Thursday, December 16, 2010

The World Market: What's on the Horizon

We took part in a survey with McKinsey Quarterly. We thought the ensuing model put into context the current global thinking as the U.S. pharma market begins to change. This is primarily meant for you global strategy types, but we think you'll agree with us that Scenario #3 -- constrained markets with unbalanced domestic fundamentals --
is the leading indicator of where the global markets are headed.

What does this mean for our clients in the U.S.? It means they need to deal with the idea that we are no longer the top market in the world. As a result, business practices and attitudes should change accordingly. To further that notion, maybe things like patient adherence should be more of a focus for in-line commercial marketing teams in the U.S.

Let us know what you think.

Which of these scenarios is most likely to happen in the next 6 months?

Scenario 2:
Stable fundamentals underpin global economic outlook
·         Careful, effective removal of fiscal and monetary stimuli
·         Strong growth in emerging market economies
·         Modest corporate-sector growth in medium term (emerging markets, productivity, developed world)
·         De-leveraged consumers in developed countries remain weak in near term until income and job growth recover in medium term
·         Reduced potential for financial inflation

Scenario 1:
Robust global markets remain susceptible to shock
·         Fiscal and monetary stimulus-driven economies
·         Strong growth in emerging market economies
·         Strong corporate sector growth (very strong in productivity and developed world)
·         Stable U.S. consumer sector (job growth returns, slow de-leveraging, modest income growth)
·         High potential for financial inflation, resulting in rapid currency movements, commodity prices and stock/bond markets
·         Failure to re-balance debt ratios, energy policies, health care expenditures, and pension obligations

Scenario 4:
Troubled global markets overwhelm domestic fundamentals
·         New shocks derail emerging market economies, stalling growth
·         Market driven curtailment of fiscal and monetary stimuli in developed countries
·         Sustained weakness in global consumer sector
·         Public sector is neutral to negative impact
·         Corporate sector is neutral to negative impact
·         Potential for raid currency devaluation in developed countries

Scenario 3:
Constrained global markets perpetuate imbalances
·         Strong growing emerging market economies
·         Fiscal- and monetary- stimuli-driven economy, although with ballooning deficits; fundamental policies are not repaired
·         Stable corporate sector (emerging markets growth and productivity surge offset by stagnation in developed world)
·         Weak U.S. consumer sector (structural loss of jobs, continued de-leveraging, declining per capita consumption)
·         Slow devaluation of dollar relative to commodities and emerging market currencies and commodity based inflation (dollar/euro terms)

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