More Ways to Win by 2020

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Murray Aitken, IMS Health’s Senior Vice President for Healthcare Insights and Sameer Savkur, Country Manager for IMS Health India are interviewed about the projected trends, opportunities, and challenges in the pharmaceutical market in India and around the world over the next 10 years. Murray emphasizes the importance to consider both the short and long term when considering strategy, while Sameer notes that CEOs should emphasize profitability over growth.

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More Ways to Win by 2020

  1. 1. 1 More Ways to Win by 2020 An audio interview with IMS Health’s Murray Aitken and Sameer Savkur AUDIO INTERVIEW! Turn on your speakers.
  2. 2. More Ways to Win by 2020 IMS Experts: Murray Aitken & Sameer Savkur Length: ~14 minutes To download an MP3 of this interview, click here. To download the PDF transcript, click here. Questions? Comments? Fill out the form at the end of this presentation. Murray Aitken Sameer Savkur
  3. 3. 3 So Murray, perhaps we can start with you to get a global perspective of the pharmaceutical industry over the next ten years. It’s quite a positive outlook I believe. Murray Aitken (MA): It is Andrew. There are many ways for CEOs of pharmaceutical companies to win in the next ten years, particularly for companies that maintain a focus on innovation and cater to present unmet needs. To download an MP3 of this interview, click here. To download the PDF transcript, click here. Questions? Comments? Fill out the form at the end of this presentation.
  4. 4. 4 And this is in spite of predicted slower growth in the industry overall? Some analysts are predicting a decline over the next ten years due to two significant periods of patent expiry. Add in the cost containment practices some pharmas are adopting, and the industry is predicted to drop to a value of $500 billion from its more than $800 billion value today. MA: That’s one way to look at things, but it’s only half the picture. To download an MP3 of this interview, click here. To download the PDF transcript, click here. Questions? Comments? Fill out the form at the end of this presentation. Know more on IMS Health, click here
  5. 5. 5 Ah, I see. So what is the other half? MA: It’s true that we expect to see lower growth in the next five years than there has been in past decades, but that will pick up in the latter half of this decade. And we should be factoring in pharmerging market growth in countries including China, Brazil, Russia and India. These markets will account for about 50% of the global market growth over the next five years and their potential for growth is substantial. This provides yet another axis on which to play to win. To download an MP3 of this interview, click here. To download the PDF transcript, click here. Questions? Comments? Fill out the form at the end of this presentation. Know more on IMS Health, click here
  6. 6. 6 Yes, it is an exciting time for emerging markets. Past investment in research should also yield returns in the next decade I presume. Research is, after all, ongoing. MA: Yes. It is easy to get distracted with the losses to come from patent expiries in the coming decade, but there are plenty of new drugs and innovations in the pipeline that will drive growth in the second half of the decade. Our forecast is high single-digit market growth reaching $1 trillion by 2020. To download an MP3 of this interview, click here. To download the PDF transcript, click here. Questions? Comments? Fill out the form at the end of this presentation. Know more on IMS Health, click here
  7. 7. 7 I see. So there are plenty of reasons to be optimistic then, given the full picture. MA: Absolutely. There will be many ways to win over the next decade – perhaps more than there has been previously, so you are right, it really is an exciting time to be in the pharma industry. To download an MP3 of this interview, click here. To download the PDF transcript, click here. Questions? Comments? Fill out the form at the end of this presentation. Know more on IMS Health, click here
  8. 8. 8 So what should CEOs be considering now as they plan for the next decade? MA: Well the fundamentals that are in our favour include a growing population, a large ageing segment, and more chronic disease. As a result there will certainly be opportunities in certain disease areas. Oncology, diabetes, asthma, vascular disease, hypertension, antibacterials and psychosis will still top the list in 2020, with hyperlipidemia and GERD, or acid reflux disease, moving out of the top ten to be replaced by Pain and HIV. Technology will provide additional solutions, there will be a more educated specialist market segment, and emerging markets, as we’ve mentioned, will be a key player as they will require existing and new drugs. To download an MP3 of this interview, click here. To download the PDF transcript, click here. Questions? Comments? Fill out the form at the end of this presentation. Know more on IMS Health, click here
  9. 9. 9 I suppose the challenge is for CEOs to make the right decision about what to focus on based on their business model? MA: That’s right. There is no ‘one size fits all’ answer here. CEOs have to pick a strategy that is clear in its aspirations and mission and ensure they have a business model that supports proper execution. To download an MP3 of this interview, click here. To download the PDF transcript, click here. Questions? Comments? Fill out the form at the end of this presentation. Know more on IMS Health, click here
  10. 10. 10 So to the analysts who claim there is no shareholder value over the next ten years and predict a negative ROI, you are saying the opportunities are out there for companies that make the right decisions. MA: Absolutely. Look, as with any changing market dynamic, you have to move with the changes and plan where to play and how to play. Are CEOs balancing their plays across today and tomorrow? To download an MP3 of this interview, click here. To download the PDF transcript, click here. Questions? Comments? Fill out the form at the end of this presentation. Know more on IMS Health, click here
  11. 11. 11 What do you mean by that? MA: Well firstly, they need to decide where to play in the market. Are they focusing on today’s growth segments at the expense of emerging opportunities, for example. Are their strategies short-sighted you mean? MA: Exactly. And talking of sight, are they blindly pursuing specialist driven medicines, biologics and generics without a clear path to winning? To download an MP3 of this interview, click here. To download the PDF transcript, click here. Questions? Comments? Fill out the form at the end of this presentation. Know more on IMS Health, click here
  12. 12. 12 With such a diverse market, there are so many choices, and yet that could ultimately be their downfall I suppose. MA: If they make the wrong choice, yes. But the opportunities are there. It’s a question of adjusting your strategy and portfolio to fit the changing demands. For example, rather than diversify as they may be doing today, they may need to rethink their Go-to-Market strategy and focus on growth in one niche area. Sameer Savkur (SS): Also, if I may, the market is telling us is to adjust expectations. CEOs should be lowering their top- line growth aspirations and placing greater emphasis on profitability over growth. To download an MP3 of this interview, click here. To download the PDF transcript, click here. Questions? Comments? Fill out the form at the end of this presentation. Know more on IMS Health, click here
  13. 13. 13 MA: Yes, that’s right Sameer. Gone are the days of the blockbuster model. That’s in the past. Science has become more complex and disease specific. SS: And emerging markets such as India affect the balance of play. MA: Yes, absolutely. While focus in the past has been on the more established markets of the US, Japan and Europe, CEOs should be looking to take advantage of the opportunities derived from playing across more markets. Emerging markets present great opportunities for branded generics, but there are significant opportunities for innovative products in the long term in these markets as well. CEOs have to decide to play in generics or pursue slow but growing innovation opportunities. To download an MP3 of this interview, click here. To download the PDF transcript, click here. Questions? Comments? Fill out the form at the end of this presentation. Know more on IMS Health, click here
  14. 14. 14 India is a rapidly developing economy, obviously. Sameer, what can we expect in terms of growth in the pharma market there over the next ten years? SS: Well, today’s market is worth about $10.5 billion. We’ve seen a 15.4% growth rate over the last five years and that has been driven by strong economic growth. GDP growth of 8% has enabled an increase in the pharma industry and we expect to see value double to $20 billion by 2014. To download an MP3 of this interview, click here. To download the PDF transcript, click here. Questions? Comments? Fill out the form at the end of this presentation. Know more on IMS Health, click here
  15. 15. 15 So what factors will influence this dramatic growth? SS: Well GDP growth of around 7% to 9% will continue to increase private spending. India is largely a self-paid market with government spending only accounting for 25%. That broad trend will continue, but we are also seeing increasing penetration of private insurance, which will fuel growth further. And of course, government spending is set to increase as the government develops the rural market. To download an MP3 of this interview, click here. To download the PDF transcript, click here. Questions? Comments? Fill out the form at the end of this presentation. Know more on IMS Health, click here
  16. 16. 16 Why the focus on the rural market? SS: There is the need to improve access to healthcare in rural areas. At present rural areas account for 70% of the population, yet only 40% of spending. I see. What is being done to address this? SS: Several things. Firstly government initiatives have been rolled out recently to improve health care access in rural areas. Some examples of these are the National Rural Health Mission and the Rashtriya Swasthya Bima Yojana. Secondly, the government has also offered tax exemptions for setting up hospitals in non-urban areas. To download an MP3 of this interview, click here. To download the PDF transcript, click here. Questions? Comments? Fill out the form at the end of this presentation. Know more on IMS Health, click here
  17. 17. 17 What impact has these incentives had? SS: It has attracted a lot of interest and private investment in this sector, and is driving the hospital business. The robust GDP forecast coupled with the increased spending power of the non-urban / rural population is being leveraged by Pharma companies looking to grow their business. To download an MP3 of this interview, click here. To download the PDF transcript, click here. Questions? Comments? Fill out the form at the end of this presentation. Know more on IMS Health, click here
  18. 18. 18 Can you give some examples? SS: Certainly. We are seeing quite a few big Pharma companies expanding their field forces to cover non-urban / rural areas in a bid to exploit this untapped potential. All these initiatives are bound to improve rural healthcare access in the coming years. To download an MP3 of this interview, click here. To download the PDF transcript, click here. Questions? Comments? Fill out the form at the end of this presentation. Know more on IMS Health, click here
  19. 19. 19 So things are definitely moving in the right direction. I want to go back now to something Murray mentioned earlier about chronic disease being a key growth trend in the next ten years. Is that the case in India? SS: Most definitely. We have already seen a huge shift over the last ten years from acute disease to chronic disease. The ratio in 2000 was 80:20 and by 2015 we expect it to be 70:30. With chronic disease, patients stay on medications longer, and that is a positive trend for the pharma industry. To download an MP3 of this interview, click here. To download the PDF transcript, click here. Questions? Comments? Fill out the form at the end of this presentation. Know more on IMS Health, click here
  20. 20. 20 India is a largely branded generics market. Is that set to continue into the future? SS: Yes it is. Branded generics presently make up 98% of the market with patented products making up the remaining 2%. By 2015 we do expect patented product penetration to increase to 6%, so that will have an impact on how multinationals look at the India market. Added to that, the pricing landscape is changing. To download an MP3 of this interview, click here. To download the PDF transcript, click here. Questions? Comments? Fill out the form at the end of this presentation. Know more on IMS Health, click here
  21. 21. 21 Oh really. How so? SS: Obviously branded generics are priced low for mass consumption while patented products command a higher premium, up to 200-300% of the generic equivalents. At these prices, is India seen as a lucrative market for investment? SS: Definitely. India is likely to be the third-largest economy by 2030. Also factor in the rise in the middle class increasing people’s ability to pay, given the changing dynamic in spending I mentioned earlier. Companies definitely see India as a place to be and tend to adopt one of three strategies. To download an MP3 of this interview, click here. To download the PDF transcript, click here. Questions? Comments? Fill out the form at the end of this presentation. Know more on IMS Health, click here
  22. 22. 22 What strategies would these be? SS: Either they acquire companies - we’ve seen 4 or 5 important acquisitions recently including Abbott-Piramal and Diachii-Ranbaxy - or they partner with local Indian companies especially from a contract manufacturing perspective. For example we’ve seen GSK tie up with Dr Reddy. Innovations and branded generics are both key drivers for growth, and we will see that in India in the long term, so CEOs should be considering India in their strategies even beyond 2020. To download an MP3 of this interview, click here. To download the PDF transcript, click here. Questions? Comments? Fill out the form at the end of this presentation. Know more on IMS Health, click here
  23. 23. 23 Are MNCs investing in the India pharma market directly? SS: Yes that is also happening especially in innovations of new molecules, where MNC companies have been successful in India. However, the third strategy, and I would say that the biggest trend we will see in India is the focus on improved healthcare delivery. India is a large country where 70% of the population has a challenge accessing medicines and healthcare. A key growth area will be in innovations to improve the delivery system, and we expect to see lucrative partnerships established to address this. To download an MP3 of this interview, click here. To download the PDF transcript, click here. Questions? Comments? Fill out the form at the end of this presentation. Know more on IMS Health, click here
  24. 24. 24 MA: Yes that’s an interesting point, and really what I was making earlier. Innovations will really be the key driver for growth in the pharma industry not just in India but globally over the next ten years and beyond. It seems there are many opportunities to win over the next decade then. MA: Absolutely. It’s a question of knowing what you need to focus on, be it innovations, disease areas, or delivery and realising that there are indeed more ways to win in the market now than there ever has been before. It’s a very exciting time. SS: Yes it is. To download an MP3 of this interview, click here. To download the PDF transcript, click here. Questions? Comments? Fill out the form at the end of this presentation. Know more on IMS Health, click here
  25. 25. 25 Thank you for listening! • To download an MP3 of this interview, click here. • To download the PDF transcript, click here. • Questions? Comments? − Fill out the form at the bottom of this slide, or − Visit www.imshealth.com or email info.sg@sg.imshealth.com.

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