The pharmaceutical industryMarch 27th 2014, University of Zurich Fabienne Heimgartner, Interpharma

What it needs for one drug

CHF investment

working hours experiments

scientists

drug

1 000 000 000

7 000 874

6 587

423

1

A long way to go…

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Overview

Interpharma

Economic impact of the pharmaceutical industry

Research & Development

Market access - Counterfeiting

Medical progress – some examples

Social responsibility

Main challenges for the pharmaceutical industry

Interpharma

… is the association of research-based pharmaceutical companies in Switzerland

… was founded 1933 … wants to create conditions conducive to innovation so as to

promote pharmaceutical research, development and production … supports efforts to create a social, economic and political environment

that strengthens Switzerland as a center of pharmaceutical research and production

Member companies: Actelion, Novartis, Roche, AbbVie, Alcon, Amgen, Bayer, Biogen Idec, Boehringer Ingelheim, Bristol-Myers Squibb, Gilead, Janssen, Merck Serono, Pfizer, Sanofi, UCB and Vifor

Interpharma partners

World

• EMEA EMEA EMEA

SwitzerlandIFPMA

PhRMAEFPIA

EUEurope

OECDWHO

EMA

Economic impact of the pharmaceutical industry

Switzerland: most competitive economy in the world

Source: World Economic Forum: The Global Competitiveness Index 2013–2014

Worldwide market shares 2013

9Source: Interpharma mit Datenbasis IMS Health Schweiz

The pharmaceutical industry matters…

Source: The Importance of the Pharmaceutical Industry for Switzerland, study by Polynomics on behalf of Interpharma, October 2013.

More than 169’800 employees Direct: 39‘500 Indirect: 130’300 Multiplier: 4.3

Pharmaceutical industry

32% of total Swiss exports 64.1 Mia CHF (2012)

Gross added value: 6.0% of GDP (35.5 Mia. CHF, 2012) Direct: 3.3% Indirect: 2.7% Multiplier: 1.8

4x more productive compared tooverall economy(workplace productivity in 2012) Employee pharma: CHF 488’000 Employee overall economy: CHF 124’000

What the Swiss say about the pharmaceutical industry..

Research & Development

Worldwide R&D expenditures

R& D Investments

Portion of R&D costs on sales

Roche H

olding Int

elMerc

k

Novartis

Microso

ftPfi

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hnson

Samsun

g0%

5%

10%

15%

20%

25%21.0%

19.0%17.3% 16.5%

13.3% 13.3%11.4%

5.8%

Source: Booz & Co, The 2012 Global Innovation 1000 Study, 2013.

Which therapeutic areas are studied?

Preclinical and clincal studies

Source: www.ipmglobal.org

Active ingredients are tested for safety and efficacy

Global framework for clinical research

Helsinki-Declaration (1964): important ethical framework informed consent of probands/patients outweigh the risks and burdens to the research subjects independent assessments by Research Ethics Committees

„Good Clinical Practice“ GCP-Guidelines scientific quality standards for clinical trials have to be embodied in national laws

Biomedicine-Convention (1997) und additional protocols Minimum standards to protect human right and dignity in medicine and

biology

Recommendations of the Council of Europe…National Laws Humanforschungsgesetz / Heilmittelgesetz

Probability of success to market

Source: CMR International 2012 Pharmaceutical R&D Factbook

Bottlenecks: Reasons for failure

Market access

Efficacy, safety, quality

Examination of submitted documents (clinical data on efficacy, safety, quality, purity ..)

Check whether international guidelines have been followed (On-site inspections)

After approval continuous surveillance of safety

Drug approval /authorisation

Swiss Federal Office for Public Health (BAG) Relative efficacy, suitability, efficiency

Therapeutic comparison with comparable drugs on the market

International price referencing every three years Country basket: Austria, Germany, Denmark, France, UK and the Netherlands

Federal Medicines Commission asan advisory committee to BAG includes experts and stakeholders

List of pharmaceutical specialties (SL)

Pricing and reimbursement

International drug prices

The cooperation between industry & government in Switzerland

„ I see more creative pricing models as we go forward, and these pricing models will always be specific to the individual countries because the needs, resources and healthcare delivery systems are very specific to those countries. We are prepared to go for not only differentiated pricing across countries, but also within countries. ..But for this kind of system to work, solidarity between rich and poor countries is needed..“Severin Schwan, CEO Roche

What is a fair price for a drug?

Globalised provision of drugs

Production„Good Manufacturing

Practice“Supply chain

(whole sale, storage)Pharmacy, hospital,

doctors office patient

Difficulties in deliverysupply bottlenecks

Safety of drug, safety of supply, safety of dosage..

Nega

tive

impa

cts Falsified

medicines(Counterfeits)

Illegal drug imports

Globalised production and distribution

Medication mistakes

Stopped drug delivieries (Source: Swissmedic)

2008: 687 2010: 1861 Swissmedic anticipates over 50‘000 illegal deliveries each year

Illegal drug imports in Switzerland on the rise

Sour

ce: P

fizer

Approximately 10% of all drugs are falsified globally- over 30% in some countries of Latin America, Southeastern Asia and Africa (WHO,OECD )

Multi-billion sales for globally organised criminals

Over 50 % of all drugs, illegaly sold from the internet, are falsified (WHO)

High health risk > 200‘000 annual deaths (WHO)

Counterfeit medicines – Some facts

Medicrime Convention of the Council of Europe Safeguarding of public health through penal measures

against criminal behaviors, protection of victims promotion of cooperation at national and international

levels Stop Piracy (www.stop-piracy.ch) Public education Public sector: Swissmedic, IGE, seco, EDA, …

economy: pharma, watches, software,food..

Fight against counterfeiting

Interpol Public Awareness Campaign against internationally

organised crime

Medical progress – some examples

Medical progressesHIV/ AIDS

In 1994, 50x more people died in Switzerland than today

Today: >30 HIV drugs available

2011: first therapy for MS in tablet form is approved (escalation-therapy) 2013: European approval of two tablets for the treatment of relapsing-remitting

MS

for the first time, there is an oral MS-therapy available (rrMS)

Medical progressesMultiple sclerosis

Autoimmune disease

50-60% of patients do not respond to broad-acting drugs

To date, 5 biologicals (mostly antibodies) are registered, more to follow..

2/3 of severe RA-patients respond very well to biologicals- fast and targeted efficacy- few adverse events- prevention of joint-destruction- reduction of morning stiffness

Medical progressesRheumatoid arthritis

„novel“ revolutionary substance class Big, highly complex molecules not easy to copy ≠ generics (Biosimilars)

Insulins, antibodies, proteins to stimulate bloodcells To treat MS, cancer, diabetes…

Biologicals

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= Biopharmaceuticals . Produced with biotechnical processes in living cells (e.g. hamster cells, bacteria)

Bio- and genetically engineered products

CancerRheumaMultiple sclerosisEye complaintsDiabetesHematopoiesisVaccinesGrowth hormonesothers

Benefit of drugs: 40-percent accountability for increased life expectancy

Due to novel drugs Total

Social responsibility

The pharmaceutical industry supports…

Access programs: donations, education & training, pricing schemes, transfer of technology, capacity building

Numerous multinational initiatives: e.g. Global Fund, GAVI, WHO, UNITAID

Company programs: e.g. African Comprehensive HIV/AIDS Partnership (ACHAP) in Botswana (Merck); AmpliCare for diagnosis and therapy of HIV-positive mothers and their newborns (Roche)

Good governance: good manufacturing practices, ethical standards, guarantee high quality, safety & efficacy of medicines and vaccines, comply with regulatory requirements

Social responsibility

London Declaration 2020

Collaborative programme of various private and public partners against neglected tropical diseases (NTDs)

Goal Eradication of 5 NTDs and control over 10 NTDs by 2020

Approach Sustain, expand and extend drug access programmes Advance R&D through partnerships and provision of funding Enable adequate funding with endemic countries to implement NTD programmes

Examples Novartis : long-term commitment to leprosy treatment and control by donating

multidrug therapy (Rifampicin, Clofazimin & Dapson) Pfizer : donations of Azithromycin for trachoma until at least 2020

Projects against diseases in developing countries

Source: IPFMA, Status Report, R&D for “Diseases of the Developing World (DDW)”, 2011

Quelle: IFPMA Facts and Figures. Issue 2012.

Partnership-Directory

http://partnerships.ifpma.org/pages/

The industry appeals as well to..

Governments in low/middle income countries- to support the development- to create conducive frame conditions for global partner companies

High-income countries- to financially support healthcare-systems in developing countries- to promote vaccine programmes

Challenges Donations of drugs are of no use, when infrastructure is missing Sanitary conditions prevent certain therapies (clean water..) Corruption, political instability Missing engagement of governments in the fight against diseases: lack/gap

of information

Source: Technology Transfer: a Collaborative Approach to Improve Global Health, IFPMA ,2011.

Main challenges for the pharmaceutical industry

Changes in healthcare systems

Unhealthy lifestyles

increase in chronic diseases.

Emerging markets

allowing the populations of these countries greater access to healthcare services.

Advances in science and technology

innovative medicines, but also increase in innovation costs.

Aging world population

demand for medical care is growing, which is forcing the funding organizations to take aggressive cost-containment measures.

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Causes of death now and then

1980: 2011:

Cardiovascular systemTumorsRespiratory systemAccidents and violenceDigestive systemMetabolism and bloodSuicideNervous systemInfectionsPsycheOthers

Cardiovascular systemTumorsPsycheRespiratory systemNervous systemAccidents and violenceDigestive systemMetabolism and bloodSuicideInfectionsOthers

Demographic change

Source: WHO, 2005

Great demand for research persists

There are still no therapies for 2/3 of all diseases

Aging population more chronic diseases

Cancer most probably the most common future cause of death

Challenge dementia triplication of diagnoses until 2050

What drives innovation?

Medical need Scientific advances Market incentives Innovation-friendly

regulatory, economic and IPR framework

Stable and predictable environment

Medical Need

Scie

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Other challenges for the industry

Policy makers becoming increasingly concerned about health expenditure and cost of innovation

Debate too much focused on cost and not on efficiency

Growing concern over possible ineffective (or harmful) use of untested technology

Need for enlightened tools for assessing value of health care services

fabienne.heimgartner@interpharma.ch phone: 061 264 34 44

Thank you for your attention!