Will Pharma Survive the Headwinds of Change in the new Healthcare Eco System - Trends and Opportunities in Pharmaceuticals and Life Sciences

Will Pharma Survive the Headwinds of Change in the new Healthcare Eco System

Trends and Opportunities in Pharmaceuticals and Lifesciences

Reenita DasPartner, Frost & Sullivan

May 8, 2013

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Everything that we think we know might be wrong…

We are in the middle of a massive global remix. Disciplines merge and cross-pollinate. Technology intrudes into biology and society. Power and authority are redistributed. Boundaries shift -- or disappear. A new world is emerging…

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Healthcare Transformations

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2012 marks a watershed in the US healthcare system (US supreme courts decision to uphold patient protection and Affordable medical care and Obamas re-election)

Increasing speed and intensity of product competition-ferocity of generic competition

Declining R&D productivity garners companies to seek innovation outside

The number of products that die before going live is going to dramatically increase in the next few years

Emerging markets become the key driver to growth and spending

Consolidation continues to increase including at the hospital sector level

Teva joins the Ranks of Top 10 Global Pharma Company• First non-western, non-innovative company to join these ranks

The Healthcare Industry is at a Tipping Point

Source: Frost & Sullivan analysis

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Asia as the Focus for Healthcare Spending Growth

G7 $6,147.00 billion

50.0% increase 2010-2020CAGR 4.0%

APAC$2,927.00 billion

151.0% increase 2010-2020CAGR 9.2%

Australia$198.00 billionCAGR 3.0%

Hong Kong$20.00 billionCAGR 3.2% South Korea

$127.00 billionCAGR 5.5%

Singapore$23.00 billionCAGR 9.6%

Malaysia$25.00 billionCAGR 8.4%

Taiwan$65.00 billionCAGR 7.8%

India$331.00 billionCAGR 14.5%

China$1,446.00 billionCAGR 15.5%

Indonesia$47.00 billionCAGR 8.1%

Vietnam$31.00 billionCAGR 14.8%

The Philippines$26.00 billionCAGR 11.5%

Thailand$25.00 billionCAGR 8.4% Brazil, Russia, India, and

China (BRIC)$1,958.00 billion

212.0% increase 2010-2020CAGR 12.1%

United States$3,922.00 billion

CAGR 4.6%

Note: APAC includes India, China, Japan, Hong Kong, The Philippines, South Korea, Australia, Indonesia, Malaysia, Singapore, Vietnam, Thailand, and Taiwan. Source: WHO, World Bank and Frost & Sullivan analysis.

Total Healthcare Expenditure, Global, 2010-2020

Japan$563.00 billionCAGR 3.0%

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The Consumer Profile is Changing: BRIC represents 2.9 billion: 40% of world population

In 2000, 10% (606 million) of the global population was aged 60+. By 2050 this will be more than 21% (2 billion.)

75% of those aged 60+ have one chronic condition - 50% have two or more chronic conditions

On the positive side, this group is predicted to influence innovation, choice and spend on healthcare resources and assets

Source : WHO

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Personalized Medicine

Patient Centric

Decentralized, Community-based

Collaborative, Shared Information

Based on Protocols and Analytics

Preventing Sickness (Wellness)

Integrated, Two Way

Source: Frost & Sullivan analysis.

Personalization, Communication, Decentralization, Collaboration

From...

One Size Fits All

Provider Centric

Centralized, Hospital-based

Fragmented, Specialized

Based on Individual Expert

Treating Sickness

Fragmented, One-way INFORMATION FLOW

LOCATION

FOCUS

APPROACH

TREATMENT

DECISION MAKING

OBJECTIVE

...To

Procedure-based Bundled, CapitatedREIMBURSEMENT

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Disease/Care Management

Prevention/Wellness

Goal:Keep

People Healthy Longer

Goal:Keep

People Healthy Longer Goal:

Manage or Mitigate

Risk

Goal:Manage

or Mitigate Risk Goal:

Diagnose and

Reduce Treatment

Delay

Goal:Diagnose

and Reduce

Treatment Delay

Goal:Manage

Goal:Manage Goal:

Quality of Life

Goal:Quality of

Life

Goal:Move to

More Interaction and Self-

Mgmt

Goal:Move to

More Interaction and Self-

Mgmt

Healthy/“Worried Well”

“At Risk” Undiagnosed Chronically IllManaged

Chronically IllUnmanaged

Endof Life

Continuum of Care

Siz

e of

Impa

cted

Pop

ulat

ion

Source: Frost & Sullivan analysis.

Shifting Emphasis From Acute Care to Prevention

Track, Predict, Intervene, Manage•Early identification and prevention

•New models of care delivery to improve collaboration among providers, patient knowledge, self-help and health

•Increase intervention and incentivize better chronic disease management

$$

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Moving to Prediction and increasing Quality of Life

Global Healthcare

Spend

Better health throughearlier diagnosis

Inc

rea

sin

g L

ifes

pa

n

The most advantageous way to combat many diseases, such as diabetes or cancer is to predict susceptibility, characterize and begin preventive treatment before the onset of the disease

Screening and Localizing diseases is the most efficacious and cost effective approach to improving quality of life

Predict, 5% Predict, 9%

Predict, 22%Diagnose, 15%

Diagnose, 19%

Diagnose, 27%

Treat, 70%Treat, 60%

Treat, 35%

Monitor, 10% Monitor, 12% Monitor, 16%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2007 2012 2025

Global Healthcare Spend

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To the HOME…..Care Anywhere…Care Networking… Care Customization

10

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Transformation 1: There is a rebalance of the public and private sectors in the financing and delivery of care

Multi Trillion Dollar Opportunity in Private Sector

• Driven by demographic changes — aging, chronic illness — there is a demand to redress the public versus private balance as governments explore new ways to control costs and change practitioner behaviour

• New pay and reimbursement models will focus on outcomes, quality and cost-savings

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Transformation 2: Re-engineering of HC

Enabled through the power of connectivity and personalized, democratized technology solutions to achieve greater efficiency and improved outcomes

to satisfy demanding, informed consumers

Source: Frost & Sullivan analysis

This patient-centric health system opens the door to new market participants from industries such as mass retail, telecommunications, health/wellness/spa and travel and tourism.

Connectivity and smaller cheaper testing solutions will reduce dependence on large, expensive facilities and give individuals greater control over their health and well-being.

Point of Care PatientLab

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Transformation 3: HC becomes Personalized, Predictive and Preventive

Healthcare is becoming a precision-based industry.

Source: Frost & Sullivan analysis

Personalized Medicine

Genetic Mapping

Advancements in predictive and preventative

medicine

Patient segmentation/

tailored treatment regimens

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Pharma’s New Growth Strategies

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Market Predictions

‘Pharmerging’ Markets

• Affordable access will be the key to entering next-wave emerging markets. Less costly generics and cost-effective point-of-care testing are possible entry routes into these markets

• Clinical development activity will increase in emerging markets• Globalization, economics, and demographics are expected to drive the

healthcare industry

Personalized Medicine

• Convergence to help drive the pharma industry• Personalized medicine testing to become more non-invasive• Testing will become more rapid• Will expand in developing countries

Drug Development

• Large pharma to exit areas of R&D and focus on specialties and complex disease areas

• Open innovation to become industry norm (i.e., new collaborations to share intellectual property, create global network for biomedical research, alliance with external scientists)

Generics/Biosimilars

• Focus on next generation of generics/biosimilars (e.g. stem cells)Source: Frost & Sullivan analysis

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Future of Technologies

Present-2020

• Curative therapies

• Eradication of HIV, hepatitis, TB, etc.

• Widespread access to biologics

• Pre-symptomatic disease detection

made possible via widespread

accessibility to screening tools such

as multiplex assays, DNA

sequencing

• Precision tailored therapies based on

genome

• Companion diagnostics the rule

rather than the exception

• Targeted therapies – (beyond

molecular targets?)

• Regenerative medicine

• A few effective stem cell therapies

• Effective gene therapies

• Some diagnostics and prescriptions

available at local pharmacy

• Self-diagnosis for many diseases

• Personalization prevention

strategies

• Companion Diagnostics – more an

exception than a rule

• Targeted therapies – molecular

targets

• Tailored therapies

• Self-diagnosis for some diseases

(HIV)

• Biosimilars beginning to emerge

• Personalized medicine is mobilized

to ethnic populations (genetic

similarities)

• Earlier cancer detection at Stage I/II

• Hospital care transfer to

community care

2021-2025 2026-2030

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De-emphasize the clinician

Integration of information, analytics – holistic view of patient, eliminate administrative waste and unnecessary care

Risk Sharing is here to stay… who takes the responsibility?

De-emphasize the product

Build services

Outcome and Cost Data will guide purchasing decisions

Rough Roads Ahead for the Healthcare Business.. From Volume to Value… Is this Revolution or Evolution?

Source: WHO; DFID; Frost & Sullivan analysis

De-emphasize the clinician

Integration of information, analytics – holistic view of patient, eliminate administrative waste and unnecessary care

Risk Sharing is here to stay… who takes the responsibility?

De-emphasize the product

Build services

Outcome and Cost Data will guide purchasing decisions

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2020

Increase patient engagement

We Need to Move Beyond the Pill…

Source: Frost & Sullivan analysis

Need to capture value outside of the product to SERVICES using analytics/data

Pharma companies need to think beyond treating diseases…. To preventing them… focus on wellness, lifestyle, consumer driven trends

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Frost & Sullivan Anna TsujiCorporate Communications – JapanTel: +81-(0)3-4550-2210Email: [email protected]

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