The Healthy Picture Life Science Quo Vadis (Thomas Cueni)

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10-06-09

The Healthy Picture:"Life Science Quo Vadis?"

Thomas Cueni

Secretary-General, Interpharma

Life Science Forum Basel, June 23rd 2010

June, 2010

2The economic crisis…

Strongest economic slowdown for decades

Recession in all OECD-countries

Outlook for Switzerland (seco, march 2010)

GDP:2009: - 1.7% 2010: +1.4% due to exports

Unemployment rate:2009: 3.8%2010: 4.3%

Worldwide economic situation recovers faster from its

breakdown than expected – fragile situation due to national

debts (euro crisis)

Swiss export sector hit by crisis

Life Science Forum Basel 2010The Healthy Picture:"Life Science Quo Vadis?"

Thomas Cueni; Interpharma

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June, 2010

3… is not a pharma crisis

Pharma exports still growing

Foreign trade statistics for pharmaceutical products, vitamins and

diagnostica from january to december 2009 against previous year:

+5.1%

Total pharma exports 2009: 58.1 billion CHF

Pharma exports by trade blocks:

Europe -0.5%

Asia +22.0%

North America +22.7%

So far no return to protectionism as previously feared

Everybody is suffering – pharma with a time lag (Eurozone)

June, 2010

4Share of GVA* as percentage of aggregate economy, 2008

* GVA: Gross Value Added

*



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June, 2010

5EU- governments grappling to reduce their large budget deficits (1)

Germany

Seeking quick savings: consensus on drug cost reduction package

Price freeze for all reimbursed drugs until end 2013

Increase of the mandatory rebate from 6 to 16% as of 1/8/2010

Early benefit assessment. If no additional therapeutic value (ATV) reference pricing, if

ATV mandatory negotiation with national association of sickness funds

Greece

Ministerial Decree providing across-the-board price cuts of up to 27% for patent-

protected drugs

Several companies suspend distribution of some of their products on the Greek market

Sweden

Basic agreement for zero growth

Introduction of value-based pricing with a number of potential reforms currently on the

table

June, 2010

6EU- governments grappling to reduce their large budget deficits (2)

Ireland

Changes to the pricing mechanisms of branded products

Increased pressure to cut the prices of generics

Short-term price reductions: 40% on 300 patent expired drugs

Increase of social insurance rebate from 3,53 to 4%

In return extension of basic agreement until March 2010

Denmark

Ad hoc reassessment of reimbursement status of medicines following patent expiry

Likely change of reimbursement status for important drugs (hypertensives): public

savings estimated up to 40 Mio. €

New advisory council on hospital medicine RADS

Italy

A series of cost-containment measures on pharmaceuticals including

Mandatory reduction of 12.5% on the price of off-patent medicines from June until December 31st 2010

Potential tender for off patent medicines



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June, 2010

7

Spain

First cost reduction package for patent expired drugs in March 2010

An average 25% price reduction for all generic medicines (except for medicines

whose retail price is lower than € 3.12) to be implemented by July 2010

Changes to the reference price system

Second package announced in May 2010

Compulsory rebate of 7.5% on sales of medicines (in-patent and off-patent) not

included in the reference price system applied to the whole medicine chain

(industry, wholesalers and pharmacies), each one with its corresponding margin,

dragged through to the end

Portugal

Second set of measures to reduce the public deficit (following a first set of measures

adopted in March 2010):

Reduction of expenditure in hospitals

Reduction of the price for in vitro diagnostics for diabetes;

Reduction of prices of medicines starting with generics;

Implementation of audits to pharmaceutical expenditure with NHS

EU- governments grappling to reduce their large budget deficits (3)

June, 2010

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France

Reduction of National growth target for health insurance expenditure

Early application of price cuts for several therapeutic classes: contractually-agreed price

reductions by mid-2010: expected savings: 100 million €

UK

Health care must find efficiencies of at least £15 – 20 billion in the next three years

New government plan for health includes:

a renewed commitment to introduce a system of „value-based pricing‟ for medicines

reform the National Institute for Clinical Excellence (NICE)

£200m more for cancer medicines

EU- governments grappling to reduce their large budget deficits (4)



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June, 2010

9Economic crisis leads to increasingpayer pressure & cost cuttings

-5%

0%

5%

10%

15%

20%

25%

30%

-10% -5% 0% 5% 10%

PRICE GROWTH %

VO

LU

ME G

RO

WTH

%

2010-2014 Compound annual growth rate (CAGR): price and volume elements

Source: IMS Health, Market Prognosis, Mar 2010

Argentina

12.5% Price

7.5% Vol

Venezuela

30.5% Price

14.1% Vol

Brazil

India

Japan Russia

Turkey

UK

US

China

France

Germany

IndonesiaItaly

Mexico

Poland

South Africa

South Korea

Spain Thailand

Canada

June, 2010

10Further factors challenging the pharmaceutical industry

HTA is an important challenge facing the industry in Europe, there are

several more hurdles with immediate significance

HTA is not a political platform against which other environmental factors

can be addressed

The dollar's climbing value threatens to pressure

sales in coming quarters especially for U.S.

drug makers that are big exporters

to Europe but has the opposite effect

for European companies

National, regional and local pricing and access decisions

Pressures on healthcare spending

HTA

Currency effects



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June, 2010

11Focal point for industry: innovation

Innovation is the engine driving economic growth – but the

economic debate too much focused on prices

Quelle: Medicines in Development for Cancer; PhRMA 2009

June, 2010

12Milestones in cancer treatment since 1997

Today, every second cancer case can be treated successfully

1997 Approval of Rituxan, the first monoclonal antibody, to treat non-

Hodgkins lymphoma

1998 Approval of Tamoxifen based on it's ability to reduce the risk of

breast cancer by half in high risk women

2001 Approval of Gleevec to treat chronic myeloid leukemia

2004 Approval of Avastin for the treatment of metastatic colorectal cancer

2006 Approval of adjuvant (Post Surgery) Herceptin for early stage HER2-

positive breast cancer based on data that show the drug results in a 52

percent improvement in preventing recurrence

2007 Approval of Nexavar for primary liver cancer, making it the only drug

approved for liver cancer



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June, 2010

13Powerful stories beat dry statistics

June, 2010

14Higher survival rates due to drug innovation

The decline in cancer mortality rate is attributable

up to 25% to drug innovation;

up to 40% to imaging innovation (computed tomography

(CT) scans, MRI etc.) and

only 7% to the decline in (lagged) incidence (e.g. earlier

diagnosis, cancer control activities, screening etc.).

F.R. Lichtenberg, „Has medical Innovation reduced Cancer Mortality?“, National Bureau of Economic Research Working Paper No. 15880 (Cambridge, MA: NBER, April 2010)



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June, 2010

15Outlook

28% 26% 27%17%

23% 26%

10% 13% 8%

8%

7%7%

12%3% 11%

6%

9% 5%

2%

2%1%

2%

1% 1%

2%

3%2%

2%

2% 2%

4%

6%5%

6%

5% 4%

35%42% 40%

52%47% 49%

7% 6% 6% 6% 6% 5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2009 2010(f) 2011(f) 2012(f) 2013(f) 2014(f)

US EU5 Japan Canada

South Korea Rest of Europe* "Pharmerging" Rest of World

US

33%

EU5

16%Japan

10%Canada

2%

S. Korea

2%

Rest of

Europe*

7%

Pharmerging

24%

Rest of World

6%

2014 Market Share, US$

Source: IMS Health, Market Prognosis, Mar 2010. New Pharmerging definition

Contribution to Global Growth, Const US$

*Russia, Turkey, Poland, Romania, Ukraine are excluded from Europe, included in “Pharmerging”

June, 2010

16Global corporate performance

RAN

K

1989 2009

1 Merck & Co (US) Pfizer (US)

2 Bristol-Myers Squibb (US) Merck & Co (US)

3 Glaxo (UK) Novartis (CH)

4 SmithKline Beecham (UK) Sanofi-Aventis (F)

5 Ciba-Geigy (CH) GlaxoSmithKline (UK)

6 American Home Prod. (US) AstraZeneca (UK)

7 Hoechst (DE) Roche (CH)

8 Johnson & Jonhson (US) Johnson & Jonhson (US)

9 Bayer (D) Lilly (US)

10 Sandoz (CH) Abbott (US)

Source: IMS Health, 20010



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June, 2010

17

Dim

en

sio

n o

f cen

trali

sati

on

Perspective of assessmentRelative Efficacy

Cost-effectiveness

National

European European assessment of relative efficacy

European assessment of cost-effectiveness

National assessment of relative efficacy

National assessment of cost-effectiveness

European Commission

EMA

Small MS

Big MS

Patients

HTA agencies

Sickness funds

Scientific assessment based on RCTs

Broader assessment based societal/health care priorities

Scientific assessment based on real-life evidence

Assessment by national

agency

Coordination/collaboration

Assessment by EU body

Industry?

Stakeholder

June, 2010

182015: the market we would like to be is a place where…

The marketing authorization is protected from economic or non-

scientific consideration;

At launch, all eligible patients have access at a price that reflects

the value;

Early dialogue with regulators and payers is established to align

expectations and reduce uncertainty and increase predictability at

national/local level;

The burden of clinical development costs is reduced by one clinical

development plan that meets the needs of both regulators and

payers;

The acceptance of a new generation of clinical trials design

(adaptive trials, surrogate endpoints, predictive biomarkers) is

increased.



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June, 2010

19Pharmacological vision for 2020

Major value added for patients

Biomarkers enable development of more targeted therapies

and help speed up clinical development

Stem cell research, systems biology and nanotechnology will

be exploited to using biotech in researching and

manufacturing drugs and vaccines

New forms of delivery – safer and more effective

Substantial advances in therapies for cancer, dementia,

metabolic, inflammatory and infectious disease

More customized programmes for early detection, prevention

and treatment of common diseases

June, 2010

20Quo Vadis?

Arcadia, the fountain of youth by Lucas Cranach

Entrance to Hades, by Rodin



Health & Medicine

The Healthy Picture Life Science Quo Vadis (Thomas Cueni)