Development Outlook for European Industry in current Economic - PowerPoint PPT Presentation

Challenges and Opportunities for Generic Medicines Development Outlook for European Industry in current Economic Recession Gudbjorg Edda Eggertsdottir December 6, 2012

Watson acquires Actavis Acquisition value EUR 4.25 billion (USD 5.5 billion) • Acquisition closed 31 Oct 2012 • • Creates 3 rd largest global generics company ~$8.0 billion projected 2012 pro forma combined revenue • 17,000 employees • Strengthened commercial position with footprint in 60+ • countries • 30+ manufacturing facilities; ~44 billion unit capacity 12 global R&D centers •

Global Powerhouse Two powerful, profitable and rapidly growing companies into one exceptional global business

Our global marketplace 60/+ countries Top 3 in 12 markets 5 billion potential customers Top 5 in 16 markets

Watson Will Continue to Grow • Well-Defined, Balanced Growth Strategy • Global Generics • Global Brands and Biosimilars • Anda Distribution • Supported by Leading Global Supply Chain • Substantial Investment in Internal Growth • Significant investment in internal R&D • Investments in people/resources to support marketing and sales growth • Financial Strength to Drive External Growth • Expanding market/geographic access through Actavis acquisition

Key role of generic and biosimilar medicines Generic Medicines Affordability Accessibility Availability Approximately $30bn can be saved globally by improving • suboptimal use of generics* Japan has the biggest opportunity, followed by Cyprus • *IIHI Ministers Report 17.09.12 from IMS Institute for Healthcare Informatics

Opportunities Global generic spending is growing by over 10% a • year to reach around $415 billion by 2016* Fastest growth in pharmerging markets • Europe ‘s share in growth drastically reduced • New emerging markets with high purchasing • power (Russia, China, Middle East, Africa) Demographic changes (ageing and growing • populations) both in Europe and globally Patent expiries in developed countries • * IMS Market Prognosis 2012

Challenges • Increasing regulatory requirements to manage more complex operations • New pharmacovigilance requirements • Anti-counterfeit measures – implementation of FM directive • Unique identifier • API controls • Management of continuity of supply • Increasing competition from countries outside Europe • Lack of level playing field • Market access barriers and delays as identified in the EC Sector Inquiry • Strong price pressure in the EU

Influence of recession on pharma market

Pharmaceutical growth trend in Europe is a major concern Cost-containment and austerity measures a key driver 2001- 2006- 2011- 2005 2010 2015 Europe CAGR CAGR CAGR 8% 6% 1-4% Regions Top 5: 7% 5% 0-3% Other West: 8% 4% (-1)-2% East: 13% 11% 6-9% Source: IMS Market Prognosis 2011

Payers in Europe have implemented cost containment measures targeting pharmaceutical supply and/or demand Supply side Demand side • Reference pricing • Promotion of generics • Volume controls • Prescribing budgets • Mandatory price cuts • Patient co-payment All Rebates and clawbacks Risk sharing agreements • • reducing growth • Faster to implement • Slower to implement • Widely seen in crisis struck (IMF) • Long-term sustainability countries • Technology often required

Generic penetration will continue to grow based on patent expiries and economic pressures Sales by Segment $610Bn $876Bn $1,120Bn 10% 9% 8% 21% 28% 52% 40% 63% 69% Brand Generic Other 2005 2015 2010 Source: IMS Market Prognosis, Sep 2011

Biosimilar Products in the 7MM Despite impressive growth biosimilars still account for very small portion of biologics sales (~3% of the relevant drug classes in terms of US$ in 2011) 400 $365mm ~107% CAGR %, 2007-11 350 300 $256mm 250 epoetin theta US$mm epoetin zeta 200 epoetin alfa $144mm 150 filgrastim somatropin 100 $76mm 50 $20mm 0 2007 2008 2009 2010 2011 Source: IMS Health, MIDAS, MAT Q4 2011; Actavis research 7MM – US, Japan, France, Germany, Italy, Spain and UK

Regulatory hurdles

Key hurdle: lack of right for EU companies to manufacture during SPC Global competition from • Emerging key emerging markets (India, Markets South Korea, Russia, China, Brazil) EU generics industry Lack of provision for • advanced manufacturing during SPC in Europe SPC

Key hurdle: Major increase in costs due to the Falsified Medicines Directive The implementation • costs of possible new anti-falsification technologies for the EU generic industry could reach € 1 billion. WARNING € 1 billion

Key hurdle: Possible shortages due to API supply problems API Supply API sourced from the EU 25% API sourced from outside the EU 75% • EU is implementing a new requirement for API imported into the EU – written confirmation of GMP status Key supplying countries must get prepared (India, China, etc.) •

How can we strengthen the industry?

Europe 2020 Barroso commission II • Three mutually reinforcing priorities: I. Smart growth: developing an economy based on knowledge and innovation. II. Sustainable growth: promoting a more resource efficient, greener and more competitive economy. III. Inclusive growth: fostering a high-employment economy delivering social and territorial cohesion.

Export Loss of EU Generic and Biosimilar Medicines Industry Date of international competition 20 year patent + Up to 5 year SPC Period of market loss to EU companies

Leading countries in number of Canidates for biosimilars

European Generic Medicines Industry: Major Contributor to Employment and Development European countries with generic medicines R&D and manufacturing European countries with generic medicines manufacturing Source: EGA Internal survey 2010 Updated 2010.10

EU2020 Industrial Policy – priorities for generic and biosimilar medicines industry Creating a sustainable internal market for generic and biosimilar • medicines Creating sustainable pricing and reimbursement • Tax exemptions and funds for generic R&D • Tax initiatives for manufacturing jobs • Fostering market access in third countries • Advanced manufacturing for export • Eradication of non-tariff barriers in 3rd countries • Improved mutual recognition of API inspections • Better regulation • Harmonisation of quality standards to ICH Standards • Establishing global development for biosimiliar medicines •

EU-US Task force • EGA and GPhA jointly support setting up a High Level Working Group on Growth and Jobs to create opportunities for the European and American industries in the globalised economy. • EGA and GPhA have put forward practical priority measures for our industry: • global development and international harmonisation of data requirements for approval of biosimilar medicinal products single development programme and international harmonisation of • data requirements for approval of generic medicinal products mutual recognition of compliance inspections • • not mismatching the EU and the US IP rights systems • advanced manufacturing provision

Global development of biosimilars • We are very close to a breakthrough! • Europe is now willing to embrace the concept of a global reference product for biosimilars • Also US FDA, and Canadian authorities have indicated willingness to support global development.

Final comments • Generics remain key in containing costs post patent expiry • Generic penetration continues to vary based on specific country drivers Massive savings can still be made globally by • optimizing use of generics Price reductions continue to exert pressure on • generics Sustainable price & reimbursement systems • need to be implemented • Reference pricing systems need to be improved Regulatory requirements need to fit the • purpose If it isn’t a problem, don’t fix it! • International harmonization is key •

Thank you!