Transcript
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Tools and Strategies for Launching a SuccessfulGeneric in Todays Ultra Competitive Environment
KATE KUHRT
BERLINSEPTEMBER 27, 2008
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BEST OF TIMES
Population all over the world getting older
Increase in the size of middle class in manycountries
Governments and employers promoting use ofgeneric drugs in efforts to slow down increase inhealth care spending
Increased acceptance of generic drugs by patients
and physicians
A number of blockbusters losing patent protection
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AND WORST OF TIMES
Innovation drought
ANDA backlog and authorized generics
Pressure on prices and diminishing margins
Government regulation
Consolidation among wholesalers and retailers
Increased competition
Generic filings and approvals at all-time high
A number of new entrants, many from India, often with accessto low-cost APIs
Overcapacity in manufacturing
Focus on market share rather than bottom line
Authorized generics in the U.S.
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ANDA APPROVALS BY INDIAN GENERICS
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2007 YTD FINAL ANDA APPROVALS BYCOUNTRY
USA; 116; 39%
In ia; 85; 28%
G many; 25; 8%
I a ; 23; 8%
Oth ; 20; 7%
Ic an ; 6; 2%
Cana a; 11; 4%
Switz an ; 13;
4%
Source: Newport Strategies Horizon Global system
Through August
, 2007
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ARE THE GENERICS INDUSTRTS GOLDENYEARS OVER?
Expectation that only the fittest will survive
Coping strategies aimed at:
Reducing cost
Reducing risk Improving speed to market
Differentiation
Achieving critical mass
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COPING STRATEGIES: CONSOLIDATION
Consolidation expected to continue in pursuit of
Top-line growth
Opportunities in new markets
Synergies
Example: Barrs acquisition of Pliva
Biogenerics
New dose forms
Presence in emerging markets
Access to API
Result: Industry will likely be dominated by a handful of globalplayers plus many small, focused players
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LEAGUE TABLES ARE CONSTANTLY SHIFTING
Source: TS Research
Global IsraelTeva 8400
Global AustriaSandoz 5960
Global GermanyMerck KGaA 2200
EU SloveniaKrka 600
Global USMylan 1260
EU Germanyratiopharm 2000
Global IndiaRanbaxy 1170
EU GermanyStada 1400
Global IndiaCipla 740
US USPerrigo 1024
Global CanadaApotex 770
US USWatson 2550
Global USBarr 3000
EU HungaryGedeon Richter 600
Focus HQSales $M
Global USHospira 3480
Global IndiaDr Reddys 550
US USActavis 1835
US USEndo 650
Purchase by Mylan expected to close H2 07
Sold US Business
Lost Bid for Pliva
Acquired Mayne
Acquired Pliva
Acquired Andrx
Acquired Betapharm
Majority stake in Matrix; Acquiring Merck KGaA
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COPING STRATEGIES: GEOGRAPHICDIVERSIFICATION: EUROPE Recent Examples
Barr-Pliva
Mylan-Merck Generics
Hospira-Mayne
DRL-Betapharm
Matrix-Docpharma
Ranbaxy-Terapia
Aurobindo-Milpharm
Alkem close to buying two firms in UK and Germany
Pros Counterweight to the U.S. market
Some markets still focused on branded generic
Rapid growth of pharma industry in E. Europe and Russia
Cons Some markets as competitive as U.S.
Generic uptake high at the expense of margins
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COPING STRATEGIES: GEOGRAPHICDIVERSIFACTION: JAPAN
Pros
Japanese generics market seen as having a tremendousgrowth potential
Currently % by value, 7% by volume
Cons
Some still skeptical about actual market potential
Difficult for foreign companies to do it alone
Acquisitions, JVs, and marketing agreements provideready access to:
Manufacturing
Marketing
Distribution relationships
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Acquisitions
Zydus Cadila acquired a 00% stake in Nihon Universal Yakuhin in April 2007
Joint Ventures
In November 200 , Ranbaxy increased equity stake in Nippon Chemiphar from0% to 0%
Marketing Agreements
In August 200 , Lupin entered into a long-term marketing agreement with KyowaPharmaceutical
In March 200 , Hospira-Taiyo agreement to sell each others injection agents
Additional companies to watch
Continued speculation that Teva will eventually acquire a Japanese firm
Rumors that one of the three large generics (Nichi-iko, Sawai, Towa) will comeunder part ownership by a large multinational
Torrent Pharma opened a fully-owned subsidiary in Yokohama in April 200
Dr. Reddy's considering setting up an office in Tokyo or Osaka
COPING STRATEGIES: GEOGRAPHICDIVERSIFACTION: JAPAN
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COPING STRATEGIES: BACKWARDINTEGRATION INTO API Recent examples
Mylan-Matrix
Barr-Pliva
Pros
More control over cost and access to API
Decreasing number of established API manufacturers stillindependent due to M&A
Different parts of the value chain may make money in different products
Faster response times
Cons
No one plant can make all APIs required by a typical generic
Making just enough for captive use often not economical
Other dose companies wary of buying API from a competitor
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COPING STRATEGIES: MOVINGMANUFACTURING AND R&D TO LOWER-COST COUNTRIES Applies to both API and dose
Examples Sandoz multiple units in India
Teva scientists in Faridabad, acquired Regent Drugs (JK)
Apotex manufacturing and R&D facilities in Bangalore
Ratiopharm R&D center in Goa Stada production sites in Russia, Vietnam ( 0: 0 JV) and China
Perrigo JV in China for ibuprofen
Actavis API development facility and CRO in India
Pros Abundance of scientists
Cost savings Cons
Language barriers
Potential for intellectual property theft
Quality control
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COPING STRATEGIES: ALLIANCES WITHCOMPANIES IN LOWER-COST COUNTRIES Applies to both API and dose Manufacturing
Examples Alpharma-Shasun
200 agreement for 0 finished dose products and undisclosed number of APIs
Actavis-Orchid
2007 agreement involving cephs in Europe
Development, manufacturing, and distribution agreement for 0 non-cephs inthe U.S.
Pros Cost savings
Access to a diverse talent pool
Cons Longer response time to changes in market dynamics
Potential delays due to regulatory issues Potential loss of IP
Challenges with managing long-distance relationships
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COPING STRATEGIES: SOURCING APIFROM LOWER-COST COUNTRIES
Examples
Teva, Apotex, Watson has been sourcing from India for years
Indian companies increasingly sourcing out of China
Pros
Cost savings Many qualified API sources to choose from
Cons
Many API sources with limited track record
FDA inspections more lax overseas?
Language barrier QA costs
Potential shortages due to stricter enforcement of localenvironmental laws
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COPING STRATEGIES: SOURCING APIFROM LOWER-COST COUNTRIES (cont)
Source: Newport Strategies Horizon Global
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2518
8
17
104
0
20
40
60
80
100
120
Established Less Established Potential Future
NumberofCorpo
rateGroups
India
China
+2
+
+2
-
+7
+
Change from 200
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COPING STRATEGIES: FOCUS ON NICHEPRODUCTS
Examples
Ranbaxy, DRL eyeing Bradley Pharmaceuticals(dermatology)
Pros Less competition
Margins in difficult formulations likely to remain higher
Inhaled products, certain injectables, controlled release
Cons Even $20M products attracting interest
If multiple generics get involved, may not recoupinvestment
Costly barriers to entry for certain products
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COPING STRATEGIES: INNOVATION
New formulations
Andrx Altoprev (controlled-release lovastatin)
Ranbaxy Riomet (metformin oral solution)
New molecules
Best known examples: Pliva Zithromax (azithromycin), Teva
Copaxone (glatiramer) Ranbaxy expects to be the first Indian pharma co to launch a new NCE
(exp. 20 )
Pros
Potential for big returns during patent and exclusivity period
Cons Original R&D very expensive and risky: It may take 000s of failuresbefore a successful NCE
Possible reimbursement issues and higher marketing costs for genericplus products
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COPING STRATEGIES: PARAGRAPH IVPATENT CHALLENGES
Pros
Generic companies can make a considerable amount ofmoney during the 80-day exclusivity period
First-to-market generic company often maintains a big
market share even after the end of the exclusivity
Cons
Expensive and risky
Authorized generics and shared exclusivity reduce the
potential payoff from the initial 80 days
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PARAGRAPH IV PATENT CHALLENGES
As of September 7, 2007, challenges on productsencompassing
unique brand names
282 unique molecules or molecule combinations
8 unique dose forms
In 200 , 27 molecules (or new combinations) first wereexposed to patent challenges
So far in 2007, 7 molecules (or combinations) have seentheir first patent challenges
Source: FDA, Newport Strategies Horizon Global
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IMPORTANCE OF API IN PATENTCHALLENGES
Risk of supplier failure is high for companies involved with patentchallenges
Even one day of delay can cost the company FTF status
Risk is also high for API manufacturers
Generics may settle with innovators or do deals with other
generics who use other API sources If dose company is backward integrated into API, may switch to
internal API source when convenient
If development starts too early, product may be withdrawn frommarket
Backward integration into API may provide crucial advantages Coordinated API and dose development
Coordinated regulatory submissions
Speedy addressing of any issues
Improved knowledge of polymorphs
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COPING STRATEGIES: SOPHISTICATEDPRODUCT SELECTION
Companies need to pick products for development very carefully
It is not enough to look at sales data!
Pharmacodynamics
Toxicity Country Regulations Pack Pricing Reimbursement
Data Needs during Product Selection
Approvals
API Sources Company Data Manufacturing Capabilities Bioequivalence Stability
Sales
Dose Form and Strength Patents, Patent Challenges Labeling Chemistry, Synthesis Data Exclusivity Market Exclusivity
Targeting EvaluationDeal
MakingFormulation
DevtRegistration
& ReviewLaunch
LaunchL 8 monthsL 8 years L 7 years L years
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COPING STRATEGIES: SOPHISTICATEDPARTNER SELECTION
Companies need to pick partners and acquisitiontargets carefully
Data Needs during Partner Selection
Patent portfolio
Patent challenge experience Approvals Backward/forward integration Current alliances Location
Product portfolio
Product pipeline Geographic reach Financials Regulatory experience Manufacturing capabilities
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TOOLS TO TH RESCUE!
Access global market, intellectual property and product info
Predict key data in advance (e.g. competitiveness, genericlaunch date)
Flexible, fast searching across multiple, exacting criteria
Identify early, viable source of API supply and backupsources
Spot in- and out-licensing capabilities
Identify potential partner companies with multiple, exacting
criteria
Keep a watchful eye on potential acquisition targets and trackcompetitors
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THANK YOU!
Kate Kuhrt
Newport Strategies
Thomson Reuters
2 Commercial Street
Portland, Maine 0 0
USA
+ (207) 87 - 700 x2
kaire.kuhrt@thomsonreuters.com
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