A robust generic market: difficulties and complexities Athens, 6 th - PowerPoint PPT Presentation

A robust generic market: difficulties and complexities Athens, 6 th March 2013 SARAH RICKWOOD, Director Thought Leadership, IMS HEALTH

Agenda slide • The Global Generics Market − No Longer Protected Brands − Country Environment • Key Factors for a Robust Generic medicines market - Net Cost of Treatment - Rules and Incentives: INN Prescribing Case Studies • The Future of Generics - Where growth will come from? - Biosimilars 2

1 The Global Generics Market Generics have seen superior growth performance for a number of years 2 0 0 8 -2 0 1 2 : Global Generic Volum e Sales 1,100 10 • Growth is driven by government that 1,000 9 938 under high debt and fiscal deficits are 892 900 pushing for even greater generication 8 830 Volume in SU Billion Volume Growth (% ) 800 760 7 • In Pharmerging countries growth is 715 700 underpinned by generic growth 6 600 • Fewer, smaller small molecules going 5 500 forward 4 400 3 300 2 Pharma Generics 200 1 100 5 yr CAGR 5.0% 7.2% 0 0 2008 2009 2010 2011 2012 Generic Volume Growth Pharma growth Generic Volume Source: IMS Health, MIDAS, MAT Sept 2012, Rx only. Market Segmentation + LIC countries 3

1 The Global Generics Market Top 8 Mature Accelerated shift in spending on generics is expected to continue to 2016 in the mature markets 2 0 1 1 : 5 8 7 Bn 2 0 0 7 : 5 1 3 Bn 2 0 1 6 : 6 2 3 – 6 4 3 Bn 11% 13% 12% 13% 14% 20% 15% 16% 20% 61% 58% 47% Generics Protected (Non-generic) Unprotected (Non-generic) Other 5 Yr CAGR • Globally, growth between 2012-2016 is Region 2007 -2011 2012-2016 forecast to slow to 3-6% CAGR compared to 6% over the past five years. Top 8 Mature 4% 0 - 3% • Largest growth seen in Generics as a Protected (Non-Generic) (4) – (1)% 3% result of increased LOE, payer reforms Generics 9% 8 – 11% and growth 4 – 7% Unprotected (Non-Generic) 4% Source: IMS Health Market Prognosis, Sept 2012 (* ) at ex-manufacturer price levels, not including rebates and discounts. Audit data only. Market size represented in constant US$. All CAGR calculations are 5 years 4

1 Dynamics No Longer Protected Brands Each country shows a unique pattern of products in the protected and un-protected sector Market share segm entation ranked by no longer protected brands 100% 90% 80% 70% 60% 50% 40% 30% 4 6 % 3 8 % 3 4 % 3 3 % 3 3 % 3 2 % 3 2 % 2 9 % 20% 2 8 % 2 6 % 2 7 % 2 5 % 2 5 % 2 4 % 1 1 % 2 0 % 1 0 % 1 6 % 1 9 % 1 4 % 10% 0% Others INN Unbranded Company Branded Branded Protected No Longer Protected Source: IMS Health, MIDAS, Market Segmentation, MAT Sep 2012, Rx only. 5

1 Country Environment Top 8 Mature Historically generic penetration moves slowly even in large markets: recently Spain has accelerated 2 0 0 3 -2 0 1 2 : Generic volum e penetration dynam ics in the top 8 m arkets 100 UNPROTECTED MARKET % (SU) GENERIC VOLUME SHARE of 90 80 70 60 50 40 30 20 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Canada Germany Japan UK France Italy Spain United States Source: IMS MIDAS Sep 2012 Ethical Total Market based on SU. 6

1 Models of Generics Systems We have several different models of generic systems Payer centric Prescriber centric • Low prices • High prices • Patient get different mfg • No/ low discounts • Logistic challenges • Patient get same mfg Payer centric Prescriber centric Pharm acist centric Pharm acist centric • Varied prices • High discounts • Patient get same mfg 7

1 Challenges Generic companies are in a period of significant opportunity, but there are challenges Geography Molecules Technologies Therapy area Which are the Which are the What technologies most promising molecules which will provide Which areas hold countries to focus will undergo least competitive edge the greatest on? price erosion over and sustainable promise? Country time? margins? Movement to profitability and Vertical integration Devices and specialty Geo-expansion and API control delivery systems And not forgetting Evolving structures, changing regulations, role of stakeholders and scope of new players in generics 8

Agenda slide • The Global Generics Market − No Longer Protected Brands − Country Environment • Key Factors for a Robust Generic m edicines m arket - Net Cost of Treatment - Rules and Incentives: INN Prescribing Case Studies • The Future of Generics - Where growth will come from? - Biosimilars 9

2 Net Cost of Treatment Payers tend to focus on price, however, medicine mix is key to cost reduction I MS developed a m ethodology to assess drug ...based on a basket of m edicines m ix and prices across countries... including seven therapy areas I MS Methodology • Angiotensin II antagonists, anti- depressants, anti-epileptics, anti- Price per unit psychotics, anti-ulcerants, Cost per cholesterol regulators and oral treatm e * anti-diabetics. nt day • The cost is calculated as each Mix of Pharm aceutical countries mix of patented/ NLP , drugs costs and generic products * • The TA weights are the same for all countries Treatm ent volum e ( treatm ent days) 10

2 Net Cost of Treatment Greece has historically higher cost/ daily dose than the EU average but recent reforms change this Cost per treatment day, based on DDD, Q3 12 vs. Q3 11 Q3 2012 Q3 2011 Selected therapy areas: Angiotensin II antagonists, anti-depressants, anti-epileptics, anti-psychotics, anti-ulcerants, cholestrol regulators and oral anti-diabetics. Source: IMS MIDAS, Q3 2012 and Q3 2011 11

2 Drivers and constraints for Generics Factors that have been shown to drive generic utilisation and factors that inhibit generic utilisation Drivers •Mandatory INN prescribing •Generic first dispensing and prescribing •Large price differential between generic and originator Constraints •Reimbursement levels •Patient Co-payments •Cultural resistance from doctors •Incentives for dispensing/ prescribing •Lack of incentives for pharmacists to generics dispense •Lack of margin for wholesalers to distribute •Preference for brands in certain markets •Across the board price cuts 12

2 Spain: The recent Royal Decree laws In last years the Spanish healthcare environment has experienced continuous change driven by RDLs The most crucial being the Royal Decree Law (RDL) 09/ 2011 RDL 1 6 / 2 0 1 2 RDL 0 8 / 2 0 1 0 • Prescriptions general scheme RDL 0 4 / 2 0 1 0 • Information systems to support the • 7.5% discount for physicians prescription • Price reduction of generics reimbursed drugs • Delisting of drugs and sanitary products • Modification of the • Adaptation of the number • Reference Price System (RPS) Reference Price System of units per pack • Selected Prices System (SPS) (RPS) – minimum price • Patients co-payment in outpatient and gradual reduction pharmaceutical services August 2011 March 2010 April 2012 May 2010 RDL 0 9 / 2 0 1 1 • Elimination of the gradual price reduction in the RPS • INN prescription (active ingredient) • Extension of the 7.5% mandatory discount to 15% for non protected drugs with no generics or Biosimilars Note: Main measures of each RDL (non exhaustive list) 13

2 Spain: Generics Evolution Generics’ penetration velocity has considerably increased during the last years Com parison of generics’ penetration evolution depending on generics’ launch date ( MS – % SU) 60% • Generics penetration at a molecule level is much more aggressive the more recent 50% the generics’ entrance. Market Share (% SU) • The yearly evolution of 40% generics’ penetration keeps an ascendant trend since 2008 30% • Despite the short historic available, molecules with 20% generics entrance in the last MAT present higher generics penetration achieving a 10% 37% MS the third quarter after the first generic launch. 0% MAT 09/ 08 MAT 09/ 09 MAT 09/ 10 MAT 09/ 11 MAT 09/ 12 Source: NPA: IMS Health analysis 14

2 Drivers and Barriers for Generics Current model needs to change for generics to grow The potential for generics will rely on how key stakeholders and generic players shape the market DRI VERS CHALLENGES  Healthcare reform s expanding  access to the population with generics Dim inishing levels of near term patent uptake benefiting in volume terms expiries and future revenue potential  Introduction of incentives to increase  Increasingly competitive environment as generic prescribing and utilisation traditional branded pharm a looks  Incentives to the distribution system tow ards hybrid m odels encroaching on the generic market space  I ncreasing penetration in added  Delays in approvals and high regulatory value segments such as specialist costs driven ; injectables; Biosimilars  Further scrutiny of pricing and margins as governments look towards ever more complex cost containm ent measures 15

Agenda slide • The Global Generics Market − No Longer Protected Brands − Country Environment • Key Factors for a Robust Generic medicines market - Net Cost of Treatment - Rules and Incentives: INN Prescribing Case Studies • The Future of Generics - Where growth will come from? - Biosimilars 16