Merck Asia Pacific President of Human Health Ramesh Subrahmanian has been among the most energetic executives to have worked in the Indian pharmaceutical industry. Prior to serving in his present responsibilities, Subrahmanian worked for Sanofi-Aventis in several senior capacities - one of which was to head the company's Indian operations in 2000.

Subrahmanian is passionately trying to bring about a change in the medical paradigm in the Asia Pacific region, more emboldened than ever by Merck's product pipeline. He spoke at length about Merck's plans and upcoming programs to PharmAsia News' India bureau from his office in Singapore.

[Editor's note: Subrahmanian will discuss emerging market strategy at the 2nd PharmAsia Summit, to be held in San Francisco, Oct. 25-26, 2010. For a list of topics and speakers, click here .]

PharmAsia News: Asia-Pacific is one of the key emerging markets for Merck. Where does the region stand in terms of the overall game plan?

Ramesh Subrahmanian: At Merck, we define emerging markets as those where there is both a very high level of unmet medical need and also those countries that are seeing a significant economic growth. In the current Merck position, we exclude only United States, Canada, Western Europe and Japan. Other than that we include everything as emerging market. While one might argue that Australia and New Zealand is not a typical emerging market, these countries are high growth opportunities driven by increased income and GDP growth but still have issues of significant unmet medical needs. So, mainly it takes all of Asia including China, all of Latin America - say countries like Brazil - and all of Eastern Europe, Middle East and Africa.

PharmAsia News: Asia is growing rapidly but there must be huge challenges of dealing with diverse cultures and local market complexities unlike that in U.S. and Europe.

Subrahmanian: Post the integration with Schering-Plough, we stand globally as the second largest pharma company and across all the emerging markets we are the fifth largest. In Asia Pacific we are the sixth largest company as of today. Clearly, our global strengths have not been reflected fully in the emerging markets and also not so much in the Asia Pac region in particular.

You are right about the diverse cultures within the Asian markets, but our aspiration very simply put is to be a leader in the healthcare space in these markets. While there are significant differences in the environment - the healthcare systems and the stages of economic developments etcetera - again, two common factors are significant for us in tapping markets: unmet medical need - meaning even countries which are relatively more mature on the development cycle, there is a huge need to shape up the medical treatment paradigm in those markets. It is not just about the drugs that are available or not available - it is also about the patient treatment, infrastructure development, knowledge sharing, etcetera.

These are very common features that we see and therefore even if the cultures are diverse we have to adapt to the specific markets - like that of reimbursed market or out-of-pocket. If we talk about China or Korea, it is a big reimbursed market but there is a large out-of-pocket population, the same is with Taiwan, and then we have countries like India which is an extreme self-paid, out-of-pocket market.

To focus on these opportunities, we have in our portfolio products that address significant unmet medical needs. For example, vaccines are a very important component of public health and preventive care, and we have a big role to play in that direction. In anti-infectives, similarly, which is a mainstay in many developing markets, we have a very strong portfolio. Talking about cardiovascular care and diabetes, Merck has been a leader in that segment, and now we have built a very competitive position in diabetes. For areas like women's health - from fertility issues to contraception - the need in Asia Pac matches with what we have in our product portfolio.

The common themes to repeat are - unmet medical needs, under developed medical paradigm and a Merck portfolio that addresses these issues in the best way. So, even if the healthcare structures are different, what is important is how best one can adapt to the local environment and work together.

PharmAsia News: Where do you see Merck against its global peers, especially when a few of them are leaning on acquisition-oriented growth to attain market leadership? It is a race out there.

Subrahmanian: As part of our emerging markets strategy, we have said that we want to be the number one or number two across all emerging markets. As of today, globally we rank as number two while in the emerging markets we are at number five, therefore our aspiration is to be at the same position as we are globally across the emerging markets.

We have identified seven high priority markets where we want to be established as the leaders or the number two position, and those are the usual suspects - China, India, Korea, Brazil, Russia, Mexico and Turkey. That does not mean that other markets are not important but our success in the bigger markets will enable us to invest further and translate that success to serve other countries as well. So that's our aspiration.

Yes, you said it is a race but it is not a short term race. We see our ability to partner with stakeholders in the healthcare system as a big advantage. Traditionally our focus is on the physician community who are very important links to improve the healthcare system. In markets which are still forming, we are looking at partnerships with government agencies and groups that can drive change like NGOs, healthcare providers who can contribute in building infrastructure.

It is clear that such big changes cannot be done all by us. For example, we are looking at ways in which immunization programs can be looked at from the angle of shaping the immunization policy, extend help from our vaccines portfolio, forge partnership with stakeholders and deliver value. We want to convince that we are here for the long term and we have products that can contribute in those efforts. Essentially, we understand that we not only need to demonstrate our ability in these markets but also deliver and make an impact on all - from the patients to the doctors.

PharmAsia News: Agreed that partnerships do take you closer to the stakeholders in these markets, but the market landscape itself is changing with so many big acquisitions in countries like India. How do you intend to get to the number one or number two positions in these markets without striking any deals?

Subrahmanian: I do not think emerging markets can be approached as a single entity, but we need a country-wise approach. So the question is how we can be successful in China or India or in Korea. So we know we have the portfolio, we know the medical paradigm needs to be shaped up and we know that we have to partner with the stakeholders in the system. Our intention is to build partnerships and achieve long term goals. Our goal is not to just buy something to become big.

We recognize that we have a situation which is distinct from our competitors. We know that we have a great pipeline that can bring in true value. And if we can provide enough strength through our partnerships, we can not only reshape public health but also develop our market in a way different from the others. Selectively, if you have seen the announcements that we made recently for our presence in South Africa and closer in China, we have to look at those possibilities case by case. Therefore if we do spot an opportunity where we see a significant commercial value that makes an impact on public health, we will examine but it has to be a sustainable growth story, not just get on to the number one position.

PharmAsia News: Given the recent announcement in China regarding the Sinopharm deal [ Also see "Merck Teams Up With Sinopharm On Vaccines As It Gears Up For Gardasil Approval In China" - Scrip, 29 July, 2010.], are you looking at any manufacturing plans in India to make your successful products like Januvia for the local market?

Subrahmanian: We are in the process of reviewing our manufacturing footprint and network across the globe as part of our post-integration exercise with Schering-Plough. While we do so, we may certainly find ways in manufacturing activities in the emerging markets that can significantly enhance our presence and have some effect on the developed markets.

I cannot tell you today if we have any specific plans but you may have seen the manufacturing plans that we have in Hangzhou, China, and there could probably be more of that happening [Also see "Merck Expands Manufacturing Site In China As Part Of Its Global Restructuring Program" - Scrip, 23 July, 2010.]. In India, we have some manufacturing relationships that exist for our Organon business. We have those arrangements without having our own captive manufacturing set up, and these depend on country by country requirements.

PharmAsia News: Isentress is one of your key products that can have immense potential in markets such as India. Any plans to bring that product into the emerging markets like India?

Subrahmanian: I cannot speak about Isentress in India presently but we can come back to you on this. In the next two months, we can share with you more information about our HIV product plans. Our strategy is not driven by just introduction of products into the emerging markets - we would rather have a significant impact across the value chain for the patient's lives. Therefore we have research partnerships in India and China, we have sourcing and manufacturing partnerships and we also do a number of back office projects here [Also see "Ranbaxy and Merck Pen R&D Deal; Ranbaxy Could See Six-Year Earnings Surge With Recent Collaborations" - Scrip, 13 May, 2008.]. We see countries like India and China as not just markets for us but also ways to bring in manufacturing and sourcing, again not only for emerging markets, but for our global requirements.

PharmAsia News: How do you want to deal with local generic companies in India when introducing your products? There are litigations concerning some of the well-known cancer and HIV treatments.

Subrahmanian: That is the precise reason we keep saying that it is a matter of demonstrating value, it is not just about prices of products. I have kept discussing with various governments, including the government in India that even if all the medicines in India are made available free, more than 300 to 400 million people will still not be able to access healthcare of any kind.

We go with our track record for products like Januvia . We recently achieved a significant milestone in doing a deal in Bangladesh for getting Implanon on their public health plan for contraception. This is an important milestone and we want to seriously build up on such milestones for other areas as well, even in fields like anti-infectives. On issues such as patent challenges from generic companies, we are well prepared and continue to stay focused on delivering value to the patients.

PharmAsia News: Many multinational companies are spreading out into branded generics. Could you give some color about how you are shaping up on that front?

Subrahmanian: Branded generics are simply put those products that no longer enjoy patent protection but are still sold under brand names. Taking that definition forward, Merck has a very significant business in branded off-patent products. A significant part of our business today in India is branded off-patent products and it is the same for several of our emerging market businesses.

What multinational companies have done in the past is when these product came out of patents in the U.S., there seemed to be lower interest levels in these products. The reality is the lifecycle and value of branded off-patent products is very significant in the emerging markets relative to the developed markets. So we do have a very strong portfolio of branded generic products, and we will take care to supplement them selectively. It will be very different from market to market.

What we may mean to do in China may be quite different from what we mean to do in India or Korea. So yes, where we feel there is a need for branded generics in particular disease areas, we will work on them. We have brands like Zocor , Mevacor and Vytorin or Zetia - which are truly innovative - and we will do the best to get value out of them. It doesn't matter if they are old. We will be selective in our approach - country wise, segment wise - with the aim to enhance value. For us, branded generics will play a supplementary role where we already have strong presence and in countries where there is a real need to get them.

- Vikas Dandekar (v.dandekar@elsevier.com)

[Editor's note: Part two of this interview will appear in an upcoming issue of PharmAsia News.]

"We Want To Shape Up Medical Treatment Paradigm Through Partnerships," Says Merck Asia-Pac President Ramesh Subrahmanian: An Interview With PharmAsia News (Part 1 of 2)

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