Replies to post #3448 on The Rising Influence of Rising Affluence

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From SNY’s Investor Day PR earlier this week:

http://en.sanofi.com/binaries/20110906_Outlook_EN_tcm28-33355.pdf

Sanofi expects to extend its leadership in Emerging Markets, which are expected to account for 38% to 40% of its sales in 2015 compared to 29% in 2010. This objective implies double-digit sales growth in Emerging Markets over 2012-2015.

SNY defines emerging markets as everywhere other than the U.S., Canada, Western Europe, Japan, Australia, and New Zealand.

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Breast Cancer Increases Sharply in Emerging Markets

http://www.bostonglobe.com/news/world/2011/09/14/breast-cancer-cases-hit/mFy1UZYbykhe5hnaZhOPbJ/story.xml

›By Maria Cheng
September 15, 2011

LONDON - For years, it was assumed that young women in poor countries had a higher risk of dying in childbirth than from cancer. But a new study shows that is changing; specialists say that breast and cervical cancers are killing more women than labor in more than 60 developing countries.

In the first global review of breast and cervical cancer, researchers estimated the number of new breast cancer cases rose from about 641,000 cases in 1980 to 1.6 million cases last year.

Researchers at the Institute for Health Metrics and Evaluation at the University of Washington analyzed cancer registries and other data from 187 countries but also used modeling techniques to calculate their cancer rates. In contrast, the World Health Organization says there were about 900,000 breast cancer cases in 2008.

Specialists in the new study found that cervical cancer rose from 378,000 new cases in 1980 to about 454,000 cases in 2010, with most of those cases in the developing world. Still, the death rate has been dropping as more countries introduce regular screening.

Officials estimate that every year about 343,000 women die in childbirth, most in the developing world. In comparison, breast cancer kills 425,000 women a year, while cervical cancer kills about 200,000.

The increase in breast cancer is partly explained by aging populations, since older women are more vulnerable. But the globalization of bad habits - people eating more fatty foods and exercising less - is also driving the growth, particularly in Asia and Latin America.

“People may wonder what the urgency is in addressing these cancers, but the numbers are staggering,’’ said Jan Coebergh, a cancer specialist at Erasmus University Medical Centre in Rotterdam, who wrote an accompanying commentary to the study. “It’s like six jumbo jets crashing every day.’’

The study was paid for by the breast cancer group Susan G. Komen for the Cure and the Bill & Melinda Gates Foundation.‹

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Covidien Announces Shanghai R&D Center

http://finance.yahoo.com/news/Covidien-Announces-RD-Center-bw-4072358876.html?x=0

›Thursday September 15, 2011, 7:00 am

SHANGHAI--(BUSINESS WIRE)-- Covidien (NYSE:COV), a leading global provider of healthcare products, today announced the creation of its flagship research and development (R&D) center for China, which will be based in Shanghai.

The center, which will be fully functional by July 2012, will house two of Covidien’s emerging market R&D organizations:

• Tailored Products – will identify and develop products that are customized to meet the needs of China and other countries in the emerging markets

• Breakthrough Platforms – will utilize the unique skill sets and expertise of employees in Asia to create and develop new medical device technologies.

“The establishment of this R&D facility is a first for Covidien in China,” said Dr. Dong Wu, Vice President, China R&D, Covidien. “We will be undertaking a range of cutting-edge activities that will create innovative products to help physicians improve the health of the people of China and of other markets worldwide.”

The 25-member R&D staff that Covidien currently employs in Shanghai will increase to more than 300 once the new 100,000-square-foot facility is completed.

“At the core of our R&D facility will be our Laboratory and Operating Theatre Simulation Suites that will enable healthcare professionals to visit the center and be involved in the actual design and development process of future medical devices,” Dr. Wu added. “This collaborative approach will help us create products that are best suited to the needs of doctors in China and in other countries in Asia and, therefore, will be more likely to produce better patient outcomes.”

“We are very pleased Covidien has chosen Shanghai and CHJ to be the base of the Company’s inaugural R&D Center in China,” said Mr. Enliang Gui, Vice President of Caohejing Hi-Tech Park and Chairman of Pujiang company. “We are very proud of our long-standing partnership with Covidien, which has also chosen our park as the location for both its regional training center for healthcare professionals and its commercial operations.”

Mr. Alex Gu, Vice President and General Manager, Covidien China, said, “This R&D Center is the latest in a series of China-focused initiatives that clearly demonstrates our commitment to this very important market for Covidien. We look forward to a very successful future here.”‹

[DewDiligence]

Re: PFE and The Global Demographic Tailwind (from 3Q11 CC):

http://seekingalpha.com/article/304116-pfizer-s-ceo-discusses-q3-2011-results-earnings-call-transcript

In terms of highlights for the quarter, our Emerging Markets business had a strong quarter, delivering operational growth of 12% with solid performance in key countries such as China, Russia, Turkey and India.

I am pleased with the continued progress of our Established Products business to penetrate the growing generics market both in developed markets as well as within emerging markets. Close to $1 billion of the $3.2 billion in total revenues for Established Products…came from Emerging Markets.

…For China, for the quarter, our reported growth was 31% operational growth, 26% on a year-to-date basis… Also adding in on China and we maintained the #1 rank in the market in China of all multinationals and local Chinese companies. And our growth rate is outpacing the underlying growth. So China is a big anchor point for us in emerging markets and we're doing very well there.

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MRK Makes Big Bet on China

[See #msg-66847069, #msg-59590951, #msg-49465915, #msg-53041685, #msg-48221898, #msg-47908751, and #msg-47510095 for related stories.]

http://www.thestreet.com/_yahoo/story/11334445/1/merck-betting-big-on-growth-in-china.html

›By Alexandra Zendrian
12/06/11 - 01:54 PM EST

NEW YORK (TheStreet) – Merck (MRK) is putting $1.5 billion into research and development in China over the next five years starting with an R&D headquarters in Beijing.

Six hundred employees are expected to be put to work once the first phase of construction is completed in 2014. The facility will operate in drug discovery, translational research, clinical development, regulatory affairs and external scientific research programs, Merck said.

"The establishment of the MSD Asia R&D headquarters represents an important milestone as we implement our strategy of building capabilities, and relationships to succeed in fast growing geographic regions," said Peter Kim, the president of Merck Research Laboratories, in a press release. "By strategically locating in China, we are able to complement our existing R&D capabilities, and facilitate new collaborations with scientists in the region and across emerging markets."

Merck said in November that it views the United States, Japan and China as its three critical markets. The Dow component is hoping to reach 400,000 physician customers in China by the end of 2012, up from its current 207,000 customers in the country.

Merck's competitors, including Pfizer (PFE) and Abbott Laboratories (ABT), are also expecting significant growth from China [see #msg-59590951].

Pfizer has said it expects China to be its third largest market by 2015, and its second largest market in 2017.

Approximately 25% of Abbott's sales in 2010 came from the emerging markets, according to its 2010 annual report. That number is anticipated to reach one-third of total sales by 2015.‹

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NVS’ Galvus and Lucentis approved in China (with comments): #msg-71019396.

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AMGN’s buys Turkish drug company for $700M:

http://finance.yahoo.com/news/amgen-buying-turkeys-mustafa-nevzat-103141964.html ).

I like it! Turkey is one of the six most important emerging markets for drugs (#msg-47908751), and this deal shows that AMGN wants in on the lucrative business of selling branded generics in emerging markets. As I’ve posted on this board ad nauseam (e.g. #msg-66847124, #msg-61960596) branded generics in emerging markets is the most important future growth driver of the drug/biotech industry.

As for AMGN’s purportedly losing biotech “cred” by buying a generic-drug company, so be it. I’ll take profits over biotech cred any day of the week.

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From LLY's 1Q12 PR:

http://finance.yahoo.com/news/lilly-reports-solid-start-first-103000996.html

China remained Lilly's fastest-growing market, with revenue growth of 41 percent.

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MYL acquisition of Strides is about TGDT: #msg-85140093.

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PFE shuffles division-level management with an eye toward eventual spinoffs:

http://www.sec.gov/Archives/edgar/data/78003/000007800313000031/x991217a.htm

On January 1, the company will begin operating with three commercial businesses -- the Global Innovative Pharmaceutical business, led by Geno Germano; the Global Established Pharmaceutical business, led by John Young; and the Vaccines, Oncology and Consumer Healthcare business led by Albert Bourla. [Bourla rather than Amy Schulman for this business unit is the major change in today’s announcement.] The company remains on track to provide a 2014 baseline management view of profit and loss for each of these businesses, starting with the Q1 2014 quarterly results.

All these machinations are to enable PFE to split into three publicly-traded companies at some point in the next few years, but probably not before 2017.

If the split happens, the “Global Established Pharmaceutical” company, which will sell branded generic drugs throughout the world with an emphasis on emerging markets, will be a strong beneficiary of The Global Demographic Tailwind.

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Re: PFE’s huge emerging-markets business in branded generics

Some investors on Twitter and other venues were surprised to see that: i) branded generics (what PFE calls “Established Products”) comprised 53% of PFE’s overall sales in 1Q14; and ii) this business had a much higher profit margin than PFE’s branded-drug business.

These figures come from PFE’s 1Q14 PR:



For readers of this board, it should not be a revelation that branded generics are the future of Big Pharma :- ) See, for instance, #msg-66847124, #msg-61960596, and #msg-66595029.