Innovation and Access: New Cancer Drugs Come to India

In August 2015, former U.S. president Jimmy Carter was told that his skin cancer, melanoma, had spread to his brain, giving him weeks to live. Despite this death sentence, President Carter received Merck's "breakthrough" drug Keytruda and, remarkably, in December 2015 he appeared cancer-free. Approved for use by the FDA in early 2015, both Merck's Keytruda and Bristol-Meyers Squibb's (BMS) Opdivo were headed toward blockbuster status for treating melanoma, with remarkable clinical results—and pricing to match. In the U.S. market, Keytruda was priced at $12,500 per month and Opdivo at $13,100, with global revenues in the fourth quarter of 2016 reported at $214 million and $475 million, respectively.

Now Merck and BMS needed to decide on their entry strategies for these new drugs in emerging markets around the world. One market—India—held both potential and pitfalls. Its large population and rapidly growing per-capita income suggested large market opportunities, but the protection of drug patents in India had historically been weak. Indian generics manufacturers such as Cipla had long reverse-engineered and produced blockbuster drugs for distribution in India as well as in many of the world's least developed countries. These reverse-engineered drugs had been offered widely at drastically reduced prices. Weak patent protections and low-priced competition were inimical to the business models of multinational pharmaceutical corporations, but staying outside markets like India might not be a viable alternative. How could Merck and BMS successfully approach emerging markets with new drugs like Keytruda and Opdivo?