For drug developers, it's hardly news that markets such as Brazil, Russia, India and China (BRIC) are not the once hoped-for promised land, and Frost & Sullivan has put together a report that outlines the reasons the situation may get worse.

"I think the biggest challenge today for selling into BRIC for global companies is the need to understand customer segmentation and behavior – how to optimize this and ensure your product is customized to that need – trying to sell value beyond the product, per se," said Frost & Sullivan partner Reenita Das, author of the report. For international firms trying to get a drug development foothold in BRIC territories, the main obstacle is the price of doing business, "compared to local companies who can produce at one-tenth of the cost," she added.

The report, "Is BRIC the Savior for the Life Sciences and Medical Devices Sector?" cited the specific problem of each region. China, for example, has a plan "definitely" moving ahead to introduce a fast-track approval process for new drugs that could exclude firms that have not conducted clinical trials in the country, Das told BioWorld Today.

"This is a real opportunity for global companies to get early mover advantage, and it is a fair system, in my opinion," she said. "Global companies are already doing trials in China so this is not new – it is only the companies that are not doing [trials in the country] that will be impacted, but really the question is, 'If you want to work in emerging markets, is it for the long haul?'" No short-term strategy for making money there exists, she said.

India cut prices to make drugs, as well as devices such as stents, more affordable. Russia is proposing to limit the state purchasing of foreign medicines, and Brazil has introduced higher import tariffs to encourage local industry.

On top of all that, physicians in the BRICs tend to be less poorly trained than those in other countries. "Training and continuous education is always a challenge in a semi-rural setting, but companies need to do this in order to build credibility and relationships," Das said, pointing to differences between the more metropolitan areas and others. "Tier one cities are already saturated with too many competitors and barriers," she said. "Tier two and tier three cities are where the large population base exists and where the need for health care still exists. For example, in India, this is a strategy many companies like General Electric and others are focusing on."

For drug development firms, Das provided a list of bullet-pointed advice. "Customize and localize your product. Identify segments and regions – you cannot capture all at once, so take a staged approach. There is nothing called one China or one Brazil; there are almost a dozen differences between the north and south in each of these countries. Build local public and private partnerships. Show the governments and regulations that you intend to be there for the long haul. Base your strategy not on volume business, but on value."

Das' report offered four main strategies. One involves adding knowledge to add value – training the doctors outside of tier one cities by using social media and websites. Another has to do with settling for an extended period in the chosen BRIC. A third entails carefully customizing products for the demographic, staying mindful of the demands of gatekeepers in a given territory. In Brazil, regulatory requirements are especially extensive, and compliance can take up to eight years. Once in the market, drug companies face the problem of distribution in a very large geographical area.

In Russia, Frost & Sullivan said, the regulatory framework for the health care sector is "incoherent," with a registration process that takes up to three years. Then, imported brands face competition from "hundreds" of local manufacturers.

In India, the private sector provides 70 percent to 75 percent of health care in the country, with the rest provided by government, and the urban/rural divide is high, so that most private health care targets only the tier one cities.

In China, the country's FDA has new product registration requirements, combined with requirements for good manufacturing process and a complex distribution channel. At the same time, government reforms of reimbursement in hospitals have had an effect, with low-priced domestic brands favored and the government regularly revising downward the price points for high-value medical products. China, in particular, seems to struggle in its relations with the rest of the world, given scandals related to its drug manufacturing and regulatory practices. (See BioWorld Today, April 24, 2013.)

Asked whether China bears cultural factors that make scientific straightforwardness rare, Das responded: "That's a very good question. Yes, it is anarchy, and it has not changed."