CLIFF
Dec 08, 2014
CLIFF
PATENT CLIFF(2012-2015)
Presentation byPeruka Venkata Ramana Prasad
1st Semester, MBA(Pharm)Department Of Pharmaceutical Management
NIPER
What is patent cliff
Global blockbusters by revenue& patent expiration
Global drug sales at risk from patent expiration
Fall down of companys annual revenue
Key drugs in pipeline
Frequency of NME approvals may come down
Big pharma job cuts announced since 2009
FLOW OF PRESENTATION
Increasing merges &acquisitions
Hatch-waxman act-1984
Patent exclusivity & generic entry regulations
Generics will dominate the market
ENTERING “pharmering markets”
Patent wars
Contd..
It is most often described as an industry-wide expiration of the patents of a number of
blockbuster drugs with a combined of $250 billion in annual sales will go off-patent by 2015, creating
a life-threatening situation for many of the top companies in pharma sector
WHAT IS PATENT CLIFF
Source : Evaluate Pharma,2012
Other sectors, such as software and consumer goods, have patents. But they rely on rapid innovation to maintain sales.In pharmaceuticals, stringent regulations on
authorization and marketing impose tighter controls, higher costs and longer lead times, making drug developers more reliant on patent monopolies to recoup their costs
Why only pharma field is more worried?
KEY GLOBAL PLAYERS
Source : Individual company financials online 2012
GLOBAL BLOCKBUSTERS BY REVENUE&PATENT EXPIRATION
Source : Bioassociate Consulting & Management Ltd
Source : Evaluate Pharma,2012
2012 2013
2014 2015
Patent Expiration Of Drugs By Year
Source : IMS Global Insight, 2011
Source : IMS Global Insight, 2011
2013
Source : IMS Global Insight, 2011
2014
Source : IMS Global Insight, 2011
2015
Global drug sales at risk from Patent Expiration
Source : Evaluate Pharma Vantage 2010
Forecasted revenues of few blockbuster Post-generification
Source : The Economist,2011
PFIZER – US$30 Lipitor , viagra
Eli lilly- US$13(50%rvnu) Evista , zyprexa &Cymbalta
Takeda- 52%revenue loss Actos
Forest labs- 52%revenue loss Lexapro
Gsk,Novartis,bms,A&Z- 14-40%revenue loss
Fall Down Of Companies Annual Revenue
Source : Price watercoopers,2011
2009-2013 annual patent losses by company
Source : Bio associate Consulting & Management Ltd
0%
5%
10%
15%
20%
25%
30%
R&
D a
s %
of
sale
s
Source: Company data, Goldman Sachs Research estimates
Over $280 billion spent on R&D over last decade
Source : Bioassociate Consulting & Management Ltd
Key drugs in Pipeline
Source : Analyst and company reports,2012
Frequency of NME approvals may come down
Source : US FDA , 2012
2012 : 28NME’s
Big Pharma job cuts announced since 2010
Source : FiercePharma.com,2012, Price watercoopers 2010
Increasing Merges &Acquisitions
2011 –Sanofi-Aventis- Genzyme- -US$20Bn. -Biotech
2011 – Novartis - Aires pharm – US$250Mn -Cystic fibrosis pnemonia2011 – Amgen - Biovex -- US$1Bn -Cancer vaccine Oncovex2009 –Pfizer - Wyeth - US$68 -Fill pipeline, Biologics2009 –Merck -Schering-plough-US$41.1 -18NME’s in pipeline
2009, 563 deals worth US$161.2Bn took place
Source : Pfizer,2012
Contd..
Merges in 2012
Source: business-beacon.com, 2012
Acquisitions in 2012
Source: business-beacon.com, 2012
Contd..
29
For Innovator companies
Patent term extension Provides New drug product exclusivity 30 months stay for ANDA approval
For Generic manufacturers Created “Abbreviated New drug Application” approval
process for generic versions of innovator drugsFile ANDAs with bioequivalence data using innovator
product 180 day exclusivity for first-to-fileCertification regarding each patent listed in the Orange
Book for the product: four certification options
Hatch-Waxman Act-1984
30
Paragraph I
Paragraph II
Paragraph IV
Paragraph III
Patent information has not been filed
Patent has Expired
Patent is invalid or non-infringed by Generic applicant
Patent has NOT expiredbut will expire on a
particular date
FDA may approve ANDA immediately
FDA may approve ANDA on the date that the patent expires
Generic applicant provides notice to patent holder & NDA filer;
entry of the first filermay or may not occur
ANDA Patent certification Options
Source : Orange book
Patent exclusivity & Generic entry regulations
Contd..
Source : DataMonitor,2011:US FDA,2012;
According to IMS Health, generics drugs accounted for 57.7% of prescriptions dispensed five years ago, and close to 75% today
Price of the drugs will be reduced
However, while the generic drug industry will certainly benefit in the short term from the patent cliff
Generics will dominate the market
GENERICS ; US$ 100 Bn/paETHICAL MANUFACTURES ; US$ 720 Bn/paIt is estimated that by 2014 generic market will reach
US$124Bn.
Source : IMS Health, 2012
LEADING GLOBAL GENERIC PLAYERS
Source : Individual company financials 2012
Generics offer Drugs at low cost
Contd..
Source : Blue cross blue shield of michigan
ENTERING “Pharmering Markets”
Source : IMS Health,2011
Contd..
Source : IMS Health,2011
INDIA has large domestic market.
Highest number of US FDA Approved manufacturing Units (74) outside the US.
Clinical trial hub
Less manufacturing cost
High CAGR
Contd..
PATENT WARS
Law suits & legal loopholes are the last resort before a patent cliff for innovators
30 Month marketing stay for brand name drugs as part of patent Infringement litigation, which provides immunity against generics.
Patent ever greening
In the end, the financial future of many pharmaceutical companies will depend on how they manage the transition of many of their brand drugs
to the generic market, as well as on their own efforts to develop novel
therapeutics and diagnostics with significant profit potential, and to adapt to the changing global
business climate.However, while the generic drug industry will
certainly benefit in the short term(upto 2015) from the patent cliff.
CONCLUSION
T H A N K Y O U
Let’s get going ….43
India, China, Russia and Brazil are some of the more obvious novel destinations for
large PHARMA to nest in.
BACK UP SLIDES
During 180 day exclusivity
AG competition typically reduces a first-filer generic’s revenues during the 180 days of marketing exclusivity by approximately 50 percent.
To prevent this loss of revenue, a generic may be willing to delay its entry in return for a brand’s agreement not to launch an authorized generic – that is, a brand’s agreement not to compete with the generic through an AG – during the generic’s 180 days of marketing exclusivity.
7. STRATERGIES TO MINIMIZE THE IMPACT OF PATENT CLIFF
Most obviously, there has been continued investment in new drug discovery and development of a “pipeline” of promising agents that address unmet medical needs and are profitable.
Enhanced advertising over the past decade in an attempt to optimize earnings prior to patent expiration
A number of drug companies have suggested that they will outsource at least some of their manufacturing to places such as Eastern Europe, India, and China, where drug products can be made at significantly less. But Quality issues will become severe.
Some pharmaceutical companies already are entering into agreements with generic manufacturers, licensing them the right to sell “authorized generics” identical to
branded drugs that have gone or will go off patent.
In an Economist article, it is revealed that Pfizer worked with an American firm in order
to help break apart a 180 day generic exclusivity period, helping the company compete with often
times cheaper generics. These practices have helped to boost sales by over half a billion in the
first half of 2012, taking at least some of the pain of the patent expiration out of the equation
Companies with the biggest cash reserves
Novartis $15 billionRoche $13.5 billion
Johnson & Johnson $13 billionMerck & Co. $10 billion
GlaxoSmithKline $9.5 billion
HYDERABAD: Dr Reddy's Laboratories has agreed to buy the entire equity holding of the Dutch injectable specialty generics manufacturer OctoPlus NV for 27.39 million euro ( 192 crore) in an all-cash deal.
The Hyderabad-based company said on Monday that OctoPlus' expertise in making improved injectable pharmaceuticals based on proprietary drug delivery technologies and focus on medicine ingredients that are difficult to formulate complement it capabilities.
Source: business-beacon.com, 2012