Learn How to Beat Problems Feb23, 2007

Tchaikapharma High Quality Medicines Sofia Learn how to beat (regulatory, legal and field problems in new EU member states to ensure a smooth transition and increase your sales) the competition and benefit from the globalization Berlin February 23, 2007

Competitiveness:
CONTENTS
Competitiveness is crucial
Innovation is down and plunging with the Big Pharma
The new Bulgarian Modern Industry: generic and in-licensed drivers of growth
Synergetic partnerships both with R&D and generics: changing the face of the Bulgarian Pharmaceutical Market
Corporate feathers securing effectively a comparative advantage: low cost and/or superior technology widespread applicability both domestically and internationally
Speed and flexibility of response in a constantly changing environment
Decision making that avoids becoming mindlessly global or hopelessly local
Why is it so important in our business?

Healthcare: crucial economic sector for the world society in the next 50 years(?) Source: UBS
The health sector: from cost driver to growth driver
Increasing life expectancy, higher incomes and ongoing innovations in medical science add up to a strong demand trend for the health sector
Health has some of the attributes of a luxury good: as incomes rise, the proportion of disposable income households are prepared to spend on it increases even faster.
The sector is immune to saturation : one can never be too healthy
Healthcare: prevalent societal need of the age
Services directed not only at the sick but also, increasingly, at the healthy
How much extraction of value we get from society from the noble work we do?
And when?

Synergy: transforming the way our industry work
Growing difficulties of the innovative industry to expand gross margins of sales and deliver new molecules: life-cycle management becomes crucial
Regulatory and legal hurdles, constant price pressure, portfolio management in a changing environment and multiple entries are a threat to all generic players
Synergy: a smart sales strategy; a decision that avoids becoming mindlessly global; enjoy the fast-track positive changes of your business
Reduce the costs and time required, manage risk and bring sustainable value
Stop outsourcing profits. Strong relationships build bottom lines.
You can save millions and make your company millions: success will now come from the reflected glory of cooperation and that is what we call a victory in our business world, otherwise: no innovation, no sales

Six Forces That Can Drive Your Company- Or Kill It
Players
The friends and foes lurking in the healthcare system that can destroy or bolster any chance of success
Funding
The process of generating revenue, differing from the one in other industries
Policy
The regulations that pervade the industry, because incompetent advise and action can do tremendous damage
Technology
The foundation for fast and secure introduction of innovations that can make healthcare delivery more efficient and convenient
Customers
The increasingly engaged consumers of healthcare, for whom the passive term ‘patient’ seems outdated
Accountability
The demand from vigilant consumers and cost-pressured payers that innovative health care products be not only safe and effective but also cost-effective relative to competing products

How do you manage these forces?
Registration and Regulatory Affairs : lots of paperwork
Legal department : lawyers and lawsuits (!)
Human resources : administration, benefits, training programs
InfoTech : software development, tech support, Website design…
Analytics : market research, financial analysis, risk calculation…
Customer care : CRM, advertising…
Manufacturing : facilities, production and warehouse management, service…
Marketing : product managers, other different class of managers, field force, marketing dep’t, more field force…
Finance and accounting : accounts payable, billing, financial and tax statements…
Logistics and procurement : just-in-time shipping, purchasing, after sales follow up…

How do you manage these forces when stuck in the middle?
Registration and Regulatory Affairs : lots of paperwork MORE
Legal department : lawyers(!) MORE
Human resources : administration, benefits, training programs MORE
InfoTech : software development, tech support, Website design… MORE
Analytics : market research, financial analysis, risk calculation… MORE
Customer care : CRM, advertising… MORE
Manufacturing : facilities, production management, service… MORE
Marketing : product managers, other different class of managers, field force, marketing dep’t, more field force… MORE
Finance and accounting : accounts payable, billing, financial and tax statements… MORE
Logistics and procurement : just-in-time shipping, purchasing, after sales follow up… MORE
MORE OF THE SAME

Remember, Einstein said:
Insanity is doing the same thing over and over again, expecting different results.

The decision:
In the fifth century BC Athens became the first (albeit limited) democracy.
In the seventeenth century, Quakers developed a decision-making process that remains a paragon of efficiency, openness, and respect.
Starting in 1945, the United Nations sought enduring peace through the actions of free people working together
Now it is in crisis of its own though the world peace is not genuinely in danger

Contents
Synergies: changing the face of the Bulgarian Pharmaceutical Market

Situation Analysis : Business environment Bulgaria
Political and Economic environment: crystal transparency
Economic stability, no inflation and solid economic growth: 5.5 % growth in 2006 (avg. 5.1% since 2000) (source: Bulgarian Center for Economic Development). Foreign deficit rapidly shrinking
Euro-Atlantic integration completed: EU Accession January 1 st 2007
High credit ratings of the country maintained (S&P, Moody’s, Fitsch)
Further pressure from EU and from within for more active structural reforms
Healthcare expenditure still is 4.3% -- among the lowest in Europe: significant upside potential as opposed to the world’s healthcare funding crisis. After the 2005 elections all leading political powers united on the healthcare reform highest priority.

Situation Analysis : Business environment Bulgaria cont’d
Healthcare System & Pharmaceutical market
Expanding institutional presence (app. 70% NHIF, MoH, Hospitals): generics’ priority & still complicated access of innovative products ( new pharma law still on 2nd reading in Health Commission – fully harmonized with EU (Directive 2001/83/EC, 2004/27/EC, EU Regulations) sets the frame for merging some steps, which will significantly decrease current time delays (avg.570 days) of access to market and reimbursement for new applications
Increased pricing pressures: implementing a cost-containment system based on pharmaco-economic evaluation of drugs with reference pricing system (fixed to the lowest bid) and the co-payment is the difference above price. Institutional & competition influences require market-adapted solutions for improved productivity and new efficiency (INN prescribing and INN substitution are not legally required)

Situation Analysis : Business environment Bulgaria cont’d
Healthcare System & Pharmaceutical market
Strong government support for technology transfer to high quality local producers both generics and original: Sustained Advantages in Positive List / Reimbursement Entries
Boom of generic registrations & consolidation in the distribution segment
Lagging HC reform & HC system still underfinanced – much better than Spanish hospital 3 year deferred payment practice
Long, 8 month payment terms in hospitals, yet to improve in 2007
Changes in reimbursement regulations / model (MoH, NHIFund). Positive and Reimbursement Lists will merge in a single formulary. NHIF becomes the only funding body to administrate drugs budget. Application for price and reimbursement - processed by one “single step”. (Healthcare Commission to decide shortly)

Bulgarian Pharmaceutical Market: 1990-2000
Local production supported by the ‘economy of deficit’
Low tech, i.e. low quality (there is still a traditional doubt about quality of local production)
Market dominated by expensive, original, branded medicines. More than 80% of the budget dried by foreign production, leading to greater foreign deficit
Nontransparent privatization of local production facilities, no investment policy (no GMP) : supporting the status quo
No healthcare reform, no health fund
Local hi-tech alternative: N/A

Bulgaria Today
World competitiveness index: comparison chart of EU new members
39 th place for Bulgaria thanks to:
health reform (NHIF)
medical academia level
the new Bulgarian modern pharmaceutical industry
Source: World Economic Forum Davos

The new Bulgarian modern industry Source: Daniel Kahneman Nobel Prize winner in economic sciences 2002 How do you read this?

The new Bulgarian modern industry Source: Daniel Kahneman Nobel Prize winner in economic sciences 2002 How do you read this letter?

The new Bulgarian modern industry Source: Daniel Kahneman Nobel Prize winner in economic sciences 2002 How do you read it now?

The new Bulgarian modern industry Is it a generic company?

The new Bulgarian modern industry Is it an original one?

OR…?

The new Bulgarian modern industry

The new Bulgarian modern industry Is a part of CL BioPharma Group

Vertically Integrated Powerhouse on the Balkans Commercial League warehouse Tchaikapharma production site Tchaikapharma production site PROJECTED Cardiac hospital Cardiac hospital PROJECTED Haemodialysis center PROJECTED

The CL/ Tchaikapharma Advantage: Winning Concept for beating regulatory, legal and market problems
Big pharma, biomedical and generic manufacturers are able to utilize the CL BioPharma Group platform from late-stage clinical trials to take-the-drug market
Trials Regulatory Manufacturing Marketing Distribution Tchaikapharma Inc Commercial League NPC Macedonia Pharmacia Distinguished Pharmacies Inc
Late Stages Clinical Trials & Safety Testing
Product Marketing & Promotion
Co-Marketing & Co-Promotion
Reimbursement Upgrading
Lobbying Services
Wholesale & Distribution
Retail Pharmacies &
Medical Centers Management Support
Registration (Marketing Authorization)
Post- & Pre-Registration Monitoring
Reimbursement
Central Tendering
CL Sourcing Licensing +
R&D Contracting
CL Sourcing Pre-Market
Research
CL Sourcing Contracting
Manufacturing
Packaging
Medical Activities
Cath-Labs
Cardio Surgery
Haemodialysis Centers
Primary Care Centers Management
Bulgarian Cardiac Institute, JSC Reaching Across The Entire Value Chain

The CL/ Tchaikapharma Advantage: cont’d Winning Concept for beating regulatory, legal and market problems
CL/Tchaikapharma thrives with the philosophy of being a broadly-based vertically integrated healthcare company and delivering healthcare solutions to the patient, rather than just producing & selling drugs: “ Patient always comes first ”
Academia Partnerships Built On Solid Foundation
Advance market research: disease prevalence, market potential, feasibility studies
Introduction of world class standard guidelines in treatment practices
Disease management & portfolio planning
Extended diagnostic programs: nation-wide prevention & diagnostic campaigns in Cardiovascular Diseases, Diabetes, respiratory, oncology etc.
Disease management: therapeutic baskets, combined therapies, end curing or/and continuous therapeutic solutions
Precisely targeted investment policy, aiming at improving state and quality of healthcare- Haemodialysis centers project and CathLabs Project

The CL/ Tchaikapharma Advantage: cont’d Winning Concept for beating regulatory, legal and market problems
Specialty hospital chains per therapeutic areas (or state hospital privatization) of:
Five to ten specialized hospitals in Invasive cardiology, Metabolic, CNS and Respiratory diseases in collaboration with leading Bulgarian & European (Czech Republic, Italy & Austria) key opinion leaders. The pilot clinic in Pleven opens March 2007
Six to twelve Haemodialysis Centers in cooperation with Majors
Four Drug Addiction Treatment Centers in cooperation with a Big Pharma.
Health Insurance Fund establishment in Bulgaria
Strategic Investment Projects

Contents
Synergies: changing the face of the Bulgarian Pharmaceutical Market

Spearheaded Entry/Re-Entry of Major Generic Players
Only few of the foreign generic companies come closer to the local players’ performance
Source: IMS Data

Novartis / CL BioPharma Group Generics Cooperation
Sandoz (Lek) & Tchaikapharma : very successful, though limited scale model of bulk supply

Case Study Enalapril (Bulk Supply from Sandoz) Market Share (# of patients) Nov ‘06 Distancing leadership position in a very crowded generic market Source: NHIF, number of patients

Case Study: ACE Inhibitors Tchaikapharma In-licensed from La Roche (results for just 3 months) and elevated Pfizer to market leader in 1.5 year time only Source: NHIF, number of patients

Case Study on own Nordipin (Amlodipine): Leader In Three Months Only Source: NHIF/ in patients

Case Study: In-licensed Dilatrend (carvedilol) Roche Market Share Nov ’06 Against Multiple Generic Entries Source: NHIF, number of patients

Case Study: In-Licensed Symbicort (AstraZeneca) Time Under CL Marketing Only Source: NHIF, number of Patients

Case Study on own Klacar (clarithromycin) : Leading Anti-infectives Brand Just Three Months After Launch Source: NHIF, Value BGN

Marketers judgment doesn’t always look like action to their colleagues in Sales ( Stop Einstein’s insanity) Thank You Very Much

Learn How to Beat Problems Feb23, 2007

by Slaveyko Djambazov on May 20, 2010

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