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Developing a Common Understanding of the Developing a Common Understanding of the “Multiple Dimensions” of How Data Exclusivity will “Multiple Dimensions” of How Data Exclusivity will
Impact the Turkish Pharmaceutical Industry and Impact the Turkish Pharmaceutical Industry and Health Care EconomicsHealth Care Economics
January 19, 2004January 19, 2004
Amsterdam Athens Beijing Chicago Emeryville Hong Kong JohannesburgCambridge Frankfurt
London Los Angeles Madrid Manila Milan Moscow Mumbai Munich New York Palo Alto
Paris San Francisco São Paulo Seoul Shanghai Stockholm Tokyo Toronto ZurichSingapore
Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 2TPA-XCL-TurkeyData-1-15-04-PG
Executive SummaryExecutive Summary A wide range of perspectives on a complex set of factors (such as starting date of “DE” application, A wide range of perspectives on a complex set of factors (such as starting date of “DE” application,
time horizon of DE, location of registration, pipeline dynamic) that influence “data exclusivity” time horizon of DE, location of registration, pipeline dynamic) that influence “data exclusivity” implementation need to be aligned toward a implementation need to be aligned toward a ““unified viewunified view””
A A rigorous frameworkrigorous framework which captures all the variables and the dynamics between them along the which captures all the variables and the dynamics between them along the time dimension suggest that of 1288 active substance (3,162 products) in market today only 7 (when time dimension suggest that of 1288 active substance (3,162 products) in market today only 7 (when location of registration location of registration is is EU) to 12 (when location of registration is Turkey) will determine the impact EU) to 12 (when location of registration is Turkey) will determine the impact between 1995 to 2002; between 1995 to 2002;
However the future impact will be determined by how the However the future impact will be determined by how the new environment will influence new environment will influence competitive behaviorcompetitive behavior in terms of the speed at which new molecules enter the Turkish marketplace, in terms of the speed at which new molecules enter the Turkish marketplace, how pricing dynamics between generics and innovators will evolve, and how speedily generics how pricing dynamics between generics and innovators will evolve, and how speedily generics respond to introduction of new substancesrespond to introduction of new substances– Impact on the Generics Manufacturers in terms of lost revenues could range between $100 million Impact on the Generics Manufacturers in terms of lost revenues could range between $100 million
to $270 million a year, while gains to innovators could be in the range of $270 million to $600 to $270 million a year, while gains to innovators could be in the range of $270 million to $600 million — implying a concerted effort for million — implying a concerted effort for a smooth transition to a “new industry structurea smooth transition to a “new industry structure” ” is is desirabledesirable
– In the same spirit the impact on health care costs could vary (depending on how DE is In the same spirit the impact on health care costs could vary (depending on how DE is implemented) significantly, $200 to $500 million on the sixth year after line application of DE, implemented) significantly, $200 to $500 million on the sixth year after line application of DE, suggesting that suggesting that data exclusivity impact is not negligibledata exclusivity impact is not negligible..
Government along with Industry, must together evolve a Government along with Industry, must together evolve a consensus consensus between different interest between different interest groups on the likely scenarios that are more realistic, and together work out a balance and rigorous groups on the likely scenarios that are more realistic, and together work out a balance and rigorous implementation plan for data exclusivity adoption in Turkey, in building implementation plan for data exclusivity adoption in Turkey, in building a robust pharmaceutical / a robust pharmaceutical / health care platform in globalizing Turkish economyhealth care platform in globalizing Turkish economy
Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 3TPA-XCL-TurkeyData-1-15-04-PG
Objective and Critical Questions for Objective and Critical Questions for the Undertakingthe Undertaking
ObjectiveObjective Develop an objective assessment of the potential impact of Develop an objective assessment of the potential impact of “Data Exclusivity” in Turkey from multiple perspectives“Data Exclusivity” in Turkey from multiple perspectives
Critical QuestionsCritical Questions What might the impact of adopting “data exclusivity” / EU intellectual property What might the impact of adopting “data exclusivity” / EU intellectual property
protection be on: protection be on:
1.1. Government budgets? Government budgets?
2.2. The generic industry?The generic industry?
3.3. Innovator companies and their activities in Turkey?Innovator companies and their activities in Turkey?
4.4. Patient welfare?Patient welfare?
5.5. Overall economic / social benefits / costs?Overall economic / social benefits / costs? What broad scenarios exist for the adoption of “data exclusivity” / EU intellectual What broad scenarios exist for the adoption of “data exclusivity” / EU intellectual
property protection and how does the impact vary by scenario?property protection and how does the impact vary by scenario? What actions might the various players consider to prepare for the likely changes?What actions might the various players consider to prepare for the likely changes?
Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 4TPA-XCL-TurkeyData-1-15-04-PG
Adopting Various Views and InsightsAdopting Various Views and Insights
PhRMA (2 meetings)PhRMA (2 meetings) U.S. Department of TradeU.S. Department of Trade U.S.-Turkish CouncilU.S.-Turkish Council PfizerPfizer
U.S.U.S. EU-CommissionEU-Commission Turkish Representation Turkish Representation
in EUin EU EFPIAEFPIA EGAEGA
EuropeEurope Merck Sharp and DohmeMerck Sharp and Dohme GSKGSK PfizerPfizer EczacibasiEczacibasi FakoFako YASEDYASED Government Departments: Government Departments:
– Patent officePatent office– Ministry of Foreign Ministry of Foreign
AffairsAffairs– Ministry of Economic Ministry of Economic
AffairsAffairs Association of Research-Association of Research-
Based CompaniesBased Companies
TurkeyTurkey
We have discussed our approach with multiple organizations to ensure We have discussed our approach with multiple organizations to ensure various perspectives / insights are capturedvarious perspectives / insights are captured
Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 5TPA-XCL-TurkeyData-1-15-04-PG
Steering CommitteeSteering Committee
Steering Committee included both representatives of the multinationals/original manufacturers and local generic manufacturers from Turkish Pharmaceutical Manufacturers Association.
MembersMembers Faik Somer - Merck Sharp & DohmeFaik Somer - Merck Sharp & Dohme Muhtar Tanrıöver - Glaxo SmithKlineMuhtar Tanrıöver - Glaxo SmithKline Sedat Birol - EczacıbaşıSedat Birol - Eczacıbaşı Nurettin Turan - FakoNurettin Turan - Fako
Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 6TPA-XCL-TurkeyData-1-15-04-PG
Bottom-Up ApproachBottom-Up Approach
MacroeconomicMacroeconomic Impact Impact
MicroeconomicMicroeconomic (Firm level) (Firm level)
Impact Impact
Healthcare / Social Security Costs Employment GDP contribution of industry Global industry competitiveness FDI flows Access to innovation Patient welfare Compliance to Multinational
Standards
Industry structure, entry / exit Market shares, concentration ratio Generic producers / innovators
profitability — pipeline dynamics Firm level / industry growth Investments, R&D
Rules of Competition in
Knowledge Economy
European Union
Requirements
Turkey (and Developing
Nations) Point of View
Innovators Point of View
Generic Industry’s
Point of View
Our bottom-up approach has allowed an assessment of both Our bottom-up approach has allowed an assessment of both macroeconomic and microeconomic impact using a subset of the following macroeconomic and microeconomic impact using a subset of the following factorsfactors
Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 7TPA-XCL-TurkeyData-1-15-04-PG
Aligning Multiple Perspectives and Interests Aligning Multiple Perspectives and Interests Five Points of View and InterestsFive Points of View and Interests
World Trade OrganizationWorld Trade Organization European UnionEuropean Union Turkey GovernmentTurkey Government
MultinationalsMultinationals Local Pharma IndustryLocal Pharma Industry
Intellectual property is expensive Intellectual property is expensive and a critical differentiator in and a critical differentiator in knowledge based competition, knowledge based competition, WTO members must respect the WTO members must respect the basic requirementsbasic requirements
Turkey must respect its Turkey must respect its obligation of the TRIPS obligation of the TRIPS agreement that it signed in 1995agreement that it signed in 1995
Data Data protectionprotection should have should have been applied from 1 January been applied from 1 January 20002000
Ensure member countries adopt Ensure member countries adopt WTO (TRIPs) rulesWTO (TRIPs) rules
Protect interests of all companies Protect interests of all companies located in member countrieslocated in member countries
Views Turkey’s progress with Views Turkey’s progress with concern:concern:– Behind schedule in adopting Behind schedule in adopting
the TRIPS agreementthe TRIPS agreement– Incomplete in meeting the Incomplete in meeting the
customs union agreementcustoms union agreement– Behind schedule in meeting Behind schedule in meeting
EU membership provisionsEU membership provisions
Become a qualified candidate for EU Become a qualified candidate for EU membership as soon as possiblemembership as soon as possible
Adopt international intellectual Adopt international intellectual property rules as soon as possible, property rules as soon as possible, while ensuring:while ensuring:– Disruption of local industry is Disruption of local industry is
minimalminimal– Social and government costs do Social and government costs do
not increasenot increase– Consumers / patients have access Consumers / patients have access
to medical innovationto medical innovation– FDI continues to increaseFDI continues to increase
Enhance global reach of their intellectual capital Enhance global reach of their intellectual capital and spread costs of innovation across marketsand spread costs of innovation across markets
Participate in markets that respect international Participate in markets that respect international IP rightsIP rights
Turkey must adopt data exclusivity as per TRIPS Turkey must adopt data exclusivity as per TRIPS agreement of 1995agreement of 1995
Enable build up of robust health care sector that Enable build up of robust health care sector that adheres to high quality / technology standardsadheres to high quality / technology standards
““Phase In” into the new environment so as Phase In” into the new environment so as to co-exist as a low cost / generics providerto co-exist as a low cost / generics provider
Adoption of data exclusivity and EU rules Adoption of data exclusivity and EU rules must be linked to the date of accessionmust be linked to the date of accession
Ensure they continue to play crucial roles in Ensure they continue to play crucial roles in the Turkish health care industrythe Turkish health care industry
However, multiple views and interest make the “Data Exclusivity” issue complexHowever, multiple views and interest make the “Data Exclusivity” issue complex
Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 8TPA-XCL-TurkeyData-1-15-04-PG
Data Exclusivity Requirements in the Context of Data Exclusivity Requirements in the Context of Various AgreementsVarious Agreements
Three different interpretations of likely application of Data ExclusivityThree different interpretations of likely application of Data ExclusivitySource: EU Website, WTO Website, southcentre.org, www.kobinet.org.tr/kosgebabm/english/lib/tr/001e.html
19951995 19971997 19991999 20002000 20012001… …
EC-Turkey Customs Union EC-Turkey Customs Union Agreement 2/97Agreement 2/97
Specifies EU community laws Specifies EU community laws that need to be implemented into that need to be implemented into Turkish law, in order to remove Turkish law, in order to remove all technical barriers to trade by 1 all technical barriers to trade by 1 Jan 2001Jan 2001– Includes detailed specs by Includes detailed specs by
type of goods — motor type of goods — motor vehicles, food, medicinal vehicles, food, medicinal products, agricultural and products, agricultural and construction equipment, construction equipment, household appliances, etc.household appliances, etc.
– Annex II, chapter XIII, relates Annex II, chapter XIII, relates to medicines and specifies to medicines and specifies that 6 or 10 years of data that 6 or 10 years of data exclusivity needs to be exclusivity needs to be implemented by 1 Jan 2001, implemented by 1 Jan 2001, as per EU law 65/65/EECas per EU law 65/65/EEC
TRIPS Agreement with WTO 1995TRIPS Agreement with WTO 1995 Covers all aspects of IP protection Covers all aspects of IP protection
including copyrights, trademarks, including copyrights, trademarks, patents and undisclosed information patents and undisclosed information (data protection)(data protection)
Turkey agreed to protect all Turkey agreed to protect all undisclosed data (Article 39.3)undisclosed data (Article 39.3)
No requirement on data exclusivityNo requirement on data exclusivity
EC-Turkey Customs Union EC-Turkey Customs Union Agreement 1/95Agreement 1/95
Harmonize Turkey’s legislation for full Harmonize Turkey’s legislation for full free movement of goods with EU by free movement of goods with EU by 1 Jan 20011 Jan 2001
Two requirements relating to data Two requirements relating to data protectionprotection– Implement TRIPS by 1 Jan 1999Implement TRIPS by 1 Jan 1999– Remove technical barriers to Remove technical barriers to
trade by 1 Jan 2001trade by 1 Jan 2001
Implement TRIPs by 2000 (because of 5 year Implement TRIPs by 2000 (because of 5 year transition period for developing country)transition period for developing country)
Implement TRIPs by 1999Implement TRIPs by 1999
Implement Data Exclusivity by 2001Implement Data Exclusivity by 2001
Ag
ree
me
nts
Ag
ree
me
nts
Imp
lic
ati
on
s
Imp
lic
ati
on
s
of
Da
ta
of
Da
ta
Ex
clu
siv
ity
Ex
clu
siv
ity
Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 9TPA-XCL-TurkeyData-1-15-04-PG
Aligning Multiple Perspectives and InterestsAligning Multiple Perspectives and InterestsUnified View Is Critical to Resolution of Outstanding IssuesUnified View Is Critical to Resolution of Outstanding Issues
Multiple InterestsMultiple Interests
GenericsGenerics– ““Phase in” into new Phase in” into new
environmentenvironment InnovatorsInnovators
– Enhance global reachEnhance global reach Turkish GovernmentTurkish Government
– Qualify for EU Qualify for EU accession and manage accession and manage the industry transition the industry transition while implementing DEwhile implementing DE
EUEU– Ensure member Ensure member
countries adopt WTO countries adopt WTO rulesrules
WTOWTO– Ensure global Ensure global
standards in standards in protection protection of undisclosed of undisclosed informationinformation
Unified ViewUnified View
Develop a sound logic Develop a sound logic structure to classify and structure to classify and identify the molecules identify the molecules potentially affected by DEpotentially affected by DE
Develop different Develop different scenarios for DE scenarios for DE application based on the application based on the most likely combination of most likely combination of the critical variables such the critical variables such as length of DE (6 vs. 10), as length of DE (6 vs. 10), price impact, etc.price impact, etc.
Understand the impact of Understand the impact of the different scenarios on the different scenarios on the industry as well as on the industry as well as on health care costshealth care costs
Understand the current Understand the current impact as well as potential impact as well as potential future impactfuture impact
International International Connectivity Connectivity RequirementsRequirements TRIPsTRIPs EU / Multinationals EU / Multinationals
enhanced involvementenhanced involvement
Economic Vibrancy Economic Vibrancy of Local Industryof Local Industry Wealth CreationWealth Creation EmploymentEmployment Balanced Balanced
DevelopmentDevelopment
Social Costs & Social Costs & BenefitsBenefits HealthcareHealthcare Dislocation of Dislocation of
industryindustry Consumer access Consumer access
to innovationto innovation
In light of the multiple perspectives on Data Exclusivity, an objective and In light of the multiple perspectives on Data Exclusivity, an objective and unified view is critical to resolving the outstanding issuesunified view is critical to resolving the outstanding issues
Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 10TPA-XCL-TurkeyData-1-15-04-PG
AffectedAffected Active Active
SubstancesSubstances
ScenarioScenario Specification Specification
Range of Range of AssumptionsAssumptions
Critical Critical VariablesVariables
Logic Logic StructureStructure
Structure of the ApproachStructure of the Approach
1
2
3
4
Classifies the various pharmaceutical products into various categories which might differently impact healthcare cost and pharmaceutical industry structure for different interpretations, policies, and implementation of Data Exclusivity requirements
Identifies specific variables, e.g., period of Data Exclusivity, defining uncertainties surrounding interpretations and implementation of Data Exclusivity requirements
Defines range of possibilities for each of the variables of Data Exclusivity for a 6-year vs. 10-year period
Specifies various likely combinations of assumptions of the critical variables which will reflect likely Data Exclusivity application scenarios
Impact of Data Exclusivity?
– Immediate
– Future
Zeros in on those active pharmaceutical ingredients which will be affected by the different scenarios of DE application
5
We have developed a rigorous approach to analyzing the potential impact We have developed a rigorous approach to analyzing the potential impact of implementing data exclusivity of implementing data exclusivity
Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 11TPA-XCL-TurkeyData-1-15-04-PG
* Potentially affected only if data exclusivity is allowed to run beyond patent** In case of multiple registrations (i.e., additional strength / form, new uses), first registration is considered as data exclusivity does not apply to subsequent registrations in EU with the exception of France. Issue is still being debated in EU (including harmonized 10+1 year) and is likely to be resolved in the near future. New uses currently get 3 years of additional data exclusivity in the U.S.*** As there is a significant overlap between the products in pipeline and sold in EU- and U.S.-only products in EU will be considered
Registered Pre-Year X
Not Sold in Turkey
Sold in EU / U.S.***
In EU / U.S.*** Pipeline
Originals
Patented*
Not Patented
Registered Post-Year X**
Generics
Sold in Turkey
Originals and generics both
currently in the market
Only originals in Only originals in market today — market today —
may face generics may face generics in future in future
Originals not yet in Originals not yet in Turkey — may Turkey — may
enter market and enter market and may face generics may face generics
in future in future
Future Impact
(Qualitative / Quantitative Assessment via Case Studies and Model)
Immediate Impact
(Quantitative Assessment via Model)
LogicStructure1
Our assessment will reflect an assessment of immediate, potential future Our assessment will reflect an assessment of immediate, potential future and indirect impactsand indirect impacts
Modeling Impact of Data Exclusivity Immediate Modeling Impact of Data Exclusivity Immediate vs. Future Impactvs. Future Impact
Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 12TPA-XCL-TurkeyData-1-15-04-PG
Logic Structure: Classification of Logic Structure: Classification of Pharmaceutical Products in TurkeyPharmaceutical Products in TurkeyThe following decision tree describes the logic of the classification process andThe following decision tree describes the logic of the classification process andhighlights the areas affected by Data Exclusivityhighlights the areas affected by Data Exclusivity
* Potentially affected only if data exclusivity is allowed to run beyond patent** In case of multiple registrations (i.e., additional strength / form, repeat use), first registration is considered as data exclusivity does
not apply to subsequent registrations in EU with the exception of France. Issue is still being debated in EU (including harmonized 10+1 year) and is likely to be resolved in the near future. New uses and new forms of the active substance currently gets 3 years of
additional data exclusivity in the U.S. *** As there is a significant overlap between the products in pipeline and sold in EU- and U.S.-only products in EU will be considered
3a
3b
4b
4a
1
2
Sold in Turkey
Not Soldin Turkey
Sold in EU / U.S.***
In EU / U.S.*** Pipeline
Manufactured in Turkey
Importedto Turkey
Registered Pre-Year X**
Originals
Patented*
Not Patented
Registered Post-Year X**
Description
No impact area
Sold in Turkey, registered post-Year X
Marketed by generic manufacturers– e.g., Ator,
Vigrande, Osteomax
Generics
Sold in Turkey, registered post-Year X
Marketed by innovator firms– e.g., Lipitor,
Pantpas, Telfast
Sold in Turkey, registered post-Year X
Marketed by innovator firms– e.g., Relpax
Not sold in Turkeyor EU / US
Developed by innovator firms
Not sold in Turkey, sold in EU / U.S.
Marketed by innovator firms– e.g., Edronax
Universe of Pharma Products
LogicStructure1
Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 13TPA-XCL-TurkeyData-1-15-04-PG
A range of variables and potential assumptionsA range of variables and potential assumptions
Key Driver Critical Variable
Location of first registration considered for Data Exclusivity
Turkey or EU, whichever is earlier
Turkey Interpretation
Data Exclusivity Start Year
2003 or later 1995–1999
– Least likely
1999, 2000, 2001 – Most likely
Data Exclusivity Beyond Patent Protection
No Data Exclusivity beyond patent expiry
Data Exclusivity beyond patent expiry
Policy Choice(s)
Length of Data Exclusivity
6 years 10 years
Price Impact No change in prices Prices go up to original’s level
Market Dynamics
Generic-Original Market Dynamics
Historic Prices
Critical Variables of Immediate Impact ModelCritical Variables of Immediate Impact Model
Range of Assumptions2 3
Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 14TPA-XCL-TurkeyData-1-15-04-PG
Classification of Pharmaceutical Products for Classification of Pharmaceutical Products for Different Registration DatesDifferent Registration Dates
Sold inTurkey
Not Sold in Turkey
Sold in EU / U.S.
In EU / U.S. Pipeline
Manufactured in Turkey
Imported to Turkey
Registered Pre-Year X
Registered Post-Year X
Year X = 1995–1998Year X = 1995–1998– No legal commitment by TurkeyNo legal commitment by Turkey– Applicable only if Turkey applies data exclusivity Applicable only if Turkey applies data exclusivity
retrospectively from start yearretrospectively from start year– Early entry by Turkey into EU might create some Early entry by Turkey into EU might create some
legal issues vs. specific molecules launched in this legal issues vs. specific molecules launched in this date range (e.g., generics in Turkey but not in EU)date range (e.g., generics in Turkey but not in EU)
– General consensus in the industry that data General consensus in the industry that data exclusivity start year will not be before 1999exclusivity start year will not be before 1999
Year X = 1999Year X = 1999– Turkey–EU Association Council Decision No 1 / 95 Turkey–EU Association Council Decision No 1 / 95
(intellectual property rights)(intellectual property rights)– TRIPS will be implemented by 1999TRIPS will be implemented by 1999
Year X = 2000Year X = 2000– TRIPS AgreementTRIPS Agreement
– Developing countries have 5 years to implement Developing countries have 5 years to implement (by 2000)(by 2000)
Year X = 2001Year X = 2001– Turkey–EU Association Council Decision No 2 / 97 Turkey–EU Association Council Decision No 2 / 97
(removal of technical barriers)(removal of technical barriers) Turkey committed to remove technical barriers to trade by Turkey committed to remove technical barriers to trade by
2001 with Turkey-EU Association Decision No 1/952001 with Turkey-EU Association Decision No 1/95 EEC Directive 65 / 65 (data exclusivity) is among the rules EEC Directive 65 / 65 (data exclusivity) is among the rules
and regulations to be implementedand regulations to be implemented – Decision No 2 / 97 is a commitment by Turkey to Decision No 2 / 97 is a commitment by Turkey to
implement data exclusivity by January 2001implement data exclusivity by January 2001
Universeof Pharma Products
Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 15TPA-XCL-TurkeyData-1-15-04-PG
Scenarios for Immediate ImpactScenarios for Immediate Impact
Location of Registration
Length of Data
Exclusivity
Date of Registration Post-YEAR X,
within Each Scenario
Turkey Turkey or EU*
* Whichever is earlierSource: Monitor Analysis
6 Years
10 Years
SCENARIO 1
SCENARIO 2
SCENARIO 3
SCENARIO 4
1995–1998
1999
2000
2001
2003 or later
Most Likely Cases
Scenario Specifications4
Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 16TPA-XCL-TurkeyData-1-15-04-PG
Potentially Affected Products Due to Data Potentially Affected Products Due to Data Exclusivity Exclusivity
* Withdrawn from the market in 2002, excluded from the impact analysis** Bulk of the sales go through the tendering process, which is not reflected in the IMS data, but taken into account in the impact analysis*** Bristol Myers SquibbNote: Excludes SSK expenditureSource: IMS Health, Ministry of Health,Monitor Analysis
At most up to 10, and at least 3 active substances could potentially be affected with implementation of Data Exclusivity
Active Substance Original Product
Marketing Authorization
Holder
Number of
Generics
Registration Date in Turkey
Registration Date in EU
2002 Original
Sales (000 $)
2002 Generic
Sales (000 $)
2002 Total Sales
(000 $)
Atorvastatin Lipitor Pfizer 2 1998 1997 23,465 14,210 37,675
Sildenafil Viagra Pfizer 2 1999 1998 11,500 6,582 18,082
Pantoprazole Pantpas Bayer 2 2001 1998 6,075 8,289 14,364
Glimepiride Amaryl Aventis 1 1997 1996 5,370 535 5,906
Meloxicam Mobic Boehringer 3 1998 1995 4,398 15,074 19,472
Fexofenadine Telfast Aventis 1 1999 1996 4,135 1,354 5,489
Alendronic Acid Fosamax Merck 2 1997 Pre-1995 18,014 101 18,115
Lansoprazole Ogastro Abbott 8 1997 Pre-1995 1,140 33,537 34,677
Nimesulide* Mesulid Pfizer 4 1996 Pre-1995 6,569 4,095 10,664
Paclitaxel** Taxol BMS*** 1 1997 Pre-1995 6,034 1,116 7,150
1B
1A
2B
2A
T E
6
10
10 9 6 3Active Substances Affected
Length of Data Exclusivity
Location of Registration
4
Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 17TPA-XCL-TurkeyData-1-15-04-PG
Immediate Impact — Value Shift in RevenuesImmediate Impact — Value Shift in Revenues
Turkey Turkey with EU
Dat
a E
xclu
sivi
ty P
erio
d
Location of Registration
6 Y
ears
10 Y
ears
11
22 44
33
128 128 12878
32 17 17
-104 -104 -104-59
-21 -11 -11 0
-250
-125
0
125
250
Year-7 Year-6 Year-5 Year-4 Year-3Decision
1/95(1999*)
Year-2TRIPS
(2000*)
Year-1Decision
2/97(2001*)
2002
Data Exclusively Start Year
(+7%) (+7%) (+7%)
(+5%)(+2%) (+1%) (+1%)
(0%)
(+7%) (+7%) (+7%)(+4%)
(+1%) (+1%) (+1%)(0%)
Most Likely Cases
$(MM)
Original Gains Generic Losses* ???
51 51 51
170 0 0 0
-38 -38 -38
-7000 0
-100
-50
0
50
100
Year-7 Year-6 Year-5 Year-4 Year-3Decision
1/95(1999*)
Year-2TRIPS
(2000*)
Year-1Decision
2/97(2001*)
2002
Data Exclusively Start Year
(+3%) (+3%) (+3%)
(+1%)(0%) (0%) (0%) (0%)
(+2%) (+2%) (+2%)
(+1%) (0%) (0%) (0%) (0%)
Most Likely Cases
$(MM)
128 128 12878
32 17 17
-104 -104 -104-59
-21 -11 -11 0
-250
-125
0
125
250
Year-7 Year-6 Year-5 Year-4 Year-3Decision
1/95(1999*)
Year-2TRIPS
(2000*)
Year-1Decision
2/97(2001*)
2002
Data Exclusively Start Year
(+7%) (+7%) (+7%)(+5%)
(+2%) (+1%) (+1%)
(0%)
(+7%) (+7%) (+7%)(+4%)
(+1%) (+1%) (+1%)(0%)
Most Likely Cases
$(MM)
7954 51
170 0 0 0
-60-40 -38
-7 000 0
-150
-75
0
75
150
Year-7 Year-6 Year-5 Year-4 Year-3Decision
1/95(1999*)
Year-2TRIPS
(2000*)
Year-1Decision
2/97(2001*)
2002
Data Exclusively Start Year
(+5%)(+3%) (+3%)
(+1%)(0%) (0%) (0%) (0%)
(+4%)(+3%) (+2%)
(+1%) (0%) (0%) (0%) (0%)
Most Likely Cases
$(MM)
Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 18TPA-XCL-TurkeyData-1-15-04-PG
Immediate Impact — Increase in Healthcare CostsImmediate Impact — Increase in Healthcare Costs
Turkey Turkey with EU*
Len
gth
of
Dat
a E
xclu
sivi
ty
Location of Registration
6 Y
ears
10 Y
ears
11
22 44
33Most Likely Cases
27 27 2721
128 8
10 10 10
8
43 3
37 37 37
29
16
10 10
00
45
Year-7 Year-6 Year-5 Year-4 Year-3Decision
1/95(1999**)
Year-2TRIPS
(2000**)
Year-1Decision
2/97(2001**)
2002
Data Exclusively Start Year
$(MM)
Public Private* Whichever is earlier; ** ???Source Monitor Analysis
Most Likely Cases
15 15 1511
6 6 6
4
21 21 21
15
0 0 0 00
25
Year-7 Year-6 Year-5 Year-4 Year-3Decision
1/95(1999**)
Year-2TRIPS
(2000**)
Year-1Decision
2/97(2001**)
2002
Data Exclusively Start Year
$(MM)
Most Likely Cases
27 27 2721
128 8
10 10 10
8
43 3
37 37 37
29
16
10 10
00
45
Year-7 Year-6 Year-5 Year-4 Year-3Decision
1/95(1999**)
Year-2TRIPS
(2000**)
Year-1Decision
2/97(2001**)
2002
Data Exclusively Start Year
$(MM)
Most Likely Cases
2116 15
11
8
6 5
4
29
2220
15
0 0 0 00
35
Year-7 Year-6 Year-5 Year-4 Year-3Decision
1/95(1999**)
Year-2TRIPS
(2000**)
Year-1Decision
2/97(2001**)
2002
Data Exclusively Start Year
$(MM)
Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 19TPA-XCL-TurkeyData-1-15-04-PG
Future Impact: Multiple Uncertainties Will Drive Future Impact: Multiple Uncertainties Will Drive Competitive Responses(?)Competitive Responses(?)
Data Exclusivity Data Exclusivity Requirements?Requirements?
New Governance New Governance Guidelines on Guidelines on
HealthcareHealthcare
Past / Current Market
Behavior
Future Market
Behavior?
Product / Market Strategy? Pipeline Management? Alliances? Pricing? Registration Speed?
Understanding and Extending the Past
Capturing the Range of Likely Responses in
the New Environmentvs.
Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 20TPA-XCL-TurkeyData-1-15-04-PG
Likely Changes in Competitive Behaviour in the Likely Changes in Competitive Behaviour in the Pharmaceutical IndustryPharmaceutical Industry
Time
Degree of Intensity of Competitor Behaviour
Transition Phase (5–6 Years)
Uncertainties associated with
market and competitive responses
Range of Possibilities
Post Data Exclusivity “Market Order”
Extremely intense competitive behaviour
Rapid introduction of new molecules
Intense price competition from generics in response to recent changes in government’s reimbursement policy
Improved registration speed to EU standards (Recommended time in Turkey-EU Association Decision 2/97 is 210 Days)
Marginal change in competitive behaviour
Marginal increase in introduction of new molecules from historical numbers
Price competition modest
* In view of the discontinuous nature of change Data Exclusivity may spur in the marketplace, the assumptions for the assessment of future impact must take into account extreme outcome, while not ignoring, but not influenced by past market behaviour
Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 21TPA-XCL-TurkeyData-1-15-04-PG
104
70 70 62
8
0
50
100
150
200
OrignialsRegistered* inEU Post-1995
Originals Soldin TurkeyPost-95
Originals Only Originals withGenerics
Potential Future ImpactPotential Future Impact
* Initial application of the molecule only, MRP** Azelaic Acid is registered in EU after 1995, but before 1995Source: IMS Health, MRPFG Product Index, Monitor Analysis
Original Product Registrations in EU and Original Product Registrations in EU and Turkey Post-1995, End of 2002Turkey Post-1995, End of 2002 Likely Dynamics in the FutureLikely Dynamics in the Future
Generics might enter to compete Generics might enter to compete against originalsagainst originals
Originals in EU (not yet in Turkey) Originals in EU (not yet in Turkey) which might enter Turkeywhich might enter Turkey
There are a large number of current molecules that may potentially be There are a large number of current molecules that may potentially be affectedaffected
Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 22TPA-XCL-TurkeyData-1-15-04-PG
Critical Variables of Future Impact ModelCritical Variables of Future Impact Model
Key Driver Critical Variable Based on 1997–2002* Modest Competitive
Intensity High Competitive
Intensity**
Market Forces
Number of affected substances1
2–3 5 7 first two years 6 next two years 4 in the last year
Price differential between originals and generics2
30% 60% 80%
Annual sale of the affected active substance at year 63
$24 M
– Based on 3 molecules
$20 M
– Based on 5 molecules
$16 M
– Based on 7 molecules
Government Registration Capacity
Time lag between the launch of the original and generic product
2 years
– Current average
1–2 years 1 year
– EU Recommendation
* Assumptions based on variables estimated by analyzing what would have happened if 6 year data exclusivity was implemented between these years** Reflects views of some industry insiders regarding future environment in view of more vibrant environment resulting from recent policy shifts1, 2, 3 Check appendix for rationale of assumptionsNote: 10 year case will not be analyzed due to difficulties in forecasting the time-horizon. Furthermore, patent protection in later stages will minimize the impact of
additional 4 year protection provided by 10 year Data Exclusivity
Range of Assumptions
Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 23TPA-XCL-TurkeyData-1-15-04-PG
Sale s(Th $)
Original vs . Ge ne ric Pr ice Diffe re ntial***
2002 Sale s We ighte d
Price Diffe re ntial
2002 Apr-03
ATORVASTATIN 37,675 32% 9.5%
FEXOFENADINE 5,489 44% 1.9%
GLIM EPIRIDE 5,906 16% 0.8%
M ELOXICAM 19,472 17% 2.6%
PANTOPRAZOLE 14,364 55% 6.3%
SILDENAFIL 18,082 32% 4.6%
ALENDRONIC ACID 18,115 27% 3.9%
LANSOPRAZOLE* 30,051
NIM ESULIDE** 30,618 26%
PACLITAXEL 7,150 6% 0.3%
Total Sale s 126,252.1
Ave rage Price Diffe re ntial 29% 30%
M e dian Price Price Diffe re ntial 30%
Range of PossibilitiesRange of Possibilities
4
2
1
2
0
1
2
3
4
5
1997 1998 1999 2000 2001 2002
2.3
Historical Analysis of Number of Active Substances That Would Have Been Affected, Depending
on Registration Location*
Assumption 1 Velocity of
Introduction similar to historical average
3
X 2
Assumption 2 Velocity of Introduction
higher than historical average reflecting some industry insiders’ views about future environment
2.3 5
Average Price DifferentialAverage Price Differential 29%29%
Median Price DifferentialMedian Price Differential 30%30%
Average Price DifferentialAverage Price Differential 68%68%
Median Price DifferentialMedian Price Differential 54%54%
Price DifferentialPrice DifferentialNumber of Affected Molecules
Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 24TPA-XCL-TurkeyData-1-15-04-PG
$0
$5
$10
$15
$20
$25
2004 2005 2006 2007 2008 2009$0
$5
$10
$15
$20
$25
2004 2005 2006 2007 2008 2009
Range of Possibilities — Active Substance Sales Range of Possibilities — Active Substance Sales EvolutionEvolution
Sales Evolution of Active Substance Sales Evolution of Active Substance
$MM $MM
Y3–Y6CAGR
Y3–Y6CAGR
18%
12%
30%
28%
16%
59%
Critical Assumptions 3 molecule 1 year time gap Start 2004
Critical Assumptions 5 molecule 2 year time gap Start 2004
Generic
Original
Active Substance
Active Substance
Original
Generic
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Future Impact of Data Exclusivity — IndustryFuture Impact of Data Exclusivity — Industry
Case 2
Case 3
Case 1
Conservative
Moderate
Aggressive
2004 2005 2006 2007 2008 2009 Cumulative
Effect 2004–2009
As a Percentage of Sales
2004–2009
Total Generic Loss at Ex-Factory Prices 0 7 25 52 85 126 295 2–3%
Total Original Gain at Ex-Factory Prices 5 26 68 122 188 268 677 4–5%
2004 2005 2006 2007 2008 2009 Cumulative
Effect 2004–2009
As a Percentage of Sales
2004–2009
Total Generic Loss at Ex-Factory Prices 0 8 32 66 112 170 388 3–4%
Total Original Gain at Ex-Factory Prices 5 31 86 161 256 376 915 5–7%
2004 2005 2006 2007 2008 2009 Cumulative
Effect 2004–2009
As a Percentage of Sales
2004–2009
Total Generic Loss at Ex-Factory Prices 0 16 59 118 195 273 660 5–7%
Total Original Gain at Ex-Factory Prices 5 46 141 267 419 595 1,473 9–11%
* Number of affected molecules are 7 for the first 2 years, 6 next 2 years, 4 in the last year. Average molecule sale comparable to 3 molecule caseNote: Market size is forecasted based on 4-year CAGR. Two alternative cases are considered for ranges given under percentage of sales. First case assumes
market share of generics vis a vis originals will remain the same. Second case assumes all the growth during the 6 year period will come from originalsSource: IMS, Monitor Analysis
Critical Assumptions
Data Exclusivity Start Year 2004
Number of Affected Molecules 3
Price Differential 30%
Registration Lag Between Originals and Generic
1 Year
Critical Assumptions
Data Exclusivity Start Year 2004
Number of Affected Molecules 3
Price Differential 60%
Registration Lag Between Originals and Generic
1 Year
Critical Assumptions
Data Exclusivity Start Year 2004
Number of Affected Molecules Dynamic*
Price Differential 80%
Registration Lag Between Originals and Generic
1 Year
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Future Impact of Data Exclusivity — Health CareFuture Impact of Data Exclusivity — Health Care
Case 2
Case 3
Case 1
Conservative
* Number of affected molecules are 7 for the first 2 years, 6 next 2 years, 4 in the last year. Average molecule sale comparable to 3 molecule caseNote: Market size is forecasted based on 4-year CAGR. Forecast used to calculate percentage of sales is the total market size for pharmaceutical products in
the case of increase in health care cost and total state spending on pharmaceutical products for cost to the stateSource: IMS, Monitor Analysis
Moderate
Aggressive
2004 2005 2006 2007 2008 2009 Cumulative
Effect 2004–2009
As a Percentage of Sales
2004–2009
Increase in health care costs at retail prices 7 30 64 106 154 214 576 2%
Cost to the state at retail prices 5 22 47 78 113 157 423 2%
2004 2005 2006 2007 2008 2009 Cumulative
Effect 2004–2009
As a Percentage of Sales
2004–2009
Increase in health care costs at retail prices 7 34 82 143 218 311 795 3% Cost to the state at retail prices 5 25 60 105 160 228 583 3%
2004 2005 2006 2007 2008 2009 Cumulative
Effect 2004–2009
As a Percentage of Sales
2004–2009
Increase in health care costs at retail prices 7 46 124 225 346 486 1,234 5%
Cost to the state at retail prices 5 34 91 165 254 357 906 5%
Critical Assumptions
Data Exclusivity Start Year 2004
Number of Affected Molecules 5
Price Differential 60%
Registration Lag Between Originals and Generic
1 Year
Critical Assumptions
Data Exclusivity Start Year 2004
Number of Affected Molecules 3
Price Differential 30%
Registration Lag Between Originals and Generic
1 Year
Critical Assumptions
Data Exclusivity Start Year 2004
Number of Affected Molecules Dynamic*
Price Differential 80%
Registration Lag Between Originals and Generic
1 Year
Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 27TPA-XCL-TurkeyData-1-15-04-PG
Indirect Effects Need Equal Amount of AttentionIndirect Effects Need Equal Amount of Attention
Positive Concerns
Pharmaceutical Industry
General Economy
More forward looking manufacturers might be able to participate in a more dynamic marketplace
Foreign direct investment might increase
Generic manufacturers might lose export opportunities of active ingredients
Short-term disruption in employment (may not be significant because of migration to generic manufacturers)
Sound DE / IP policy will contribute to its international stature
Trading relationships in sectors which are export intensive (auto, textiles, glass)
Development of local entrepreneurship which is in tune with global partnerships
None, except how disruption of pharma industry might impact the overall economy
Impact of Application of Data Exclusivity
Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 28TPA-XCL-TurkeyData-1-15-04-PG
Next StepsNext Steps
Specific Steps
Specific Guidelines Specific Guidelines for Industry on for Industry on
Intellectual Property Intellectual Property Management in Management in
Turkish IndustryTurkish Industry
Outcome
Policy and Industry Policy and Industry Action Programs for Action Programs for DE ImplementationDE Implementation
Essential Next Essential Next StepsSteps
Tailored Tailored Presentations in D.C., Presentations in D.C.,
Brussels, and Brussels, and International International
AgenciesAgencies
Define Data Define Data Exclusivity Policy Exclusivity Policy vis-à-vis Overall IP vis-à-vis Overall IP
PolicyPolicy
Evolve a Evolve a Communication Communication Strategy to All Strategy to All
Concerned for a Concerned for a Clear Path ForwardClear Path Forward
Develop a working Develop a working group for “DE” group for “DE” implementationimplementation
Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 29TPA-XCL-TurkeyData-1-15-04-PG
ConcessionConcession
Industry Industry Reconstruction Reconstruction RequirementsRequirementsFact Based Fact Based
Guidelines on PPGuidelines on PP
Three Proposed Exercises Must Integrate Different Points of Three Proposed Exercises Must Integrate Different Points of View and Interest Toward a Comprehensive Policy EngineView and Interest Toward a Comprehensive Policy Engine
“A Comprehensive Policy Engine on
Intellectual Property
Management”
World Trade OrganizationWorld Trade Organization
Intellectual property is expensive and a critical differentiator in knowledge based competition, WTO members must respect the basic requirements
Nations must respect its obligation of the TRIPS agreement
Protect interests of all companies located in member countries
TurkeyTurkey
Become respected for WTO membership as soon as possible
Adopt international intellectual property rules as soon as possible, while ensuring:– Disruption of local industry is minimal– Social and government costs do not
increase– Consumers / patients have access to
medical innovation– FDI continues to increase
InnovatorsInnovators
Enhance global reach of their intellectual capital and spread costs of innovation across markets
Participate in markets that respect international IP rights
Turkey must adopt data exclusivity as per TRIPS agreement of 1995
Enable build up of robust health care sector that adheres to high quality / technology standards
Generic ManufacturersGeneric Manufacturers
“Phase In” into the new environment so as to co-exist as a low cost / generics provider
Adoption of data exclusivity and IP rules must be linked to the some benefits / conditions(?)
Ensure they continue to play crucial roles in the local health care industry
Industry StrategyIndustry Strategy
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