New Models, New Metrics for Generics. IGPA Conference Montreal October 1 st 2009

Transcription

1 New Models, New Metrics for Generics IGPA Conference Montreal October 1 st 2009

2 Current Environment Improving but 1 Stakeholders Patients Effects Price conscious and value for money Selecting cheaper drugs or generics Deferral of treatment 2 Pharmacists Reduced revenues/margins/cash flow Increased/new competition 3 Manufacturers Reduced spend and cost focus inflation Rationalisation of portfolio/development projects Possibility of mergers/acquisitions/partnering 4 5 Distributors Healthcare Providers (incl physicians/specialists) Cash-flow and credit issues Reduced inventories to minimise financial exposure Increase in distribution costs Consolidation among local distributors New models Changed prescribing practices Increase in generic / therapeutic substitution Pricing pressures Escalating overall healthcare costs 6 Payers Shifting costs to patients Formulary control and HTAs intensify Alternative procurement eg contracting 2

3 SALES US$BN % GROWTH CONSTANT US$ The Global Pharma Market Sales and growth in the audited market Source: IMS Health, MIDAS, MAT Mar

4 Top 10 markets sales and growth Audited markets in MAT Mar 2009 Country Source: IMS Health, MIDAS, MAT Mar 2009 US$bn 2009 % Mkt Shr 2009 % Growth Const US$ 2009 CAGR Key Markets $ % United States Japan France Germany Italy Spain United Kingdom China Canada Brazil

5 % MARKET SHARE US$ % GROWTH CONSTANT US$ % MARKET SHARE US$ % GROWTH CONSTANT US$ In the non-generic market, specialist driven sales are gaining market share despite declining growth North America Europe Primary care driven sales share Primary care driven growth Specialist driven sales share Specialist driven growth Source: IMS Health, MIDAS, Market Segmentation, MAT Jun 2009, Rx only 5

6 PRICE ABS GROWTH CONST (US$MN) MNF Arising from higher growth from price for protected brands with less offset from generic price declines 2,500 2,000 Protected (HP) Never protected (HP) Total Growth No longer protected (HP) Combined price growth 1,500 1, ,000 6 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Source: IMS Health, MIDAS PADDs monthly, May 2009, Elements of Growth Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09

7 Generic market

8 SALES US$BN % GROWTH CONSTANT US$ The generics market reaches $80bn with growth recovering to 8.2% Global generic sales Generic growth Pharma growth (Mkt Seg universe) Source: IMS Health, MIDAS, Market Segmentation, MAT Jun 2009, Rx only 8

9 VOLUME SALES STANDARD UNITS BN VALUE SALES US$BN Generics now make up over one half of volume sales, but merely a fraction of the value market Volume growth Value growth Generics 31% 44% Non-generics -3% 20% 800 Non-generic products Generic products Source: IMS Health, MIDAS, Market Segmentation, MAT Jun 2009, Rx only 9

10 Generics contribute a quarter of total value market growth* 20% % of absolute change Constant US$ Non-generics Generics 20% 80% 28% 80% 2003 AC = $31.7bn 2006 AC = $28.8bn Source: IMS Health, MIDAS, Market Segmentation, MAT Jun 2009; Rx only, * Market Segmentation universe 72% 2009 AC = $21.1bn 10

11 The 8 key markets hold 77% of the generic market; Brazil and Turkey ranked among the leading 10 countries* Spain 3.2 All others 13.4 Generic sales $80 billion Italy 3.6 Japan 3.7 Turkey 4.1 UK 5 Brazil 5.3 Canada 5.4 France 6.5 Germany 8.1 US 41.8 Source: IMS Health, MIDAS, Market Segmentation, MAT Jun 2009, Rx only. *Market Segmentation universe 11

12 8 key US Japan France Germany Italy Spain UK Canada % MARKET SHARE US$ TOP 8 At June 2009 generics growth positive again in the US and UK Generics growth outperforms overall Rx market growth Other Generics No longer protected Protected 100% 80% 60% Numbers show value growth by segment 40% 20% % Rx-only Market Top 8 US Japan France Germany Italy Spain UK Canada Size US$BN % Growth Constant US$ Source: IMS Health, MIDAS, Market Segmentation, Jun 2009, Rx only 12

13 % SU MARKET SHARE Key countries show stark contrast in terms of generics volume penetration US France UK Germany Spain Canada Italy Turkey 10 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Source: IMS Health, MIDAS, Market Segmentation, MAT Jun 2009, Rx only 13

14 Still wide variance within the unprotected market of generics volume share in key markets Japan Italy Spain Hungary Australia Turkey France Czech Republic Brazil UK Poland Germany Canada US 24% 40% 41% 46% 50% 51% 52% 59% 65% 71% 73% 75% 81% 89% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% % VOLUME GENERIC MARKET SHARE OF UNPROTECTED MARKET Source: IMS Health, MIDAS, Market Segmentation, MAT Jun 2009, Rx only 14

15 VOLUME MARKET SHARE % SU The reason being even after patent expiration brands still retain a sizeable volume share in some countries 100% UNPROTECTED MARKET SEGMENTATION VOLUME (SU) 80% 60% 40% 20% 0% US Canada Germany Poland UK Brazil Slovakia Czech Sweden INN unbranded generics Branded generics Company branded generics Original brands Other products Source: IMS Health MIDAS Market Segmentation Jun 2009, Rx only Denmark France Turkey Australia Hungary Spain Italy Ireland Japan 15

16 The issues for R&D Pharma

17 CONSTANT US$BN % OF PRIOR YEAR S SALES TOP 8 $137 billion are at risk for generic competition in the 8 key markets, $91bn in the US through 2013 Value of products at risk % Global Global US US 42 10% Source: IMS Health, MIDAS, Market Segmentation, MAT Jun % 6% 4% 2% 0% 17

18 % MARKET SHARE US$ Top 20 corporations exposure to generics Protected Protected Protected Protected => % 80% 60% 40% 20% 0% Pfizer AZ Novartis S-A GSK Roche Merck J&J Lilly Abbott Amgen Teva Takeda Wyeth B-I BMS S-P Bayer Eisai Novo Source: IMS Health, MIDAS, Market Segmentation, MAT Jun 2009, Rx only, *Market Segmentation universe 18

19 VOLUME ABS GROWTH CONST (US$MN) MNF Negative volume growth for protected brands is a consistent negative 500 Protected (HP) Never protected (HP) No longer protected (HP) Combined Volume growth ,000-1,500-2,000-2,500-3,000-3,500 Source: IMS Health, MIDAS PADDs monthly, May 2009, Elements of Growth 19 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09

20 TOTAL RX Generic erosion is becoming steeper and faster Brand Share of Molecule Prescriptions 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% MONTHS SINCE GENERIC INTRODUCTION Source: IMS Health, National Prescription Audit Plus, Dec 2008; brand shares include line extensions 20

21 SHARE Value erosion is becoming more pronounced Brand Share of Molecule Sales 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Class of 2002 Class of 2003 Class of 2004 Class of 2005 Class of 2006 Class of 2007 Class of Months since Generic Launch Source: IMS Health, National Sales Perspectives, Dec

22 Multinational R&D-based companies are diversifying into generics to compensate for sales erosion Daiichi Sankyo Sanofi-Aventis GSK Pfizer Novartis Merck Teva Ranbaxy Zentiva Aspen Greenstone Sandoz Ebewe Merck Bioventures Lonza Pliva Barr Geographic market expansion Own off-patent brands & established products Specialty injectable generics Biosimilars Generics consolidation Actavis Source: IMS Health, Generic Market Prognosis, Jun 2009 Ratiopharm 22

23 Generic potential

24 CONSTANT US$BN % OF PRIOR YEAR'S SALES TOP 8 $137 billion opportunity for generics in the 8 key markets through 2013 Value of products at risk Const US$bn % of Prior Year's Sales 10% % % 4% 2% Source: IMS Health, MIDAS, Market Segmentation, MAT Jun % 24

25 CONSTANT US$BN % OF PRIOR YEAR'S SALES $91 billion opportunity in the US through 2013 Value of products at risk Const US$bn % of Prior Year's Sales 32 12% 10% 25 8% Source: IMS Health, MIDAS, Market Segmentation, MAT Jun % 4% 2% 0% 25

26 Caution, delays and non-approvals have recently dampened prospects for potential blockbusters Acomplia (2006) asenapine (2008) bifeprunox (2007) Cervarix (2007) Chantix (2006) Cimzia (2008) Cordaptive* (2008) Effient (2008) Exforge* (2007) Exubera (2006) gaboxadol (2008) Galvus (2007) Gardasil (2006) Invega (2007) ipilimumab (2008) Source: IMS Health, Market Insights, Mar 2009 Janumet* (2007) Januvia (2006) Lucentis (2006) Mircera (2007) Numax (2008) Pristiq (2007) Revlimid (2006) succinobucol (2008) Sutent (2006) Tekturna (2007) Tykerb (2007) ustekinumab (2009) Vimpat (2008) Viviant (2008) Xarelto (2008) Zactima (2008) 26

27 But caution, delays and non-approvals have recently dampened prospects for potential blockbusters LL D D LL LL D U R LL U R Acomplia (2006) asenapine (2008) bifeprunox (2007) Cervarix (2007) Chantix (2006) Cimzia (2008) Cordaptive* (2008) Effient (2008) Exforge* (2007) Exubera (2006) gaboxadol (2008) Galvus (2007) Gardasil (2006) Invega (2007) ipilimumab (2008) Source: IMS Health, Market Insights, Mar 2009 LL R LL R U LL D R Janumet* (2007) Januvia (2006) Lucentis (2006) Mircera (2007) Numax (2008) Pristiq (2007) Revlimid (2006) succinobucol (2008) Sutent (2006) Tekturna (2007) Tykerb (2007) ustekinumab (2009) Vimpat (2008) LL Viviant (2008) R Xarelto (2008) U Zactima (2008) D Limited launch Registration or clinical trials delay Limited uptake Regulatory delay 27

28 The Payer effect Pricing and reimbursement

29 Price pressure takes different shape in every country* Fierce generics players competition erodes prices Reference pricing Price cuts Brands-generics price differential requirement Generic prescribing targets/incentives Pharmacy substitution targets/incentives Generic rebate contracting/tendering Generic rebates clawbacks Source: IMS Health, Generic Market Prognosis, Jun *Practices may vary between regions within a country. 29

30 Different generic rules and incentives across EU markets will lead to different strategies Rules and incentives Market rules Mandatory price reduction Patient co-pay Price referencing Pharmacy-level substitution * At the pharmacy * With the health insurers Market incentives With wholesalers With payers Favouring brands Favouring generics 30 * Some regions only

31 USA Health Reform The dilemma Uninsured 45.7m 46.3m Private health covered 177.4m 176.3m Government health insured 83m 87.4m (cost implication) What Obama wants: New and crucial protection for people who already have insurance Affordable access to coverage for those without Reduced spending for families, businesses and Government 31

32 Economic Analysis of Generic Medicines $734 BILLION SAVINGS GPhA Commissioned Analysis by IMS May 2009

33 Economic Analysis of Generic Medicines $121 BILLION IN 2008 ALONE! GPhA Commissioned Analysis by IMS May 2009

34 The Future potential for generics to deliver savings Not only on price basis

35 Hidden Generic values USA Increasing generic utilization by 3% adds approximately $10 billion in additional savings Increasing Medicaid utilization by 3% adds $1.4 billion in additional annual savings Conservatively cumulative generic savings by end of 2010 could exceed $1 trillion 35

36 Biogenerics Offer Further Savings Opportunities 36

37 Biosimilars Definite savings if inter-changeability/substitution allowed However, Defensive price reductions by originator and other molecules in the therapeutic class potentially offer greater savings 37

38 NEW THERAPY STARTS TH USA New Therapy starts are moving away from brands in 17 chronic therapy classes 4,500 4,000 3,500 3,000 2,500 2,000 1,500 Brand NTS Linear (Brand NTS) Generic NTS Linear (Generic NTS) 1,000 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Source: IMS NPA Market Dynamics, Jun 2009, 17 chronic therapy areas representing 47% of dollars and 38% of prescriptions 38

39 Potential for Payers to demand a generic as first line in many key primary care areas 100% Percentage of first line patients receiving a generic, now and by 2012, in key primary care areas 80% 60% 40% 20% 0% HYPERTENSION - ARBs OSTEOPOROSIS ASTHMA /COPD DYSLIPIDEMIA DEPRESSION UK Generic first line 2007 UK Generic first line 2012 German Generic first line 2007 German Generic first line 2012 Source: IMS Disease Analyser Germany, UK, 1 st line use defined as new to pharmacotherapy ARBs=Angiotensin II receptor antagonists (antihypertensive class) 39

40 The solution for managing drug costs lies with generics

41 Key Challenges for Generics Still Ahead Pricing pressures Future portfolio Lowest cost manufacturing Tech transfers, costs and skills Sustainability within regions/countries Complexity of portfolio and geographical spread API vertical integration Regulatory requirements and legislation Inventory costs Logistics Maintenance of quality 41

42 The Generic Opportunity Unprecedented drug savings over next 4 years Price reductions and tendering are not the answer Long term plan for generic utilisation is the key Post 2013 drug bill will rise significantly if actions not implemented now 42

43 Alan Sheppard Principal, Global Generics Thought Leadership Thank you