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Pharma Industry Overview - New York University brao/mg795fall07class5.pdfPharma Industry Overview Types of drugs Prescription & Non-prescription 5 Patented drugs Generic drugs OTC

Aug 21, 2018

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  • Pharma Industry Overview

    Background & big picture trends

    Key demand drivers

    Pharma R&D

    Challenges Ahead

    1

    Challenges Ahead

    Global Innovation trends in Bio-pharma

  • Pharma Industry OverviewThe big picture

    Pharma profits are generated from broad based list ofcompounds

    Major targets include infection, cardiovascular conditions,depression, inflammatory diseases, etc.

    Pharma sector is more or less immune to the economy Demand for drugs has always been growing

    2

    Demand for drugs has always been growing Most drug costs are reimbursed by government, managed

    care or other third parties Major challenges ahead including lack of blockbuster drugs,

    competition from generics, managing consolidation, andchanging dynamics of managed care

    Collaboration with biotech firms is critical to developingnovel new ideas, and improvements in drug discoverymethods

    New waves of the future genomics, proteomics, bio-informatics, disease management, wellness, EMR, etc

    Source: IMS Research, 2003Source: IMS Research, 2003

  • Pharma Industry OverviewGlobal pharma sales by 1998-2005

    Global Sales US$B1998 1999 2000 2001 2002 2003 2004 2005

    3Source: IMS Health Total Market Estimates and Global Pharma Forecasts (includes IMS Audited and Unaudited Markets)All information current as of February 27, 2006.

    Total World Market (current US$) $298 $331 $356 $390 $427 $497 $559 $602

    Growth Over Previous Year(Constant US$)

    7% 11% 11% 13% 9% 10% 8% 7%

  • Pharma Industry OverviewGlobal audited pharma sales in 2005

    World AuditedMarket

    2005 Sales(US$B)

    % GlobalSales

    % GrowthYear-over-Year (Constant $)

    North America $265.7 47.0% 5.2%

    Europe $169.5 30.0% 7.1%

    4Source: Source: IMS MIDAS, MAT Dec 2005All information current as of February 27, 2006..

    Europe $169.5 30.0% 7.1%

    Japan $60.3 10.7% 6.8%

    Asia, Africa andAustralia

    $46.4 8.2% 11.0%

    Latin America $24.0 4.2% 18.5%

    Total IMSAudited

    $565.9 100% 6.9%

    Why so high?Why so high?

  • Pharma Industry OverviewTypes of drugs

    Prescription & Non-prescription

    5

    Patented drugs Generic drugs OTC drugs

    Source: IMS World Review 2003.

    OffOff--patent ethicalspatent ethicals18% of US Sales18% of US SalesSome plans mandateSome plans mandate

    generics if availablegenerics if availablePriced at 30Priced at 30--80%80%

    discounts to patenteddiscounts to patentedWaxmanWaxman--Hatch Act (84)Hatch Act (84)

    accelerated genericsaccelerated generics

    Physician controlledPhysician controlled65% of US Sales65% of US SalesPharmacyPharmacy--dispenseddispensed(retail, hospital,(retail, hospital,mailmail--order, etc.)order, etc.)

    Emphasis on provenEmphasis on proveneffectivenesseffectiveness

    SelfSelf--medicated by patientmedicated by patient17% of US Sales17% of US SalesMost OTCs began asMost OTCs began as

    prescription drugsprescription drugsWidely availableWidely available

    20012001

    Will this distributionWill this distributionchange over time?change over time?

  • Pharma Industry OverviewGenerics are booming

    GENERIC DRUGS - FACTS

    Generics account for 42% of all prescriptions (2002 data) For every 1 percent increase in utilization of generic drugs there is a

    corresponding savings of $1.16 billion dollars for health plans andemployer groups

    The average branded prescription is four times the cost of a generic

    6

    The average branded prescription is four times the cost of a generic Generics save consumers $8-10 billion per year Nine out of ten adults are willing to use generic drugs if recommended

    by their physician Eight out of ten adults, regardless of income, would choose a generic

    if the savings was $10 or greater Annual savings on chronic medications could be thousands of dollars

    for patients.

    Source: Medvantx.com 2003

    By 2010, ~80% of patentedBy 2010, ~80% of patenteddrugs will be exposeddrugs will be exposedto generic competition!to generic competition!

  • Pharma Industry OverviewGenerics are booming

    but big pharma is busy chasing

    7

    Source: Medvantx.com 2003

    but big pharma is busy chasingthe blockbusters

  • Pharma Industry OverviewLeading Products in 2002Product Category Company 2002 Sales in

    $ (Billions)Patentexpiry

    Lipitor CholesterolReducer

    Pfizer 9.0 2010

    Zocor CholesterolReducer

    Merck 6.0 2005

    Prilosec/Losec Anti-ulcerant AstraZeneca 5.0 Expired

    8

    Prilosec/Losec Anti-ulcerant AstraZeneca 5.0 Expired

    Zyprexa Schizophrenia

    Lilly 4.0 2011

    Novarsc Hypertension Pfizer 4.0 2007

    Vioxx Anti-inflammatory

    Merck 3.0 2013

    Celebrex Anti-inflammatory

    Pharmacia 3.0 2013

    Remaining 3/10 --- 11.0 ---

    TOTAL 45.0

    Source: ESP PharmaSource: ESP Pharma

  • Pharma Industry OverviewTop 15 Blockbusters in 2005

    9

    Source: Zydowsky Consultants, LLC, 2006Source: Zydowsky Consultants, LLC, 2006

  • Pharma Industry OverviewProjections

    The global pharmaceutical market is forecast to grow toUS$842 billion in 2010

    Strong growth in the 10 European markets that joined theEuropean Union in 2004 will help to boost European salesover the next five years

    There were a total of 16 new blockbuster drugs in 2005,

    10

    There were a total of 16 new blockbuster drugs in 2005,generating combined sales of US$18.1 billion

    Total pharmaceutical sales from the top 10 companiesaccounted for more than 40% of the total market

    Source: Piribo, Pharmaceutical Market Trends, 2006Source: Piribo, Pharmaceutical Market Trends, 2006--2010, June 20062010, June 2006

  • Key Drivers

    11

    Key Drivers

  • Pharma Industry OverviewKey Drivers

    Industry drivers Demographic trends

    Management of R&D

    Consolidation and strategic alliances

    Direct-to-consumer push

    12

    Direct-to-consumer push

    Threat from generics to big pharma

    Firm-level impacts Need to continue investments in R&D

    Need a solid partnering strategy

    Need to identify and prioritize opportunities and act onthem

  • Pharma Industry TrendsKey Drivers..

    Recent Industry Facts Shift from acute to chronic care products Pharma companies have strong balance sheets Period 2000-2004: Total biotech industry funding of approx. $95 billion

    Improved funding in 03 & 04, VC activity in 04

    13

    Improved funding in 03 & 04, VC activity in 04comparable to 00 peak

    Dramatic advances in genomics (targets),combinatorial/computational chemistry, HT/UHT*screening, SAR*

    Continued pipeline growth at many companies (may stillfall short?)

    Human Genome Project Data Glut

    HTHT High throughput UHTHigh throughput UHT UltraUltra--high throughput SARhigh throughput SAR -- StructureStructure--Activity RelationshipActivity Relationship

  • Pharma Industry TrendsSome demographics..

    Demand Drivers Aging baby boomers

    Lengthening life span

    Changing criteria for health and wellness

    Critical need for life-saving drugs in developing countries

    14

    Critical need for life-saving drugs in developing countries

  • Pharma Industry Trends

    Key Demographic Facts Over 60s in the US to

    rise from 606 millionin 2000 to 2 billion in2050

    Over 65s in the USexpected to expand53% from 2001 to

    15

    53% from 2001 to2020 vs. overallpopulation growth of17 %

    Over 65s account for16 % of USpopulation, but 33 %of all prescriptionswritten

    Source: US Census & PhRMA, 2006

  • Pharma R&D

    16

    Pharma R&D

  • Pharma Industry TrendsThe Role of R&D

    What are the chances that a single screenedcompound will be commercialized into a drug?

    How much does it cost to launch a new drug?

    How long does it take to launch a new drug?

    17

    How long does it take to launch a new drug?

    How many drugs are in Phase III today? Howmany of these will be blockbusters?

  • Pharma Industry R&DThe Drug Development Funnel

    Discovery

    Preclinical Testing

    Phase I20-100 healthy volunteers used to determinesafety and dosage

    100-500 patient volunteers used to look

    Laboratory and animal testing

    5,000 10,000 Screened

    5 enter clinical trials

    Compound SuccessRates by Stage

    250 enter preclinical testing

    18

    ClinicalTrials

    Phase III

    Phase IV: AdditionalPost-Marketing Testing

    FDA

    Phase III

    Review/Approval

    1K - 5K patient volunteers used to monitoradverse reactions to long-term use

    100-500 patient volunteers used to lookfor efficacy and side effects

    1 approved byFDA

    5 enter clinical trials

    KEY QUESTION: How to shorten the new drug development process?

    0 5 10 15

    Years

    Source: PhRMA, 2006

  • 19

    Source: PhRMA, 2006Source: PhRMA, 2006

  • Pharma Industry R&DMajor Challenges

    R&D expenditures continue to rise rapidly US R&D expenditures have doubled since 95

    Cost to develop a new drug = $802M

    It takes 5,000-10,000 compounds to result injust one approved drug

    20

    just one approved drug

    Only 3 of 10 marketed recover R&D costs

    Time to develop at 15 years almost doubled since the 60s

    Pressure from Wall Street to meet growthexpectations

    Source: IMS Research, 2003

  • Pharma Industry R&DMajor challenges

    21

    Source: PhRMA, 2006

  • Pharma Industry

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