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Copyright © 2016 QuintilesIMS. All rights reserved.
Trends in the Global Pharma-Market and its
Impact on the Supply Chain
Dr. Frank Wartenberg
President Central Europe
October, 20th, 2016
1
Top line growth forecast at 4-7% CAGR to 2020
(in constant US$)Pharmerging growth declines to single digits
© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
Developed Markets
CAGR 2016-2020
US 6%-9%
Japan (-1)%-2%
Germany 3%-6%
UK* 4%-7%
Italy 2%-5%
France (-2)%-1%
Spain 2%-5%
Canada 3%-6%
Developed 4%-7%
Pharmerging Markets
CAGR 2016-20 LCUS$
China 5%-8%
Brazil 7%-10%
India 10%-13%
Russia 6%-9%
Turkey 12%-15%
Mexico 2%-5%
Pharmerging
LCUS$6%-9%
Pharmerging
US$4%-7%
Global Sales and Market Growth
At par with region CAGR
Lower than region CAGR
Higher than region CAGR*Subject to clawback
0%
2%
4%
6%
8%
10%
12%
0
200
400
600
800
1.000
1.200
1.400
1.600
2015 2016 2017 2018 2019 2020
Gro
wth
Sa
les
(B
n L
CU
S$
)
Global sales Developed growth
Pharmerging growth
Source: IMS Market Prognosis March 2016; at ex-manufacturer price levels, not including rebates and discounts. Contains Audited + Unaudited
data; Sept 2015 forecasts used for all countries outside of top 52
2
35%
32%
25%
21%
34%
41%
39%
43%
37%
65%
68%
75%
79%
66%
59%
61%
57%
63%FR
ES
IT
DE
UK
RU
JP
CA
US 15% 2%
13% -2%
10% 2%
11% 11%
14% 2%
11% 0%
11% 1%
10% -2%
5% -3%
© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
Over time growth in specialty markets out-performed traditional markets in
terms of value…
Specialty Traditional
Average specialty share: 34%
Specialty Traditional
5 year CAGR (’10-’15)2015 value share specialty vs. traditional in TOP 5 EU
+ focus countries
Source: IMS Health, MIDAS, MAT Q4 2015
3
…. and are expected to remain the main growth driver in Europe till 2020 Share of Absolute Growth 2015-2020 and 2020 Sales by Region
© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
93%
7%
Traditional 2020 Sales
Specialty 2020 Sales
93%
7%
Traditional Growth 2015-20
Specialty Growth 2015-20
66%
34%64%
36%
94%
6%
93%
7%
60%40%
24%
76%
82%
18%
79%
21%
LATAMLC$ 20Mrd Growth
North AmericaLC$ 152Mrd Growth
EuropeLC$ 42Mrd Growth
AFMELC$ 21Mrd Growth
AsiaLC$ 88Mrd Growth
Source: IMS Health Market Prognosis September 2015; at ex-manufacturer price levels, not including rebates and discounts.
Contains Audited + Unaudited data; IHII analysis
4© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
At the same time, wholesalers loosing ground amongst European
countries
78%
76%
73%
62%
59%
57%
53%
50%
47%
42%
35%
19%
13%
26%
33%
36%
36%
45%
33%
50%
58%
58%
5%
7%
7%
6%
17%
12%
DK
CZ
BE
HU 1%
DE
PL 3%
AT
ES 2%
FR
IT
UK 1%
Direct retailDirect HospitalTraditional FLW
Delta WHS
2015 vs 2011
Q4/2015 value share by channel in TOP 5 EU + focus
countries
Traditional Full
Line Wholesalers
Direct sales to retail
Direct
sales to
hospitals
Source: IMS Health, total market, shares are based on value, Q4 2015, direct shares from local affiliates
+3%
-4%
-2%
-1%
-4%
-5%
-5%
-4%
-9%
-7%
-11%
5© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
Specialty products require a special handling leading to a rise in new
distribution models
Distribution
Preparation
Administration
• Many specialty products need
refrigeration or freezing
• Often requires maintaining cold chain
distribution during the whole delivery
process
• Specialty products can require
compounding of individual ingredients in
an exact strength and dosage form
tailored to the patient’s need
• Many specialty products are self-
administered injectable
• Requires patient training to administer
• Support to achieve adherence needed
Source: ASHP Specialty Pharmacy Resource Guide, available at:
http://www.ashp.org/menu/PracticePolicy/ResourceCenters/Specialty-Pharmacy-Resource
Rise of Homecare and specialty
pharmacies
• “Total service” to patient
• Aseptic services (e.g. oncology)
• Compliance programs/ patient
support
• Elimination of indirect payer costs
7© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
Typically specialty products are high price products with simultaneously
low volumes
100.0%
80.0%
0.0%
60.0%
40.0%
20.0%
2015
$142.4 Bn
61.7%
7.8%
11.3%
7.7%
10.2%
16.8%
11.3%
2010
$146.2 Bn
73.2%
EU 5 – Concentration of product
sales volume in SU bn US$
Source: IMS Health, MIDAS MAT Q4 2015, US$ and SU
All othersProducts 51-100Products 11-50Top 10 products
8.0%
98.0%
100.0%
6.0%
2.0%
4.0%
0.0%
2.2%
1.7%
0.7%
2.8%
1.9%
0.6%
2010
409.9 Bn
95.4%
2015
411.1 Bn
94.7%
EU 5 – Concentration of product
sales in bn US$
8
HUMIRA ENBREL GLIVEC
Mark upPrice per
pack €
WHS mark
up
Price per
pack €
WHS mark
up
Price per
pack €
WHS mark
up
AUSTRIA €23.74 fixed mark-up 975 23.7 858 23.7 2,705 23.7
BELGIUM €2.30 + 0.9% 951 10.9 918 10.6 2,284 22.9
FRANCE6.68% for first €450 (with a
minimum mark-up of 0.30€)
0% above €450829 30.1 732 30.1 1,737 30.1
GERMANY
Fixed fee of €0.70 plus 3.15%
mark-up to a limit of €37.80 on
the percentage mark-up
element.
3,631 38.5 3,164 38.5 5,331 38.5
SPAIN€7.54 where ex-MNF price excl
sales tax is >€91.63 N/A 845 7.54 1.184 7.54
© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
They have a large impact on WHS margins – manufacturers try to keep
those by direct sales
Why direct sales?
• Ability to control discounting
• Ability to receive information about the dispenser
• Eliminate wholesaler exporting
• Manage distribution costs Source: IMS Health
9© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
Wholesalers offer pre-wholesaling carrying out warehousing & logistic for
manufacturers
Wholesalers
Patients
PharmaciesSelf-dispensing
doctors
Manufacturers
Hospitals
Classic distribution system for pharmaceuticals
with pre-wholesalers
Source: IMS Health
Characteristics
• Manufacturers outsource the warehousing and
logistic to pharmacies, self-dispensing doctors and
hospitals to so called pre-wholesalers
• Wholesalers often offer pre-wholesaling services
Pre-Wholesalers
10© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
Parallel trade is a huge threat for specialty products due to different price
levels in the EU
European annual parallel trade
Size
Import markets context
Source: IMS MIDAS and internal database, import markets: DEU, GBR, NLD, Nordics and IRL, All sales at ex-MNF level.
€5.2bn (EU 8)Size
- 4% PI
+ 5% Non-PI growth
+ 4% Total market growthGrowth
9% PI(8 main import markets only)
3% across EU28
Share0
1
2
3
4
5
6
MAT 06'14 MAT 06'15 MAT 06'16
€P
I sa
les
(B
n)
Specialist Primary Care
~60%
+ 2%- 4%
+ 2%- 4%
- 7%+ 6%
11© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
The traditional dispensing and distribution model is changing…
Wholesalers
Patients
PharmaciesSelf-dispensing
doctors
Manufacturers
Hospitals
Classic distribution system for
pharmaceuticals
Source: IMS Health
Trends:
Manufacturers
• Aim to control the supply chain (reduce distribution
costs – increase margin, control exports)
Pharmacies
• Discounts driven (mainly generics and PI)
• Trend towards dispensing fees
Wholesalers
• Parallel Export important in several markets
• Offer pre-wholesaling to participate in direct sales
business
New market players
• Homecare and Specialty pharmacies
12© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
… to a highly complex environment
Wholesalers
Patients
PharmaciesSelf-dispensing
doctors
Manufacturers
Hospitals
Parallel trader
Pre-Wholesalers
Mail-orderSpecialized
pharmacies
Source: IMS Health
Pre-wholesaling Direct sales Parallel trade New distribution channels
13© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
Counterfeits are a high threat leading to another big challenge for
distributing pharmaceuticals
Inside the fake Viagra factory
Source: The Telegraph “Inside the fake Viagra factory” (23 Aug 2005)
Which one is the
counterfeit?
14
Politicians take actions and continue efforts to highly control the
pharmaceutical supply chainIntroduction of Falsified Medicines Directive
© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
Objective: Protection of patients from falsified
medicines in the legal distribution chain
Content: Pan-European system to verify the
authenticity of medicinal products
Scope: All Rx-bound products); OTC-products
cannot be subject to authentication
Due date: Implementation in all countries by
Q1/2019, Non – compliance puts sales at
risk!!!
Additional tasks and new costs for the pharmaceutical supply chainSource: EU “Falsified Medicines”, ESM “A European Medicines Verification System “
15© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
Key Insights to Take Away
Growth in the pharmaceutical market mainly comes from specialty care1
Specialty products are typically high cost products with low volumes and require a specific
handling in distribution, preparation and administration2
Manufacturers seek to fully tap high margins for those products and keep control over the whole
distribution process via direct sales 3
Wholesalers react to this development by expanding their business in offering manufactures pre-
wholesaling services4
Big threat of counterfeits leads to even stricter regulations (Falsified Medicine Directive) of the
pharmaceutical supply chain in the next years5
16
Please contact me for more information
Dr. Frank Wartenberg
President Central Europe
frank.wartenberg@quintilesims.com
+49 (0) 69 6604-4315
Follow me on Twitter: @FrankWartenberg
© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
17
© 2016, IMS HEALTH GmbH & Co. OHG
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IMS HEALTH GmbH & Co. OHG vervielfältigt, gespeichert, weiterverarbeitet und in keiner Weise zugänglich gemacht werden.
Die gegebenenfalls im Zusammenhang mit Daten verwendeten Begriffe „Patient, Arzt, Arztpraxis, Verordner oder Apotheke“ bezeichnen keine personenbezogenen, sondern ausschließlich (nach §
3 Abs. 6 Bundesdatenschutzgesetz) anonyme Informationen.
IMS stellt durch den Einsatz modernster Technologien und Verfahren sicher, dass seine Dienstleistungen, unabhängig davon wie die Daten untereinander verknüpft werden, den
Datenschutzbestimmungen entsprechen.
© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
18
© 2016, IMS HEALTH GmbH & Co. OHG
All rights reserved. The information may not be duplicated, stored, further processed, nor be made accessible in whole or in part to any third party without the prior express written consent of IMS
HEALTH.
In connection with data/figures used terms, such as „patient, doctor, medical practice, prescriber or pharmacy”, do not designate any personal data but exclusively anonymous information (in
accordance with § 3 Abs. 6 “Bundesdatenschutzgesetz” – German Federal Data Protection Act)
IMS employs high sophisticated technologies and methods which ensure all its Information Services to meet the applicable data-protection requirements, regardless the way data are combined with
one another.
© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
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