introduction to pharma industry final v 1.003

7/22/2019 Introduction to Pharma Industry Final v 1.003

http://slidepdf.com/reader/full/introduction-to-pharma-industry-final-v-1003 1/76

I n t r o d u c t i o n t o P h a r m a I n d u s t r y

www.cbacademy.in www.cbresearch.in

Introduction to thePharmaceutical Industry





Global pharma market is around 800bn and growing at 7%

Source: IMS Health Market Prognosis, Jun 2009





Developed markets – US, Europe, & Japan –

constitute around 80% of the market

Source: IMS Health Market Prognosis, Jun 2009





Power of innovation - Global top selling brands





World’s Top Pharma Companies

Source: IMS Health, Deutsche Bank estimates





Therapeutic Categories

• Alzheimer’s disease

• Arthritis/Inflammation

• Cardiology

• Central Nervous System

• Diabetes

• Epilepsy

• Gastrointestinal/Ulcer • Head Trauma/Spinal Cord Injury/Stroke

• Infectious Disease

• Multiple Sclerosis

• Oncology/Hematology

• Ophthalmology

• Osteoporosis/Hormone Replacement

• Pain Management

• Respiratory

• Sexual Dysfunction

• Sleep Disorders

• Urinary Incontinence





R&D spend of top pharma companies




Basic Terminology



9


API & FF• Chemical Intermediates (basic/fine/specialty)

• Active Pharmaceutical Ingredients

– Active chemicals furnishing pharmacological activity or other

direct effect in the treatment

• Finished Formulations

• Dosage forms

– How the drug is delivered to the patient.

– Parenteral (skin piercing), topical (skin surface), tablet, oral

(liquid or dissolved powder), inhalation and transdermal.



10


Drug Master File or DMF• A document

– Prepared by a pharmaceutical manufacturer at his discretion – Submitted to the appropriate regulatory authority in the intended drug market

– No regulatory requirement to file a DMF

– Provides the regulatory authority with confidential, detailed information about facilities,

processes, or articles used in the manufacturing, processing, packaging, and storing of one or

more human drugs.

• In U.S., there are five types of DMF's:

Type Purpose

I Manufacturing Site, Facilities, Operating Procedures, and Personnel

IIDrug Substance, Drug Substance Intermediate, and Material Used in Their

Preparation, or Drug Product

III Packaging Material

IV Excipient, Colorant, Flavor, Essence, or Material Used in Their Preparation

V FDA Accepted Reference Information (to be discussed with FDA)



11


Generic Drugs (Gx)• A generic drug is a drug which is produced and distributed without patent

protection.

• Equivalent versions of originator pharmaceutical product (API) – Internationally approved non proprietary scientific name (INN) or Brand name

– Essentially similar (Quality, safety & efficacy) but less expensive (20%-90%)

– Strict observance of BE (Bio-Equivalence)

• When a pharmaceutical company first markets a drug, it is usually under a patentthat allows only the pharmaceutical company that developed the drug to sell it.

• Generic drugs can be legally produced for drugs where: – 1) the patent has expired,

– 2) the generic company certifies the brand company's patents are either invalid, unenforceable

or will not be infringed, – 3) for drugs which have never held patents, or

– 4) in countries where a patent(s) is/are not in force.

Innovative Drugs: The first version of a drug which is developed and patented by an originator company.The product is covered by exclusive rights to marketing.





Generic Development Chain






Generics now account for 15% of the global Pharma market

value and nearly 30% of volume

Source: IMS Health Consulting using MIDAS MAT Mar 2008; Generics include unbranded, branded & copy products excludes consumer health & alternative

medicines

Generic penetration of the Global Pharma Market

Value Volume






5.0%

UK

$23.5bn

However, mature markets are growing in low single digits…

4.1%US

$286.8bn

6.2%

Canada

$17.1bn

3.6%Japan

$65.2bn

5.1%

Germany

$36.7bn

6.2%France

$38.9bn

6.1%

Spain

$18.0bn

1.0%

Italy

$22.9bn

4.3%8 Mature markets

$509.1bn






… while many Pharmerging markets are experiencing

double-digit growth

Source: IMS Health, Market Prognosis, Jun 2008 *DLO program excluded. "Pharmerging" markets include: China, India, Brazil, Russia, Mexico, Turkey, and S.

Korea

25.7%

China

$17.6bn

9.7%

Brazil

$15.7bn

17.2%

Turkey

$9.5bn

9.0%

Russia*

$5.5bn

13.0%India

$9.2bn

7.5%

Mexico$11.1bn

10.7%

S. Korea

$10.4bn

13.9%

7 Pharmergingmarkets

$79.0bn




www.cbacademy.in www.cbresearch.in16

2015

800 - 1,100

2008

669

575

94

150 - 180

Forecast of totalpharmaceutical salesUSD billions

Going forward, generics industry expected to

continue growth trajectory

* Biologics are included in non-generics

Source: IMS; Espicom; Evaluate; Datamonitor; Citigroup; Goldman Sachs; Cowen

CAGR 2008 - 15Percent

3 - 7

7 - 10

2 - 7Non-generics*

Generics

650 - 920





Generics growth mainly driven by close to USD 300 billion

sales going off patent by 2015

* Worldwide sales in USD billions in year of US patent expiration; patent expirations not corrected for supplementary patents or litigation probability;2015 forecast extrapolated

** Without insulin/insulin derivatives and epo/epo derivatives (Epoetin alfa, Epocrit/Eprex/Epogen, 4.9, 2013)

*** Patent expirations in the US, often different for other countries

Source: Evaluate

Top-10 Rx products, 2008**Sales by patent expiration

USD billions*

RankTradename

Worldwidesales, 2008USD billions

Patent ex-piration***Year

114

121

288

53

Total2013 -

15

2010 -

12

2007 -

09

Molecule

1. Lipitor 201112.6Atorvastatin

3. Seretide/

Advair

20117.6Fluticasone/

salmeterol

2. Plavix 9.3 2011Clopidogrel

4. Enbrel 6.5 2012Etanercept

6. Remicade 20185.4Infliximab

5. Diovan 6.0 2012Valsartan

8. Nexium 5.2 2014Esomeprazole

9. Avastin 20184.8Bevacizumab10. Zyprexa 20114.8Olanzapine

5.37. Rituxan 2014Rituximab

Patent expiryuntil 2012





9 - 12

Emerging markets demand – ~ 80% of the incremental Gx

growth likely to come from emerging markets

RETAIL GENERICS MARKET*

USD billions

94

150 - 180

High-

income

countries**

46 - 71

Global

generics

sales,

2015

Low- and

medium-

income

countries

10 - 15

Global

generics

sales,

2008

3 - 5

CAGR 2008 - 15Percent

* Net sales (after rebates)

** World Bank definition: > USD 11,456 per capita GNI

Source: Espicom; IMS, McKinsey





83% of the world's populationlive in low- and medium-incomecountries …

… suffering 90% of world's diseaseburden …

… and consuming only ~ 14%of drugs in value

17

10

86

100% =

USD 669billion

14

1.45 billionDALYs*

90

6.7 billionpeople

83

Low- and medium-income countries

High-incomecountries

* Disability-adjusted life years

Source: WHO; UNO

Emerging markets demand – growth prospects in low- and medium-income countries driven by need to reduce disease burden

TOTAL PHARMACEUTICALS MARKET, 2008

Percent



20

I n t r

o d u c t i o n t o P h a r m a I n d u s t r y

Clinical Trials• Clinical trials are conducted to allow safety and efficacy data to be collected

for health interventions (e.g., drugs, devices, therapy protocols).

Phase Group of People Purpose

I 20-80

• Evaluate the safety of the drug

• Determine a safe dosage range of a drug• Identify side effect of a drug

II 100-300• Effectiveness of the drug

• Further evaluation of its safety

III 1000-3000• Further confirm its effectiveness

• Monitor side effects

IVPost Marketing

Surveillance

• delineate additional information regarding the drug’s risks,

benefits and optimal use



21

I n t r


Obtaining CoS (Certificate of Suitability) in EU

• The role of a Certificate of Suitability (CEP) is to certify the compliance of a

material with the requirements laid down in the relevant monograph of theEuropean Pharmacopoeia. Active pharmaceutical ingredients for which a

Certificate of Suitability has been granted are suitable for use in medicinal

products.



22

I n t r


Dossiers

• A collection of papers containing detailed information about a particular

person or subject (usually a person's record).

• Compilation of documents relevant for a specific regulatory purpose in

specific countries for developmental or marketing a medicinal product in a

structured form.

• Clinical Trial Authorization Application

– It is an application for authorisation to conduct a clinical trial.

• Marketing Authorization Application (MAA)

– It is an application (to the relevant authority ; typically the UK's MHRA or the European

Commission's Committee for Medicinal Products for Human Use (CHMP)) to market a drug ormedicine.

– The U.S. Food and Drug Administration equivalent is a New Drug Application (NDA).



23

I n t r

o d u c t i o n t o P h

a r m a I n d u s t r y

BE & BA• Bio Availability: It is a measurement of the rate and

extent of a therapeutically active drug that reaches the

systemic circulation and is available at the site of action. – For drug products that are not intended to be absorbed into the

bloodstream, bioavailability may be assessed by measurementsintended to reflect the rate and extent to which the activeingredient or active moiety becomes available at the site of action.

• Bioequivalence: Bioequivalence is a term inpharmacokinetics used to assess the expected in vivobiological equivalence of two proprietary preparationsof a drug. – The United States Food and Drug Administration (FDA) has

defined bioequivalence as, "the absence of a significantdifference in the rate and extent to which the active ingredientor active moiety in pharmaceutical equivalents orpharmaceutical alternatives becomes available at the site of drug action when administered at the same molar dose undersimilar conditions in an appropriately designed study."

API

absorbed/

available at

action site

BA BA

Level Level

BE

Comparison at Same

molar dose,

Experimental conditions

Similar

rate & extent

of absorption



24

I n t r



Differences between BA & BE

BA BEMeasure of rate, extent & amount of active

ingredient available at the site of action.

Absence of a significant difference in rate,

extent and amount of active ingredient at

the site of action.

Done for 1 drug at a time. 2 drugs usually branded & potential are

compared at the same time.

Done for generic. It is not done in the case of innovator drug.



25

I n t r



Patents- Lifecycle Maximization (1/2)• Standard: 20 years

• SPC: Supplementary Protection Certificate

– + 5 years (for Pharma & Plant technologies)

– To compensate originator companies for the time & cost of developing registration data.

• “Evergreening”

– Aims to prevent or delay Gx competition by extending market protection through patents on

minor changes (on new use/indication, dosages, changes in formulation, salt or ester, colour )

to the originator product.

– This can block the registration or marketing of Gx medicine for treatments where the base

patent has already expired.



26

I n t r



Patents- Lifecycle Maximization (2/2)• Data Exclusivity

– Period of time duration (beginning from first marketing approval of the originator’s product)

during which Gx applicant is restricted from applying to the medicines authorities for market

authorizationData Exclusivity is not data protection: Originator’s data remains protected by

copyright laws & legal provisions

– Generics do not use originator’s data: Medicine authorities never release originator’s data to

third parties



27

I n t r



Types of companies related to life sciences

• Pharmaceutical companies (Manufacturers & Marketers)

– Chemical drugs &/or Biotech products

– Diagnostic companies

– Medical device companies

• R&D companies (Technology driven)

• Contract Research and Manufacturing Organizations (CRAMS)

• Clinical Research Organizations (CRO)

• Trading companies, Indenters, suppliers, distributors

• Pharmacies



28

I n t r



International Marketing

Departments of a Pharmaceutical companyTop Management & Board of the company

(Board of Director, Executive Committee, Chairman, Managing Director, CEO,

Director etc)

Marketing SalesBusiness

Development

Purchase &

Supply Chain

Regulatory

Affairs

Head Office R&D Manufacturing

Domestic Marketing

• President - Sales & Marketing

• Senior Vice President

• Vice President

• Country Managers

• Senior Executive• Executives

• President –Sales & Marketing

• Senior Vice President

• Vice President

• Senior General Manager

• General Manager (Marketing

Head)

• Assistant General Manager

• Dy. General Manager

• Marketing Manager

• Product Manager

• Executive (Product)

• Trainee

(PMT)

Project

Management

Team

Others(Finance, IT,

HR)

ExportsMarket

Research



29

I n t r



Departments of a Pharmaceutical companyTop Management & Board of the company

(Board of Director, Executive Committee, Chairman, Managing Director,

CEO, Director etc)

Marketing

Head

OfficeR&D

Manufacturin

g

• Vice President - Sales

•General Manager – Sales

• Regional Sales Manager

• Territory Sales Manager

• Area Sales Manager

• Executive (junior or Senior)

– Sales

• Product Specialist & MedicalRepresentative

• General Manager

• Senior Manager

• Manager

• Executive

* Sometimes

divided – geography

wise

• Manager

Purchase

• Executive

• Supervisor

• Vice President

• General

Manager

• Manager

• Assistant

Manager

• Executive

•* Sometimes

divided –

geography wise

SalesBusiness

Development

Purchase,

Dispatch &

Supply Chain

Regulatory

Affairs

Others

(Finance, IT,

HR)

Exports

• Senior Executive

Exports

* Sometimes

divided –

geography wise

Market Research

• Analyst



30

I n t r



Departments of a Pharmaceutical company

Top Management & Board of the company


Director etc)


• Manager – Analytical

Department

• Dy. Manager

• Research Scientist

•Research Coordinator

• Senior Research Executive

• Research Executive

• Research Assistant

• Research Associate

* Mainly divided for F&D and

NDDS

Others

(Finance, IT,

HR)



31

I n t r



Departments of a Pharmaceutical company

Top Management & Board of the company


Director etc)

Production Planning

& Control

Quality Control, Quality

Assurance


• Manager Production

• Manager Plant

• Manager Engineering,

• Deputy Manager (store)

• Assistant Manager Production

• Junior Principal Executive

• Senior Executives & Executives(Production)

• Production workers

• Packing Research Associate

• Senior Technical Officer

• Shift Incharge

• Manager (QC)

• Deputy Manager (OC)

• Junior Principal Executive

(QC)

• Senior Principal Executive

(QC)

• Executives (Stores)• Supervisor (Store)

• Workers (Store)

Others

(Finance, IT,

HR)

Engineering &

Maintenance



32

I n t r



ManufacturingCapacity

Plant

CapacityReactor Capacity

Manufacturing Facilities Details• General: name, address, location

• Product(s) manufactured: API/FF/IM, therapeutic category, dosage form• Technology of the plant

• Approvals granted to facility: 2 types

– Product Approvals- USDMF, EDMF, JDMF, KDFM, CEP, COS etc.

– Facility Approvals- GMP, FDA, EMEA, Korean, JPMDA, ANVISA, MHRA etc.

• Manufacturing Capacity

– Volume of products that can be generated by a production plant or enterprise in a given period

by using current resources.

– 2 types



33

I n t r



Good Manufacturing Practices• GMP

– World wide recognized guidelines outlining the aspects of production that would affect the

quality of a product (Foods, Pharmaceutical products and Medical devices).

• Versions :

– C GMP: US, enforced by US FDA, Current GMP

– WHO GMP: 100 countries- mainly developing;

– EU GMP: European Union

– UK: The Medicines Act (1968) covers most aspects of GMP in what is commonly referred to as

"The Orange Guide", which is named so because of the color of its cover; it is officially knownas The Rules and Guidance for Pharmaceutical Manufacturers and Distributors.

– Australia, Canada, Japan, Singapore, others…

– ICH GMP (since 1999): for API ; apply to signatories of International Conference on

Harmonization – EU, JP, US & other countries who adopted ICH GMP to manufacture & test

APIs - Australia, Canada, Singapore

• Examples: – Japan, Singapore follow ICH Q7 regulation

– India and China follow their national GMP guidelines

– For EU, US (follow EU GMP, C GMP respectively)



I n t r






I n t r




Para Filing



I n t r






I n t r




Clinical TrialsTesting of INDs (Investigational New Drugs) in human subjects to prove safety and efficacyprior to the drug's approval for marketing. The investigation of a previously untested drugis generally divided into three phases:

1. Phase I: Introducing the product (or drug) into a small number, generally 20 to 80, patients or healthy volunteers to determine the drug's metabolism, pharmacological actions, and sideeffects associated with increasing doses.

2. Phase II: introducing the product (or drug) into a small number, generally no more than

several hundred, patients with the disease or condition under study to evaluate theeffectiveness of the drug, common short-term side effects and risks associated with its use.

3. Phase III: Introducing the product (or drug) into several hundred to several thousand subjects.Studies are expanded controlled and uncontrolled trials performed after preliminary evidencesuggesting effectiveness of the drug has been obtained. If the results of the Phase III ClinicalTrials are favorable, then the FDA will normally license the drug for manufacture and sale.This phase is usually performed using double blind studies with a placebo and the actual drug.

4. Phase IV: Ongoing testing studies conducted after the drug is approved. This is done to ensurethe long-term efficacy of the drug, detect any long-term beneficial and/or detrimental sideeffects, and to determine additional potential uses for the drug



I n t r o d u c t i o n t o P h



Clinical Trials








Making of a Drug – Long, Risky & Expensive

Source : PhRMA, Annual Membership survey 2009

39

Average cost of

bringing out newdrug to market






R&D productivity is declining

Source PhRMA, FDA






Patent cliff – exposure for various big pharma cos





www.cbacademy.in www.cbresearch.inSource: company publications [Barr has been merged with Teva]

World’s generics players

Revenues, $ bn, 2007

+ Arrow Generics

NA OTC

CEE / Russia

INDIA PROJECTED TO BE THE 10th






Top 14 pharmaceutical markets, 2015Top 14 pharmaceutical markets, 2005

INDIA PROJECTED TO BE THE 10th

LARGEST MARKET BY 2015US$ billion

6

7

8

9

10

13

13

14

19

20

31

32

68

248

15

15

19

20

20

25

25

25

32

38

38

46

82

444

UK

Italy

France

Japan

Germany

Canada

US

Spain

India

Turkey

South Korea

Brazil

Mexico

China

6

5

3

2

4

8

1

7

14

13

12

11

10

9

Germany

China

UK

Spain

Italy

Turkey

South Korea

Mexico

Brazil

India

Canada

US

Japan

France

6

5

3

2

4

8

1

7

14

13

12

11

10

9

India will be 3rd largest growth






Incremental growth (2005-2015)

US$ million

India will be 3rd largest growth

opportunity globally

13

7

11

12

14

14

14

23

196US

China

Japan

Germany

France

UK

Canada

India

Brazil








Drug Approval Process – NDA & ANDA

FDA Approval

ANDA Submitted

FDA review ( 1 – 2 Years)

Formulation

BA/BE Study (1 Year)

Safety and Efficacy

Established by

Clinical Trials of Innovator

FDA Approval

NDA Submitted

FDA review (2.5 Years)

Extensive Human

Clinical Studies (3 Years)

Clinical Studies -

Effectiveness (2 Years)

Clinical Studies –

Safety (1 Year)

Investigational New Drug Submitted

Discovery & Preclinical (3-4 Years)

Innovator / Branded Generic

45






Paragraph 4 filings in the US remaining a key profit driver

2.07

1.69

0.86

1.44 1.52

Par

1.87

0.900.43

Barr Mylan

3.79

1.21

1.72

0.35

Teva

2.59

0.33

1.85

Watson

All other products

Paragraph IV

45 35 26 23 18EPS from ParagraphIVPercent

Source: JP Morgan analyst report (September 2007)

ESTIMATED EPS, 2008

USDESTIMATES

Paragraph IV gives six-month

exclusivity to the generic company in US






R&D spend of top Gx companies

0

2

4

6

8

1012

% s

a l e s s

p e n t o n

R & D

Source: company publications, 2007-08






Emergence of Biotechnology

Bi i il N t t i ti f






Biosimilars – Numerous patent expirations of

biologics will drive the marketWORLDWIDE SALES OF EXPIRING BIOLOGICS*

USD billions in year of US patent expiration

8

17

9

21

59

1

Total2008 -15***

2015***

14131211

1

10

2

09

1

2008

1 3 4 2 3 9 7 16 45Number ofmolecules*,**

* Analysis does not include ~ 80 products with unclear year of patent expiry (account for ~ 16% of biologics sales in examined period)

** Molecules only counted if sales reported in database, further 24 molecules listed for examined period without reported sales

*** 2015 sales extrapolated from previous years

Note: May contain rounding errors

Source: Evaluate






Significant price differentials exist across countries

AVERAGE GROSS PRICES

USD per standard unit, Q3/2008

1 Omeprazole – 20 mg capsules; Amlodipine – 5 mg tablets; Simvastatin – 20 mg tablets

2 Retail channel sales in India; no differentiation into Gx/Rx provided

3 Hospital channel sales in China; no differentiation into Gx/Rx provided

4 Tablets not sold, price refers to capsules

5 Only low sales of Simvastatin in Japan

Note: Not including retesting cost to enter other markets

Source: IMS

Japan 0.78

0.32

India2 0.07

UK 0.12

France 0.66

Italy 0.55

China3 0.20

Spain 0.16

Germany 0.48

US

Country Omeprazole1 Amlodipine1 Simvastatin1Molecule

0.41

0.284

0.23

0.21

0.22

0.05

0.10

0.04

0.08

0.34

0.32

0.20

0.14

0.13

0.22

0.03

N/a5

0.44

Factor11x

Factor15x

Factor10x

Country-specific health care systems can be






y p y

grouped into 3 clusters

KEY MARKET CHARACTERISTICS OF CLUSTERS

Cluster I

Drug adoption opportunity

•Underdeveloped healthcare system

E.g., emerging markets(Russia, CIS, India, China, Mexico)

Cluster II

Gx penetration opportunity

•Developed health caresystem

•Medium generics pene-tration

E.g., Italy, France, Spain, Portugal, Brazil, Hungary, Japan

Cluster III

Commoditization challenge

•Developed health caresystem

•High generics penetration•Substitution requirement•E.g., US, UK, Netherlands, Scan

dinavia, Germany

Generics companies apply specific toolboxes/strategic






Generics companies apply specific toolboxes/strategic

mindsets by cluster

Commoditizationchallenge

Gx penetration opportunityDrug adoptionopportunity

KEY MARKET CHARACTERISTICS OF CLUSTERS

•Bottom-line management

•Large portfolio,and molecule deals

•Payorrelationships, contracts, and tenders

•Low COGS

•Top-line management•Sales force effective-ness

and efficiency (e.g., T&S)•Pharmacy, trade spend

optimization (gross-to-netratio)

• Prepare ramp-up atdefined trigger points/health care reforms,reimbursement programs

• Brand building (includingOTC)

• Tailored portfolio• Partnership with

governments

Required

toolbox/strategicmindset

Cluster I Cluster II Cluster III

Source: McKinsey






Power of the government - Health care system reforms






US UK DenmarkGermany

Power of the government Health care system reforms

have been instrumental in creating the generics industry

* Health Care Reform Act

** International Non-proprietary Name

Source: IMS; Simoens; expert estimates; McKinsey

Keyreformcreatinggenericsindustry

Hatch-Waxman Act (1984)

NHS reforms/Fundholding Scheme(1991)

Danish HealthAct (1991)

Gesundheits-strukturgesetz*(1993)

Today'sgenerics

industryVolumepenetrationin percent

•Simplification offiling process forgenerics by

introduction ofANDAs

•Paragraph IV

• Introduction ofphysician pre-scription budgets

• Impact furthersupported byenforcement ofINN** prescription

• Implementationof mandatorysubstitution for

pharmacists

• Introduction ofphysician pre-scription budgets

(continuouslymodified over time)

3664

3862

4060

3268

Generics

Non-generics

Significant Mergers and Acquisitions 2008 2009






GSK/Stiefel Labs

$ 3.6 billion

Significant Mergers and Acquisitions 2008-2009

Pharma/Specialty

Pharma/Biotech

Shionogi/Sciele

$ 11 billion

Novartis/Alcon

$ 10.4 billion

Roche/Genentech

$ 46 billion

King/Alpharma

$ 1.6 billion

Pfizer/Wyeth

$ 68 billion

Biotech/Biotech

Diagnostics

Medtech

Invitrogen/Applied

Biosystems

$ 6.7 billion

Gilead/CV

Therapeutics

$ 1.4 billion

Roche/Ventana

$ 3.4 billion

Kinetic Concepts/

LifeCell

$ 1.7 billion

Fresenius/APP

Pharma

$ 3.7 billion

Hologic/Third Wave

$580 million

CSL/Talecris

$ 3.1 billion

Takeda/Millennium

$ 8.2 billion

Eli Lilly/ImClone

$ 6.2 billion

Celgene/Pharmion

$ 2.7 billion

Inverness/BBI

$ 100 million

ViroPharma/Lev

Pharma

$ 618 million

Johnson & Johnson/

Mentor

$ 1.07 billion

Eisai/MGI Pharma

$ 3.5 billion

Inverness/Paradigm

$ 230 million

Pharma/Pharma

Merck/Schering

Plough

$ 41.1 billion

Teva / Barr

$ 7.1billion

Watson /

Arrow pharm

$ 1.75 billion

Burrill & Company

Significant Partnerships






Significant Partnerships

Pharma/BiotechTakeda/Amgen

$ 1.78 billion

GSK/Archemix

$ 1.4 billion

GSK/Valeant

$ 820 million

Takeda/Anylam

$ 1 billion

GSK/Dynavax

$ 810 million

Astellas/CoMentis

$ 760 million

GSK/Tolerx

$ 750 million

Biotech/BiotechGenzyme/Osiris

$ 1.38 billion

Genzyme/Isis Pharma

$ 1.1 billion

Nycomed/Immunomedics

$ 620 million

Celgene/Array

$ 1.04 billion

Celgene/Acceleron

$ 560 million

Roche/Synta

$ 1 billion

GSK/Synta

$ 965 million

BMS/Exelixis

$ 865 million

Pfizer/Medivation

$ 725 million

Genzyme/PTC Theraputics

$ 437 million

Summary : The reshaping of the global pharma market








7 “Pharmerging”

Growth moving from…

Branded Drugs

8 developed

Primary Care

Organic Growth

Small molecules

Specialist care

Inorganic Route

Biologicals

Generics

…to

continues…

Multiple drivers lead to increasing pressure on margins and






p g p g

growth for big pharmacos

Increasing pressures

• Keep costs low andinvestments flexible

towards emerging areas

• Explore new growth

avenues and sources

to fill the pipeline

Source: Paraxel; analyst/industry reports; press searches; web searches

Imminent patent expiries

•450 molecules worth US$350 mn going off-patent

•Loss of blockbuster sales significant for big pharma – largemanufacturing capacity getting freed up

Increased pricing challenge

Weak pipeline and falling

R&D productivity

•R&D spend outpacing

revenue growth (11%

vs.10%)

•Significant drop in rate of

NCE launches (~30% drop)

•Time to market grown to

15 years (10 years in

1970s)

•Dramatic increase inlicensing deals by top 25

pharma

Changing nature of demand

growth

•Emerging markets priority

growth area for several

pharmacos as regulated

markets slow down

•Branded Gx play requires

different operations - low

cost proposition and rapid

innovative but incremental

new drugs

Improving manufacturing operations through outsourcing is a






key margin improvement lever

Source: McKinsey analysis from ‘Pharma Operations 2015’ knowledge effort

Key learnings on operational and cost

performance of pharmacos

•Significant room for Rx and Gx companies to

improve productivity

•Rx pays a big premium over Gx that will be hard

to justify going forward

•US/EU manufacturing is typically at a significant

premium over LCC manufacturers

•The cost challenge will be greater as

blockbusters decline

•Investments in capacity to become more

challenging going forward

Multiple levers can be explored to

improve operational

performance, e.g.,

•Network rationalisation

•Virtual/flexible/asset light models

•Outsourcing manufacturing

especially to LCCs

•Efficient procurement

•Supply chain management

•Lean manufacturing

•Capex optimisation

ILLUSTRATIVE

Several pharmacos have announced aggressive plans to






Several pharmacos have announced aggressive plans to

outsource manufacturing

Source: Analyst/industry reports; web/press searches

“Struck deal to offshore vast majority of API/raw materials sourcing to

India . . . to shift to countries with lower production costs”

“Consolidate 50% of network across LCC and HCC locations”

“Increase reliance on third-party contract manufacturers as part of

ambitious expansion plan”

“Outsource 30-35% of manufacturing activities to India and China”

“Completely exit API manufacturing over the next 5-10 years”

“Stop production at half of its 27 manufacturing facilities by 2010”

“Double outsourcing of manufacturing activities to 30% from 15%”

ILLUSTRATIVE

Global contract manufacturing is expected to

http://www.amgen.com/index.jsp

http://images.google.com/imgres?imgurl=http://www.iph.fgov.be/glp/oecd/UCB%20Pharma%20Logo.jpg&imgrefurl=http://www.iph.fgov.be/glp/oecdcourse2004.htm&h=984&w=2266&sz=89&hl=en&start=4&um=1&tbnid=TO5cQYw7zSpQvM:&tbnh=65&tbnw=150&prev=/images?q=UCB+pharma+logo&um=1&hl=en&rlz=1T4GZEZ_en-GBCN285CN285






g p

touch ~US$75 billion by 2015

US$ billion

+9%

2015

75

2007

35

Size of global contract manufacturing

•Global pharma market growth to

remain stable

•API and formulations costs to

decrease as a proportion of sales

with increased outsourcing

•Outsourcing of manufacturing by

pharmacos to increase dramatically

across APIs and formulations

•Contract manufactured APIs to

increase as a proportion of total

outsourced APIs

Key drivers of growth

India is extremely well positioned as an LCC sourcing






destination over the next few years

India

• Highest number of USFDA approved plants outside

the US

• Low cost process development talent

• Significantly lower capex and opex costs

• Strong track record of contract manufacturing

partnerships

China

• Low cost proposition

for APIs/intermediates

• Strengths in

fermentation and

enzymatic products

• Only 5 plants USFDA

approved at this point

Eastern Europe

• Strong proposition in

select segments

(e.g., formulations

supply within EU)

• Strong talent base(lower cost than

western Europe)

India is extremely well positioned in

the medium term (5-7 years) to be

the LCC sourcing destination of

choice across most segments

India’s contract manufacturing share is likely to



I n t

r o d u c t i o n t o P h



grow to 12% in 2015

US$ billion, per cent

India’s share of global contract manufacturing opportunity

14

9688 86

4

35

2007

12

75

2015 Base

75

2015 Aggressive

100% =

India size (US$ billion)

CAGR (per cent)

1.5 9 10

25 27



I n t




Cardiovascular (―CVS‖)—MAT June 2009 Sales—INR41.1 Bn (11.3% of IPM)

41

Cardiovascular (Top 10 Companies Among the Overall Top 50 Companies Analysed) Y-o-Y Growth Rate (%)

Company

MAT

Jun-09

FYTD

(Apr-09 –

Jun-09) Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09

Company Share in

TA (MAT Jun-09)

%

Torrent Pharma 13.6 27.7 15.5 20.4 29.8 33.8 20.5 29.0 6.5

Sun Pharma 13.5 19.2 6.3 7.9 20.0 11.9 14.8 32.4 6.3

Cadila Healthcare 7.8 4.0 10.2 5.0 8.9 6.4 4.4 1.3 6.0

Cipla 21.5 22.5 26.5 11.4 30.8 18.8 17.1 32.9 5.7

Ranbaxy 9.8 10.4 3.5 11.3 16.0 9.9 8.7 12.7 5.5

Unichem 0.3 5.2 (4.6) (4.0) 3.3 1.7 7.5 6.6 5.4

Lupin Ltd. 17.2 20.4 16.6 8.9 20.6 19.8 16.8 24.7 5.2

Sanofi Aventis 14.4 2.7 10.7 8.5 25.8 (0.1) 2.3 6.1 5.1

USV 33.9 19.9 49.1 35.8 30.4 18.3 18.5 23.0 4.8

Piramal Healthcare 15.9 18.6 23.1 14.2 29.0 24.0 12.9 19.1 4.6

Total 14.4 17.0 14.5 12.4 21.0 15.9 14.4 20.8 100.0

Source ORG IMS; Nomura research

Domestic Formulations—Breakdown by Therapy (cont’d)



I n t




Gastrointestinal—MAT June 2009 Sales—INR40.0 Bn (10.8% of IPM)

42

Gastrointestinal (Top 10 Companies Among the Overall Top 50 Companies Analysed) Y-o-Y Growth Rate (%)

Company

MAT

Jun-09

FYTD

(Apr-09 –


Company Share in

TA (MAT Jun-09)

%


Dr. Reddy’s Labs 5.9 23.1 4.4 5.7 15.7 17.4 19.6 32.7 4.7

Abbott 9.9 14.3 16.6 8.3 21.9 14.1 8.0 21.8 4.2

Aristo Pharma 18.1 15.1 30.0 29.9 32.7 14.4 12.7 18.1 4.0

Alkem 21.4 32.0 30.8 33.9 38.2 21.6 35.6 40.0 3.9

Mankind 20.0 16.7 33.2 27.5 24.8 14.9 14.3 21.2 3.9

Sun Pharma 20.1 25.3 17.0 20.6 28.8 20.2 20.9 35.2 3.7

Ranbaxy 14.4 10.8 21.5 32.5 21.2 1.7 8.4 24.6 3.4

Torrent Pharma 10.1 23.5 17.8 26.0 37.6 28.2 16.4 26.2 3.3


Total 10.4 12.3 17.0 16.5 21.9 8.7 9.1 19.7 100.0





I n t

r o d u c t i o n t o P h a r m a I n d u s t r y


Respiratory—MAT June 2009 Sales—INR32.2 Bn (8.8% of IPM)

43

Respiratory (Top 10 Companies Among the Overall Top 50 Companies Analysed) Y-o-Y Growth Rate (%)

Company

MAT

Jun-09

FYTD

(Apr-09 –


Company Share in

TA (MAT Jun-09)

%

Cipla 12.8 14.5 13.3 6.7 20.7 8.4 14.3 21.7 19.0


Pfizer 15.3 17.3 17.9 10.2 10.0 8.5 16.9 29.0 6.3

GlaxoSmithKline 2.4 14.3 13.5 12.2 15.4 8.3 14.0 21.4 4.8


Lupin Ltd. 25.6 34.3 19.1 22.3 33.2 33.0 30.3 39.7 3.7

Alembic 10.0 27.6 1.2 1.8 14.4 11.1 32.9 42.2 2.7

Wockhardt 0.6 16.1 8.8 9.2 16.5 6.8 13.5 30.2 2.6

Sanofi Aventis 6.0 18.3 12.3 7.1 16.1 11.0 18.9 25.8 2.5

Glenmark Pharma 17.8 26.3 5.4 14.3 26.3 12.1 29.1 41.7 2.4

Total 10.3 17.1 12.7 10.8 18.9 12.3 14.9 25.0 100.0





I n t



Pain/Analgesics—MAT June 2009 Sales—INR31.7 Bn (8.7% of IPM)

44

Pain/Analgesics (Top 10 Companies Among the Overall Top 50 Companies Analysed) Y-o-Y Growth Rate (%)

Company

MAT

Jun-09

FYTD

(Apr-09 –


Company Share in

TA (MAT Jun-09)

%

Novartis 4.9 7.1 3.9 7.4 13.5 2.3 8.7 11.0 6.1


Ranbaxy 10.8 9.6 19.6 21.7 22.5 6.3 9.6 13.3 5.4


Sanofi Aventis 2.5 4.6 11.0 1.2 0.7 (2.7) 8.9 8.6 4.1

Alkem 11.6 28.2 25.4 26.5 25.1 26.0 31.0 27.5 4.1

Dr. Reddy’s Labs 1.1 7.0 8.1 4.0 7.8 1.4 4.9 14.9 3.8

Ipca Labs 30.4 21.0 58.4 52.3 51.0 27.6 22.7 13.7 3.3


Cipla 10.9 9.7 22.5 17.2 21.9 1.8 12.2 15.7 2.6

Total 10.3 11.4 18.0 15.9 18.4 9.5 10.3 14.5 100.0





I n t



Vitamins/Minerals/Nutrients—MAT June 2009 Sales—INR28.3 Bn (7.7% of IPM)

45

Vitamins/Minerals/Nutrients (Top 10 Companies Among the Overall Top 50 Companies Analysed) Y-o-Y Growth Rate (%)

Company

MAT

Jun-09

FYTD

(Apr-09 –


Company Share in

TA (MAT Jun-09)

%

Merck Ltd. 16.5 10.6 30.2 28.6 31.8 9.3 4.8 18.3 6.9

Wockhardt 12.2 18.7 15.6 18.3 27.2 24.9 17.7 14.1 6.0

GlaxoSmithKline (2.2) 5.6 10.7 16.5 22.6 19.0 6.3 (5.6) 5.5

Pfizer 12.8 18.7 28.5 42.5 35.4 23.9 30.3 4.4 4.9

Elder Pharma 11.4 18.5 9.9 14.9 13.9 8.0 21.9 26.9 4.1

Raptakos Brett 15.7 15.0 21.5 24.4 25.3 15.9 6.9 22.6 3.5

Novartis 0.5 (2.6) 5.5 10.5 2.7 (2.6) (0.5) (4.8) 3.3


Abbott 11.0 7.2 36.6 28.4 25.7 17.5 1.8 3.8 2.6

Alkem (0.7) 7.8 8.7 3.0 2.2 5.0 8.8 9.6 2.6

Total 7.7 10.3 14.4 16.3 16.4 10.0 8.3 12.6 100.0





I n t



Gynaecology—MAT June 2009 Sales—INR21.1 Bn (5.8% of IPM)

46

Gynaecology (Top 10 Companies Among the Overall Top 50 Companies Analysed) Y-o-Y Growth Rate (%)

Company

MAT

Jun-09

FYTD

(Apr-09 –


Company Share in

TA (MAT Jun-09)

%


Emcure 24.3 5.5 27.7 17.1 26.3 3.0 6.4 7.1 7.2

Cipla 31.3 32.7 22.9 13.6 37.1 28.0 24.7 48.0 6.6

Franco Indian 16.4 3.1 33.2 26.8 24.8 2.3 6.0 1.3 5.4

Sun Pharma 12.7 17.6 12.2 9.4 18.2 10.4 15.3 28.1 4.2

Wyeth Ltd. 18.8 21.1 14.7 18.1 20.8 22.5 19.9 20.8 3.8

Novartis (1.2) 1.6 (1.0) 5.7 15.9 7.6 6.2 (8.0) 3.7

Mankind 46.6 46.1 14.0 14.8 32.8 40.7 45.1 52.7 3.2

Schering Plough 9.5 (3.0) (2.6) 2.2 12.5 (3.4) (1.5) (4.0) 2.8

Alkem 24.7 34.5 21.1 18.4 40.3 28.1 33.5 42.0 2.4

Total 13.8 14.1 16.2 12.5 19.2 13.1 11.8 17.3 100.0





I n t



Dermatology—MAT June 2009 Sales—INR20.3 Bn (5.6% of IPM)

47

Dermatology (Top 10 Companies Among the Overall Top 50 Companies Analysed) Y-o-Y Growth Rate (%)

Company

MAT

Jun-09

FYTD

(Apr-09 –


Company Share in

TA (MAT Jun-09)

%


Glenmark Pharma 24.1 25.1 22.5 23.8 36.7 23.0 26.9 25.7 7.7

Ranbaxy 15.3 5.9 20.9 19.1 21.4 5.4 0.4 12.5 6.8

Schering Plough 17.6 10.0 28.4 35.3 29.4 22.0 3.6 6.5 5.1


Win Medicare 16.6 20.4 21.2 19.6 28.1 16.3 15.9 29.4 3.6

Cipla 13.7 19.5 16.5 8.0 28.6 17.4 17.8 23.3 2.3

Wockhardt 15.2 34.5 16.4 35.2 27.7 33.2 37.2 33.4 2.1


Dr. Reddy’s Labs 14.4 26.5 25.3 18.7 26.2 26.4 23.6 29.5 2.0

Total 14.8 20.6 19.8 19.2 26.8 19.5 19.2 23.0 100.0





I n t



Neurology (CNS)—MAT June 2009 Sales—INR20.1 Bn (5.5% of IPM)

48

Neurology (Top 10 Companies Among the Overall Top 50 Companies Analysed) Y-o-Y Growth Rate (%)

Company

MAT

Jun-09

FYTD

(Apr-09 –


Company Share in

TA (MAT Jun-09)

%

Sun Pharma 13.7 18.2 10.2 11.9 20.4 13.6 13.8 28.4 18.2

Intas 14.7 24.7 17.2 21.3 17.7 25.9 25.5 22.8 9.5

Torrent Pharma 15.6 22.0 23.8 22.7 33.9 25.3 18.3 22.3 7.9

Abbott 7.3 12.9 13.2 8.7 13.2 11.0 7.5 20.9 6.5


Sanofi Aventis 14.3 14.7 14.7 12.7 23.8 2.1 15.5 28.2 3.8

Ranbaxy 6.1 (5.0) 8.8 9.7 5.8 (11.9) (4.2) 2.3 3.8

Unichem 1.6 13.8 2.2 5.6 8.3 4.1 12.6 26.7 3.1

Micro Labs 18.7 25.3 22.8 22.2 20.0 23.4 21.6 30.9 3.0

Novartis 2.2 10.9 2.2 7.9 8.0 8.9 15.7 8.4 2.6

Total 13.0 17.4 15.1 15.3 19.9 15.5 15.0 22.0 100.0





I n t



Anti-Diabetic—MAT June 2009 Sales—INR19.3 Bn (5.3% of IPM)

49

Anti-Diabetic (Top 10 Companies Among the Overall Top 50 Companies Analysed) Y-o-Y Growth Rate (%)

Company

MAT

Jun-09

FYTD

(Apr-09 –


Company Share in

TA (MAT Jun-09)

%

Abbott 1.0 (4.6) 4.1 (1.5) 4.6 (9.2) (4.4) 0.3 18.9

USV 23.6 15.2 29.5 27.9 35.2 13.8 14.4 17.7 10.8

Sanofi Aventis 18.2 9.1 20.8 28.1 32.4 6.0 6.4 15.0 7.8

Sun Pharma 14.7 18.5 7.0 9.5 19.5 13.2 12.8 30.3 7.1


Micro Labs 12.2 19.2 16.6 12.1 13.4 16.2 12.9 29.4 3.6

Lupin Ltd. 37.1 47.4 41.9 38.1 46.0 43.8 45.0 53.8 3.1

Panacea Biotec 8.5 2.6 2.9 0.3 8.7 4.7 (0.1) 3.2 2.8

Ranbaxy 3.4 5.6 (4.1) 4.7 6.2 4.5 1.6 11.0 2.7

Franco Indian 15.0 15.0 9.1 16.7 29.8 17.1 9.3 18.6 2.4

Total 14.2 14.7 14.3 14.4 21.0 11.4 12.4 20.5 100.0





I n t



Share Price Performance - Generics

12

4/2006 1/23/2007 3/2/2007 4/11/2007 5/21/2007 6/28/2007 8/7/2007 9/14/2007 11/5/2007

Labs. Towa Nichiiko Sawai Fuji Topix Topix Pharma Index

Indexed Share Price Performance

11/6/06=100

(41.4)%

+34.6%

+11.6%

+60.0%

Source FactSet

(22.5%)

(4.5)%

(2.6)%

Glossary



I n t



GlossaryAbbreviated New Drug Application (ANDA) –

application by a company intending to sell a

generic copy of a drug. The ANDA contains data

testing bioequivalence and stability, for use by

patients in the US market.Active Pharmaceutical Ingredient (API) – the

substance in a drug that is pharmaceutically active

(participates in main reaction in the body) and

responsible for the main effects of the drug.

Authorized Generic (AG) – generic drugs

produced and marketed by branded

pharmaceutical companies. Authorized generics

compete with approved generics during and after

“the 180-day exclusivity period”.

Bioequivalence – in vivo (“ within the living” in

Latin) equivalence of two proprietary preparations

of a drug; if two products are bioequivalent they

would be expected to be, for all intents and

purpose, the same.

Biologic – “…any virus, therapeutic serum, toxin,

antitoxin, vaccine, blood, blood component or

derivative, allergenic product, or analogousproduct… applicable to the prevention, treatment

or cure of diseases or injuries of man (Section 35

(a) of Public Health Service Act)”.

Blockbuster – a product with annual sales in the order of

USD1bn is defined as a blockbuster.

Branded Generics – generic equivalent of a branded drug

sold with a name given by the generic company.

Contract Research and Manufacturing (CRAM)

– outsourcing of products/services by multinational

pharmaceuticals from low-cost providers.

Declaratory Judgment (DJ) – a court judgment that

determines the rights of parties without orderinganything to be done or awarding damages.

Drug Master File (DMF) – document prepared by

pharmaceutical manufacturer and submitted at its own

discretion (hence not mandatory) to FDA. There are five types

of DMFs. Type 2 DMFs relate to substance/intermediate being

used or manufactured in preparation of a product by the

company. The main objective of the DMF is to support

regulatory requirements and prove quality, safety and efficacy

of a medicinal product. It is usually a supporting document to

IND, NDA or ANDA.

Food & Drug Administration (FDA) – US regulatory agency

which oversees all aspects of pharmaceutical regulation, from

clinical trials and registration to manufacturing standards and

promotional claims.

Formulary – a list of prescription drugs covered by a particular

drug benefit plan in the US. The formulary is subject to

periodic review and modification by the health plan.First to File (FTF) – an ANDA applicant which receives FTF

status is eligible for generic marketing exclusivity for 180 days

(may be shared with another ANDA applicant) during which

the FDA cannot grant final approval to other ANDA applicants

for the same generics.

Glossary




G ossa yHealth Maintenance Organization (HMO) – a

type of managed care organization (MCO) in the

US that provides a form of health care coverage

that is fulfilled through hospitals, doctors and other

providers with which the HMO has a contract.Moving Annual Total (MAT) – total revenue or

volume recorded in the prior 12-month period. It

is frequently used to compare data.

New Drug Application (NDA) – application by a

company intending to market a drug with active

ingredients that has not been previously approved

by the FDA.

New Drug Delivery System (NDDS) – newer and

improved systems.

Over-the-counter (OTC) – drugs that may be

sold directly to the consumer without a

prescription.

Para-IV certification – an ANDA filing is a

para-IV certification where the ANDA applicant

believes that its product or use of the product will

not infringe the innovator’s patents covering the

reference product, or where the applicant believesthat such patents are not valid or enforceable.

Preliminary Injunction (PI) – a temporary court

order at the request of one party that prevents

another party from pursuing a particular course of

conduct until the conclusion of a trial on the

merits. This essentially means that a PI should begranted only when the requesting party shows

there is a substantial likelihood of irreparable

harm unless the injunction is granted. A court will

grant a PI also if a party raises significant

questions worthy of additional inquiry such that

the harm to him or her outweighs the injury to

others if the injunction is denied.

Priority Review – fast track review by the FDA

over a 6-month period as against the standard 10

months, essentially to bring a drug to the market

faster. Usually done for drugs targeting unmet

medical needs.

Total Prescriptions (TRx) – Total number of

prescriptions, including new prescription, written

for a drug.

Temporary Restraining Order (TRO) – a court

order of limited duration. A TRO commandsparties involved in the case to maintain a certain

status until the court hears further evidence and

decides whether to issue a preliminary injunction.

introduction to pharma industry final v 1.003

Documents