UCB is in the midst of implementing its so-called SHAPE program, a restructuring that will focus the company on "its core areas in CNS and immunology and to strengthen its presence in strategic markets," which to be sure include the hot emerging markets of Brazil, Russia, India and China, as well as Mexico and South Korea, which are all excluded from the GSK deal. The deal also excludes UCB's "new core products," Vimpat, Neupro, and Cimzia.
GSK, on the other hand, has shown itself to be an aggressive acquirer of emerging market businesses in the past year, and we're not just talking the so-called BRIC countries. Besides today's UCB deal, over the past few months GSK signed what it called a "transformational agreement" with the South African generics company Aspen Pharmacare Holdings and followed up with the $210 million and $36.5 million acquisitions of BMS’s Egypt and Pakistan businesses.
Bulking up in emerging markets--which are growing at a much faster clip (albeit from a tiny base compared to established markets) than the US and Europe--is a long-term strategy that relies primarily on marketing mature, often generic, products. Focusing on high-margin specialist products for niche indications--an increasingly popular strategy among pharmaceutical and biotech companies alike--puts many emerging markets and their enormous growth potential in a kind of commercial blind spot.
For smaller companies this is of course pretty much irrelevant. For mid-sized firms like UCB, hanging onto a presence in the larger BRIC countries is likely enough--provided patients there can afford your drugs. But for those behemoths with large primary care portfolios and the quickly approaching patent cliff to navigate, emerging markets are both the silver lining and an increasingly important source of revenue. GSK is wise to keep collecting those customs stamps.
image from flickr user mondayne used under a creative commons license.