Dynamics in the Pharma and Biotech Industry

Dynamics in the Pharma and Biotech Industry

Jennifer Brice, Industry Manager,

Pharmaceuticals/Biotechnology

June 22, 2011June 22, 2011

Today’s Presenter

Jennifer Brice, Industry Manager,

Pharmaceuticals/Biotechnology,

Frost & Sullivan

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Focus Points

• Current Market

– Current state of biopharma

– Global revenues and market shares

– Drug sales by therapeutic categories

• Changing Dynamics

– Major patent expirations

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– Major patent expirations

– Therapy category shift

– Generic companies sales growth

– Biologic patent expiries

– Biosimilars market

– Pharma/biotech consolidation

• Market Opportunities

Current Market

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Current State of BioPharma

• The pharmaceutical and biotechnology industry is in a state of transition.

• Reorganization, M&A, consolidation, and portfolio changes are being evaluated in order to maintain growth centers in the face of a myriad of serious challenges.

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the face of a myriad of serious challenges.

• Overall, companies are looking to align with areas of growth opportunity as well as new business strategy and product development paradigms.

Global Biopharmaceutical Market Share by

Pharmaceutical Companies

Market Share by Pharmaceutical Companies, 2010

Other24.8%

PFE12.3% SNY

GSK6.8%%

AZN6.0%

LLY4.2%

BMY3.5%

JNJ4.1%

ABT3.6%

AMGN2.7%

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• Global Pharma Market (2010) - $550 Billion (4.7% growth)

• In 2010, Pfizer, Merck, Novartis, Roche, Sanofi-Aventis, and GlaxoSmithKline dominated the worldwide market

Source: Cowen & Co 2010, Frost & Sullivan analysis

12.3%

MRK8.4% NVZ

8.8%

RHHBY7.3%

SNY7.5%

Global Biopharmaceutical Market Share by Therapeutic

Categories

Therapeutic Categories: Drug Sales as a Percentage of the Total Market, 2010

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• In 2010, the cardiology therapeutic area (18.3%) produced the most drug sales followed by oncology/hematology (18.0%) and antibiotics/antivirals (14.5%)

Source: Cowen & Co 2010, Frost & Sullivan analysis

Changing Dynamics

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2009 2010 2011 2012

Product Sales ($MM) Product Sales ($MM) Product Sales ($MM) Product Sales ($MM)

Prevacid 3,514 Aricept 1,810 Lipitor 7,493 Singulair 3,327

Topamax 2,302 Cozaar/Hyzaar 1,454 Plavix 4,483 Enbrel 3,274

Lamictal 2,099 Protonix 1,132 Advair 4,321 Diovan 2,848

Valtrex 1,777 Taxotere 1,078 Seroquel 3,772 Lexapro 2,617

Flomax 1,485 Arimidex 729 Actos 2,957 Lovenox 2,539

Small Molecule Pharmaceuticals: Major Patent Expirations (U.S.), 2009-2012

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Imitrex 1,312 Gemzar 722 Zyprexa 2,670 Viagra 1,046

Adderall 1,309 Xalatan 544 Levaquin 1,779 Geodon 989

Keppra 1,247 NovoSeven 497 Avapro 843 Detrol 905

CellCept 968 Combivir 407 Caduet 485 Provigil 867

AmbienCR 899 Mirapex 402 Femara 447 Zometa 796

Suboxone 468 CoregCR 311 Xeloda 420 Avandia 676

All Others 2,335 All Others 3,260 All Others 2,366 All Others 4,584

Totals 19,715 Totals 12,346 Totals 32,036 Totals 24,468

Source: Kenneth Kaitin, Tufts University

Sales of Unbranded Generics by Leading Corporations $MM % Market Share % Growth

Teva 7,925 21.5 12.8

Mylan Labs, Inc. 3,789 10.3 10.3

Sandoz (Novartis) 3,457 9.4 53.0

Watson Pharma 2,125 5.8 7.6

Generic Companies Sales Growth

Sales growth for the top 10 generic companies grow at 21.1%:

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Watson Pharma 2,125 5.8 7.6

Greenstone (Pfizer) 1,470 4.0 -9.5

Par Pharma 1,380 3.7 18.2

Hospira Inc 1,173 3.2 20.5

Actavis US 992 2.7 93.4

Glopal Pharm Corp 980 2.7 255.3

Boehringer Ingelheim 878 2.4 23.7

Top 10 24,169 65.6 21.1

Source: IMS Health, National Sales Perspective, Sept 2010

Cardiology Sales of Key Companies

Company 2010 Cardiology Sales ($MM)

Pfizer 14,957

AstraZeneca 9,334

Sanofi-Aventis 9,194

Novartis 8,764

Bristol-MyersSquibb

8,392

Merck 7,476

Cardiology drug sales as a percentage of the total market expected to decline by 2015 due to patent expiries by top players and increased emphasis on other disease areas:

• Pfizer’s Lipitor (2011)• Pfizer’s Caudet (2011)• Sanofi-Aventis’ Plavix (2011)

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Source: Frost & Sullivan analysis.

Merck 7,476

GlaxoSmithKline 2,789

Abbott 2,664

Roche 497

Forest Labs 429

Eli Lilly 355

Johnson & Johnson

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Other 10,930

Total 75,843

• Merck’s Cozaar (2010)• Merck/Schering-Plough’s Zetia (2012)• Merck/Schering-Plough’s Integrillin(2015)

• Novartis’ Diovan and Exforge (2012)• Novartis’ Lescol (2012)• AstraZeneca’s Atacand (2012)• Bristol-Myers Squibb’s Avapro (2011)• Abbott’s Advicor (2013)• Abbott’s Tarka (2010)

Central Nervous System Sales of Key Companies

Company

2010 Central Nervous System Sales ($MM)

Eli Lilly 9,268

AstraZeneca 6,099

Pfizer 5,409

Johnson & Johnson

3,995

Bristol-Myers

Central Nervous System drug sales as a percentage of the total market expected to decline by 2015 due to patent expiries by top players and increased emphasis on other disease areas:

• Eli Lilly’s Zyprexa (2011)• Eli Lilly’s Symbyax (2011)• Eli Lilly’s Cymbalta (2013)• Pfizer/Wyeth’s Effexor XR (2010)• Pfizer/Eisai’s Aricept (2010)• Pfizer’s Geodon (2010)

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Bristol-MyersSquibb

2,625

Forest Labs 2,409

Novartis 2,077


Merck 1,152

Abbott 658

Other 5,559

Total 41,248

• Pfizer’s Geodon (2010)• AstraZeneca’s Seroquel (2011)• AstraZeneca’s Zomig (2013)• Bristol-Myers Squibb/Otsuka’s Abilify (2015)• Forest Lab’s Lexapro (2012)• Forest Lab’s Namenda (2013)• Novartis’ Exelon (2012)• Novartis’ Comtan (2013)• Merck’s Maxalt (2014)• Boehringer Ingelheim’s Mirapex (2011)• Cephalon’s Provigil (2012)• Novo Nordisk’s Novolog (2014)

Respiratory Sales of Key Companies

Company 2010 Respiratory Sales ($MM)


Merck 7,885

AstraZeneca 4,099

Pfizer 2,007

Respiratory drug sales as a percentage of the total market expected to decline by 2015 due to patent expiries by top players and increased emphasis on other disease areas:

• Merck’s Singulair (2012)• Sepracor’s Xopenex (2012)

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Roche 1,246

Sanofi-Aventis 1,077

Novartis 924

Forest Labs 5

Other 595

Total 29,413

• Sepracor’s Xopenex (2012)• Pfizer’s Revatio (2012)• Johnson & Johnson’s Levaquin(2010)

• Sanofi-Aventis’ Allegra and Johnson & Johnson’s Zyrtecgenerics and Merck/Schering-Plough’s OTC Claritin will continue to impede allergy market

Therapy Category Shift (Global), 2010-2015

2010 Revenues

� Cardiology

� Cancer/Oncology/Hematology

� Antibiotics/Antivirals

2015 Revenues

� Cancer/Oncology/Hematology


� Cardiology

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� Central Nervous System

� Respiratory

Source: Cowen & Co 2010; Frost & Sullivan Analysis

� Cardiology

� Rheumatology

� Diabetes

Biologic Patent Expiries (2004-2020)

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Source: IMS Health, MIDAS, Market Segmentation, June 2010

Key Biologics and U.S. Patent Expiries

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Source: IMS Health, MIDAS,, June 2010

Biosimilars Market

• The biosimilars market is complex with many factors that may affect market potential

– Products with different administration routes may gain favor over less desirable methods

– Biosimilars for chronic diseases may be viewed differently than biosimilars that are used only once

– Doctors may be more willing or less willing to prescribe biosimilars depending upon

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– Doctors may be more willing or less willing to prescribe biosimilars depending upon the indication (cancer vs. immunological disorders)

– Doctors may not be willing to switch patients already using biopharmaceuticals to a biosimilar

– Doctors may only prescribe biosimilars to new patients

– While generic medicines will produce significant cost savings, biosimilars are not expected to save much

• Conservative risk/benefit perspective at the FDA = fewer FDA approvals

• Prolonged FDA regulatory process = exacerbated pipeline gaps

– PDUFA IV requirements for advisory committee reviews

Pharma/Biotech Consolidation Continues

Consolidation

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– Negotiated Risk Evaluation and Mitigation Strategies (REMs) required for most NDA filings

• Tougher patent litigation settlements = loss in key franchise

Consolidation

Source: Frost & Sullivan

Pharmaceutical M&A Activity, 1995-2010

Pharmaceutical M&A Activity, 1995-2010

• In 2010, there have been 986 transactions

• The number of M&A have slightly

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Source: IMAA 2011.

have slightly increased (+3%); this is the fourth consecutively increase since 2006, and a new record in terms of numbers of transaction

Significant Mergers & Acquisitions in 2009

Pfizer - WyethPfizer - Wyeth

Value: $68 billion

Key Reason:

Imminent loss of Pfizer’s revenues due to patent expiration of Lipitor

Value: $68 billion

Key Reason:

Imminent loss of Pfizer’s revenues due to patent expiration of Lipitor

Merck & Co. - Schering Plough

Merck & Co. - Schering Plough

Value: $41 billion

Key Reason:

Schering-Plough pipeline consisting mainly of biologics, with about 18

Value: $41 billion

Key Reason:

Schering-Plough pipeline consisting mainly of biologics, with about 18

Roche -Genentech

Roche -Genentech

Value: $46.8 billion

(44% of remaining shares)

Key Reason:

Roche, through acquiring

Value: $46.8 billion

(44% of remaining shares)

Key Reason:

Roche, through acquiring

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expiration of Lipitor ($13.4bn ) during 2010-2011

Wyeth’s current portfolio of marketed products and strong pipeline of biologics particularly in CNS.

expiration of Lipitor ($13.4bn ) during 2010-2011

Wyeth’s current portfolio of marketed products and strong pipeline of biologics particularly in CNS.

biologics, with about 18 drugs in Phase III.

Schering-Plough offers geographical diversity with 70% of its revenue outside the United States.

biologics, with about 18 drugs in Phase III.

Schering-Plough offers geographical diversity with 70% of its revenue outside the United States.

Roche, through acquiring the remaining 44% of shares gets complete control of Genentech, a leader in biotechnology with blockbusters such as Avastin and Rituxan.

Roche, through acquiring the remaining 44% of shares gets complete control of Genentech, a leader in biotechnology with blockbusters such as Avastin and Rituxan.

Source: Frost & Sullivan

Top Deals in 2010

Target Company Target Country Acquirer Company Acquirer Country

Genzyme U.S. Sanofi-Aventis France

Alcon Switzerland Novartis Switzerland

Millipore Corp U.S. Merck KGaA Germany

Ratiopharm Germany Teva Israel

Valeant Pharm U.S. Biovail Corp Canada

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Valeant Pharm U.S. Biovail Corp Canada

TalecrisBiotherapeutics

U.S. Grifols Spain

OSI Pharmaceuticals U.S. Ruby Acquisition Inc U.S.

Piramal Healthcare Ltd India Abbott Laboratories U.S.

Source: IMAA 2011.

FIPCO (Fully Integrated Pharma Co.)

Manufacturing

Sales &Distribution

CSO

CMO

Partnerships

Clinical

Manufacturing

Sales &Distribution

VIPCO (Virtually Integrated Pharma Co.)

Changing Business Models

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ResearchTechnology

Clinical &Regulatory

CROs

Academia, Scientific, Institutions

R&D

Preclinical Support

ClinicalDevelopment

Preclinical CRO

Source: Burrill & Co.

Market Opportunities

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• Emerging Markets– High unmet needs for treatments

– Potential for growth in contract markets (CROs and CMOs)

• Personalized Medicine– Advances in a number of molecular profiling technologies, including proteomic

profiling, metabolomic analysis, and genetic testing, may allow for a greater degree of personalized medicine than is currently available

• Develop/commercialize biosimilars/generics

Current Pharmaceutical Opportunities

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• Develop/commercialize biosimilars/generics

• Social Media

• M&As

Next Steps

� Request a proposal for or Growth Partnership Services or Growth Consulting Services to support you and your team to accelerate the growth of your company. ([email protected]) 1-877-GoFrost (1-877-463-7678)

� Join us at our annual Growth, Innovation, and Leadership 2011: A Frost & Sullivan Global Congress on Corporate Growth (www.gil-global.com)

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� Register for Frost & Sullivan’s Growth Opportunity Newsletter and keepabreast of innovative growth opportunities(www.frost.com/news)

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For Additional Information

Jennifer Brice

Industry Manager

Pharmaceuticals & Biotechnology

(650) 475-4560

[email protected]

Britni Myers

Corporate Communications

Healthcare

(210) 477-8481

[email protected]

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Daniel Ruppar

Research Director

Healthcare

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Chris Olsen

Director of Business Development

Healthcare

(650) 475-4561

[email protected]

Dynamics in the Pharma and Biotech Industry

Health & Medicine

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