brazil pharmaceutical market the most efficient … 1 confidential –not for distribution brazilian...

6/10/2016

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Confidential – Not for Distribution

Brazilian Pharmaceutical Market

MEDICINES FOR EUROPE

Hugo Carradinha

Head of Brazil for Mylan8-10 JUNE 2016, DUBROVNIK


“Brazil Pharmaceutical Market the Most Efficient Market in the World!”

• 9 months get the budget done!

December/

January

February/

March

Rest of the

yearDecember

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...we should not forget the other 245 days of the year...

Brazil Pharmaceutical Market

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Brazil is undergoing a period of economic recession coupled with political uncertainty

Source: IPEA (SCN/IBGE)

Source: Unemployment rate (PNAD Contínua and Revista Exame); Job vacancies

(Ministry of Labour and Folha de São Paulo). Unemployment rate from 2015 – Credit Suisse forecast (aligned with other sources)

0.3%

201720132012

-3.7%-3.8%

0.1%

3.0%

1.9%

201620152014

GDP real growth (inflation discounted)

1.1

-1.5

6.8%

2013

7.1%

2014

0.4

2016 20172015

11.5%

13.0%

8.5%7.4%

1.3

2012

variation in the # Formal jobs (millions)

Unemployment rate (%)

• Federal police investigations reveal corruption scandals involving politicians and private companies

• New temporary government after Dilma´s impeachment, bringing market uncertainty

• General paralysis in economic decision making, further hampering ability for any short term

improvement in the scenario.

Projections Projections


Healthcare in Brazil is funded by private and public sources

Private

Health Ins.

67

(48%)43

(31%)

Public (SUS)

Private

OOP

29

(21%)

Private

14

(77%)

Public

4.4

(23%)

Total healthcare expenditure

(US$ billion)

Total drug expenditure

(R$ billion @ discounted prices)

Source:

- Healthcare expenditure (WHO)

- Drug expenditure (IMS databases: NRC + Retail, MAT 12/2015)

Public System

• In theory, universal access to healthcare is provided

by the government and services are free of charge

through the SUS system

• However, the quality, scope of products and

services are limited

Private System

• Roughly,25% of the population is covered by a

private payer, which is heavily fragmented with more

than 1,500 entities

• 80% of the total coverage is driven by employer

funded / co-funded plans

Public System

• Government dispenses medicines for free as long

as they are incorporated in one of the several

existent programs

• Public drug expenditure is a composition of NRC

(US$ 4B) + Farmácia Popular Program (US$0.3B)

Private System

• Inpatient care is mandatory for a list of diseases,

whereas Outpatient care is typically not covered by

private payers, creating a huge out-of-pocket

market.

• Private drug expenditure is a composition of NRC

(US$ 2B) + Retail OOP (US$ 12B)

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Ministry of Health budget shall not increase this year, but spends may likely shift towards drug purchases

• Ministry of Health Budget (2015 and 2016, US$ billion)

4.8 Drugs & Programs5.6

+0,2%

2015 2016

Others

Basic care

Hospital and ambulatory care

30

13

5.5

7.1

30.4

11.8

5.7

7.1

+ 0.8 bi

- 1.2 bi

+ 0,18 bi

Source: PLOA 2015 e 2016


8

Pricing and reimbursement are independent

processes in Brazil

Registration Pricing Reimbursement

• Maximum selling prices for all drugs (retail and non-retail) are set by a governmental entity called CMED (Drugs Market Regulation Chamber)

• These prices are applicable for both private and public environment, independently of any kind of funding (i.e. maximum prices apply to the out-of-pocket market)

• Unbranded generics must be sold at prices at least 35% below the level of the reference

• Prices are adjusted annually, normally below the inflation level

Public

• The government dispenses a variety of outpatient drugs, which can be obtained in institutions covered by SUS

• Inpatient treatments are also available, including high-cost drugs as listed

Private

• Drugs are generally included within inpatient procedures

• Some payers demand prior approval for the usage of expensive drugs

• Outpatient care is not covered by private payors, exception to a list of oral oncologics

• Registration process in Brazil may take as 4 years for reference and branded generic drugs

• ANVISA is the government entity responsible for the registration process

• FDA or EMA approval does not guarantee that a drug will be approved in Brazil.

• ANVISA has adopted positions of independence from other international regulatory agencies, e.g..: , drug without a phase III pivotal study is automatically denied

4 years in average 1 year in average Minimum: 3 months

3 years minimumApplies for high-cost drugs’ list

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The Brazilian pharma market totals US$18.3 billion with an ~10% growth rate – institutional market decelerates

Brazilian Pharma Market – US$ billion in PPP e tender prices*

MAT February 2016

4.1

(31%)

+10%

15

10.3

(68%)

4.7

(32%)

2013

MAT Feb

14

9.1

(69%)

5.8(31%)

2015

MAT Feb

17

11.1

(68%)

5.2

(32%)

2014

MAT Feb

+11%

+11%

2016

MAT Feb

Retail 11.0%

Institucional 10.5%

18.3

12.7(69%)

CAGR

2013-2016

MAT Feb

Volume decelerates,

price and discounts

sustain value growth

Institutional sector

shows signs of

deceleration

+10%

+14%

+10%

+11%

+13%

+6%

Source: IMS PMB, PPP, and NRC MAT February 2016


Market Leaders is a mix between multinational and local companies

Source: IMS PMB, PPP, MAT February 2016.

Notes: (1) EMS Group

Brazilian Retail Pharmaceutical Market – Corporation Ranking

RKPPP

Corp.US$ MAT FEB 16

(MM-PPP)

Growth2016 x 2015(MAT Feb)

Portfolio Mix per segment R$ PPP

Abs %RX

ExclusiveRX Mature Promoted

RX INN RX Trade OTC

1 NC FARMA 1 1.068 93.1 10% 4% 24% 43% 8% 21%

2 HYPERMARCAS 0.962 141.7 17% 3% 16% 14% 17% 50%

3 SANOFI 0.961 103.9 12% 10% 31% 23% - 37%

4 ACHE 0.793 140.0 21% 12% 60% 14% - 15%

5 NOVARTIS 0.654 25.6 4% 28% 36% 21% 3% 12%

6 EUROFARMA 0.629 104.7 20% 5% 60% 28% - 7%

7 BAYER 0.465 55.3 14% 30% 42% - - 28%

8 GSK 0.396 50.8 15% 24% 34% - - 43%

9 PFIZER 0.365 21.4 6% 16% 59% - - 25%

10 TAKEDA 0.343 18.9 6% 10% 31% 1% 12% 46%

Total market 12.67 1.5 13% 14% 37% 12% 5% 33%

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Hospitals, Physicians and Pharmacies in Brazil

Source: CNES database, CENSOMED 2013, IMS distribution study database.

Brazil total

709

11,624

6,102

2,680

51,631

19,476

3,178

184,337

32,949

1,343

49,506

14,274

922

24,137

8,937

# Hospitals 8,836

# Physicians 293,235

# Pharmacies 70.836

North

Mid-West

Northeast

Southeast

South

Hospitals, Physicians and Pharmacies

Brazil Overview

• Southeast region is the where the

highest concentration of hospitals,

physicians and pharmacies, followed by

northeast and South

• There are 70.836 pharmacies in Brazil –

small independents are by far the most

numerous


Patients

• Seek physician advise for therapy and brand choice for RX drugs and purchase OTC drugs based on brand awareness/ preferences

• Limited role on RX segment

• Central role in OTC segment, where DTC promotion is allowed and patient is the key driver of purchasing decision

• Highly influenced by price –some substitution occurs at the POS after physician prescription

Brazilian market is influenced mainly by doctors

80%

POSs-75%

of the market

70.836

Total # of PoS

20%

13% 16% 29%

%purchases when pharmacist

offers 2nd drug spontaneously

% pharmacists that offer 2nd

drug when patient complains

Physicians

• There are approximately 293 thousand physicians in Brazil – GPs are the most predominant, followed by Pediatricians and Gynecologists

• Physicians are very important in driving adoption and uptake of drugs

PoSLarge number of PoS with

broad distribution

Prescription

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12,8%9,0%

12,0%13,7%

18,8%

15,8%

15,8%

15,4%

16,3%

15,0%

Chains

24,7%

Total

28,6%

Ind 7-8

33,7%

Ind 5-6

30,0%

Ind 1-4

27,4%

%purchases when pharmacist offers 2nd drug spontaneously

%pharmacists that offer 2nd drug when patient complained

% Trade

% Generics

Type of product

offered by pharmacist

considering both

situations

Source: IMS Database November/2014

Substitution rate in the retail market is about 30%


Key Barriers to increase of generic medicines market share

• Approval times for generic medicines close to 46 months and growing, resulting in delays for patients to access affordable generic medicines

• Tax differentiation (business and import tax) between local companies and multinational companies endanger the introduction of new generic medicines in the market

• Brazilian pricing system (CMED) not increasing above inflation levels (previous 2016)

• Lack of incentives for physicians to prescribe generically and pharmacists in pharmacy chains to dispense generic medicines

• Patients lack information on generic medicines affordability and quality

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• Thank you for your attention

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