Strategic generic portfolio selection may 12th 2010

Asa Cox

Founder genericlicensing.com

Strategic Portfolio Planning

for Generic Drugs

May 12, 2010

- 13 years in generics

Manufacturing, Development, Licensing, Consulting

- International projects

About me

- Online networker

- Web business 2.0 believer

- Overview of typical generic portfolio’s

- Specifics of portfolio planning for generics

- Why strategic planning is important for generic companies

Topics

- Introduction to sourcing generic products from 3rd parties

Aim: To understand why strategy and

planning for generic portfolio’s is required!

- Does typical exist?!

Country variables:

� Demographic

� Population

� Market development

Overview of typical generic portfolio’s

� Market development

� Local players

� Drug provision policy

� Generic incentives

� Economy

Does typical exist?!

Typical category portfolio’s?

e.g United Kingdom




e.g United Kingdom

Full : Teva, Actavis, Sandoz, Mylan





e.g United Kingdom




Profit: Arrow, Ratiopharm, Winthrop, Stada



e.g United Kingdom

Full : Teva, Actavis, Sandoz, Mylan,




Focused: Rosemont, Hospira, Perrigo



e.g United Kingdom





Focused: Rosemont, Hospira, Perrigo

Manufacturing: Cipla, Ranbaxy, Wockhardt, Aurobindo...

If you were creating a portfolio from scratch... where would you start?!

Specifics of portfolio planning for generics


� Cash vs Profit� Business plan/strategy

� Cost of entry

� Available technology


� Available technology

� Risk of competition

� Supply chain


� Cash vs Profit

� IMS top down� Value or volume

� Level of competition


� Level of competition

- Same data as everyone!

� Manufacturing capability


� Cash vs Profit

� IMS top down

� Patent expiries� Originator tactics


� Originator tactics

� Timing

- First in reaps rewards

� At risk vs late to the party

- Legal costs & expertise

� COGS vs ASP- Stock vs cash

- Loss vs market share


� Cash vs Profit

� IMS top down

� Patent expiries



�

� Dose forms

� Biologics

� Capacity

� Dedicated units

� Supply chain

� Cost


� Cash vs Profit

� IMS top down

� Patent expiries


� Marketing & Distribution


� Marketing & Distribution� Rx or OTC

- Branded or Private Label

- Standard or Generic+

� Hospital or retail

- Wholesale, Multiples, Independent, Online

� Positioning

- Service, Price, Depth, Speciality, Product Type


� Cash vs Profit

� IMS top down

� Patent expiries





� Copy Competition� Which one?!

� Response

� Attainability


Using IMS – Top Generics

Top 200

- All over $400m

- Very long tail


1. Fentanyl

Launched: January 2005, 2008 sales: $800 million

Branded equivalent: Duragesic, by Janssen 2008 sales of $250 million (from $1.1 billion)

2. Amlodipine besylate and benazepril hydrochloride*

Launched: July 2007, 2008 sales: $779 million

Branded equivalent: Norvasc, by Pfizer 2008 sales <$150m ($1.5 billion)


Branded equivalent: Norvasc, by Pfizer 2008 sales <$150m ($1.5 billion)

3. Metoprolol succinate

Launched: May 2008, 2008 sales: $675 million

Branded equivalent: Toprol, by AstraZeneca 2008 sales <$150m ($807 million)

4. Lamotrigine

Launched: February 2005, 2008 sales: $671 million

Branded equivalent: Lamictal, by GlaxoSmithKline 2008 sales $1.6 billion (peak)


5. Risperidone

Launched: September 2008, 2008 sales: $610 million,

Branded equivalent: Risperdal, by Janssen, 2008 sales $1.5b ($2.1 billion)

6. Omeprazole*

Launched: July 2008, 2008 sales: $609.8 million

Branded equivalent: Prilosec, by AstraZeneca, 2008 sales $185m ($1.1 billion)


Branded equivalent: Prilosec, by AstraZeneca, 2008 sales $185m ($1.1 billion)

7. Azithromycin

Launched: November 2005, 2008 sales: $599 million,

Branded equivalent: Zithromax, by Pfizer, 2008 sales <$150m ($1.7 billion)

8. Bupropion

Launched: December 2006, 2008 sales: $521 million

Branded equivalent: Wellbutrin, by Biovail, 2008 sales $579 million ($1.7 billion)



� Why difference in generic success? � Brand tactics

� Price match

� Alternative formulations

� Effective anti-generic messages� Effective anti-generic messages

� Doctor perspective� Long term use

� Activity limits

EXAMPLE: OMEPRAZOLE – US vs UK

US - $300m value erosion (25%)

UK -


OMEPRAZOLE – UK (£25 to £1)



Targeting patent expiry of a blockbuster?!


CLOPIDOGREL/PLAVIX


CLOPIDOGREL/PLAVIX



SUMMARY:

� Commercial strategy� Profit or volume

� Market strategy� Market strategy� Distribution channels

� Classification type

� Manufacturing capability� Product type

� Legal & Regulatory expertise� Patent expiry vs long tail

Why strategic planning is important


2009 global generic products generated $83bn (€59.8bn) in audited sales (IMS)


2009 global generic products generated $83bn (€59.8bn) in audited sales (IMS)

BCC estimates the global market to reach $129.3bn by 2014, representing a

In the $59bn global generics market in developedcountries, Japan only accounts for 6%, while the US holds 42%, and five major European national markets account for 23%.

by 2014, representing a 9% annual growth rate.


2009 global generic products generated $83bn (€59.8bn) in audited sales, according to IMS.

BCC estimates the global market to reach $129.3bn by 2014, representing a

29%

In the $59bn global generics market in developedcountries, Japan only accounts for 6%, while the US holds 42%, and five major European national markets account for 23%.

by 2014, representing a 9% annual growth rate.

$37.5bnUndeveloped markets


Government debt as % of GDP (2009)




IMS estimates that sales from the top 10 US generic players grew at an average of 13.2% in 2009

The big are getting bigger!


The big can get bigger still!



"Only those who are agile and strong will survive in this business," said Teva president and CEO Shlomo Yanai during the company's investor meeting last month in Jerusalem.

"About 15% of our business will come from acquisitions. We are taking the necessary steps and building our infrastructure by getting assets and know-how either internally, through acquisition or partnerships."

Teva estimates its 2009 global sales at $13.9bn, of which 70% are from generic products. Yanai is targeting $31bn in sales by 2015, of which 70% will still come from generics.



Teva estimates its 2009 global sales at $13.9bn, of which 70% are from generic products. Yanai is targeting $31bn in sales by 2015, of which 70% will still come from generics.

"Only those who are agile and strong will survive in this business,"


Biosimilars/follow on biologics

Approximately one-third of all newly approved drugs will be biologics. (2010) Double-digit growth of 20

percent, they generated percent, they generated $95 billion of sales amounting to approximately 15 percent of global pharma revenues.

Today, total sales of off-patent biologics amount to approximately $20 billion

The average costs of biologic drug treatment is about $72,000/year (compared to about $1,000 for conventional "small molecule" pharmaceuticals)



Biosimilars/follow on biologics


The patent cliff: 2010-15

Of total pharmaceutical sales in 2008 of $643.6bn, a staggering 30% were derived from patented products which are “at risk” from generic competition within five years, almost double the competition within five years, almost double the percentage at risk in 2000 of 17%. Whilst the industry has already started its slide, the patent cliff becomes seriously precipitous in 2010 when 9%, or $57.5bn, of total market sales are expected to lose patent protection within the space of 12 months



The world's top drugmakers face the loss of $140 billion in annual sales by 2016 (of $700bn 2008)



Inhalation marketApproximately 50% of the current $32 billion global market segment for asthma and COPD medicines is expected to lose patent protection by the end of 2016, according to industry analysts IMS Health.

The asthma and COPD market segment is projected to grow significantly faster than the pharmaceutical market, driven by factors including a significant level of under-diagnosis, and Novartis/Sandoz will hope this acquisition will gain them a large market share in the future.

Sandoz has signed a definitive agreement to acquire Oriel Therapeutics, a privately held US pharmaceuticals company, gaining exclusive rights to a portfolio of generic drug candidates and related technologies targeting medicines in the inhalable respiratory drug market. Holzkirchen, Germany, April 19, 2010



"There is still room to grow in generics," says Yanai (TEVA). "Almost $150bn of branded drugs are going to be off patent in the next five years. This does not include the five years. This does not include the expiration of biologics, which is an additional $50bn potential.”



Whats the big pharma plan?

- More investment in R&D?- Clever anti-generic tactics?- Switch out before expiry strategies?- Switch out before expiry strategies?- Increase legal spend on ever-greening patents?- Big budget advertising in BRIC markets?

The patent cliff: 2010-15. Whats the big pharma plan?

Astra Zeneca announced today that it has agreed to market 18 of Torrent Pharmaceuticals Ltd.’s branded generic drugs in 9 emerging markets, marking the U.K. drugmaker’s first generic-drug partnership.Unlike some its competitors, Astra Zeneca is very vulnerable to generic competition as many of its best selling products such as Nexium for ulcers, the antipsychotic Seroquel and Crestor for cholesterol. are near patent expiry. Industry analysts expect


Seroquel and Crestor for cholesterol. are near patent expiry. Industry analysts expect the company to lose as much as 25% of its sales revenue to generic encroachment by 2014.


Sanofi-Aventis bought Zentiva NV of the Czech Republic, Helvepharm AG of Switzerland, Medley SA of Brazil and Laboratorios Kendrick SA of Mexico to bolster its branded generics portfolio.



“Generics are an important part of the health care system. ????? believes that when there is a direct generic equivalent to the prescribed brand


name drug, it should be used provided the doctor agrees it is best for the patient.”


“Generics are an important part of the health care system. Pfizer believes that when there is a direct generic equivalent to the prescribed brand


name drug, it should be used provided the doctor agrees it is best for the patient.”

http://www.pfizer.com/about/public_policy/generics.jsp


NEW YORK, March 18 (Reuters) - Pfizer Inc (PFE.N) may still be eager to buy genericdrugmakers, after being outbid for Germany's Ratiopharm in an effort to shore up revenue as it braces for evaporating sales of its blockbuster Lipitor cholesterol treatment.

Pfizer’s expanded agreements with Aurobindo Pharma Ltd. will grow its generic product portfolio within emerging markets to reflect the diverse and often unique market dynamics


portfolio within emerging markets to reflect the diverse and often unique market dynamics and commercial interests of more than 70 countries.

Pfizer entered into agreements with Claris Lifesciences Ltd. (“Claris”) to commercialize sterile injectable medicines after the products are no longer patent protected, and have lost market exclusivity in North America, Europe, Australia and New Zealand. The Claris agreements advance Pfizer’s Established Products strategy, which focuses on the commercialization of products where market exclusivity has been lost. Pfizer’s global annual sales of established products are approximately $10 billion.


Pfizer’s global annual sales of established products are approximately $10 billion (?!)



Last year, GlaxoSmithKline entered into joint ventures with the generic manufacturers Dr. Reddy’s Laboratories (India) and Aspen Pharmacare Ltd (South Africa).

Also, the company paid $246.5 million for Bristol-Myers Squibb’s Pakistan and Egypt drug units and acquired UCB’s drug portfolio in Africa, the Middle East, Asia Pacific and Latin America for $702 million; clearing signaling its intention to more aggressively


Latin America for $702 million; clearing signaling its intention to more aggressively pursue emerging global markets.


SUMMARY: What is the future going to look like?!

� 5 year high growth window

� Major player strength & depth

� Biologics

� Big pharma entering generics

Introduction to sourcing from 3rd parties

Creating the portfolio – why look outside

- Manufacturing constraints

- Development capability

- Time to revenue

- Financial status

- Product mix- Product mix

- Country/region specific products

- Tactical & strategic relationships

Strong and agile Teva in-licenses 30% of products!


Creating the portfolio – where to look

- Emerging markets

- EU ascension states

- High Tech Far East (Korea, Taiwan)

- Well developed Latin America

- Online

- New databases

- Forums and discussion groups

- Virtual partnering events


Creating the portfolio – considerations

- Partner Selection

- Commercial relationship model

- Quality and consistency of supply

- Long term cost position

- Partner’s ambitions- Partner’s ambitions

- Beware…

- Regulatory expertise

- Number of dossiers/licenses sold

- IP ownership and supply chain flexibility

Summary

- What type of portfolio do you want?

- Selecting generic products isn’t easy

- Why strategic planning is important for generic companies

- The other option; in-license & partner- The other option; in-license & partner

That is why strategy and planning for

generic portfolio’s is required!

Documents

Strategic generic portfolio selection may 12th 2010