Emerging Issues in the Life Science Industry
Transcript of Emerging Issues in the Life Science Industry
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Emerging Issues in the Life Science Industry
Marsh 2005 Life Science Conference
„Effective Risk Management Solutionsfor the Life Science Industry“
20 & 21 October 2005, Berlin
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Agenda
• Life Science Industry – a global overview• Markets and Gographies• Industry Issues
• Emerging Health Markets• Market Drivers and Industry Positioning• Therapeutic Areas
• Convergence of Life Science industry segments• Innovation Driver• Impact of Biotechnology• Deals
• Regulation and Risk• Transparency• Integrity• Value
• Ernst & Young – Advisor in the Life Science industry• Pharma-, Biotech-, Health Care Reports• Ernst & Young Risk Advisory Service
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Life Science Industry – a global overview
Pharma – the global market
Source: IMS Health MIDAS MAT Dec 2004
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1995 1996 1997 1998 1999 2000 2001 2002 2003 20040
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14Market SizeGrowth Rate
% Growth
US$
North America
US$ (bn)
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Life Science Industry – a global overview
Pharma – the global players
Top 10 Pharmaceutical Companies, LocationsPfizer
Bristol -Meyers Squibb
Johnson & JohnsonMerck
GlaxoSmithKline
AstraZeneca
Sanofi -Aventis
NovartisRoche
Abbott
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Life Science Industry – a global overview
Pharma – growth/growth mix differs
Source: IMS MIDAS MAT/12 2004
47%
12%
7.8%
47%
12%
7.8%
4%
3%
13%
4%
3%
13%
7.6%
11%
13%
7.6%
11%
13%
11%
2.9%
1.5%
11%
2.9%
1.5%
Japan
LA
NA
AAA
Europe
31%
9.2%
6.7%
31%
9.2%
6.7%
Growth 2003-04
CAGR 2000-04
Share of Globe
Growth 2003-04
CAGR 2000-04
Share of Globe
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Life Science Industry – a global overview
Pharma – the patent expiry dilemma
Company Sales US 2004 ($M) Major expiry yearZocor Merck 3163 June 2006Zoloft Pfizer 2656 June 2007Pravachol BMS 1420 April 2006Zofran GSK 1035 June 2006Ambien Sanofi-Aventis 1489 October 2006Lamisil Novartis 528 December 2006Total 10741Norvasc Pfizer 1991 Jan.2007Coreg GSK 779 March 2007Seloken/Toprol AstraZeneca 977 August 2007Risperidone J&J 1711 December 2007Zyrtec Pfizer 1287 December 2008Total 6745
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Life Science Industry – a global overviewPharma – the generic competition
Generic market share in different geographic areas (2004)
Generic substitution - central policies for healthcare cost containment. Factors contributing to the growth of the generic industry include:
Legislation supporting increased use of genericsExpiration of blockbusters coming off patentSuccessful patent challengesIntense commitment to growth from generics manufacturersSupport from payers for generic alternatives to brand name drugs through formulary development and promotion
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Life Science Industry – a global overviewPharma – the innovation deficit dilemma
Year
Cost / benefit ratioTime to approval
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Life Science Industry – a global overviewPharma – the innovation deficit dilemma and the biotech promise
$0
$10
$20
$30
$40
$50
$60
1998 1999 2000 2001 2002 2003 20040
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20
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Biotech R&D Big pharma R&D Biotech NME approvals Big pharma NME approvals
Source: Ernst & Young
Approvals inlcude only new molecular entities, and exclude label approvals, new formulations and combinations. Certain drugs partnered between biotech and big pharma companies are counted in both groups. Big pharma is defined as the 20 largest global pharmaceuitcal companies by market cap. Companies that do not meet the definition of big pharma and do not meet Ernst & Young's definition of biotechnology are excluded from the analysis. Biotech R&D expenditures include large acquired in-process R&D charges resulting from mergers in some years.
Biotech and big pharma R&D expenditures and FDA new molecular entity (NME) approvals
R&D expenditures New molecular entities
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Market Cap($ billions)
Company
Source: Ernst & Young
$ 73.5$ 29.0$ 5.7Genentech$ 72.7$ 63.2$ 5.7Amgen
$ 358.0$ 330.8$ 41.0Biotech Industry
$ 204.5$ 252.8$ 19.3Pfizer$ 75.0$ 146.5$ 37.4Merck
2005 (May 10th)20001995
Historical pharma vs biotech
Life Science Industry – a global overviewBiotech is catching up
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Source: Ernst & Young; Yahoo Finance
Biotech
$73.58Genentech$72.69Amgen
$75.17Merck & Co., Inc.
$204.51Johnson & Johnson$204.52Pfizer Inc.$143.03GlaxoSmithKline plc (ADR)$114.24Novartis AG (ADR)$103.85Roche Holding Ltd. (ADR)$77.06Abbott Laboratories
$72.410AstraZeneca PLC (ADR)$66.711Eli Lilly & Co.$59.812Wyeth
Market CapRankPharma
Bristol Myers Squibb Co. $51.013
Top therapeutic companies by market cap (in $ billions)
Biotech
$73.58Genentech$72.69Amgen
$75.17Merck & Co., Inc.
$204.51Johnson & Johnson$204.52Pfizer Inc.$143.03GlaxoSmithKline plc (ADR)$114.24Novartis AG (ADR)$103.85Roche Holding Ltd. (ADR)$77.06Abbott Laboratories
$72.410AstraZeneca PLC (ADR)$66.711Eli Lilly & Co.$59.812Wyeth
Market CapRankPharma
Bristol Myers Squibb Co. $51.013
Top therapeutic companies by market cap (in $ billions)
Biotech
$19.78Abbott Laboratories$21.7 7AstraZeneca PLC
$52.51Pfizer Inc.$47.42Johnson & Johnson$39.23GlaxoSmithKline PLC$28.9 4Roche Holding AG$28.2 5Novartis AG$23.46Merck & Co. Inc.
$19.49Bristol-Myers Squibb Co.$17.4 10Wyeth Pharmaceuticals$13.9 11Eli Lilly & Co.$11.0 12Amgen
RevenuesRank
Pharma
Genentech Source: Ernst & Young; Yahoo (represents total revenues for most recent 12 month period reported)
$ 5.815
Top therapeutic companies by revenues (in $ billions)
Biotech
$19.78Abbott Laboratories$21.7 7AstraZeneca PLC
$52.51Pfizer Inc.$47.42Johnson & Johnson$39.23GlaxoSmithKline PLC$28.9 4Roche Holding AG$28.2 5Novartis AG$23.46Merck & Co. Inc.
$19.49Bristol-Myers Squibb Co.$17.4 10Wyeth Pharmaceuticals$13.9 11Eli Lilly & Co.$11.0 12Amgen
RevenuesRank
Pharma
Genentech Source: Ernst & Young; Yahoo (represents total revenues for most recent 12 month period reported)
$ 5.815
Top therapeutic companies by revenues (in $ billions)
Life Science Industry – a global overviewBiotech is catching up
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Life Science Industry – a global overviewBiotech is catching up with the US dominating
USA EU Asia-PacificNo.Comp.
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Mrd. US$ No.Comp. Mrd. US$2000
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No.Comp. Mrd. US$
2000
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No.Comp. Mrd. US$
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1(public companies)
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Life Science Industry – a global overview
Asian governments: strategic investments, ambitious goals
New Zealand: $660M industry in next decade,
with 18,000 employees
India(Draft
policy): $5B
industry by 2010
Japan: $200B
market by 2010Korea: Global
ranking of 7th by 2012
Taiwan: Invest $4.5 B; 18
companies by 2010Malaysia: One of
five core technologies
Biotech is catching up in Asia-Pacific
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Emerging Health MarketsEmerging Trends for the Health Market of the Future
Information-based
Medicine
Demographics/Ageing Population
- Disease Spectrum change
IndividualisedHealth Planning
- Customer Patient
Multimorbidity and Comprehensive Care
- Innovative TreatmentConcepts
• Age-related and degenerative DiseasesNeurology / StrokeCancerOrthopedics
• Lifestyle-relatedDiseasesMetabolic Diseases
Obesity-related diseases
Infectious Diseases
• Prevention• Personalised Medicine• Private Health Plans
Health SupplementsSelf medication/OTC
• Interdisciplinary Therapyinterlinking diagnosis - therapyinterlinked high tech medicineinterlinking patient – therapy - care
• Managed Care
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Emerging Markets – Health CareHealth Market as a significant economic factor in the future
HealthIT
Life ScienceIndustry
„Preventing, detecting, treating diseases“
Food and Health Supplement
Industry„Supporting health“
Health Care„Services within the
Health Market“
• Evidence-based and„Personalized“ Medicine
• Innovative Therapies• Innovative Diagnostics• Innovative Medical Devices
• Prevention Medicine• Convergence of Disciplines
• Theranostics• Molecular Imaging• Drug –coated Devices
• Nutrition /Neutraceuticals• Life Style-Products• Fitness-/Wellness-Products
• Physician Care (amb. u. stat.)• Care / Rehabilitation• Fitness / Wellness
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Emerging Markets – Health Care
Leading Therapy Classes in 2004 ($bn)…$billion 1995 2005Statines 4 25Anti-cancer 4,5 26EPO 2 10Anti-psychotics 0,5 7Biphosphonates 0 4,5Total 11 72,5
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Emerging Markets – Health Care
365 Phase III clinical products
Infectious Diseases 16%
Central Nervous System 12%
Cardiovascular 12%
Autoimmune 5%
Diabetes 2%
Cancer 28%Miscellaneous 25%
…and biotech pipelines address medical needs with preference
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Convergence of Life Sciences
Life Science Network as future innovation driver
Pharma
Medical Devices
Biotech
Diagnostics
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Molekulare Diagnostik
Mol. TargetsBiologicals
TissueEngineering,Stammzellen
Drug-coatedDevices
PersonalizedMedicine
ImagingTechniques
Innovationsfrominterfaces
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Convergence of Life Sciences
Impact of Biotechnology
• Biologicals• therapeutic proteins• antibodies• peptides• biogenerics
• Molecular Diagnostics• gene testing• disease markers• theranostics• personalized medicine
• Cell Biology• Stem cells• vaccines• tissue engineering
• Nanobiotech• biotech/devices
$1,370Recombinant interferon alfa-2a modified with PEG (monotherapy; also in combination with Copegus [ribavirin])
10. Pegasys/Copegus
$1,417Recombinant interferon beta-1a9. Avonex$1,700PEGylated version of Neupogen8. Neulasta$1,826
Recombinant erythropoietin7. Epogin/NeoRecormon
$2,500Novel erythropoiesis-stimulating protein (2nd generation EPO)6. Aranesp$2,580Recombinant fusion protein; soluble TNF receptor linked to IgG15. Enbrel$2,600Recombinant erythropoietin4. Epogen$2,891Chimeric monoclonal antibody; anti-TNF-alpha3. Remicade$2,963Chimeric monoclonal antibody; anti-CD202. Rituxan$3,589Recombinant erythropoietin1. Procrit
2004 Sales, $MTypeProduct
$1,370Recombinant interferon alfa-2a modified with PEG (monotherapy; also in combination with Copegus [ribavirin])
10. Pegasys/Copegus
$1,417Recombinant interferon beta-1a9. Avonex$1,700PEGylated version of Neupogen8. Neulasta$1,826
Recombinant erythropoietin7. Epogin/NeoRecormon
$2,500Novel erythropoiesis-stimulating protein (2nd generation EPO)6. Aranesp$2,580Recombinant fusion protein; soluble TNF receptor linked to IgG15. Enbrel$2,600Recombinant erythropoietin4. Epogen$2,891Chimeric monoclonal antibody; anti-TNF-alpha3. Remicade$2,963Chimeric monoclonal antibody; anti-CD202. Rituxan$3,589Recombinant erythropoietin1. Procrit
2004 Sales, $MTypeProduct
Top biological therapeutics
Med
Dev
ices
Dia
gnos
tics
Pha
rma
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Convergence of Life Sciences
Sales andmarketing
2005 & 2015
Technologydeals
Licensingagreements
R&DSpin offsJoint Ventures
Equityinvesments
Discoverypartnerships
R&D 2005
R&D network 2015
The Networked Pharma in 2015?
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Regulation and Risk
Drivers of Change
Demands for greater transparency
Disclosing clinical resultsPricing strategiesFinancial controls
Questions about Pharma’svalue proposition
Economic value to society
Concern over regulatory compliance and integrity
Complex regulation & authority scrutinySecurity of Supply Chain, Products, IT-systems
Actions to be taken• Continuing to ask the right questions in
order to mitigate risks and take advantage of new opportunities
• Demonstrating and communicating the value that pharma companies add to society and shareholders
• Examining their relationships with third parties – from R&D collaborators to retail pharmacies – in addition to their internal controls and standard operating procedures
• Working collaborative with stakeholders in other sectors worldwide to enhance the security and integrity of the pharma supply chain
Risk
Life Science – the most heavily regulated industry
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Regulation and Risk
Global Supply Chain Management
Product integrity, brand reputation, and patient safety rely on a series of third parties along the supply chain.
Upstream, risks and opportunities are associated with R&D collaboration, raw materials transactions
Downstream, risks and opportunities include diversion, counterfeiting, public safety, and evolving trade laws and regulations.
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Regulation and Risk
Global Supply Chain Management
From factory to customer: a long road…
H
Enduser
Short liner
wholesalerwholesaler
wholesaler
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Regulation and Risk
Assisted by the Economist Intelligence Unit225 respondents:
North America (33 percent), Europe (35 percent), Asia-Pacific (21 percent) representedPharmaceutical Manufacturers (33 percent), Wholesaler-distributors (31 percent), Pharmacies (24 percent) surveyed45 percent generate over $100 million in annual sales37 percent C-Level executives
Ernst & Young Global Supply Chain Survey
Distribution –a major risk carrier• diversion• conterfeit
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Regulation and Risk
Argue for non dominanceQuotas/Cease Supply (non dominance)Pricing CorridorsAccessing data (IMS, Customs, Wholesalers)
Political LobbyingCreating ‘best case’
Supply Chain optimisationOrganisational alignmentProduct Launch StrategiesMinimising counterfeitsDeveloping Product Pricing StrategiesCreating Day Trading Capability Systems & Information Integration and enhancementProcess and IT Controls integritySales Force Compliance
Argue for non dominanceQuotas Lease Supply (non dominance)Pricing Corridors
Redesign incentive plans Global & Import data aspectsAutomation of performance measurement and assessment
Understanding volumeflows and associated pricingAccessing customer/wholesaler dataSystems integration and controlData warehousing
Industry Regulatory
Action
Supply Chain
Internal Action
PerformanceMeasurement& Motivation
Knowledge/Information
Management
‘Day Trading’Capabilities
Legal
Taking Effective Action to mitigate Margin Erosion
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Ernst & Young and Health Sciences
Ernst & Young dedicated Health Science Competence Center
Dr. Manuel Bauer Dr. Susanne WoschMünchen KölnIndustry Specialist Industry Specialist
Dr. Siegfried BialojanMannheimIndustry Leader
Dr. Julia Schüler,MannheimSenior Industry Specialist
Dr. Ira Betz MannheimKnowledge Manager
Nina DunzweilerMannheimTeam Assistent
Account/Service Line/Client Support• Business Assessment/Development• Link to Service Lines• HS Solutions Development• Project Support
Thought Leadership/Marketing• Industry Analysis & Knowledge• Knowledge Management• Industry Reports• Public Relations• Marketing / Business Relations
Ernst & Young Health Sciences Competence CenterTel.: +49 621 4208 13 454 - [email protected] - www.de.ey.com
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Ernst & Young and Health Sciences
Ernst & Young Health Sciences Thought Leadership
"Our Biotech Reports generate deep understanding of the industry and knowledge to be exploited in client projects."
"Our Pharmaceutical Reports take up major issues in Pharma and are the basis for the development of specific solutions for clients."
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Ernst & Young and Pharma Risk Management
Ernst & Young Risk associated Advisory Services
Value proposition
Solution Sets
Core Competencies
Corporate SourcingCorporate SourcingCorporate ManagementCorporate ManagementCorporate Assuranceand Compliance
Corporate Assuranceand Compliance
Internal AuditFinancial Reporting ControlsIT Assurance & ControlsProgram & Project AssuranceEnterprise Security Mgmt.Forensic Advisory
Internal AuditFinancial Reporting ControlsIT Assurance & ControlsProgram & Project AssuranceEnterprise Security Mgmt.Forensic Advisory
Corporate Performance Mgmt.Corporate Risk Mgmt.Corporate Accountingand ReportingTreasury Management
Corporate Performance Mgmt.Corporate Risk Mgmt.Corporate Accountingand ReportingTreasury Management
Business Process OutsourcingIT OutsourcingIT Service ManagementPost Merger Integration
Business Process OutsourcingIT OutsourcingIT Service ManagementPost Merger Integration
Compliance – Cost – Quality - Performance
IT Management, Processes & Controls
Program & Project Management
Finance Processes, System & Controls
Advisory ServicesValue proposition
Solution Sets
Core Competencies
Corporate SourcingCorporate SourcingCorporate ManagementCorporate ManagementCorporate Assuranceand Compliance
Corporate Assuranceand Compliance
Internal AuditFinancial Reporting ControlsIT Assurance & ControlsProgram & Project AssuranceEnterprise Security Mgmt.Forensic Advisory
Internal AuditFinancial Reporting ControlsIT Assurance & ControlsProgram & Project AssuranceEnterprise Security Mgmt.Forensic Advisory
Corporate Performance Mgmt.Corporate Risk Mgmt.Corporate Accountingand ReportingTreasury Management
Corporate Performance Mgmt.Corporate Risk Mgmt.Corporate Accountingand ReportingTreasury Management
Business Process OutsourcingIT OutsourcingIT Service ManagementPost Merger Integration
Business Process OutsourcingIT OutsourcingIT Service ManagementPost Merger Integration
Compliance – Cost – Quality - Performance
IT Management, Processes & Controls
Program & Project Management
Finance Processes, System & Controls
Advisory Services
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Ernst & Young and Pharma Risk Management
Ernst & Young Risk associated Advisory Services
Value proposition
Solution Sets
Core Competencies
Corporate SourcingCorporate SourcingCorporate ManagementCorporate ManagementCorporate Assuranceand Compliance
Corporate Assuranceand Compliance
Internal AuditFinancial Reporting ControlsIT Assurance & ControlsProgram & Project AssuranceEnterprise Security Mgmt.Forensic Advisory
Internal AuditFinancial Reporting ControlsIT Assurance & ControlsProgram & Project AssuranceEnterprise Security Mgmt.Forensic Advisory
Corporate Performance Mgmt.Corporate Risk Mgmt.Corporate Accountingand ReportingTreasury Management
Corporate Performance Mgmt.Corporate Risk Mgmt.Corporate Accountingand ReportingTreasury Management
Business Process OutsourcingIT OutsourcingIT Service ManagementPost Merger Integration
Business Process OutsourcingIT OutsourcingIT Service ManagementPost Merger Integration
Compliance – Cost – Quality - Performance
IT Management, Processes & Controls
Program & Project Management
Finance Processes, System & Controls
Advisory ServicesValue proposition
Solution Sets
Core Competencies
Corporate SourcingCorporate SourcingCorporate ManagementCorporate ManagementCorporate Assuranceand Compliance
Corporate Assuranceand Compliance
Internal AuditFinancial Reporting ControlsIT Assurance & ControlsProgram & Project AssuranceEnterprise Security Mgmt.Forensic Advisory
Internal AuditFinancial Reporting ControlsIT Assurance & ControlsProgram & Project AssuranceEnterprise Security Mgmt.Forensic Advisory
Corporate Performance Mgmt.Corporate Risk Mgmt.Corporate Accountingand ReportingTreasury Management
Corporate Performance Mgmt.Corporate Risk Mgmt.Corporate Accountingand ReportingTreasury Management
Business Process OutsourcingIT OutsourcingIT Service ManagementPost Merger Integration
Business Process OutsourcingIT OutsourcingIT Service ManagementPost Merger Integration
Compliance – Cost – Quality - Performance
IT Management, Processes & Controls
Program & Project Management
Finance Processes, System & Controls
Advisory Services
Risk:Advanced Security CentersAverage Sales Price (ASP) ComplianceBrand ProtectionContract AssuranceCorporate Social Responsibility (CSR) Data PrivacyEnterprise Risk ManagementGlobal Legislative and Regulatory RiskIdentity and Access Management Intellectual Property and Royalty Recovery ReviewsInternal Audit Outsourcing – TeamingMarketing & Advertising Risk ServicesMarketing Mix OptimizationMedicaid Drug Rebate Program Contract Services MMA Brand Impact AnalysisSales and Marketing Compliance AssessmentSecurity Information Management Supply Chain Risk MitigationRisk and Control Anchor SolutionWholesaler Audits
HealthSciencesSolutions
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Ernst & Young and Pharma Risk Management
ContactHealth Sciences Competence [email protected]
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