Introduction to Pharma Industry Final v 1.003
Transcript of Introduction to Pharma Industry Final v 1.003
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Introduction to thePharmaceutical Industry
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Global pharma market is around 800bn and growing at 7%
Source: IMS Health Market Prognosis, Jun 2009
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Developed markets – US, Europe, & Japan –
constitute around 80% of the market
Source: IMS Health Market Prognosis, Jun 2009
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Power of innovation - Global top selling brands
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World’s Top Pharma Companies
Source: IMS Health, Deutsche Bank estimates
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Therapeutic Categories
• Alzheimer’s disease
• Arthritis/Inflammation
• Cardiology
• Central Nervous System
• Diabetes
• Epilepsy
• Gastrointestinal/Ulcer • Head Trauma/Spinal Cord Injury/Stroke
• Infectious Disease
• Multiple Sclerosis
• Oncology/Hematology
• Ophthalmology
• Osteoporosis/Hormone Replacement
• Pain Management
• Respiratory
• Sexual Dysfunction
• Sleep Disorders
• Urinary Incontinence
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R&D spend of top pharma companies
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Basic Terminology
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API & FF• Chemical Intermediates (basic/fine/specialty)
• Active Pharmaceutical Ingredients
– Active chemicals furnishing pharmacological activity or other
direct effect in the treatment
• Finished Formulations
• Dosage forms
– How the drug is delivered to the patient.
– Parenteral (skin piercing), topical (skin surface), tablet, oral
(liquid or dissolved powder), inhalation and transdermal.
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Drug Master File or DMF• A document
– Prepared by a pharmaceutical manufacturer at his discretion – Submitted to the appropriate regulatory authority in the intended drug market
– No regulatory requirement to file a DMF
– Provides the regulatory authority with confidential, detailed information about facilities,
processes, or articles used in the manufacturing, processing, packaging, and storing of one or
more human drugs.
• In U.S., there are five types of DMF's:
Type Purpose
I Manufacturing Site, Facilities, Operating Procedures, and Personnel
IIDrug Substance, Drug Substance Intermediate, and Material Used in Their
Preparation, or Drug Product
III Packaging Material
IV Excipient, Colorant, Flavor, Essence, or Material Used in Their Preparation
V FDA Accepted Reference Information (to be discussed with FDA)
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Generic Drugs (Gx)• A generic drug is a drug which is produced and distributed without patent
protection.
• Equivalent versions of originator pharmaceutical product (API) – Internationally approved non proprietary scientific name (INN) or Brand name
– Essentially similar (Quality, safety & efficacy) but less expensive (20%-90%)
– Strict observance of BE (Bio-Equivalence)
• When a pharmaceutical company first markets a drug, it is usually under a patentthat allows only the pharmaceutical company that developed the drug to sell it.
• Generic drugs can be legally produced for drugs where: – 1) the patent has expired,
– 2) the generic company certifies the brand company's patents are either invalid, unenforceable
or will not be infringed, – 3) for drugs which have never held patents, or
– 4) in countries where a patent(s) is/are not in force.
Innovative Drugs: The first version of a drug which is developed and patented by an originator company.The product is covered by exclusive rights to marketing.
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Generic Development Chain
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I n t r o d u c t i o n t o P h a r m a I n d u s t r y
Generics now account for 15% of the global Pharma market
value and nearly 30% of volume
Source: IMS Health Consulting using MIDAS MAT Mar 2008; Generics include unbranded, branded & copy products excludes consumer health & alternative
medicines
Generic penetration of the Global Pharma Market
Value Volume
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I n t r o d u c t i o n t o P h a r m a I n d u s t r y
5.0%
UK
$23.5bn
However, mature markets are growing in low single digits…
4.1%US
$286.8bn
6.2%
Canada
$17.1bn
3.6%Japan
$65.2bn
5.1%
Germany
$36.7bn
6.2%France
$38.9bn
6.1%
Spain
$18.0bn
1.0%
Italy
$22.9bn
4.3%8 Mature markets
$509.1bn
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I n t r o d u c t i o n t o P h a r m a I n d u s t r y
… while many Pharmerging markets are experiencing
double-digit growth
Source: IMS Health, Market Prognosis, Jun 2008 *DLO program excluded. "Pharmerging" markets include: China, India, Brazil, Russia, Mexico, Turkey, and S.
Korea
25.7%
China
$17.6bn
9.7%
Brazil
$15.7bn
17.2%
Turkey
$9.5bn
9.0%
Russia*
$5.5bn
13.0%India
$9.2bn
7.5%
Mexico$11.1bn
10.7%
S. Korea
$10.4bn
13.9%
7 Pharmergingmarkets
$79.0bn
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2015
800 - 1,100
2008
669
575
94
150 - 180
Forecast of totalpharmaceutical salesUSD billions
Going forward, generics industry expected to
continue growth trajectory
* Biologics are included in non-generics
Source: IMS; Espicom; Evaluate; Datamonitor; Citigroup; Goldman Sachs; Cowen
CAGR 2008 - 15Percent
3 - 7
7 - 10
2 - 7Non-generics*
Generics
650 - 920
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Generics growth mainly driven by close to USD 300 billion
sales going off patent by 2015
* Worldwide sales in USD billions in year of US patent expiration; patent expirations not corrected for supplementary patents or litigation probability;2015 forecast extrapolated
** Without insulin/insulin derivatives and epo/epo derivatives (Epoetin alfa, Epocrit/Eprex/Epogen, 4.9, 2013)
*** Patent expirations in the US, often different for other countries
Source: Evaluate
Top-10 Rx products, 2008**Sales by patent expiration
USD billions*
RankTradename
Worldwidesales, 2008USD billions
Patent ex-piration***Year
114
121
288
53
Total2013 -
15
2010 -
12
2007 -
09
Molecule
1. Lipitor 201112.6Atorvastatin
3. Seretide/
Advair
20117.6Fluticasone/
salmeterol
2. Plavix 9.3 2011Clopidogrel
4. Enbrel 6.5 2012Etanercept
6. Remicade 20185.4Infliximab
5. Diovan 6.0 2012Valsartan
8. Nexium 5.2 2014Esomeprazole
9. Avastin 20184.8Bevacizumab10. Zyprexa 20114.8Olanzapine
5.37. Rituxan 2014Rituximab
Patent expiryuntil 2012
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9 - 12
Emerging markets demand – ~ 80% of the incremental Gx
growth likely to come from emerging markets
RETAIL GENERICS MARKET*
USD billions
94
150 - 180
High-
income
countries**
46 - 71
Global
generics
sales,
2015
Low- and
medium-
income
countries
10 - 15
Global
generics
sales,
2008
3 - 5
CAGR 2008 - 15Percent
* Net sales (after rebates)
** World Bank definition: > USD 11,456 per capita GNI
Source: Espicom; IMS, McKinsey
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83% of the world's populationlive in low- and medium-incomecountries …
… suffering 90% of world's diseaseburden …
… and consuming only ~ 14%of drugs in value
17
10
86
100% =
USD 669billion
14
1.45 billionDALYs*
90
6.7 billionpeople
83
Low- and medium-income countries
High-incomecountries
* Disability-adjusted life years
Source: WHO; UNO
Emerging markets demand – growth prospects in low- and medium-income countries driven by need to reduce disease burden
TOTAL PHARMACEUTICALS MARKET, 2008
Percent
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Clinical Trials• Clinical trials are conducted to allow safety and efficacy data to be collected
for health interventions (e.g., drugs, devices, therapy protocols).
Phase Group of People Purpose
I 20-80
• Evaluate the safety of the drug
• Determine a safe dosage range of a drug• Identify side effect of a drug
II 100-300• Effectiveness of the drug
• Further evaluation of its safety
III 1000-3000• Further confirm its effectiveness
• Monitor side effects
IVPost Marketing
Surveillance
• delineate additional information regarding the drug’s risks,
benefits and optimal use
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Obtaining CoS (Certificate of Suitability) in EU
• The role of a Certificate of Suitability (CEP) is to certify the compliance of a
material with the requirements laid down in the relevant monograph of theEuropean Pharmacopoeia. Active pharmaceutical ingredients for which a
Certificate of Suitability has been granted are suitable for use in medicinal
products.
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Dossiers
• A collection of papers containing detailed information about a particular
person or subject (usually a person's record).
• Compilation of documents relevant for a specific regulatory purpose in
specific countries for developmental or marketing a medicinal product in a
structured form.
• Clinical Trial Authorization Application
– It is an application for authorisation to conduct a clinical trial.
• Marketing Authorization Application (MAA)
– It is an application (to the relevant authority ; typically the UK's MHRA or the European
Commission's Committee for Medicinal Products for Human Use (CHMP)) to market a drug ormedicine.
– The U.S. Food and Drug Administration equivalent is a New Drug Application (NDA).
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BE & BA• Bio Availability: It is a measurement of the rate and
extent of a therapeutically active drug that reaches the
systemic circulation and is available at the site of action. – For drug products that are not intended to be absorbed into the
bloodstream, bioavailability may be assessed by measurementsintended to reflect the rate and extent to which the activeingredient or active moiety becomes available at the site of action.
• Bioequivalence: Bioequivalence is a term inpharmacokinetics used to assess the expected in vivobiological equivalence of two proprietary preparationsof a drug. – The United States Food and Drug Administration (FDA) has
defined bioequivalence as, "the absence of a significantdifference in the rate and extent to which the active ingredientor active moiety in pharmaceutical equivalents orpharmaceutical alternatives becomes available at the site of drug action when administered at the same molar dose undersimilar conditions in an appropriately designed study."
API
absorbed/
available at
action site
BA BA
Level Level
BE
Comparison at Same
molar dose,
Experimental conditions
Similar
rate & extent
of absorption
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Differences between BA & BE
BA BEMeasure of rate, extent & amount of active
ingredient available at the site of action.
Absence of a significant difference in rate,
extent and amount of active ingredient at
the site of action.
Done for 1 drug at a time. 2 drugs usually branded & potential are
compared at the same time.
Done for generic. It is not done in the case of innovator drug.
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Patents- Lifecycle Maximization (1/2)• Standard: 20 years
• SPC: Supplementary Protection Certificate
– + 5 years (for Pharma & Plant technologies)
– To compensate originator companies for the time & cost of developing registration data.
• “Evergreening”
– Aims to prevent or delay Gx competition by extending market protection through patents on
minor changes (on new use/indication, dosages, changes in formulation, salt or ester, colour )
to the originator product.
– This can block the registration or marketing of Gx medicine for treatments where the base
patent has already expired.
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Patents- Lifecycle Maximization (2/2)• Data Exclusivity
– Period of time duration (beginning from first marketing approval of the originator’s product)
during which Gx applicant is restricted from applying to the medicines authorities for market
authorizationData Exclusivity is not data protection: Originator’s data remains protected by
copyright laws & legal provisions
– Generics do not use originator’s data: Medicine authorities never release originator’s data to
third parties
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Types of companies related to life sciences
• Pharmaceutical companies (Manufacturers & Marketers)
– Chemical drugs &/or Biotech products
– Diagnostic companies
– Medical device companies
• R&D companies (Technology driven)
• Contract Research and Manufacturing Organizations (CRAMS)
• Clinical Research Organizations (CRO)
• Trading companies, Indenters, suppliers, distributors
• Pharmacies
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International Marketing
Departments of a Pharmaceutical companyTop Management & Board of the company
(Board of Director, Executive Committee, Chairman, Managing Director, CEO,
Director etc)
Marketing SalesBusiness
Development
Purchase &
Supply Chain
Regulatory
Affairs
Head Office R&D Manufacturing
Domestic Marketing
• President - Sales & Marketing
• Senior Vice President
• Vice President
• Country Managers
• Senior Executive• Executives
• President –Sales & Marketing
• Senior Vice President
• Vice President
• Senior General Manager
• General Manager (Marketing
Head)
• Assistant General Manager
• Dy. General Manager
• Marketing Manager
• Product Manager
• Executive (Product)
• Trainee
(PMT)
Project
Management
Team
Others(Finance, IT,
HR)
ExportsMarket
Research
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Departments of a Pharmaceutical companyTop Management & Board of the company
(Board of Director, Executive Committee, Chairman, Managing Director,
CEO, Director etc)
Marketing
Head
OfficeR&D
Manufacturin
g
• Vice President - Sales
•General Manager – Sales
• Regional Sales Manager
• Territory Sales Manager
• Area Sales Manager
• Executive (junior or Senior)
– Sales
• Product Specialist & MedicalRepresentative
• General Manager
• Senior Manager
• Manager
• Executive
* Sometimes
divided – geography
wise
• Manager
Purchase
• Executive
• Supervisor
• Vice President
• General
Manager
• Manager
• Assistant
Manager
• Executive
•* Sometimes
divided –
geography wise
SalesBusiness
Development
Purchase,
Dispatch &
Supply Chain
Regulatory
Affairs
Others
(Finance, IT,
HR)
Exports
• Senior Executive
Exports
* Sometimes
divided –
geography wise
Market Research
• Analyst
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Departments of a Pharmaceutical company
Top Management & Board of the company
(Board of Director, Executive Committee, Chairman, Managing Director, CEO,
Director etc)
Head Office R&D Manufacturing
• Manager – Analytical
Department
• Dy. Manager
• Research Scientist
•Research Coordinator
• Senior Research Executive
• Research Executive
• Research Assistant
• Research Associate
* Mainly divided for F&D and
NDDS
Others
(Finance, IT,
HR)
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Departments of a Pharmaceutical company
Top Management & Board of the company
(Board of Director, Executive Committee, Chairman, Managing Director, CEO,
Director etc)
Production Planning
& Control
Quality Control, Quality
Assurance
Head Office R&D Manufacturing
• Manager Production
• Manager Plant
• Manager Engineering,
• Deputy Manager (store)
• Assistant Manager Production
• Junior Principal Executive
• Senior Executives & Executives(Production)
• Production workers
• Packing Research Associate
• Senior Technical Officer
• Shift Incharge
• Manager (QC)
• Deputy Manager (OC)
• Junior Principal Executive
(QC)
• Senior Principal Executive
(QC)
• Executives (Stores)• Supervisor (Store)
• Workers (Store)
Others
(Finance, IT,
HR)
Engineering &
Maintenance
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ManufacturingCapacity
Plant
CapacityReactor Capacity
Manufacturing Facilities Details• General: name, address, location
• Product(s) manufactured: API/FF/IM, therapeutic category, dosage form• Technology of the plant
• Approvals granted to facility: 2 types
– Product Approvals- USDMF, EDMF, JDMF, KDFM, CEP, COS etc.
– Facility Approvals- GMP, FDA, EMEA, Korean, JPMDA, ANVISA, MHRA etc.
• Manufacturing Capacity
– Volume of products that can be generated by a production plant or enterprise in a given period
by using current resources.
– 2 types
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Good Manufacturing Practices• GMP
– World wide recognized guidelines outlining the aspects of production that would affect the
quality of a product (Foods, Pharmaceutical products and Medical devices).
• Versions :
– C GMP: US, enforced by US FDA, Current GMP
– WHO GMP: 100 countries- mainly developing;
– EU GMP: European Union
– UK: The Medicines Act (1968) covers most aspects of GMP in what is commonly referred to as
"The Orange Guide", which is named so because of the color of its cover; it is officially knownas The Rules and Guidance for Pharmaceutical Manufacturers and Distributors.
– Australia, Canada, Japan, Singapore, others…
– ICH GMP (since 1999): for API ; apply to signatories of International Conference on
Harmonization – EU, JP, US & other countries who adopted ICH GMP to manufacture & test
APIs - Australia, Canada, Singapore
• Examples: – Japan, Singapore follow ICH Q7 regulation
– India and China follow their national GMP guidelines
– For EU, US (follow EU GMP, C GMP respectively)
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Para Filing
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Clinical TrialsTesting of INDs (Investigational New Drugs) in human subjects to prove safety and efficacyprior to the drug's approval for marketing. The investigation of a previously untested drugis generally divided into three phases:
1. Phase I: Introducing the product (or drug) into a small number, generally 20 to 80, patients or healthy volunteers to determine the drug's metabolism, pharmacological actions, and sideeffects associated with increasing doses.
2. Phase II: introducing the product (or drug) into a small number, generally no more than
several hundred, patients with the disease or condition under study to evaluate theeffectiveness of the drug, common short-term side effects and risks associated with its use.
3. Phase III: Introducing the product (or drug) into several hundred to several thousand subjects.Studies are expanded controlled and uncontrolled trials performed after preliminary evidencesuggesting effectiveness of the drug has been obtained. If the results of the Phase III ClinicalTrials are favorable, then the FDA will normally license the drug for manufacture and sale.This phase is usually performed using double blind studies with a placebo and the actual drug.
4. Phase IV: Ongoing testing studies conducted after the drug is approved. This is done to ensurethe long-term efficacy of the drug, detect any long-term beneficial and/or detrimental sideeffects, and to determine additional potential uses for the drug
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Clinical Trials
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Making of a Drug – Long, Risky & Expensive
Source : PhRMA, Annual Membership survey 2009
39
Average cost of
bringing out newdrug to market
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R&D productivity is declining
Source PhRMA, FDA
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Patent cliff – exposure for various big pharma cos
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www.cbacademy.in www.cbresearch.inSource: company publications [Barr has been merged with Teva]
World’s generics players
Revenues, $ bn, 2007
+ Arrow Generics
NA OTC
CEE / Russia
INDIA PROJECTED TO BE THE 10th
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Top 14 pharmaceutical markets, 2015Top 14 pharmaceutical markets, 2005
INDIA PROJECTED TO BE THE 10th
LARGEST MARKET BY 2015US$ billion
6
7
8
9
10
13
13
14
19
20
31
32
68
248
15
15
19
20
20
25
25
25
32
38
38
46
82
444
UK
Italy
France
Japan
Germany
Canada
US
Spain
India
Turkey
South Korea
Brazil
Mexico
China
6
5
3
2
4
8
1
7
14
13
12
11
10
9
Germany
China
UK
Spain
Italy
Turkey
South Korea
Mexico
Brazil
India
Canada
US
Japan
France
6
5
3
2
4
8
1
7
14
13
12
11
10
9
India will be 3rd largest growth
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Incremental growth (2005-2015)
US$ million
India will be 3rd largest growth
opportunity globally
13
7
11
12
14
14
14
23
196US
China
Japan
Germany
France
UK
Canada
India
Brazil
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I n t r o d u c t i o n t o P h
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Drug Approval Process – NDA & ANDA
FDA Approval
ANDA Submitted
FDA review ( 1 – 2 Years)
Formulation
BA/BE Study (1 Year)
Safety and Efficacy
Established by
Clinical Trials of Innovator
FDA Approval
NDA Submitted
FDA review (2.5 Years)
Extensive Human
Clinical Studies (3 Years)
Clinical Studies -
Effectiveness (2 Years)
Clinical Studies –
Safety (1 Year)
Investigational New Drug Submitted
Discovery & Preclinical (3-4 Years)
Innovator / Branded Generic
45
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Paragraph 4 filings in the US remaining a key profit driver
2.07
1.69
0.86
1.44 1.52
Par
1.87
0.900.43
Barr Mylan
3.79
1.21
1.72
0.35
Teva
2.59
0.33
1.85
Watson
All other products
Paragraph IV
45 35 26 23 18EPS from ParagraphIVPercent
Source: JP Morgan analyst report (September 2007)
ESTIMATED EPS, 2008
USDESTIMATES
Paragraph IV gives six-month
exclusivity to the generic company in US
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R&D spend of top Gx companies
0
2
4
6
8
1012
% s
a l e s s
p e n t o n
R & D
Source: company publications, 2007-08
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Emergence of Biotechnology
Bi i il N t t i ti f
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Biosimilars – Numerous patent expirations of
biologics will drive the marketWORLDWIDE SALES OF EXPIRING BIOLOGICS*
USD billions in year of US patent expiration
8
17
9
21
59
1
Total2008 -15***
2015***
14131211
1
10
2
09
1
2008
1 3 4 2 3 9 7 16 45Number ofmolecules*,**
* Analysis does not include ~ 80 products with unclear year of patent expiry (account for ~ 16% of biologics sales in examined period)
** Molecules only counted if sales reported in database, further 24 molecules listed for examined period without reported sales
*** 2015 sales extrapolated from previous years
Note: May contain rounding errors
Source: Evaluate
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Significant price differentials exist across countries
AVERAGE GROSS PRICES
USD per standard unit, Q3/2008
1 Omeprazole – 20 mg capsules; Amlodipine – 5 mg tablets; Simvastatin – 20 mg tablets
2 Retail channel sales in India; no differentiation into Gx/Rx provided
3 Hospital channel sales in China; no differentiation into Gx/Rx provided
4 Tablets not sold, price refers to capsules
5 Only low sales of Simvastatin in Japan
Note: Not including retesting cost to enter other markets
Source: IMS
Japan 0.78
0.32
India2 0.07
UK 0.12
France 0.66
Italy 0.55
China3 0.20
Spain 0.16
Germany 0.48
US
Country Omeprazole1 Amlodipine1 Simvastatin1Molecule
0.41
0.284
0.23
0.21
0.22
0.05
0.10
0.04
0.08
0.34
0.32
0.20
0.14
0.13
0.22
0.03
N/a5
0.44
Factor11x
Factor15x
Factor10x
Country-specific health care systems can be
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y p y
grouped into 3 clusters
KEY MARKET CHARACTERISTICS OF CLUSTERS
Cluster I
Drug adoption opportunity
•Underdeveloped healthcare system
E.g., emerging markets(Russia, CIS, India, China, Mexico)
Cluster II
Gx penetration opportunity
•Developed health caresystem
•Medium generics pene-tration
E.g., Italy, France, Spain, Portugal, Brazil, Hungary, Japan
Cluster III
Commoditization challenge
•Developed health caresystem
•High generics penetration•Substitution requirement•E.g., US, UK, Netherlands, Scan
dinavia, Germany
Generics companies apply specific toolboxes/strategic
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Generics companies apply specific toolboxes/strategic
mindsets by cluster
Commoditizationchallenge
Gx penetration opportunityDrug adoptionopportunity
KEY MARKET CHARACTERISTICS OF CLUSTERS
•Bottom-line management
•Large portfolio,and molecule deals
•Payorrelationships, contracts, and tenders
•Low COGS
•Top-line management•Sales force effective-ness
and efficiency (e.g., T&S)•Pharmacy, trade spend
optimization (gross-to-netratio)
• Prepare ramp-up atdefined trigger points/health care reforms,reimbursement programs
• Brand building (includingOTC)
• Tailored portfolio• Partnership with
governments
Required
toolbox/strategicmindset
Cluster I Cluster II Cluster III
Source: McKinsey
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Power of the government - Health care system reforms
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US UK DenmarkGermany
Power of the government Health care system reforms
have been instrumental in creating the generics industry
* Health Care Reform Act
** International Non-proprietary Name
Source: IMS; Simoens; expert estimates; McKinsey
Keyreformcreatinggenericsindustry
Hatch-Waxman Act (1984)
NHS reforms/Fundholding Scheme(1991)
Danish HealthAct (1991)
Gesundheits-strukturgesetz*(1993)
Today'sgenerics
industryVolumepenetrationin percent
•Simplification offiling process forgenerics by
introduction ofANDAs
•Paragraph IV
• Introduction ofphysician pre-scription budgets
• Impact furthersupported byenforcement ofINN** prescription
• Implementationof mandatorysubstitution for
pharmacists
• Introduction ofphysician pre-scription budgets
(continuouslymodified over time)
3664
3862
4060
3268
Generics
Non-generics
Significant Mergers and Acquisitions 2008 2009
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GSK/Stiefel Labs
$ 3.6 billion
Significant Mergers and Acquisitions 2008-2009
Pharma/Specialty
Pharma/Biotech
Shionogi/Sciele
$ 11 billion
Novartis/Alcon
$ 10.4 billion
Roche/Genentech
$ 46 billion
King/Alpharma
$ 1.6 billion
Pfizer/Wyeth
$ 68 billion
Biotech/Biotech
Diagnostics
Medtech
Invitrogen/Applied
Biosystems
$ 6.7 billion
Gilead/CV
Therapeutics
$ 1.4 billion
Roche/Ventana
$ 3.4 billion
Kinetic Concepts/
LifeCell
$ 1.7 billion
Fresenius/APP
Pharma
$ 3.7 billion
Hologic/Third Wave
$580 million
CSL/Talecris
$ 3.1 billion
Takeda/Millennium
$ 8.2 billion
Eli Lilly/ImClone
$ 6.2 billion
Celgene/Pharmion
$ 2.7 billion
Inverness/BBI
$ 100 million
ViroPharma/Lev
Pharma
$ 618 million
Johnson & Johnson/
Mentor
$ 1.07 billion
Eisai/MGI Pharma
$ 3.5 billion
Inverness/Paradigm
$ 230 million
Pharma/Pharma
Merck/Schering
Plough
$ 41.1 billion
Teva / Barr
$ 7.1billion
Watson /
Arrow pharm
$ 1.75 billion
Burrill & Company
Significant Partnerships
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Significant Partnerships
Pharma/BiotechTakeda/Amgen
$ 1.78 billion
GSK/Archemix
$ 1.4 billion
GSK/Valeant
$ 820 million
Takeda/Anylam
$ 1 billion
GSK/Dynavax
$ 810 million
Astellas/CoMentis
$ 760 million
GSK/Tolerx
$ 750 million
Biotech/BiotechGenzyme/Osiris
$ 1.38 billion
Genzyme/Isis Pharma
$ 1.1 billion
Nycomed/Immunomedics
$ 620 million
Celgene/Array
$ 1.04 billion
Celgene/Acceleron
$ 560 million
Roche/Synta
$ 1 billion
GSK/Synta
$ 965 million
BMS/Exelixis
$ 865 million
Pfizer/Medivation
$ 725 million
Genzyme/PTC Theraputics
$ 437 million
Summary : The reshaping of the global pharma market
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7 “Pharmerging”
Growth moving from…
Branded Drugs
8 developed
Primary Care
Organic Growth
Small molecules
Specialist care
Inorganic Route
Biologicals
Generics
…to
continues…
Multiple drivers lead to increasing pressure on margins and
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p g p g
growth for big pharmacos
Increasing pressures
• Keep costs low andinvestments flexible
towards emerging areas
• Explore new growth
avenues and sources
to fill the pipeline
Source: Paraxel; analyst/industry reports; press searches; web searches
Imminent patent expiries
•450 molecules worth US$350 mn going off-patent
•Loss of blockbuster sales significant for big pharma – largemanufacturing capacity getting freed up
Increased pricing challenge
Weak pipeline and falling
R&D productivity
•R&D spend outpacing
revenue growth (11%
vs.10%)
•Significant drop in rate of
NCE launches (~30% drop)
•Time to market grown to
15 years (10 years in
1970s)
•Dramatic increase inlicensing deals by top 25
pharma
Changing nature of demand
growth
•Emerging markets priority
growth area for several
pharmacos as regulated
markets slow down
•Branded Gx play requires
different operations - low
cost proposition and rapid
innovative but incremental
new drugs
Improving manufacturing operations through outsourcing is a
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key margin improvement lever
Source: McKinsey analysis from ‘Pharma Operations 2015’ knowledge effort
Key learnings on operational and cost
performance of pharmacos
•Significant room for Rx and Gx companies to
improve productivity
•Rx pays a big premium over Gx that will be hard
to justify going forward
•US/EU manufacturing is typically at a significant
premium over LCC manufacturers
•The cost challenge will be greater as
blockbusters decline
•Investments in capacity to become more
challenging going forward
Multiple levers can be explored to
improve operational
performance, e.g.,
•Network rationalisation
•Virtual/flexible/asset light models
•Outsourcing manufacturing
especially to LCCs
•Efficient procurement
•Supply chain management
•Lean manufacturing
•Capex optimisation
ILLUSTRATIVE
Several pharmacos have announced aggressive plans to
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Several pharmacos have announced aggressive plans to
outsource manufacturing
Source: Analyst/industry reports; web/press searches
“Struck deal to offshore vast majority of API/raw materials sourcing to
India . . . to shift to countries with lower production costs”
“Consolidate 50% of network across LCC and HCC locations”
“Increase reliance on third-party contract manufacturers as part of
ambitious expansion plan”
“Outsource 30-35% of manufacturing activities to India and China”
“Completely exit API manufacturing over the next 5-10 years”
“Stop production at half of its 27 manufacturing facilities by 2010”
“Double outsourcing of manufacturing activities to 30% from 15%”
ILLUSTRATIVE
Global contract manufacturing is expected to
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g p
touch ~US$75 billion by 2015
US$ billion
+9%
2015
75
2007
35
Size of global contract manufacturing
•Global pharma market growth to
remain stable
•API and formulations costs to
decrease as a proportion of sales
with increased outsourcing
•Outsourcing of manufacturing by
pharmacos to increase dramatically
across APIs and formulations
•Contract manufactured APIs to
increase as a proportion of total
outsourced APIs
Key drivers of growth
India is extremely well positioned as an LCC sourcing
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destination over the next few years
India
• Highest number of USFDA approved plants outside
the US
• Low cost process development talent
• Significantly lower capex and opex costs
• Strong track record of contract manufacturing
partnerships
China
• Low cost proposition
for APIs/intermediates
• Strengths in
fermentation and
enzymatic products
• Only 5 plants USFDA
approved at this point
Eastern Europe
• Strong proposition in
select segments
(e.g., formulations
supply within EU)
• Strong talent base(lower cost than
western Europe)
India is extremely well positioned in
the medium term (5-7 years) to be
the LCC sourcing destination of
choice across most segments
India’s contract manufacturing share is likely to
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grow to 12% in 2015
US$ billion, per cent
India’s share of global contract manufacturing opportunity
14
9688 86
4
35
2007
12
75
2015 Base
75
2015 Aggressive
100% =
India size (US$ billion)
CAGR (per cent)
1.5 9 10
25 27
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Cardiovascular (―CVS‖)—MAT June 2009 Sales—INR41.1 Bn (11.3% of IPM)
41
Cardiovascular (Top 10 Companies Among the Overall Top 50 Companies Analysed) Y-o-Y Growth Rate (%)
Company
MAT
Jun-09
FYTD
(Apr-09 –
Jun-09) Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09
Company Share in
TA (MAT Jun-09)
%
Torrent Pharma 13.6 27.7 15.5 20.4 29.8 33.8 20.5 29.0 6.5
Sun Pharma 13.5 19.2 6.3 7.9 20.0 11.9 14.8 32.4 6.3
Cadila Healthcare 7.8 4.0 10.2 5.0 8.9 6.4 4.4 1.3 6.0
Cipla 21.5 22.5 26.5 11.4 30.8 18.8 17.1 32.9 5.7
Ranbaxy 9.8 10.4 3.5 11.3 16.0 9.9 8.7 12.7 5.5
Unichem 0.3 5.2 (4.6) (4.0) 3.3 1.7 7.5 6.6 5.4
Lupin Ltd. 17.2 20.4 16.6 8.9 20.6 19.8 16.8 24.7 5.2
Sanofi Aventis 14.4 2.7 10.7 8.5 25.8 (0.1) 2.3 6.1 5.1
USV 33.9 19.9 49.1 35.8 30.4 18.3 18.5 23.0 4.8
Piramal Healthcare 15.9 18.6 23.1 14.2 29.0 24.0 12.9 19.1 4.6
Total 14.4 17.0 14.5 12.4 21.0 15.9 14.4 20.8 100.0
Source ORG IMS; Nomura research
Domestic Formulations—Breakdown by Therapy (cont’d)
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Gastrointestinal—MAT June 2009 Sales—INR40.0 Bn (10.8% of IPM)
42
Gastrointestinal (Top 10 Companies Among the Overall Top 50 Companies Analysed) Y-o-Y Growth Rate (%)
Company
MAT
Jun-09
FYTD
(Apr-09 –
Jun-09) Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09
Company Share in
TA (MAT Jun-09)
%
Cadila Healthcare 10.4 15.9 15.4 10.3 22.3 10.3 14.8 23.2 5.4
Dr. Reddy’s Labs 5.9 23.1 4.4 5.7 15.7 17.4 19.6 32.7 4.7
Abbott 9.9 14.3 16.6 8.3 21.9 14.1 8.0 21.8 4.2
Aristo Pharma 18.1 15.1 30.0 29.9 32.7 14.4 12.7 18.1 4.0
Alkem 21.4 32.0 30.8 33.9 38.2 21.6 35.6 40.0 3.9
Mankind 20.0 16.7 33.2 27.5 24.8 14.9 14.3 21.2 3.9
Sun Pharma 20.1 25.3 17.0 20.6 28.8 20.2 20.9 35.2 3.7
Ranbaxy 14.4 10.8 21.5 32.5 21.2 1.7 8.4 24.6 3.4
Torrent Pharma 10.1 23.5 17.8 26.0 37.6 28.2 16.4 26.2 3.3
Piramal Healthcare 8.6 8.5 14.8 10.0 13.7 11.4 13.3 1.7 3.0
Total 10.4 12.3 17.0 16.5 21.9 8.7 9.1 19.7 100.0
Source ORG IMS; Nomura research
Domestic Formulations—Breakdown by Therapy (cont’d)
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Respiratory—MAT June 2009 Sales—INR32.2 Bn (8.8% of IPM)
43
Respiratory (Top 10 Companies Among the Overall Top 50 Companies Analysed) Y-o-Y Growth Rate (%)
Company
MAT
Jun-09
FYTD
(Apr-09 –
Jun-09) Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09
Company Share in
TA (MAT Jun-09)
%
Cipla 12.8 14.5 13.3 6.7 20.7 8.4 14.3 21.7 19.0
Piramal Healthcare 18.9 17.4 29.2 26.8 31.8 30.6 16.3 7.0 7.5
Pfizer 15.3 17.3 17.9 10.2 10.0 8.5 16.9 29.0 6.3
GlaxoSmithKline 2.4 14.3 13.5 12.2 15.4 8.3 14.0 21.4 4.8
Cadila Healthcare 10.8 24.3 7.5 8.9 16.0 21.7 18.9 33.0 4.4
Lupin Ltd. 25.6 34.3 19.1 22.3 33.2 33.0 30.3 39.7 3.7
Alembic 10.0 27.6 1.2 1.8 14.4 11.1 32.9 42.2 2.7
Wockhardt 0.6 16.1 8.8 9.2 16.5 6.8 13.5 30.2 2.6
Sanofi Aventis 6.0 18.3 12.3 7.1 16.1 11.0 18.9 25.8 2.5
Glenmark Pharma 17.8 26.3 5.4 14.3 26.3 12.1 29.1 41.7 2.4
Total 10.3 17.1 12.7 10.8 18.9 12.3 14.9 25.0 100.0
Source ORG IMS; Nomura research
Domestic Formulations—Breakdown by Therapy (cont’d)
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Pain/Analgesics—MAT June 2009 Sales—INR31.7 Bn (8.7% of IPM)
44
Pain/Analgesics (Top 10 Companies Among the Overall Top 50 Companies Analysed) Y-o-Y Growth Rate (%)
Company
MAT
Jun-09
FYTD
(Apr-09 –
Jun-09) Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09
Company Share in
TA (MAT Jun-09)
%
Novartis 4.9 7.1 3.9 7.4 13.5 2.3 8.7 11.0 6.1
GlaxoSmithKline 10.0 14.4 17.1 22.0 20.2 3.7 19.9 20.4 5.5
Ranbaxy 10.8 9.6 19.6 21.7 22.5 6.3 9.6 13.3 5.4
Piramal Healthcare 18.7 20.9 27.4 34.5 29.1 21.0 14.4 27.6 4.7
Sanofi Aventis 2.5 4.6 11.0 1.2 0.7 (2.7) 8.9 8.6 4.1
Alkem 11.6 28.2 25.4 26.5 25.1 26.0 31.0 27.5 4.1
Dr. Reddy’s Labs 1.1 7.0 8.1 4.0 7.8 1.4 4.9 14.9 3.8
Ipca Labs 30.4 21.0 58.4 52.3 51.0 27.6 22.7 13.7 3.3
Cadila Healthcare 23.0 27.0 35.5 38.7 46.4 23.6 36.3 21.7 3.1
Cipla 10.9 9.7 22.5 17.2 21.9 1.8 12.2 15.7 2.6
Total 10.3 11.4 18.0 15.9 18.4 9.5 10.3 14.5 100.0
Source ORG IMS; Nomura research
Domestic Formulations—Breakdown by Therapy (cont’d)
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Vitamins/Minerals/Nutrients—MAT June 2009 Sales—INR28.3 Bn (7.7% of IPM)
45
Vitamins/Minerals/Nutrients (Top 10 Companies Among the Overall Top 50 Companies Analysed) Y-o-Y Growth Rate (%)
Company
MAT
Jun-09
FYTD
(Apr-09 –
Jun-09) Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09
Company Share in
TA (MAT Jun-09)
%
Merck Ltd. 16.5 10.6 30.2 28.6 31.8 9.3 4.8 18.3 6.9
Wockhardt 12.2 18.7 15.6 18.3 27.2 24.9 17.7 14.1 6.0
GlaxoSmithKline (2.2) 5.6 10.7 16.5 22.6 19.0 6.3 (5.6) 5.5
Pfizer 12.8 18.7 28.5 42.5 35.4 23.9 30.3 4.4 4.9
Elder Pharma 11.4 18.5 9.9 14.9 13.9 8.0 21.9 26.9 4.1
Raptakos Brett 15.7 15.0 21.5 24.4 25.3 15.9 6.9 22.6 3.5
Novartis 0.5 (2.6) 5.5 10.5 2.7 (2.6) (0.5) (4.8) 3.3
Piramal Healthcare 4.5 12.7 7.9 8.9 11.5 7.8 9.2 21.7 2.7
Abbott 11.0 7.2 36.6 28.4 25.7 17.5 1.8 3.8 2.6
Alkem (0.7) 7.8 8.7 3.0 2.2 5.0 8.8 9.6 2.6
Total 7.7 10.3 14.4 16.3 16.4 10.0 8.3 12.6 100.0
Source ORG IMS; Nomura research
Domestic Formulations—Breakdown by Therapy (cont’d)
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Gynaecology—MAT June 2009 Sales—INR21.1 Bn (5.8% of IPM)
46
Gynaecology (Top 10 Companies Among the Overall Top 50 Companies Analysed) Y-o-Y Growth Rate (%)
Company
MAT
Jun-09
FYTD
(Apr-09 –
Jun-09) Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09
Company Share in
TA (MAT Jun-09)
%
Cadila Healthcare 0.5 15.2 4.9 1.7 12.8 0.4 18.5 29.1 7.6
Emcure 24.3 5.5 27.7 17.1 26.3 3.0 6.4 7.1 7.2
Cipla 31.3 32.7 22.9 13.6 37.1 28.0 24.7 48.0 6.6
Franco Indian 16.4 3.1 33.2 26.8 24.8 2.3 6.0 1.3 5.4
Sun Pharma 12.7 17.6 12.2 9.4 18.2 10.4 15.3 28.1 4.2
Wyeth Ltd. 18.8 21.1 14.7 18.1 20.8 22.5 19.9 20.8 3.8
Novartis (1.2) 1.6 (1.0) 5.7 15.9 7.6 6.2 (8.0) 3.7
Mankind 46.6 46.1 14.0 14.8 32.8 40.7 45.1 52.7 3.2
Schering Plough 9.5 (3.0) (2.6) 2.2 12.5 (3.4) (1.5) (4.0) 2.8
Alkem 24.7 34.5 21.1 18.4 40.3 28.1 33.5 42.0 2.4
Total 13.8 14.1 16.2 12.5 19.2 13.1 11.8 17.3 100.0
Source ORG IMS; Nomura research
Domestic Formulations—Breakdown by Therapy (cont’d)
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Dermatology—MAT June 2009 Sales—INR20.3 Bn (5.6% of IPM)
47
Dermatology (Top 10 Companies Among the Overall Top 50 Companies Analysed) Y-o-Y Growth Rate (%)
Company
MAT
Jun-09
FYTD
(Apr-09 –
Jun-09) Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09
Company Share in
TA (MAT Jun-09)
%
GlaxoSmithKline 4.1 16.3 8.6 6.3 18.2 10.9 18.2 20.3 13.4
Glenmark Pharma 24.1 25.1 22.5 23.8 36.7 23.0 26.9 25.7 7.7
Ranbaxy 15.3 5.9 20.9 19.1 21.4 5.4 0.4 12.5 6.8
Schering Plough 17.6 10.0 28.4 35.3 29.4 22.0 3.6 6.5 5.1
Piramal Healthcare 37.8 19.5 61.5 41.0 46.4 27.1 14.5 17.0 4.8
Win Medicare 16.6 20.4 21.2 19.6 28.1 16.3 15.9 29.4 3.6
Cipla 13.7 19.5 16.5 8.0 28.6 17.4 17.8 23.3 2.3
Wockhardt 15.2 34.5 16.4 35.2 27.7 33.2 37.2 33.4 2.1
Cadila Healthcare 87.8 115.8 104.1 98.0 127.9 116.6 147.7 91.2 2.0
Dr. Reddy’s Labs 14.4 26.5 25.3 18.7 26.2 26.4 23.6 29.5 2.0
Total 14.8 20.6 19.8 19.2 26.8 19.5 19.2 23.0 100.0
Source ORG IMS; Nomura research
Domestic Formulations—Breakdown by Therapy (cont’d)
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Neurology (CNS)—MAT June 2009 Sales—INR20.1 Bn (5.5% of IPM)
48
Neurology (Top 10 Companies Among the Overall Top 50 Companies Analysed) Y-o-Y Growth Rate (%)
Company
MAT
Jun-09
FYTD
(Apr-09 –
Jun-09) Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09
Company Share in
TA (MAT Jun-09)
%
Sun Pharma 13.7 18.2 10.2 11.9 20.4 13.6 13.8 28.4 18.2
Intas 14.7 24.7 17.2 21.3 17.7 25.9 25.5 22.8 9.5
Torrent Pharma 15.6 22.0 23.8 22.7 33.9 25.3 18.3 22.3 7.9
Abbott 7.3 12.9 13.2 8.7 13.2 11.0 7.5 20.9 6.5
Piramal Healthcare 12.9 22.5 23.9 14.6 18.6 23.4 16.2 28.4 5.9
Sanofi Aventis 14.3 14.7 14.7 12.7 23.8 2.1 15.5 28.2 3.8
Ranbaxy 6.1 (5.0) 8.8 9.7 5.8 (11.9) (4.2) 2.3 3.8
Unichem 1.6 13.8 2.2 5.6 8.3 4.1 12.6 26.7 3.1
Micro Labs 18.7 25.3 22.8 22.2 20.0 23.4 21.6 30.9 3.0
Novartis 2.2 10.9 2.2 7.9 8.0 8.9 15.7 8.4 2.6
Total 13.0 17.4 15.1 15.3 19.9 15.5 15.0 22.0 100.0
Source ORG IMS; Nomura research
Domestic Formulations—Breakdown by Therapy (cont’d)
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Anti-Diabetic—MAT June 2009 Sales—INR19.3 Bn (5.3% of IPM)
49
Anti-Diabetic (Top 10 Companies Among the Overall Top 50 Companies Analysed) Y-o-Y Growth Rate (%)
Company
MAT
Jun-09
FYTD
(Apr-09 –
Jun-09) Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09
Company Share in
TA (MAT Jun-09)
%
Abbott 1.0 (4.6) 4.1 (1.5) 4.6 (9.2) (4.4) 0.3 18.9
USV 23.6 15.2 29.5 27.9 35.2 13.8 14.4 17.7 10.8
Sanofi Aventis 18.2 9.1 20.8 28.1 32.4 6.0 6.4 15.0 7.8
Sun Pharma 14.7 18.5 7.0 9.5 19.5 13.2 12.8 30.3 7.1
Piramal Healthcare 13.6 22.8 16.9 12.5 23.0 22.4 16.3 30.4 3.7
Micro Labs 12.2 19.2 16.6 12.1 13.4 16.2 12.9 29.4 3.6
Lupin Ltd. 37.1 47.4 41.9 38.1 46.0 43.8 45.0 53.8 3.1
Panacea Biotec 8.5 2.6 2.9 0.3 8.7 4.7 (0.1) 3.2 2.8
Ranbaxy 3.4 5.6 (4.1) 4.7 6.2 4.5 1.6 11.0 2.7
Franco Indian 15.0 15.0 9.1 16.7 29.8 17.1 9.3 18.6 2.4
Total 14.2 14.7 14.3 14.4 21.0 11.4 12.4 20.5 100.0
Source ORG IMS; Nomura research
Domestic Formulations—Breakdown by Therapy (cont’d)
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Share Price Performance - Generics
12
4/2006 1/23/2007 3/2/2007 4/11/2007 5/21/2007 6/28/2007 8/7/2007 9/14/2007 11/5/2007
Labs. Towa Nichiiko Sawai Fuji Topix Topix Pharma Index
Indexed Share Price Performance
11/6/06=100
(41.4)%
+34.6%
+11.6%
+60.0%
Source FactSet
(22.5%)
(4.5)%
(2.6)%
Glossary
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GlossaryAbbreviated New Drug Application (ANDA) –
application by a company intending to sell a
generic copy of a drug. The ANDA contains data
testing bioequivalence and stability, for use by
patients in the US market.Active Pharmaceutical Ingredient (API) – the
substance in a drug that is pharmaceutically active
(participates in main reaction in the body) and
responsible for the main effects of the drug.
Authorized Generic (AG) – generic drugs
produced and marketed by branded
pharmaceutical companies. Authorized generics
compete with approved generics during and after
“the 180-day exclusivity period”.
Bioequivalence – in vivo (“ within the living” in
Latin) equivalence of two proprietary preparations
of a drug; if two products are bioequivalent they
would be expected to be, for all intents and
purpose, the same.
Biologic – “…any virus, therapeutic serum, toxin,
antitoxin, vaccine, blood, blood component or
derivative, allergenic product, or analogousproduct… applicable to the prevention, treatment
or cure of diseases or injuries of man (Section 35
(a) of Public Health Service Act)”.
Blockbuster – a product with annual sales in the order of
USD1bn is defined as a blockbuster.
Branded Generics – generic equivalent of a branded drug
sold with a name given by the generic company.
Contract Research and Manufacturing (CRAM)
– outsourcing of products/services by multinational
pharmaceuticals from low-cost providers.
Declaratory Judgment (DJ) – a court judgment that
determines the rights of parties without orderinganything to be done or awarding damages.
Drug Master File (DMF) – document prepared by
pharmaceutical manufacturer and submitted at its own
discretion (hence not mandatory) to FDA. There are five types
of DMFs. Type 2 DMFs relate to substance/intermediate being
used or manufactured in preparation of a product by the
company. The main objective of the DMF is to support
regulatory requirements and prove quality, safety and efficacy
of a medicinal product. It is usually a supporting document to
IND, NDA or ANDA.
Food & Drug Administration (FDA) – US regulatory agency
which oversees all aspects of pharmaceutical regulation, from
clinical trials and registration to manufacturing standards and
promotional claims.
Formulary – a list of prescription drugs covered by a particular
drug benefit plan in the US. The formulary is subject to
periodic review and modification by the health plan.First to File (FTF) – an ANDA applicant which receives FTF
status is eligible for generic marketing exclusivity for 180 days
(may be shared with another ANDA applicant) during which
the FDA cannot grant final approval to other ANDA applicants
for the same generics.
Glossary
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G ossa yHealth Maintenance Organization (HMO) – a
type of managed care organization (MCO) in the
US that provides a form of health care coverage
that is fulfilled through hospitals, doctors and other
providers with which the HMO has a contract.Moving Annual Total (MAT) – total revenue or
volume recorded in the prior 12-month period. It
is frequently used to compare data.
New Drug Application (NDA) – application by a
company intending to market a drug with active
ingredients that has not been previously approved
by the FDA.
New Drug Delivery System (NDDS) – newer and
improved systems.
Over-the-counter (OTC) – drugs that may be
sold directly to the consumer without a
prescription.
Para-IV certification – an ANDA filing is a
para-IV certification where the ANDA applicant
believes that its product or use of the product will
not infringe the innovator’s patents covering the
reference product, or where the applicant believesthat such patents are not valid or enforceable.
Preliminary Injunction (PI) – a temporary court
order at the request of one party that prevents
another party from pursuing a particular course of
conduct until the conclusion of a trial on the
merits. This essentially means that a PI should begranted only when the requesting party shows
there is a substantial likelihood of irreparable
harm unless the injunction is granted. A court will
grant a PI also if a party raises significant
questions worthy of additional inquiry such that
the harm to him or her outweighs the injury to
others if the injunction is denied.
Priority Review – fast track review by the FDA
over a 6-month period as against the standard 10
months, essentially to bring a drug to the market
faster. Usually done for drugs targeting unmet
medical needs.
Total Prescriptions (TRx) – Total number of
prescriptions, including new prescription, written
for a drug.
Temporary Restraining Order (TRO) – a court
order of limited duration. A TRO commandsparties involved in the case to maintain a certain
status until the court hears further evidence and
decides whether to issue a preliminary injunction.