mena pharmaceutical review, strategies and outlook pptx

MENA pharmaceutical market overview Strategies and outlook

1

Wesam Nehad

2

Global pharmaceutical market overview and outlook

Agenda

What are the Growth

drivers?

Transformation in diseases and

treatments?

How will it look like?

3

MEA

Agenda

PEST Analysis

Market Entry

challenges

Go to market approaches Establishment and registration

Pricing and reimbursementDistribution

Sales and Marketing

4

Global pharmaceutical market overview and outlook

Global overview and outlook

2014

World fact book 2014 5

6

Global overview and outlook

447

289

73

38

245

AmericasAsia / Pac.

Cen. / E. Eur.

M. East / Afr.

West. Eur.

Global overview and outlook

Slow but accelerating growth

USD1,280bn

7Global Outlook for Medicines Through 2018, November 2014

2018

Global overview and outlook

Slow but accelerating growth

CAGR

Global Outlook for Medicines Through 2018, November 2014 8

http://www.worldometers.info/ 9

Global overview and outlook

What are the Growth drivers?

7,282,490,400

Net growth 80M/Year – growth rate is 1.1%

Population growth

Highest growth rate 2.1% for ME&AF

Global Outlook for Medicines Through 2018, November 2014 10

Global overview and outlook

Change in life style &

aging population

By 2018

What are the Growth drivers?

Global Outlook for Medicines Through 2018, November 2014 11

Global overview and outlook

New Innovations

Oncology $100bn

Diabetes$78bn

HepatitisC$100bn

Fewer patent expiries, launches of more innovative medicines and price increases.

What are the Growth drivers?

12

Global overview and outlook

Improved access to medicine and economic improvement

中国

Brasil

India

Россия

Tier 3 pharmerging

Tier 3 Pharmerging :Algeria, Argentina, Colombia, Egypt, Indonesia, Mexico, Nigeria, Pakistan, Poland, Romania, Saudi Arabia, South Africa, Thailand, Turkey, Ukraine, Venezuela, Vietnam

日本AFME

What are the Growth drivers?

Sources of growth

13IMS Market Prognosis, September 2014; IMS Institute for Healthcare Informatics, October 2014

North America is leading, Emerging markets are gaining, Europe is losing

How will it look like?

14

Brands Vs Generics Growth

IMS Market Prognosis, September 2014; IMS Institute for Healthcare Informatics, October 2014

Generics continue to drive growth globally and 50% of AFME growth

How will it look like?

15

Specialty Vs Traditional Growth

IMS Market Prognosis, September 2014; IMS Institute for Healthcare Informatics, October 2014

Traditional medicines are the strong growth driver in AFME region

How will it look like?

16

Transformation in treatment

How will it look like?

Oncology

Diabetes

Hepatitis C

Greater spending on specialty medicine:

Strategy pharma-emerging markets 17

Development of disease patterns

IMS Market Prognosis, September 2014; IMS Institute for Healthcare Informatics, October 2014 18

Top 20 classes by 2018

19

Number of products in pipeline by phase and therapy area

Products in pipeline

20

Hepatitis C regimen roadmap

21

PD-1 targeting drugs that boost immune system response

CDK inhibitors, which inhibit cancer cell proliferation

CAR-T cell therapies are the next generation of personalized medicine, modifying the body’s own T-cells to kill cancer cells

ALK inhibitors address crizotinib resistance and will become the standard of care in the next five years

CTLA-4 immune activation having proven success with ipilumumab

New immunotherapies

22

Conclusions

Growth patterns in developed markets will continue to flatten or decline

MNCs are shifting more of their focus to find new sources of revenues andprofitability in emerging markets

Traditional branded and Generic pharmaceutical will lead the growth in the next 5Y vs new specialty products

Pharmaceutical companies have an opportunity to market their traditional globalbrands in an extended markets (Emerging markets) (diabetes, oncology, anti-infectives and antivirals, and cardiovascular diseases)

Major five therapeutic classes will lead the growth over the next five years , diabetes,oncology, anti-infectives and antivirals, cardiovascular and CNS

23

MEA

24

MEA PEST analysis

Political

MENA remains a region in political transition

Jordan, Morocco and Gulf Cooperation Council (GCC) countries maintained stability and focused on preserving and furthering social and economic gains

The Arab Spring

War in Iraq & Syria

25

MEAF PEST analysis

Economic GDP (current US$) $3.90 trillion 2014

Population, total 594 million 2014

Urban population (% of total) 60% 2014

Nevertheless

Oil prices drop greatly affect exporters in GCC, Libya, Iraq, and Iran

26

MEA PEST analysis

Economic

27

MEA PEST analysis

Economic Out-of-pocket expenditure

28

MEA PEST analysis

Socio-Cultural Youth % of population and unemployment rates

http://www.usfunds.com/investor-library/frank-talk/why-high-oil-prices-are-likely-here-to-stay/

29

MEA PEST analysis

Socio-Cultural and lifestyle diseases

30

MEA PEST analysis

Economic

31

MEA PEST analysis

Socio-Cultural and Cancer

32

MEA PEST analysis

Socio-Cultural and lifestyle diseases

33

MEA PEST analysis

Technological

Pharmaceutical R&D

USAMEA

34

Corporate R&D spending

35

Market Entry challenges

Tier 3 Pharmerging 36

Key Challenges MEA

37

Market Entry challenges

Go to market approaches

Establishment and registration

Pricing and reimbursement

Distribution Marketing and sales

Path to Market

Path to Patient

Patient

Awareness

Healthcare

Access

Diagnosis

Treatment

38

Market Entry challenges

Go to market approaches

78%75%

58%

41%

29%

43%46%

19%

1%

41%

28%

22%

16%

0%

42%

Subsidiary/independentcommercial presence

Own sales force Ownmanufacturing/packaging

facilities

Own R&D departments Partnerships with localcompanies

Which local infrastructure do you consider most relevant for commercial success in different emerging markets?

BRICMT ME Africa

Survey for Key pharma leader /strategy and analysis pharma merging

39

Market Entry challenges

Go to market approaches

KSA Market entry by global pharma

40

Competitive analysis of pharmaceutical manufacturing using the Porter's Five Forces model

Market Entry challenges

Go to market approaches

• High government incentives

• High capital requirements / Long payback periodThreat of new

entry

• Imported raw materials and machinery

• Low supplier concentrationSupplier Power

• preference for imported pharmaceuticals

• Branded substitutes priced higher / Limited price elasticityThreat of

Substitutes

• Government is the single largest buyer

• Low switching costs for consumers / Highly regulated pricing systemBuyers Power

• Strong market presence of multinational companies

• opportunities arising from expiry drug patentsCompetition

Doingbusiness.com 41

Market Entry challenges

Establishment and registration

Economy

Ease of Doing

Business

Rank

Filtered

Rank

Starting a

Business

Dealing with

Construction

Permits

Getting

Electricity

Registering

Property

Getting

Credit

Protecting

Minority

Investors

Paying Taxes

Trading

Across

Borders

Enforcing

Contracts

Resolving

Insolvency

United Arab Emirates 22 1 2 1 1 1 3 1 1 1 12 6

Saudi Arabia 49 2 8 4 2 4 1 4 3 10 8 17

Qatar 50 3 7 5 5 5 12 9 1 8 5 1

Bahrain 53 4 11 2 9 2 5 7 4 9 13 5

Tunisia 60 5 6 9 4 8 7 5 14 4 2 2

Oman 66 6 10 6 11 3 7 9 5 7 15 8

Morocco 71 7 1 7 13 15 5 9 12 2 3 9

Kuwait 86 8 17 10 14 7 7 1 6 13 16 11

Malta 94 9 12 11 17 9 14 3 7 3 7 4

Lebanon 104 10 9 16 7 12 7 8 8 11 9 12

Egypt, Arab Rep. 112 11 4 14 15 10 1 13 18 12 18 10

Jordan 117 12 5 12 6 13 18 16 9 5 10 14

Iran, Islamic Rep. 130 13 3 17 16 19 3 16 16 19 1 13

Yemen, Rep. 137 14 13 8 18 6 18 18 17 16 4 16

West Bank and Gaza 143 15 19 18 12 11 7 14 10 14 6 18

Algeria 154 16 14 13 19 18 14 12 20 15 11 7

Djibouti 155 17 20 15 20 17 16 18 13 6 19 3

Iraq 156 18 15 3 3 14 16 15 11 20 17 18

Syrian Arab Republic 175 19 18 19 10 16 13 5 15 18 20 15

Libya 188 20 16 19 8 20 18 20 19 17 14 18

http://www.doingbusiness.org/rankings

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What do Free Zones /UAE offer?

100% Foreign ownership 100% Tax exemption for corporate, import/export, personal income 100% Repatriation of capital & profits State-of-the art purpose built infrastructure No foreign exchange controls Residence visas granted for 3 years (renewableAssistance with labor recruitment, and additional support services, such as sponsorship and housing

Market Entry challenges

Establishment and registration Free Zones

45 FZ /UAE , 4 Economic Cities/KSA

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Market Entry challenges

Establishment and registration

Journal of Drug Delivery & Therapeutics; 2013

Regulatory Barriers

• Western approval

• CPP

• GMP

• Pricing approval

• Document authentication

• Harmonization

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Market Entry challenges

Establishment and registration RA Challenges

Lack of harmonization in regulatory requirements

Absent, new or changing regulations

health authorities have limited resources

Lack of formal pre-submission meetings or scientific advice.

Long review timelines for registration hence more uncertainty.

More detailed documentation, SOPs, validation requests

More requests for inspections,

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Market Entry challenges

Establishment and registration

Frequent and early communication with Health Authorities

Early integration of emerging market strategy into development plans and

integration of regional requirements into a global regulatory plan

Be the first with a product for an unmet medical indication and proper invest

in the region

Strategies for Success

Proper Time management as the registration and company success depends

upon the time taken by product to reach the market first

Know and be compliant with national requirements

Health authority relationships critical, local talent important

Journal of Drug Delivery & Therapeutics; 2013

46

Market Entry challenges

Establishment and registration

Data requirements for pharmaceutical product registration for different region

47

Market Entry challenges

Establishment and registration

Data requirements for pharmaceutical product registration for different region

Journal of Drug Delivery & Therapeutics; 2013

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Market Entry challenges

Pricing and reimbursement

Internal Reference Pricing

Fixed Generic Price Reductions

Internal Reference Pricing

Reference Pricing

Free Pricing and Indirect Control

Value-Based Pricing

49

Reference Pricing

Market Entry challenges

Pricing and reimbursement

common feature of reference pricing systems is the desire to reduce the cost of reimbursement for healthcare providers

refers to the price of a similar medicinal product in a defined basket of countries

Taking the average price of the pharmaceutical product

in several countries

Percentage reduction on the mean average

Selecting the lowest price of the pharmaceutical among

selected countriesAverage of the three

External reference pricing,

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Market Entry challenges

Pricing and reimbursement

Internal Reference Pricing

Utilize the prices of drugs already marketed within the same country as reference points for the pricing of new drugs

The reference price established through this type of system is usually the reimbursement price for a group of drugs, rather than for a single product, this could lead branded drugs to be effectively forced down to the price of the lowest generic

Fixed Generic Price ReductionsFix the level of discount of the first and subsequent generics to enter the market, in comparison to the originator product

Saudi Arabia, the price of the originator drug is reduced by 20% upon registration of the first generic alternative, which itself is priced at 35% less than the originator. Subsequent generics are priced at 10% less than the previous one

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Market Entry challenges

Pricing and reimbursement

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Market Entry challenges

Pricing and reimbursement

pricing and reimbursement decisions are important in determining the likely commercial success of a pharmaceutical product in the marketplace

The ultimate goal is to secure the required medicines at the best possible price

Free Pricing and Indirect Control

non-reimbursed medicines and over-the-counter (OTC) products

free pricing for reimbursed pharmaceuticals is unrealistic, In the US prices for prescription medicines are negotiated with private Health Maintenance Organisations (HMOs) and Pharmacy Benefit Managers (PBMs) Most HMOs and PBMs use drug formularies, with around one third using 'closed' formularies that prevent reimbursement of non-listed drugs

53

Market Entry challenges

Pricing and reimbursement

Value-Based Pricing

The perceived value of a treatment

central to the German AMNOG (Arzneimittelmarkt Neuordnungsgesetz) system manufacturers had been free to set their own prices for new medicines in Germany. However, the new system introduced mandatory pricing assessment for newly introduced drugs in the German healthcare system, whereby the price of medicines is determined by the added benefit they bring to patients

http://www.forbes.com/sites/theapothecary/2014/06/17/the-sovaldi-tax-gilead-cant-justify-the-price-its-asking-americans-to-pay/

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Market Entry challenges

Pricing and reimbursement

Wholesale and Pharmacy Mark-ups

The percentage mark-up is regressive and dependent on the ex-factory price

Mark-ups available to wholesalers and pharmacies are controlled by thegovernment

55

Reimbursement Lists

Market Entry challenges

Pricing and reimbursement

Positive and Negative Lists

A list of medicines are selected for use in public healthcare institutions or for ambulatory prescription under national health systems or for use by major health insurers

Drugs not onto the positive list are generally not eligible for reimbursement

Negative lists are also employed for non-reimbursable drugs

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Market Entry challenges

Pricing and reimbursement

SAUDI ARABIA

Since July 2009, the Saudi Food and Drug Authority (SFDA) has been responsible for pharmaceutical pricing

Factors affecting pharmaceutical pricing include:Therapeutic significancePharmacoeconomics studiesPrices of similar, alternative registered drugsEx‐factory, wholesale and consumer prices in the country of originProposed cost, insurance and freight (CIF) price to Saudi ArabiaExport price to countries where the drug is registeredDrug prices in the official basket of reference countries

Prices for imported drugs are calculated by the country's pricing committee, which considers manufacturers' wholesale and retail prices in the 'country of origin' along with export (CIF) prices to Saudi Arabia and 30 other countries. In most cases, the lowest price is accepted

57

Market Entry challenges

Pricing and reimbursement

SAUDI ARABIA

Tendering Procedures MoH & governmental and public institutions

Secretariat General of Health (SGH)

The GCC members practice collective purchasing of pharmaceuticals and vaccines through the Secretariat-General of Health (the SGH Tender).

National Unified Procurement Company for Medical Supplies

NUPCO's major customers are:

MoH

The National Guard Health Affairs;

The Ministry of Defense & Aviation's medical services department

The Ministry of Higher Education's university hospitals and healthcare centres

King Faisal Specialist Hospital and research centers

58

Country Regulatory Authority Pricing Reimbursement

EgyptCentral Administration for Pharmaceutical Affairs

Reference price system.Positive list of drugs available for reimbursement in hospitals and primary care units

KuwaitMoH, Drug and Food Control Administration

Decision based on the price in the country of origin and CIF prices

Public medicines list reimbursed in public sector.

Morocco MoH, Drugs & Pharmacy DirectorateTwo pricing structures, for calculation method of pricing domestic drugs and for imported drugs.

Positive list, although most pharmaceuticals are privately funded.

Saudi Arabia SFDA Reference price system.Pharmaceuticals listed on government formularies are fully reimbursed, although there is no national policy.

South Africa DoH Pricing CommitteeSingle exit price set by manufacturers, incorporates wholesale and distributor fees Dispensing fees set separately

Essential drugs list. Drugs used in public sector primary care are 100% reimbursed by the government. For drugs used in hospital care or those obtained on prescription, patient co-payments may be required

TurkeyMoH, Department of Pharmaceutical Pricing; Reimbursement Commission, Ministry of Finance.

Reference price system based on lowest price among reference countries for reimbursable drugs For products not valid for reimbursement, pricing is set at 100% of the highest reference country.

Positive list. Since November 2011, prescribed medicines have been reimbursed at up to 10% above the lowest priced drug in their category

United Arab Emirates

MoHThe MoH has implemented a unified pricing system.

Reimbursement through compulsory private health insurance. Expatriates can receive 50% discount for treatment in the public sector on production of a contributory health card

Market Entry challenges

Pricing and reimbursement

59

Market Entry challenges

Distribution What distributor does?

Distributor

RA and local

authorities relations

Custom clearance

Storage and distribution

Collection and

payment

Tendering and market

access

60

Market Entry challenges

Distribution

Manufacturer Distributor

Retail Pharmacies

Private Hospitals

Wholesaler

Governmental tenders

Governmental hospitals

PC outlets

Retail consumer

Super markets

End User

What distributor does?

61

Market Entry challenges

Distribution

Man

ufactu

rer

Distributor

Exclusive

Non-exclusive

Direct to Market

Terms should be included in the agreement

• The products soldwhere and to whom the distributor will resell these products

• Ownership of inventory• Sales targets

Annual sales & Growth targetMechanism for reporting sales

• Marketing responsibilities• Any consent agreed that the distributor may employ ‘sub-distributors’;• Intellectual property rights• Circumstances in which the contract may be terminated

how the contract may be terminated (for example, by written notice sent to either party’s registered office) andconsequences on terminationWhat happens to the remainder of any stock left?The return of any confidential information (e.g. contacts

Thank you

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