Bernardo Girala, General Manager for Costa Rica, Honduras and Nicaragua at Novartis on the clustered approach to emerging markets as a failsafe method to map the latest opportunities and how “stay the course” to drive long-term returns.
Over the next decade or two, one of the fiercest business battles will be for the billions of people joining the middle class in emerging markets—a group that will make up 30 percent of the global population by 2020. To compete with global challengers and crack the middle market, multinationals will need to go through the same intense process of analysis and design that they did to develop their current successful business models.
“In my opinion, clustering markets gives you a better way to understand specific customer needs, create the right business model and gain insights to compete in a more effective way. We look closely at the individual market’s health system as well as the commercialization system. We also look at the individual market’s payor system whether it is government or HMO-private based, and we also need to segment the market between primary care and specialty products. In Central America for example, 70-80% is out-of-pocket, which is very different compared to other emerging markets in other latitudes.”, explains Bernardo Girala, General Manager for Costa Rica, Honduras and Nicaragua at Novartis.
To me, it’s vital to 'stay the course', to show commitment to a market and be in it for the long term.
Investing in emerging markets has inherent risks in terms of political and economic volatility and requires a consistent approach and a full commitment of resources.
“There is no one solution when it comes to emerging markets. Each of the markets of Central America has nuances and you have to strive to understand the markets and their drivers. In these markets you are also susceptible to the vagaries of the economic environment. When the economic situation is buoyant you need to capitalize on that growth and as things slow down, you have to accept that and prepare for that change. To me, it’s vital to 'stay the course', to show commitment to a market and be in it for the long term. A permanent presence shows real commitment to a market and its government and proves that you are prepared to take the good with the bad. Moving in and out of markets is a short-sighted approach and it can be very damaging. It’s more about long-term sustainability than quick wins as the economic environment can swing back and if you have taken the time to build trust and establish relationships long-term you will have the presence to capitalize on future opportunities that might otherwise be missed”, maintains Girala.
As developing economies become increasingly diverse and competitive, pharma companies will need strategic approaches to understand such variance within countries and to concentrate resources on the most promising submarkets. Prioritizing several clusters or sequencing the order in which they are targeted can help a company boost the effectiveness of its distribution networks, supply chains, sales forces, and media and marketing strategies.
Bernardo Girala will be presenting at Growth Markets 2014. For more information on the presentation, visit the official website.
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