Challenges and Opportunities for Generic Medicines Development Outlook for European Industry in current Economic Recession Gudbjorg Edda Eggertsdottir December 6, 2012
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 3rd 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
Two powerful, profitable and rapidly growing companies into one exceptional global business
Global Powerhouse
Our global marketplace
60/+ countries
5 billion potential customers
Top 3 in 12 markets
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
Affordability Accessibility Availability
Generic
Medicines
• 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
Europe
2001-2005
CAGR
8%
2006-2010
CAGR
6%
2011-2015
CAGR
1-4%
Regions
Source: IMS Market Prognosis 2011
Top 5: 7% 5% 0-3%
Other West: 8% 4% (-1)-2%
East: 13% 11% 6-9%
Payers in Europe have implemented cost
containment measures targeting
pharmaceutical supply and/or demand
Supply side Demand side
All reducing growth
• Reference pricing
• Volume controls
• Mandatory price cuts
• Rebates and clawbacks
• Faster to implement
• Widely seen in crisis struck (IMF) countries
• Promotion of generics
• Prescribing budgets
• Patient co-payment
• Risk sharing agreements
• Slower to implement
• Long-term sustainability
• Technology often required
69%
21%
10%
Brand Generic Other
Generic penetration will continue to grow
based on patent expiries and economic
pressures
Source: IMS Market Prognosis, Sep 2011
Sales by Segment
52% 40%
8%
63%
28%
9%
$610Bn $876Bn
$1,120Bn
2010 2005 2015
Biosimilar Products in the 7MM Despite impressive growth biosimilars still account for very small
portion of biologics sales (~3% of the relevant drug classes in terms of US$ in 2011)
0
50
100
150
200
250
300
350
400
2007 2008 2009 2010 2011
US$m
m epoetin theta
epoetin zeta
epoetin alfa
filgrastim
somatropin
~107% CAGR %, 2007-11
$20mm
$76mm
$144mm
$256mm
$365mm
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
key emerging markets (India,
South Korea, Russia, China,
Brazil)
• Lack of provision for
advanced manufacturing
during SPC in Europe
Emerging
Markets
SPC
EU generics
industry
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 sourced from outside
the EU 75%
API sourced from the EU
25%
API Supply
• 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
Period of market loss
to EU companies
Date of international
competition
20 year patent + Up to 5 year SPC
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.
• 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
Final comments
Thank you!