global generic pharmaceuticals market – brighter times ahead

Global Generic Pharmaceuticals Market – Brighter Times Ahead

Analyzing the Global Business Prospects for Generic Drug Manufacturers in the Developed and Emerging Markets

Aiswariya Chidambaram, Research AnalystHealthcare9.2.2012

Functional Expertise Particular expertise in: - Analyzing regional sales performance, identifying performance gaps and providing relevant solutions to

stakeholders for the growth and development of regional business. - Designing and roll out of appropriate training modules, conducting workshops on selling skills excellence and

working on development of Business executives at professional and personal levels. - Conducting induction training to new recruits and field coaching on marketing projects to ensure smooth

implementation. - Recruiting candidates and identifying talents at regional level by appropriate means of performance analysis and

competency mapping. Special projects implementation on a regional scale Industry Expertise Expertise in diverse therapeutic segments and product portfolios which include - Diabetology – Oral Anti Diabetics - Cardiovascular Diseases – Anti-hypertensives. - General Medicine – Antibiotics, Anti-fungals, and Health supplements. - Women’s Healthcare – Oral Contraceptives

What I bring to the Team In depth knowledge of four specific Therapeutic segments. Expertise in tracking Industry trends and events as part of Market Vigilance. Reasoning based recommendation for improved efficiency. Excellent communication and presentation skills.

Career Highlights Have successfully completed a NIH project on Filariasis at the Tuberculosis Research Centre (Chennai). Completed internship projects on Industrial Microbiology, Cytogenetics and Karyotyping, and a course on “Tools in

Bio-informatics and Vector Designing.” Worked as a Performance Consultant for South India (covering four states – Tamil Nadu, Andhra Pradesh, Kerala and

Karnataka) with a leading Multinational firm, Bayer Healthcare. Worked on market research projects such as the “Global Generics Pharmaceutical Market”, “European Pharmaceutical

and Biotech Contract Manufacturing Markets” and so on with Frost & Sullivan. Education Bachelors in Technology, specialization in Biotechnology, from Anna University, Chennai, India.

Aiswariya Chidambaram

Aiswariya Chidambaram

Research Analyst, Healthcare Practice,Frost & SullivanGlobal,Chennai,India

Focus Points

Focus Points

Key Therapeutic Areas Overview

Global Hot Spots – Generic Pharmaceuticals Market

Key Patent Expiries Between 2010 and 2017

Key Therapeutic Areas – Growth Analysis

Generics Lead the Way Ahead

Mergers and Acquisitions Outlook

Key Market Drivers and Restraints Summary

Key Mergers and Acquisitions in 2010

Competitive Landscape Analysis

Future Trends and Directions

Strategic Recommendations for Success

Conclusions and Implications

Generics Lead the Way Ahead

Source: Frost and Sullivan

The top eight global markets – the United

States, Germany, France, the United Kingdom, Canada,

Italy, Spain and Japan – account for

80% of the total generic sales

Blockbuster drugs worth $150 billion are set to

lose patent protection

between 2010 and 2017

The global generic pharmaceuticals market was valued at $123.85 billion in 2010, growing at 11.0%

India and China are huge generic markets in terms of production

volume.

The top ten global generic companies constitute a share of 47% of the total generics market.

U.S is the world’s largest generics market constituting

45%. Emerging markets such as Brazil, Russia, India,

China, Turkey and South Korea present growth

opportunities of 15 % to 20% while matured

markets are likely to grow between 6 % to 10

% over the next five years

Key Therapeutic Areas Overview

Cardiovascular and CNS are the two largest market segments, constituting nearly 38 per cent of the global generic pharmaceuticals market together.

However, therapeutic segments such as Respiratory, CNS and Oncology are likely to witness significantly high growth rates, attracting the attention of market participants.

On the contrary, segments such as Diabetes and Genitourinary/ hormonal drugs are expected to decline by the 2017.

Generic Pharmaceuticals Market: Percent Revenue Contribution of Therapeutic Segments (Global), 2010

Others include Gastro-intestinal, HIV, Immunology and so on.

Note: All figures are rounded; the base year is 2010. Source: Frost & Sullivan

Key Therapeutic Areas – Growth Analysis

Cardiovascular

2%

4%

6%

8%

10%

12%

14%

CNS Oncology Rheumatology Respiratory Diabetes

Declining

Fast Growing Growing

Development/ Fast Growing

Declining Stable

Source: Frost & Sullivan analysis.

Dermatology

Growing

Bubble size represents market value

Genitourinary

Development/ Fast Growing

One of the promising segments for generic participants to venture between 2010 and 2015 is oncology as drugs worth $10 b are set to lose patent protection by 2015

Intense competition, promotion of branded drugs and new innovative formulations such as inhalable insulin are all likely to deter the growth of generics.

The reason behind such enormous growth is the massive number of patent expiries. Almost half of the global asthma and COPD market drugs are set to lose patent protection by 2016. Relatively lesser

number of drugs are subjected to generic exposure during the forecast period and hence the decline in growth.

20%

Others

Fast GrowingC

AGR

The patent expiry of several key antipsychotics and anti-depressants contribute to the rapid growth of CNS drugs market between 2010 and 2017.

Key Patent Expiries Between 2010 and 2016

Expiry in 2010• Advair/Seretide by GSK • Aricept by Pfizer, Eisai• Arimidex by Astra Zeneca• Cozaar by Merck• Effexor by Pfizer • Flomax by Boehringer, Astellas• Gemzar by Eli Lilly • Hycamptin by GSK, Pfizer,

Protonix• Levaquin by J&J• Taxotere by Sanofi Aventis

Expiry in 2010• Advair/Seretide by GSK • Aricept by Pfizer, Eisai• Arimidex by Astra Zeneca• Cozaar by Merck• Effexor by Pfizer • Flomax by Boehringer, Astellas• Gemzar by Eli Lilly • Hycamptin by GSK, Pfizer,

Protonix• Levaquin by J&J• Taxotere by Sanofi Aventis

Expiry in 2011• Actos by Takeda • Alimta by Eli Lilly • Atacand by Astra Zeneca• Femara by Novartis• Lipitor by Pfizer• Oxycontin by Purdue• Plavix by BMS, Sanofi Aventis• Zyprexa by Eli Lilly

Expiry in 2011• Actos by Takeda • Alimta by Eli Lilly • Atacand by Astra Zeneca• Femara by Novartis• Lipitor by Pfizer• Oxycontin by Purdue• Plavix by BMS, Sanofi Aventis• Zyprexa by Eli Lilly

Expected expiry in 2012• Avandia by GSK• Avapro by Sanofi Aventis, BMS• Detrusitol by Pfizer,

Pharmacia-Upjohn• Diovan by Novartis• Evista by Eli Lilly• Lexapro by Forest• Seroquel by Astra Zeneca • Singulair by Merck• Symbicort by Astra Zeneca• Viagra by Pfizer • Viramune by Boehringer• Zeldox/Geodon by Pfizer• Zometa by Novartis

Expected expiry in 2012• Avandia by GSK• Avapro by Sanofi Aventis, BMS• Detrusitol by Pfizer,

Pharmacia-Upjohn• Diovan by Novartis• Evista by Eli Lilly• Lexapro by Forest• Seroquel by Astra Zeneca • Singulair by Merck• Symbicort by Astra Zeneca• Viagra by Pfizer • Viramune by Boehringer• Zeldox/Geodon by Pfizer• Zometa by Novartis

Expected expiry in 2013• Epogen by Amgen • Pariet by Eisai• Procrit by Amgen

Expected expiry in 2013• Epogen by Amgen • Pariet by Eisai• Procrit by Amgen

Expected expiry in 2014• Actonel by Warner Chilcott• Celebrex by Pfizer • Copaxone by Teva• Cymbalta by Eli Lilly • Micardis by Boehringer • Nexium by Astra Zeneca• Spiriva by Boehringer Ingelheim

Expected expiry in 2014• Actonel by Warner Chilcott• Celebrex by Pfizer • Copaxone by Teva• Cymbalta by Eli Lilly • Micardis by Boehringer • Nexium by Astra Zeneca• Spiriva by Boehringer Ingelheim

Expected expiry in 2015• Abilify by Otsuka • Enablex by Novartis• Neulasta by Amgen• Tracleer by Actelion

Expected expiry in 2015• Abilify by Otsuka • Enablex by Novartis• Neulasta by Amgen• Tracleer by Actelion

Expected expiry in 2016• Cialis by Eli Lilly • Crestor by Astra Zeneca

Expected expiry in 2016• Cialis by Eli Lilly • Crestor by Astra Zeneca

Source: Generic Pharmaceutical Association, CPA Global, Frost & Sullivan analysis.

Global Hot Spots – Generic Pharmaceuticals Market

GermanySize : $8.80 billion

United KingdomSize : $5.40 billion

IndiaSize:$10.00 billion

SpainSize:$2.20 billionSpainSize:$2.20 billion


United StatesSize:$55.78 billion China

Size:$26.45 billionChinaSize:$26.45 billion

ItalySize:$1.09 billionItalySize:$1.09 billion

FranceSize:$4.20 billionFranceSize:$4.20 billion

Mature

Emerging

Growing

Key

India and China are studied as two separate generic pharmaceuticals market owing to the lack of implementation of patent protection

laws up to 2005. Hence, domestic players were free to produce generic versions of molecules under patent protection in these markets by

means of reverse engineering.

Note

Key Market Drivers and Restraints Summary

Key Drivers

Key Restraints/Challenges

Generic Pharmaceuticals Market: Key Drivers and Restraints Summary (Global), 2011-2017

Source: Frost & Sullivan analysis

Increasingly stringent

regulations and price control measures

Changing population demographics and lifestyle patterns

Threat of introduction of authorised

generics by branded companies

Parallel trading and counterfeiting of generics from low cost markets

Blockbuster drugs worth $150 billion

are due to lose patent protection

between 2010 and 2017

New provisions introduced by

governments to encourage

generic utilisation

Gaining access to emerging markets

and niche therapeutic segments

Mergers & Acquisitions Outlook

Generic Pharmaceuticals Market: Number of Deals and Amount Spent on Mergers & Acquisitions (Global), 2000 - 2009

The number of deals and the total expenditure on mergers and acquisitions have been increasing steadily over the years since 2000. There was a peak in M&A activity in 2005 and 2008. The trend is likely to continue with all the key generic participants increasing their dependence on strategic alliances to conquer market shares.


Key Mergers & Acquisitions in 2010

Value: $3.72 billionKey Reason:• Abbott, by acquiring

the entire solutions business of a leading company in the branded Indian generic pharmaceuticals market such as Piramal Healthcare, has the rights to gain access to 350 brands and trademarks. These include market- leading brands in multiple therapeutic areas such as respiratory and antibiotics..

Value: $6.20 billionKey Reason:• This acquisition will

enable Abbott to attain leadership in emerging markets where there is significant opportunity for branded generics and in specialty markets like cardiovascular, neuroscience and gastroenterology. It is expected to add another $2.90 billion to Abbott’s 2010 sales.

Value: $5.00 billion Key Reason:• Ratiopharm, the

second largest generic company in Germany and the sixth largest worldwide, will position Teva as the leading generic pharmaceutical company in Europe, particularly in Germany as well as in emerging markets like Spain, Italy, France, and the Netherlands.

Abbott - Solvay

Abbott – Piramal Healthcare

Teva – Ratiopharm

Value: $550.0 million Key Reason: • . Bioniche Pharma

has more than 30 products in the market, 15 ANDAs pending for approval at the United States FDA and 25 products in developmental stages. This will help drive both top and bottom line growth for Mylan and facilitate direct entry into the North American injectables market.

Mylan – Bioniche Pharma

Source : Frost & Sullivan analysis.

Competitive Landscape Analysis

Generic Pharmaceuticals Market: Top Five Companies by Market Share (Global), 2010

Source: Frost and Sullivan analysis

Rank Company

1

2

3

4

5

Mylan

The top five generic pharmaceutical companies accounted for 39 per cent of the share in the global generic pharmaceuticals market in 2010.

The top three companies namely Teva, Sandoz and Mylan registered significant growth rates of 16, 14 and 11 per cent respectively in 2010.

Most of the big companies prefer mergers and acquisitions to organic growth as a faster means to consolidate and expand their market shares.

Future Trends and Directions

TechnologyDevelopment of Transgenic technologies

Stem cell technologiesCloning technologies


Key Trends

Balance in terms of healthcare expenditure and sales revenue is likely to shift from developed markets to emerging markets owing to immense market opportunities and untapped market potentials.

Consolidation is expected to remain the key factor for growth and sustenance of generic companies. Partnerships, mergers, acquisitions and strategic alliances will help both

branded and generic companies to expand their global footprint and gain market shares.

Large generic companies seek to establish their own R&D entity and hence are likely to increase their investments in R&D activities for long-term growth

and sustenance in the pharmaceutical industry.

Generic manufacturers tend to increasingly focus on higher value biological therapies, biosimilars,controlled release products, sterile formulations and niche therapeutic segments, which are less

competitive yet commercially attractive.

Generic consumption is likely to be favoured in a big way by the government, payers, policy-makers and physicians owing to the huge cost-saving benefits to the patients

and curtail healthcare expenditure.

Strategic Recommendations for Success


Differentiated Approach Explore New Avenues Instill Competitive Capabilities

Plan Ahead for the Future

Big multinational generic firms require to focus on Products with

technologically challenging formulations.

Products which require significant regulatory support.

Products with limited availability of APIs.

Medium-sized generic firms require to focus on Products with relatively

higher profit margins. Appropriate time of

entry into the right market.

Analyze prospects for market globalization

- Strategic alliances between multinational generic firms and domestic participants with locally restricted operations.

Strengthen distribution.

Invest in R&D.

Improve product line.

Defend company’s position in the market.

Strike a balance between supply and demand side.

Pioneer new and better technologies.

Research customer needs, preferences, expectations.

Monitor new technological developments to face the change.

Target therapeutic areas with high levels of unmet clinical needs.

Strategy is a style of thinking, a conscious and deliberate process, an intensive implementation system, the science of insuring future success – Pete Johnson

Conclusions and Implications

The global generic pharmaceuticals market is expected to peak in 2012, owing to the patent expiry of several leading brands such as Seroquel, Viagra, Lexapro to name a few.

Regulations favoring generics, wider health insurance coverage by Government and private bodies, and better co-operation from physicians and pharmacists are expected to boost generic consumption.

The consolidation wave is likely to rise high in the global generic pharmaceuticals market.

CNS and Cardiovascular are expected to be the therapeutic areas of interest for generic drug manufacturers.

However, market participants are likely to face challenges due to increasing pricing pressure, price-cuts and regulatory barriers.


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