When one door closes, another opens. What Alexander Graham Bell said ages ago makes perfect sense for the medicinemakers today. With developed markets, for long a lucrative source of revenue, crimped by slowdown, pharma firms are turning attention to the galloping seven in the developing world — Brazil, Russia, India, China (or the famed BRIC), and Mexico, Indonesia, and Turkey –or the E7 — as the new El Dorado.

E7 the new El Dorado for pharmaStephen Arlington, global pharma & life sciences advisory leader, PricewaterhouseCoopers (PwC), said by 2020, when global pharmaceutical sales would touch $1.3 trillion, a fifth would come from E7. In 2008, about 12% did, as sales touched $773 billion. "This indicates the shifts the pharma industry would take," Arlington said.The reasons for the emergence of the E7 range from rising population to low penetration.

Bhavin Shah, analyst with broking house Dolat Capital Market, said emerging markets provide a great arena for branded generics play. "They are not yet fully tapped and have less competition — factors companies can thrive on."

IMS Health, the pharma market-intelligence provider, estimates emerging markets will grow at 14-15% this year owing to increased spending by governments on healthcare and broader public and private healthcare funding. On the other hand, growth in the US is seen at a meagre 1-2% in 2009, while that in the top five EU countries — France, Germany, Italy, Spain and United Kingdom — is seen between 3% and 4% this year.

Sriram Rathi, analyst at Centrum Broking, said EBIDTA or operating profit margins in emerging countries are much higher at around 20-25%, against 16% in the US/EU."There are huge pricing pressures in the EU," said Shah.

Inventory rationalisation was another key issue affecting markets in the EU and the US.A spokesperson for Mumbai-based drugmaker Lupin said E7 countries are untapped and are growing between 10% and 15% year on year. "This certainly will be the next growth driver," the spokesperson said. Lupin's rival Ranbaxy Laboratories is targeting Mexico, Brazil and Russia. "We don't have a presence in Turkey or Indonesia but the other emerging economies are sure to boost us up," a company spokesperson said.

The Gurgaon-based company registered a 50% sales growth for the third quarter of this year (September quarter) in Brazil, and an about 38% growth in Mexico, against de-growth in the US and EU.

Atul Sobti, Ranbaxy's MD & CEO, said sales were under pressure in Russia due to credit crunch, price revisions, etc, but believes the market would bounce back soon.

The Lupin spokesperson says that the company is fine-tuning strategies for the E7 markets and would be looking at growth — both organically and through acquisitions, as also partnerships and alliances.

Even for biosimilars (off-patent versions of biopharmaceutical drugs), potential lies in Latin America and Asia, says Kiran Mazumdar Shaw, CMD of Bangalore based biotechnology player Biocon. "Our partnership with Mylan Labs for the development, supply, and commercialisation of biosimilars would drive us forward. The non US/EU markets for biosimilars are about $1 billion, growing at a good 30% per year.