Global trends in pharma market and its impact on supply chain

Copyright © 2016 QuintilesIMS. All rights reserved.

Trends in the Global Pharma-Market and its

Impact on the Supply Chain

Dr. Frank Wartenberg

President Central Europe

October, 20th, 2016

1

Top line growth forecast at 4-7% CAGR to 2020

(in constant US$)Pharmerging growth declines to single digits

© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)

Developed Markets

CAGR 2016-2020

US 6%-9%

Japan (-1)%-2%

Germany 3%-6%

UK* 4%-7%

Italy 2%-5%

France (-2)%-1%

Spain 2%-5%

Canada 3%-6%

Developed 4%-7%

Pharmerging Markets

CAGR 2016-20 LCUS$

China 5%-8%

Brazil 7%-10%

India 10%-13%

Russia 6%-9%

Turkey 12%-15%

Mexico 2%-5%

Pharmerging

LCUS$6%-9%

Pharmerging

US$4%-7%

Global Sales and Market Growth

At par with region CAGR

Lower than region CAGR

Higher than region CAGR*Subject to clawback

0%

2%

4%

6%

8%

10%

12%

0

200

400

600

800

1.000

1.200

1.400

1.600

2015 2016 2017 2018 2019 2020

Gro

wth

Sa

les

(B

n L

CU

S$

)

Global sales Developed growth

Pharmerging growth

Source: IMS Market Prognosis March 2016; at ex-manufacturer price levels, not including rebates and discounts. Contains Audited + Unaudited

data; Sept 2015 forecasts used for all countries outside of top 52

2

35%

32%

25%

21%

34%

41%

39%

43%

37%

65%

68%

75%

79%

66%

59%

61%

57%

63%FR

ES

IT

DE

UK

RU

JP

CA

US 15% 2%

13% -2%

10% 2%

11% 11%

14% 2%

11% 0%

11% 1%

10% -2%

5% -3%


Over time growth in specialty markets out-performed traditional markets in

terms of value…

Specialty Traditional

Average specialty share: 34%

Specialty Traditional

5 year CAGR (’10-’15)2015 value share specialty vs. traditional in TOP 5 EU

+ focus countries

Source: IMS Health, MIDAS, MAT Q4 2015

3

…. and are expected to remain the main growth driver in Europe till 2020 Share of Absolute Growth 2015-2020 and 2020 Sales by Region


93%

7%

Traditional 2020 Sales

Specialty 2020 Sales

93%

7%

Traditional Growth 2015-20

Specialty Growth 2015-20

66%

34%64%

36%

94%

6%

93%

7%

60%40%

24%

76%

82%

18%

79%

21%

LATAMLC$ 20Mrd Growth

North AmericaLC$ 152Mrd Growth

EuropeLC$ 42Mrd Growth

AFMELC$ 21Mrd Growth

AsiaLC$ 88Mrd Growth

Source: IMS Health Market Prognosis September 2015; at ex-manufacturer price levels, not including rebates and discounts.

Contains Audited + Unaudited data; IHII analysis

4© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)

At the same time, wholesalers loosing ground amongst European

countries

78%

76%

73%

62%

59%

57%

53%

50%

47%

42%

35%

19%

13%

26%

33%

36%

36%

45%

33%

50%

58%

58%

5%

7%

7%

6%

17%

12%

DK

CZ

BE

HU 1%

DE

PL 3%

AT

ES 2%

FR

IT

UK 1%

Direct retailDirect HospitalTraditional FLW

Delta WHS

2015 vs 2011

Q4/2015 value share by channel in TOP 5 EU + focus

countries

Traditional Full

Line Wholesalers

Direct sales to retail

Direct

sales to

hospitals

Source: IMS Health, total market, shares are based on value, Q4 2015, direct shares from local affiliates

+3%

-4%

-2%

-1%

-4%

-5%

-5%

-4%

-9%

-7%

-11%


Specialty products require a special handling leading to a rise in new

distribution models

Distribution

Preparation

Administration

• Many specialty products need

refrigeration or freezing

• Often requires maintaining cold chain

distribution during the whole delivery

process

• Specialty products can require

compounding of individual ingredients in

an exact strength and dosage form

tailored to the patient’s need

• Many specialty products are self-

administered injectable

• Requires patient training to administer

• Support to achieve adherence needed

Source: ASHP Specialty Pharmacy Resource Guide, available at:

http://www.ashp.org/menu/PracticePolicy/ResourceCenters/Specialty-Pharmacy-Resource

Rise of Homecare and specialty

pharmacies

• “Total service” to patient

• Aseptic services (e.g. oncology)

• Compliance programs/ patient

support

• Elimination of indirect payer costs


Typically specialty products are high price products with simultaneously

low volumes

100.0%

80.0%

0.0%

60.0%

40.0%

20.0%

2015

$142.4 Bn

61.7%

7.8%

11.3%

7.7%

10.2%

16.8%

11.3%

2010

$146.2 Bn

73.2%

EU 5 – Concentration of product

sales volume in SU bn US$

Source: IMS Health, MIDAS MAT Q4 2015, US$ and SU

All othersProducts 51-100Products 11-50Top 10 products

8.0%

98.0%

100.0%

6.0%

2.0%

4.0%

0.0%

2.2%

1.7%

0.7%

2.8%

1.9%

0.6%

2010

409.9 Bn

95.4%

2015

411.1 Bn

94.7%

EU 5 – Concentration of product

sales in bn US$

8

HUMIRA ENBREL GLIVEC

Mark upPrice per

pack €

WHS mark

up

Price per

pack €

WHS mark

up

Price per

pack €

WHS mark

up

AUSTRIA €23.74 fixed mark-up 975 23.7 858 23.7 2,705 23.7

BELGIUM €2.30 + 0.9% 951 10.9 918 10.6 2,284 22.9

FRANCE6.68% for first €450 (with a

minimum mark-up of 0.30€)

0% above €450829 30.1 732 30.1 1,737 30.1

GERMANY

Fixed fee of €0.70 plus 3.15%

mark-up to a limit of €37.80 on

the percentage mark-up

element.

3,631 38.5 3,164 38.5 5,331 38.5

SPAIN€7.54 where ex-MNF price excl

sales tax is >€91.63 N/A 845 7.54 1.184 7.54


They have a large impact on WHS margins – manufacturers try to keep

those by direct sales

Why direct sales?

• Ability to control discounting

• Ability to receive information about the dispenser

• Eliminate wholesaler exporting

• Manage distribution costs Source: IMS Health


Wholesalers offer pre-wholesaling carrying out warehousing & logistic for

manufacturers

Wholesalers

Patients

PharmaciesSelf-dispensing

doctors

Manufacturers

Hospitals

Classic distribution system for pharmaceuticals

with pre-wholesalers

Source: IMS Health

Characteristics

• Manufacturers outsource the warehousing and

logistic to pharmacies, self-dispensing doctors and

hospitals to so called pre-wholesalers

• Wholesalers often offer pre-wholesaling services

Pre-Wholesalers


Parallel trade is a huge threat for specialty products due to different price

levels in the EU

European annual parallel trade

Size

Import markets context

Source: IMS MIDAS and internal database, import markets: DEU, GBR, NLD, Nordics and IRL, All sales at ex-MNF level.

€5.2bn (EU 8)Size

- 4% PI

+ 5% Non-PI growth

+ 4% Total market growthGrowth

9% PI(8 main import markets only)

3% across EU28

Share0

1

2

3

4

5

6

MAT 06'14 MAT 06'15 MAT 06'16

€P

I sa

les

(B

n)

Specialist Primary Care

~60%

+ 2%- 4%

+ 2%- 4%

- 7%+ 6%


The traditional dispensing and distribution model is changing…

Wholesalers

Patients


doctors

Manufacturers

Hospitals

Classic distribution system for

pharmaceuticals

Source: IMS Health

Trends:

Manufacturers

• Aim to control the supply chain (reduce distribution

costs – increase margin, control exports)

Pharmacies

• Discounts driven (mainly generics and PI)

• Trend towards dispensing fees

Wholesalers

• Parallel Export important in several markets

• Offer pre-wholesaling to participate in direct sales

business

New market players

• Homecare and Specialty pharmacies


… to a highly complex environment

Wholesalers

Patients


doctors

Manufacturers

Hospitals

Parallel trader

Pre-Wholesalers

Mail-orderSpecialized

pharmacies

Source: IMS Health

Pre-wholesaling Direct sales Parallel trade New distribution channels


Counterfeits are a high threat leading to another big challenge for

distributing pharmaceuticals

Inside the fake Viagra factory

Source: The Telegraph “Inside the fake Viagra factory” (23 Aug 2005)

Which one is the

counterfeit?

14

Politicians take actions and continue efforts to highly control the

pharmaceutical supply chainIntroduction of Falsified Medicines Directive


Objective: Protection of patients from falsified

medicines in the legal distribution chain

Content: Pan-European system to verify the

authenticity of medicinal products

Scope: All Rx-bound products); OTC-products

cannot be subject to authentication

Due date: Implementation in all countries by

Q1/2019, Non – compliance puts sales at

risk!!!

Additional tasks and new costs for the pharmaceutical supply chainSource: EU “Falsified Medicines”, ESM “A European Medicines Verification System “


Key Insights to Take Away

Growth in the pharmaceutical market mainly comes from specialty care1

Specialty products are typically high cost products with low volumes and require a specific

handling in distribution, preparation and administration2

Manufacturers seek to fully tap high margins for those products and keep control over the whole

distribution process via direct sales 3

Wholesalers react to this development by expanding their business in offering manufactures pre-

wholesaling services4

Big threat of counterfeits leads to even stricter regulations (Falsified Medicine Directive) of the

pharmaceutical supply chain in the next years5

16

Please contact me for more information

Dr. Frank Wartenberg

President Central Europe

[email protected]

+49 (0) 69 6604-4315

Follow me on Twitter: @FrankWartenberg


17

© 2016, IMS HEALTH GmbH & Co. OHG

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18

© 2016, IMS HEALTH GmbH & Co. OHG

All rights reserved. The information may not be duplicated, stored, further processed, nor be made accessible in whole or in part to any third party without the prior express written consent of IMS

HEALTH.

In connection with data/figures used terms, such as „patient, doctor, medical practice, prescriber or pharmacy”, do not designate any personal data but exclusively anonymous information (in

accordance with § 3 Abs. 6 “Bundesdatenschutzgesetz” – German Federal Data Protection Act)

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Global trends in pharma market and its impact on supply chain

Healthcare

Transcript of Global trends in pharma market and its impact on supply chain