brazil jv

“ADVANTAGE” IN BRAZIL

Copyright 2009 MANAS KANUNGO 1

A SUCCESS STORY:

Eli Lilly & Boehringer Mannheim JV

AUG `96 - DEC `99

Brazil: Lilly / Roche (BMC) Business Results

BACKGROUND

BOEHRINGER MANNHEIM Corp (BMC) & ELI LILLY HAD BOTH IDENTIFIED


BRAZIL AS A PRIORITY COUNTRY w/ SIGNIFICANT GROWTH POTENTIAL.

BASED ON THE GLOBAL MARKETING ALLIANCE EXISTING IN 1996, BOTH

COMPANIES DECIDED TO INVEST IN A JOINT 5-YEAR AGREEMENT

TO DEVELOP THE DIABETES BUSINESS IN BRAZIL.


BACKGROUND

• PROJECT FORMALLY BEGAN EARLY `96, AND LAUNCHED IN AUG `96

• A NEW DIABETES CARE DEPARTMENT WAS FORMED WITHIN LILLY BRAZIL


• BOTH MAINTAINED SHARED & SPECIFIC MARKETING RESPONSIBILITIES

• BOTH COMPANIES SHARED A COMMON SALES FORCE

• TEAM PROMOTED THE COMPLETE PORTFOLIO OF DIABETES PRODUCTS

- ORAL TABLETS, URINE STRIPS, INSULIN, MONITORING SYSTEM


BACKGROUND

THE ALLIANCE WAS TERMINATED OCT `31ST, `98, DUE TO ACQUISITION OF


CORANGE / BOEHRINGER MANNHEIM BY HOFFMAN LA ROCHE.

MONITORING BUSINESS FROM ASTA MEDICA & LILLY WERE TRANSFERRED

TO NEWLY FORMED PATIENT CARE BUSINESS UNIT OF ROCHE DIAGNOSTICS

BRAZIL IN JULY & NOV `98 RESPECTIVELY.


RELEVANT DEMOGRAPHICS - BRAZIL

• POPULATION: 160 MM > 15% UNEMPLOYED


• 250K TOTAL MDs; 150K GPs; 2K ENDOs; 250K NURSES; NO DNEs

• 75K PHARMACISTS; 50K PHARMACIES INCL. 35 SPECIALIZED PHARMACIES

• 6,500 HOSPITALS: PRIVATE, FEDERAL, STATE, MUNICIPAL


DIABETICS - BRAZIL

• 7.6% DIABETICS

• 2.5MM UNDIAGNOSED


• 2.5MM UNDIAGNOSED

• 0.5MM BEING TREATED WITH INADEQUATE / UNACCEPTABLE THERAPIES

• 22.3% OF DIAGNOSED GET NO TREATMENT

• 40.7% ARE ON ORAL AGENTS

• 29.1% ARE ON DIETETIC TREATMENT

• 7.9% ARE ON INSULIN THERAPY

FINANCIAL, MARKET DEMOGRAPHICS: `96 - `98

• 10% - 15% OF EMPLOYED POPULATION WITH DISPOSABLE INCOME

• VERY HIGH BUT RELATIVELY STABLE:



IMPORT DUTIES CORP / SALES TAXES

INTEREST RATES INFLATION

• MINIMAL GOVERNMENT REIMBURSEMENT AND INSURANCE COVERAGE

TILL JULY ‘96: BAYER ONLY COMPANY w/MONITORING PRODUCTS, > 70% SHARE

BIOBRAS, NOVO, SOME LILLY INSULIN

LOCAL $ALES (x$ MM)

7.8

9.3

7

8

9

10

Humulin



1.40.7

2.1

4.5

3.1 3.3

0

1

2

3

4

5

6

7

96 97 98 99*

Advantage

*Est $ = R$ 1.80

Lilly $ Share Est = 32%

HUMULIN UNIT SALES

432

700

500

600

700

Units x1000



181

291

432

0

100

200

300

400

500

96 97 98 99* *Forecast

HUMAN INSULIN IMS SHARES - UNITS

53.1%

45.3%42.3%50.0%

60.0% Lilly Novo Biobras



22.4%24.5% 26.6%

28.2% 28.8% 29.0%

0.0%

10.0%

20.0%

30.0%

40.0%

96 97 98

ADVANTAGE® ORIGINAL vs ACTUAL LOCAL SALES (x$ MM)

10

13

18

12

14

16

18 Orig.Frcst. Actual Tot. Mkt.



0.5 0.7

10

3.64.5

6.3

7.8

0

2

4

6

8

10

12

96 97 98

Aug - Dec

12 Mnth

12 Mnth

12 Mnth

ADVANTAGE MARKET SHARE

34%

43%



7%

'96 '97 '98

MONOTORING COMPANIES - $MM & SHARES ‘98

7.3

5.3



41% 29%

2.5

14%

1.5

8%

1.4

8%0.5

3%

Adv/Lily Bayer Abbott Roche Asta Others

TOTAL BM / ROCHE vs OTHERS - $MM & SHARES ‘98

10.2

Total Roche = Adv / Lilly 7.3 + Roche 1.5 + Asta 1.4



57%

5.3

29%

2.5

14% 0.53%

Tot. Roche Bayer Abbott Others

ADVANTAGE METERS & KITS UNITS SOLD

36779

28366



44753900 4500 5000

1996 1997 1998

Original

Actual

ADVANTAGE METERS & KITS $ALES & AUP

‘96 ‘97 ‘98

TOT $ Orig 160K 200K 200K



Actual 290K 855K 1,169K

KITS AUP Orig 42.24 43.29 45.45

Actual 73.21 73.81 76.57

METER AUP Orig 0 2.85 3.00

Actual 28.47 1.88 20.11

ADVANTAGE EQUIV. VIALS ‘50 UNITS (X000) SOLD

200

160



10.910.5

102

85

1996 1997 1998

Original

Actual

ADVANTAGE STRIPS $ALES & AUP

‘96 ‘97 ‘98

TOT $ Orig 260K 3,200K 5,800K



Actual 395K 3,399K 6,279K

‘25 AUP Orig 16.25 14.41 15.59

Actual 18.95 17.05 16.50

‘50 AUP Orig 30.97 32.25 33.81

Actual 35.78 32.78 30.76

ADVANTAGE % SALES IN MAJOR SEGMENTS

72.0%69.5%

74.5%

Retail



27.0%30.5%

25.5%

'96 '97 '98

Hospital

ADVANTAGE $MM SALES IN MAJOR SEGMENTS

5.8

Retail



0.50.2

3.1

1.4

2.0

'96 '97 '98

Hospital

1998 ADVANTAGE % $ALES IN ALL SEGMENTS

Govt. Hosp

7%Distrib.

11%



Sp. Pharm

48%

Priv. Hosp

18%

Chains

16%

KEY SUCCESS FACTORS

1. ALL THREE PLAYERS - BM, LILLY, MARKET, WERE READY & COULD GROW



2. AN ALLIANCE DEDICATED FOR DIABETES with a COMPLETE PORTFOLIO

3. RAISING EVERYONE’S LEVEL OF AWARENESS, EDUCATION (H-J), TRAINING(see separate presentation on this initiative)

KEY SUCCESS FACTORS

4. GIVING CUSTOMERS WHAT THEY NEEDED MOST:

ATTENTION



ATTENTION

FREQUENT VISITS, PARTNERSHIP IN THEIR EVENTS, ENHANCE THEIR KNOWLEDGE (H-J)

HELP THEM DO THEIR JOB BETTER

TOOLS FOR PATIENT USE: MATERIALS FOR EDUCATION, TRAINING, CONTROL

PRODUCT THEY COULD RELY ON

QUALITY, AVAILABILITY, TIMELY DELIVERY, PRICE, SERVICE, SUPPORT, HELP DESK

KEY SUCCESS FACTORS

5. THE TEAM’S COMMITTMENT FOR EFFECTIVE, LONG-TERM RESULTS:



BUILDING AWARENESS & RECOGNITION VIA MEDIA, PROF. SOCIETIES, CONGRESSES

HARVARD - JOSLIN - SBD EDUCATION & TRAINING PROGRAM FOR ENDOs, GPs, EDUCATORS *

CLOSED - LOOP, PRIORITIZED, VALUE BASED PROGRAMS & PROMOTIONS

* Please see separate presentation on this initiative.

brazil jv

Travel