Global Generic Pharmaceutical Market - Qualitative and Quantitative Analysis

Global Generic Pharmaceutical Market – Qualitative

and Quantitative Analysis

Aiswariya Chidambaram

Senior Research Analyst - Life Sciences

Pharma Tech, Ahmedabad

12-11-2013

2

Focus Points

Focus Points

Generics Lead the Way Ahead

Global Generic Pharmaceutical Market – Patent Cliff

Key Therapeutic Areas Overview

Key Therapeutic Areas Growth Analysis

Key Market Drivers and Challenges

Mergers & Acquisitions Outlook

Competitive Landscape Analysis

U.S. Generic Pharmaceutical Market Overview & Regulatory Analysis

European Generic Pharmaceutical Market Overview & Regulatory Analysis

Strategic Recommendations

Indian Generic Pharmaceutical Market Overview & Regulatory Analysis

Future Trends and Directions – Vision 2025

Generics Lead the Way Ahead

Source: Frost and Sullivan

Blockbuster drugs ($150 billion) to lose

patents between 2010

and 2017.

The top eight

global markets

comprise 80% of

the total generic

sales.

The global generic pharmaceutical market worth over $150 billion in 2013, growing at CAGR (2013 – 2018) of 8.4%

India and China - huge generic markets in production volume.

The top ten global generic companies account for 47% market share.

U.S world’s largest generics market (45%).

Over the next five

years

Emerging markets -

15 % to 20% growth.

Matured markets – 6%

to 10% growth.

Global Generic Pharmaceutical Market – Patent Cliff

0

5

10

15

20

25

30

35

40

45

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

24.33

16.95

27.79

33.43

42.11

33.18

7.08

15.21

8.13 7.96

2.96

Sa

les

($

Bil

lio

n)

Year

Total Pharmaceutical Market: Sales Value of Drugs Losing Patent

Protection (Global), 2007 - 2017

Generic companies have been proactive in

filing for marketing rights and exclusivity

well ahead of patent expiry.

Ranbaxy was the first filer of ANDA for

generic Lipitor in November 2011 while

Watson Pharma was to sell authorised

generic version in the U.S.

Teva was awarded with 180 days

exclusivity to sell generic Losartan while Hi

Tech Pharmacal successfully challenged

J&J’s Levaquin (oral solution).

The U.S. patent for AstraZeneca’s Crestor

was challenged by Apotex, Mylan and

Sandoz.

Key Therapeutic Areas Overview

Cardiovascular and CNS are the two largest market segments, constituting nearly 38% of the global generic

pharmaceutical market together.

However, therapeutic segments such as Respiratory, CNS and Oncology are likely to witness significantly high

growth rates, attracting the attention of market participants.

On the contrary, segments such as Diabetes and Genitourinary/ hormonal drugs are expected to decline by the

2017.

Generic Pharmaceutical Market: Percent Revenue Contribution by Therapeutic Segments (Global)

Others include Gastro-intestinal, HIV, Immunology and so on.

Note: All figures are rounded;. Source: Frost & Sullivan

16.1%

21.7%

0.2%

4.3% 4.5% 8.3% 3.4%

6.4%

35.1%

CNS Cardiovascular Dermatology Genitourinary/Hormonal Drugs Respiratory Rheumatology Diabetes Oncology Others

Key Therapeutic Areas – Growth Analysis

Cardiovascular

2%

4%

6%

8%

10%

12%

14%

CNS Oncology Rheumatology Respiratory Diabetes

Declining

Fast Growing Growing

Development/ Fast Growing

Declining Stable

Source: Frost & Sullivan analysis.

Dermatology

Growing

Bubble size represents market value

Genitourinary

Development/ Fast Growing

One of the promising segments for generic participants to venture between 2010 and 2015 is oncology as drugs worth $10 b are set to lose patent protection by 2015

Intense competition, promotion of branded drugs and new innovative formulations such as inhalable insulin are all likely to deter the growth of generics.

The reason behind such enormous growth is the massive number of patent expiries. Almost half of the global asthma and COPD market drugs are set to lose patent protection by 2016. Relatively lesser

number of drugs are subjected to generic exposure during the forecast period and hence the decline in growth.

20%

Others

Fast Growing C

A

G

R

The patent expiry of several key antipsychotics and anti-depressants contribute to the rapid growth of CNS drugs market between 2010 and 2017.

Key Market Drivers and Challenges

Key Drivers

Key Challenges Source: Frost & Sullivan analysis

Price control measures

introduced by

governments

Changing population

demographics and

lifestyle patterns

Intense price

competition due to

imports from low-cost

markets

Increasingly

stringent

regulations to

safeguard quality

Patent expiry of key

blockbuster drugs

worth $150 billion. New provisions

introduced by

governments

Access to emerging

markets and niche

therapeutic segments

0

10

20

30

40

50

60

70

80

90

0.00

5.00

10.00

15.00

20.00

25.00

30.00

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Nu

mb

er o

f D

eal

s

To

tal V

alu

e o

f D

eals

($ B

illi

on

)

Year

Total Value of Deals Number of Deals

Note: All figures are rounded; Source: Frost & Sullivan analysis.

Mergers & Acquisitions Outlook

Generic Pharmaceutical Market: Number of Deals and Amount Spent on Mergers & Acquisitions (Global), 2000 - 2009

The number of deals and the total expenditure on mergers and acquisitions have been increasing steadily over the years

since 2000. There was a peak in M&A activity in 2005 and 2008. The trend is likely to continue with all the key generic

participants increasing their dependence on strategic alliances to conquer market shares.

Source: Thomson Reuters and Frost & Sullivan analysis.

Competitive Landscape Analysis

Generic Pharmaceutical Market: Ranking of Top Five Companies by Market Share (Global)

Source: Frost and Sullivan analysis

Rank

Company

1

2

3

4

5

Mylan

The top five generic pharmaceutical companies

accounted for 40% of the share in the global generic

pharmaceutical market.

The top three companies namely Teva, Sandoz and

Mylan registered significant growth rates of 16, 14

and 11% respectively in 2010 - 2011.

Most of the big companies prefer mergers and

acquisitions to organic growth as a faster means to

consolidate and expand their market shares.

World’s largest generic

pharmaceutical market

represents 45% of global share.

Highly saturated – highest

levels of generic penetration

Predominantly unbranded

generics (INN prescribing)

Characterized by high levels of

generic prescribing, strong IP

legislations, retailers purchasing

on price

Blockbuster drugs worth over

$67 billion to lose patent

protection

More than 500 industry

participants – top five

companies constitute 50% sales

Most attractive hub for low-

cost destinations like India,

China – increased pricing

pressure

Aggressive patent challenges

and Paragraph IV filings

Mergers and acquisitions -

most sought-after trend in the

U.S.

Market Overview

U.S. Generic Pharmaceutical Market

11

Key Blockbuster Drugs Losing Patent Protection – U.S.

2010 2011 2012 2013 2014 2015 2016 2017

Atorvastatin Clopidogrel Candesartan

Cilexetil Duloxetine Aripiprazole

Epoetin alfa

(Procrit/ Eprex) Adalimumab

Oseltamivir

Docetaxel Goserelin Enoxaparin Filgrastim Celecoxib Imatinib

mesylate Ezetimibe -

Donepezil Latanoprost Epoetin beta Insulin

lispro

Darbepoetin

alfa Pregfilgrastim

Lopinavir

with

Ritonavir

-

Fluticasone

propionate with

Salmeterol

Xinofoate

Levofloxacin Escitalopram

Oxalate

Interferon

beta – 1a

(Avonex

Esomeprazole

Magnesium Rituximab

Olmesartan

Medoxomil -

Gemcitabine Olanzapine Etanercept

Interferon

beta – 1a

(Rebif)

Glatiramer

acetate Trastuzumab - -

Pharmaceutical Market: Key Blockbuster Drugs Losing Patent Protection (United States), 2010-2017


12

2010 2011 2012 2013 2014 2015 2016 2017

Losartan Pioglitazone Irbesartan Rabeprazol

e Infliximab - - -

Pantoprazole Quetiapine Montelukast Risedronate Raloxifene - - -

- - Peginterferon

alfa 2a

Simvastatin

with

Ezetimibe

Telmisartan - - -

- - Rosiglitazone TacrolimU.S

. Tiotropium - - -

- - Rosuvastatin Oxaliplatin - - - -

- - Sildenafil - - - - -

- - Tolterodine - - - - -

- - Valsartan - - - - -

Key Blockbuster Drugs Losing Patent Protection – U.S.

(continued)

Pharmaceutical Market: Key Blockbuster Drugs Losing Patent Protection (United States), 2010-2017


13

Regulatory Impact Analysis – U.S.

Pricing & Reimbursement

Regulatory Environment in the U.S Generic Pharmaceutical Market

Gregg-Schumer Act Hatch-Waxman Act

• “Generic companies could

obtain market authorisation

by proving bioequivalence

of generics to brands

• Safe Harbour Provision:

experimental use of

patented drugs permitted by

generic companies

• 180-day market exclusivity

for first-to-file generic

applicant

• 30-month stay for patents

listed in Orange Book

• “Single 30-month stay”

granted to branded

company for patent

infringement suit

• Stay to run concurrently

with FDA’s consideration

of application

• No significant delay in

generic entry

• Allows generic companies

to file counterclaims

against innovators

• Generic drug price ranges

from 90% of brand

equivalent with just 1

competitor 5% with 16-20

competitors

• Medicare Prescription Drug,

Improvement and

Modernization Act (MMA)

2003

• Medicare reimburses drugs

based on weighted average

prices

• Competitive bidding is

practiced


14 M74E-52

Europe Generic Pharmaceutical Market

Market Overview

Top five countries – Germany,

the United Kingdom, France, Italy

and Spain represent 50% volume

share and 18% value share

globally.

As per EGA, generic drugs

generate savings of €30 billion.

Germany and the UK are highly

penetrated generic markets

Represent 64% and 60% of

volume share respectively in

Europe.

Germany is the largest generic

market in Europe accounting for

27% sales

Source : Frost & Sullivan analysis.

Mature markets (Germany, the

UK) to present sluggish growth

between 5 – 6%

Italy and Spain are expected to

register higher growth rates

between 18 – 20%

Eastern Europe to contribute

maximum growth

Europe primarily dominated by

branded generics except the UK

Calcium antagonists, anti-

ulcerants and platelet inhibitors

to face high generic competition

Highly fragmented market with

county-specific regulations

15

Drug France Germany Italy Spain U.K.

Anastrozole 2010 2010 2010 2010 2010

Aripiprazole 2011 2011 2011 2011 2011

Atorvastatin 2011 2011 2011 2011 2011

Candesartan Cilexetil 2012 2012 2012 2012 2012

Celecoxib 2014 2014 2014 2014 2014

Clopidogrel 2013 2013 2013 2013 2013

Darbepoetin alfa 2014 2014 2014 2014 2014

Docetaxil 2010 2010 2010 2010 2010

Donepezil 2012 2012 2012 2012 2012

Pharmaceutical Market: Key Blockbuster Drugs Losing Patent Protection (Europe), 2010-2017

Key Blockbuster Drugs Losing Patent Protection – Europe

16


Duloxetine 2012 2012 2012 2012 2012

Escitalopram Oxalate 2014 2014 2014 2014 2014

Esomeprazole Magnesium

2010 2010 2010 2010 2010

Etanercept 2014 2014 2014 2014 2014

Ezetimibe 2017 2017 2014 2017 2017

Fluticasone propionate with Salmeterol xinofoate

2013 2013 2013 2013 Invalidated

Glatiramer acetate 2015 2015 2015 2015 2015

Imatinib mesylate 2016 2016 2016 2016 2016

Infliximab 2014 2014 2014 2014 2014


(continued)

17


Insulin glargine 2014 2014 2014 2014 2014

Insulin lispro 2010 2010 2010 2010 2010

Interferon beta 1a (Rebif) 2013 2013 2013 2013 2013

Irbesartan 2013 2013 2013 2012 2013

Levofloxacin 2011 2011 2011 2012 2011

Lopinavir with Ritonavir 2016 2016 2016 2016 2016

Montelukast 2012 2012 2012 2012 2012

Mycophenolate mofetil 2010 2010 2010 Expired (2007) 2010

Olanzapine 2011 2011 2016 2011 2011


(continued)

18


Olmesartan medoxomil 2017 2017 2017 2017 2017

Oseltamivir 2017 2016 2017 2017 2016

Oxaliplatin 2013 2013 2013 2013 2013

Pegfilgrastim 2017 2017 2017 2017 2017

Peginterferon alfa-2a 2013 2013 2013 2013 2013

Pioglitazone 2011 2011 2011 2011 2011

Quetiapine N.M 2012 2012 2012 2012

Rabeprazole Expired (2007)

2012 2012 2012 2012

Risedronate 2010 2010 2010 2013 2010


(continued)

19


Rituximab 2013 2013 2013 2013 2013

Rosiglitazone 2013 2013 2013 2013 2013

Rosuvastatin 2017 Not mentioned 2012 Not mentioned 2017

Sildenafil 2013 2013 2013 2013 2013

Telmisartan 2013 2017 2017 2013 2017

Tiotropium 2016 2015 2014 2015 2012

Tolterodine 2012 2012 2012 2012 2012

Trastuzumab 2012 2012 2012 2012 2012

Valsartan 2011 2011 2011 2011 2011

Zoledronic acid 2012 2012 2012 2012 2012


(continued)

20

Regulatory Impact Analysis - Europe

Data Exclusivity

8+2+1 Formula European Bolar Clause Sunset Clause

Regulatory Environment in the European Generic Pharmaceutical Market

• Uniform level of data

protection of

originator products for

10 years

• Permits to access data

of a generic

application but the

generic version

cannot be launched

until the completion of

the ten-year period

• Originator companies

are granted 8-year

data exclusivity and 2

years market

exclusivity

• Additional one year

exclusivity awarded

for new product

indications and those

shifting from

“prescription only” to

OTC

• Generics can enter the

market only after the

10th or 11th year

• Permits initiation of

generic R&D activity

prior to patent

expiry of brands

• Withdrawal of

brands before

generic entry cannot

stop generic

companies from

using them as

reference products

• Allows cancellation

of marketing

authorization for

products not in

market for 3 years

• Legal challenges by

patent owners can

prevent generic

companies from

applying

registrations more

than 3 – 4 years in

advance of patent

expiry

European Bolar Clause

Source: Frost & Sullivan analysis.

21

Regulatory Policies of Key Generic Markets in Europe -

Comparative Analysis

Policies Germany United

Kingdom France Spain Italy

Reference pricing

Patient co-payment

Generic prescribing

Generic substitution

Time delay in market

access

Generic Pharmaceutical Market: Impact of Regulatory Policies (Europe)

Source: Frost & Sullivan analysis. Low High

Branded generics dominate the

Indian pharma market (98%)

valued at over $12.00 billion

World leader in exporting

generics to foreign countries;

exports growing at 22%

Anti-infectives and GI constitute

30% revenue share

India produces 20 – 22% of

world’s generic drugs including

nearly 60,000 generic brands

covering 60 key therapeutic

areas

Ranks third in API

manufacturing accounting for

6.5% of world API production

Highly fragmented market with

more than 22,000 registered

units

Companies such as Sun,

Lupin, Aurobindo, Dr.Reddy’s

Laboratories, Cipla and Ranbaxy

have been aggressive in DMF

and ANDA filings with an

granted approval rates of 35%

Top ten players account for

37% market share in India

Consolidation in the form of

strategic alliances between

Indian and foreign companies is

on the rise

Extremely promising future for

generics in India

Market Overview

Indian Generic Pharmaceutical Market


Export of Indian Generics to the U.S.

Domestic

48 % Export

52 %

Total Pharmaceutical Market: Breakdown by

Domestic Sales and Export Sales (India)

Steep rise in export of Indian generics to

the U.S. over the last five years

Currently generic drugs from India

represent 18% of generic drugs in the U.S.

India has more than 75 U.S. FDA approved

plants and tops the world in DMF and ANDA

filings in the U.S.

Indian generic firms directly compete with

multinational generic companies leading to

Intensified price competition in the U.S.

It is estimated that India is likely to capture

at least 30% of replacement generic

equivalents in the U.S. by 2018


Regulatory Impact Analysis - India

Pharmaceutical Policy Drug Policy 1996

Pharmaceutical Policy 2002 National Pharmaceuticas Policy 2006

Quality Control Price Control IPR Protection

On Prices On Margin

Bulk Drugs Formulations

Essential Commodities Act 1955 Drug (Price Control) Order 1995

GMP/cGMP Amended Patents

Patents Amendment Act 2005 Drug and Cosmetic Act 1940

Schedule M Schedule Y


25

Regulatory Impact Analysis – India (continued)

Quality Control

Regulatory Environment in the Indian Generic Pharmaceutical Market

Patent Protection/ IP Rights Pricing & Reimbursement

• The revised policy of the

National Pharmaceutical

Policy Authority, has

capped margins on generic

drugs at 15% for

wholesalers and 35% for

retailers

• Price controlled drugs

Category I: Essential drugs

Category II: All drugs not in

Category I

• Drugs exempted from price

control required to meet

specific criteria

• Patents Amendment Act

2005 (TRIPS Agreement)

strictly prohibited reverse

engineering of drugs

• Covers two types of

generic drugs – off patent

generics and generics of

drugs patented before

1995

• Introduced compulsory

licensing for exports

• Mainly encourages foreign

companies to trade in

India

• The Drug and Cosmetics Act

(D&C) 1940 regulates

import, manufacture,

distribution and sales

• Schedule M – requirements

for factory premises, plant,

materials, plant and

equipment

• Schedule Y – legislative

requirements for clinical

trials

• Increasing regulatory

compliance in India boosts

confidence of MNCs


Future Trends and Directions – Vision 2025

Technology

Development of Transgenic technologies

Stem cell technologies

Cloning technologies


Key Trends

Balance in terms of healthcare expenditure and sales revenue is likely to shift from developed

markets to emerging markets.

Consolidation is expected to remain the key factor for growth and sustenance of generic

companies.

Large generic companies are likely to increase their investments in R&D activities

Increasing focus on higher value biological therapies, biosimilars,

controlled release products, sterile formulations and niche therapeutic segments.

Generic consumption is likely to be favoured in a big way by the government, payers,

policy-makers and physicians.

Strategic Recommendations for Success


Differentiated Approach Explore New Avenues Instill Competitive Capabilities Plan Ahead for the Future

Big multinational generic

firms require to focus on

Products with

technologically

challenging formulations.

Products which require

significant regulatory

support.

Products with limited

availability of APIs.

Medium-sized generic firms

require to focus on

Products with relatively

higher profit margins.

Appropriate time of entry

into the right market.

Analyze prospects for

market globalization

- Strategic alliances

between multinational

generic firms and

domestic participants with

locally restricted

operations.

Strengthen distribution.

Invest in R&D.

Improve product line.

Defend company’s

position in the market.

Strike a balance

between supply and

demand side.

Pioneer new and better

technologies.

Research customer

needs, preferences,

expectations.

Monitor new

technological

developments to face

the change.

Target therapeutic

areas with high levels

of unmet clinical

needs.

Strategy is a style of thinking, a conscious and deliberate process, an intensive implementation system, the science

of insuring future success – Pete Johnson

28

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Questions

30

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AISWARIYA CHIDAMBARAM

Senior Research Analyst – Life Sciences

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Global Generic Pharmaceutical Market - Qualitative and Quantitative Analysis