The Global Generic Medicines Market through an Investment Banker's Crystal Ball Vijay P. Karwal, CFA Managing Director, Head of Industrials, Consumer and Healthcare, CIMB Investment Bank 5 December 2012
Should we trust investment bankers to read the future? Development of market capitalization of investment banks - Jan 2007 to 2012YTD (USDbn) 1 140 120 100 JPM: -5.3% 80 GS: -29.9% 60 Barclays: -51.9% UBS: -52.3% 40 BofA: -57.8% CS: -61.2% 20 MS: -66.6% RBS: -76.2% 0 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 GS JMP BofA MS CS UBS Barclays RBS Sources: Factset as of 30 Nov 2012 Note 1) Market capitalization rebased to 100 1
Perhaps some are getting with the program! Development of market capitalization of CIMB - Jan 2007 to 2012YTD (USDbn) 300 250 +121% 200 150 100 50 0 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Sources: Factset as of 30 Nov 2012 Note 1) Market capitalization rebased to 100 2
Following the acquisition of RBS assets, CIMB recently emerged as a leading Asia Pacific investment bank Top rated bookrunner of Asia Pacific IPO 2 in 2012YTD Extensive combined network across Asia Pacific USDm Rank Bookrunner No. 1 CIMB (incl. RBS assets) 13 2,142 Japan 2 Deutsche Bank 11 1,425 China 3 UBS 10 1,141 S. Korea 1 4 Maybank 10 1,615 Taiwan India Myanmar Hong Kong 5 JP Morgan 10 1,266 Cambodia Philippines Thailand Vietnam Malaysia M&A ASEAN league table rankings 2011-12YTD by Sri Lanka Singapore announced deals Bank No. USDm Indonesia 1 Goldman Sachs 61 83,453 Australia 2 CIMB (incl. RBS assets) 54 34,601 3 Credit Suisse 51 73,267 4 JP Morgan 46 56,327 CIMB’s core markets 5 Morgan Stanley 44 62,465 Japan partnership with BTMU Sources: CIMB, Dealogic as of 30 Nov 2012 Note 1) New license applied for; 2) Excluding Chinese A shares, Japan, apportioned values 3
CIMB has been an active advisor to the APAC healthcare sector in 2012 Alvogen Alvogen Religare Health Trust IHH Healthcare Berhad Watson Pharmaceuticals Acquisition of up to 67.0% Investment by IMM into IPO Concurrent Dual-Listing Acquisition of Ascent shareholding in Kunwha Convertible Bonds and IPO Pharmahealth Ltd from Redeemable Convertible Pharmaceuticals by Strides Arcolab Preference Shares of Alvogen Korea Limited Joint Global Coordinator, Joint Principal Advisor, Joint Alvogen Korea Limited Bookrunner and Global Coordinator, Sole Financial Advisor Financial Advisor Sole Financial Advisor Underwriter Coordinator Joint Bookrunner KRW 75.7 billion KRW59.7 billion SGD511 million SGD2.5 billion AUD375 million 2012 2012 2012 2012 2012 Alvogen’s first entry CIMB introduced Unprecedented Largest healthcare First entry of scale into Asia IMM PE, a leading Business Trust sector IPO in Asia into the APAC Korean private structure with a ever pharmaceutical First ever cross- equity fund, to co- portfolio of Indian market for Watson 3rd largest IPO border controlling invest in Alvogen’s healthcare assets Watson becomes a stake acquisition in globally YTD 2012 Asian platform First ever a Korean top 5 player in the CIMB successfully Demonstrated our pharmaceutical international listing Australian generic secured more than company by a strong capabilities of Indian healthcare market 1/3 of cornerstone foreign investor in executing assets Pre-empted a demand and complex transaction Quick execution Largest allocations planned broader involving several period of 2 months international listing auction process stakeholders from kick-off to from India since Simultaneous signing 2007 signing and closing 4
Topics of today’s presentation 1. Long-term Concerns About Generic Industry 2. Drivers of Future Growth 3. Impact of Merger & Acquisition Activity 4. The Banker’s Crystal Ball: Competitive Outlook 5
Sources: CIMB, broker research Patent expirations 2005 through 2029 industry Patent cliff raising long-term concerns about generic Brand sales value of Launches (US$m) 2005 10,700 2006 17,200 2007 10,500 2008 15,800 2009 17,300 2010 18,700 2011 16,783 2012 35,514 2013 16,966 2014 15,453 2015 19,618 2016 14,780 2017 8,622 “Patent cliff” 2018 6,610 2019 7,127 2020 2,952 2021 5,970 2022 870 2023 2,790 2024 86 2025 2,878 2026 3,346 2027 2,868 2028 180 2029 814 6
Public market valuation of generic leaders at historic lows Biotech, pharma and generic P/E multiples have diverged since the ‘09 - ’11 convergence Concern about future generic Patent cliff driving optimism on Convergence growth, pharma pipelines generics, concern on pharma 32.0x recovering 28.0x 24.0x 20.0x Biotech: 17.3x 16.0x Generic: 13.6x Pharma: 12.8x 12.0x 8.0x Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Biotech Pharma Generic Sources: Factset as of 30 Nov 2012 Note: Biotech index includes BIIB, AMGN, GILD, CELG, ALXN; Pharma index includes PFE, MRK, BMY, LLY, JNJ, ANT; Generic index includes WPI, MYL, TEVA, PRGO, HSP 7
Visibility on sources of future growth key to outlook Growth alternatives Industry concerns • Patent cliff • US: growth outlook moderate with generic penetration already over 80% • Europe: impact of crisis on demand • Increasing competition from lower cost providers accelerating price erosion • Global pricing pressures from governments, payors, and increasingly concentrated customer channel • GDUFA impact • Evolving brand defense strategies • Profit concentration in early launch opportunities increasing earnings volatility 8
Visibility on sources of future growth key to outlook Growth alternatives Industry concerns 1. New growth markets 1 • Patent cliff • US: growth outlook moderate with generic penetration already over 80% 2 2. Niche formulations • Europe: impact of crisis on demand • Increasing competition from lower cost 3. Biosimilars 3 providers accelerating price erosion • Global pricing pressures from governments, 4 payors, and increasingly concentrated 4. Branded drugs customer channel • GDUFA impact 5. Scale efficiencies 5 • Evolving brand defense strategies • Profit concentration in early launch opportunities increasing earnings volatility 9
New growth markets: growth moving away from 1 developed markets Global generics market breakdown by geography 2010 generic market share 2020E generic market share 15% 25% 27% 3% 3% 41% 6% 4% 3% 4% 4% 4% 13% 5% 5% 5% 6% 7% 5% 6% 6% 3% US Germany Brazil France UK Japan Turkey Canada Italy Spain Others 10
Illustration of global growth potential: 1 generic utilization by region Generic utilization (by prescription volume) 89% 81% 75% 73% 71% 65% 59% 52% 51% 50% 46% 41% 40% 24% 11
Asian Pharma market growing at double digit rates, 1 driven by strong growth in generics Total Asian pharma market size and growth (USDbn) 2011 pharma market breakdown CAGR 350 OTC 11.1% 323 306 Generic drugs 300 286 10.8% 51 14% Patented drugs 47 266 42 246 250 39 35 208 18.0% 130 200 119 182 54% 31 105 92 79 32% 156 27 150 64 25 51 41 100 Patented drugs Generic drugs OTC 6.7% 142 138 140 136 131 112 104 50 90 0 2008A 2009A 2010A 2011A 2012F 2013F 2014F 2015F Sources: BMI Note: Asian pharma market includes China, India, Japan, South Korea, Indonesia, Thailand, Malaysia, Vietnam, Philippines and Taiwan 12
Asian pharma markets remain relatively fragmented 1 Market share of top 10 pharma companies by country (by value) 74% 50% 44% 41% 38% 37% 32% 25% 10% Sources: IMS Health, BMI, broker research 13
ASEAN Harmonization – significant future single 1 market opportunity • without compromising on drug quality, safety and efficacy’ Association of Southeast Asian Nations (ASEAN) Harmonisation of process for pharmaceutical • product approval Pharmaceutical Products Working Group • Brunei Cambodia Indonesia Laos Malaysia …'develop harmonization of pharmaceutical regulations of • the Member Countries to complement and facilitate the • objective of AFTA (elimination of technical barriers to trade) without compromising on drug quality, safety and efficacy ’… Myanmar Philippines Singapore Thailand Vietnam • 1967 Establishment of ASEAN • ASEAN Common Common Common Technical Technical • 1992 ASEAN Free Trade Area (AFTA) Technical Requirements Dossier • Document (A-CTO) (A-CTR) (A-CTD) 1999 Pharmaceutical Products Working Group • – Approval times for generic MAs: 2013 Decentralized Procedure for medicinal products - ~15-18 months in Singapore, Malaysia and Vietnam – – 2020 - ~18-24 months in Hong Kong, Thailand and Brunei ASEAN Economic Community – – • 14
Recommend
More recommend
