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A Blurring Of The Lines? Is "innovator" or "generic" becoming ...

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    A Blurring Of The Lines? Is "innovator" or "generic" becoming ... A Blurring Of The Lines? Is "innovator" or "generic" becoming ... Presentation Transcript

    • A Blurring Of The Lines? Is “innovator” or “generic” becoming harder to discern? MARCH 2008 Mike Chace-Ortiz, Director, Product Strategy, TS API Intelligence Source: THOMSON REUTERS RESEARCH © THOMSON REUTERS Your use of these materials is subject to the terms and conditions hereof. Please read the disclaimer carefully before using these materials.
    • The word on the street
      • The distinction between innovators and generics is narrowing
      • Innovators, hungry for profits and struggling against poor pipelines are fighting fire with fire and plunging into generics
      • Generics, fighting a hypercompetitive, low margin business and too few patent expiries are being forced to redeploy talented scientific resources into novel R&D
    • Fact or myth? Following the money…
      • To what extent are generics investing in innovative R&D?
      • Are brand companies investing in generics?
      • What brand revenue do generic companies raise?
      • What generic revenues to innovators raise?
      • What is the state of novel pipelines at generic companies?
      • How does R&D spend compare between innovators and generics?
    • Where is the generic industry’s money being invested?
    • Just three short years ago… Source: Thomson Reuters Research ©THOMSON REUTERS Global Israel Teva /IVAX 5500 Global Austria Sandoz/Hexal 4600 Global Germany Merck KGaA 2200 EMEA Slovenia Krka 600 US US Mylan 1350 EU Germany ratiopharm 2000 Global India Ranbaxy 1150 EU+US Germany STADA 1200 EMEA Czech Zentiva 475 US US Perrigo/Agis 1400 Global Canada Apotex 1000 US US Watson/Andrx 2550 Global Iceland Actavis/Pliva 1550 EMEA Hungary Gedeon Richter 600 Focus HQ Sales $M Global US Hospira 2500 US US URL Mutual 500 US US Barr 1050 US US Endo 650 Pending Pending 2005
    • Approximately $40bn later… 7500 Teva 8831 8700 Sandoz 5923 ? ratiopharm 2245 ? Covidien 1300 2300 Barr 1832 ? Sigma 2090 1310 Actavis 1667 1156 STADA 1830 ? Krka 960 1900 Watson 1980 580 Dr Reddy’s 1375 7340 Mylan 3810 675 Zentiva 1994 1300 Gedeon Richter 1359 Cumulative M&A Spend Sales $M 2100 Hospira 2690 ? Apotex 1000 818 Perrigo 1490 420 Ranbaxy 1360 2008 Source: Thomson Reuters Research ©THOMSON REUTERS
    • M&A among generics has spread quickly to lower tiers * Estimated figure Source: Thomson Reuters Research ©THOMSON REUTERS Acquirer Spend Target Sun (India) $450M Taro (proposed) Ache (Brazil) $200M* Biosintetica Wockhardt (India) $450M Morton Grove, Pinewood, Negma Genepharm (Greece) $65M Douglas Jubilant (India) $20M PSI Nicholas Piramal (India) $18M Avecia Custom Synthesis Unit Orchid (India) $4M Bexel US Alembic (India) $37M Dabur’s non-oncology portfolio Biocon (India) $43M AxiCorp GmbH (70% stake)
    • The impact of global generic consolidation: Australia 2005 Generic Market US$550M Source: Australian Gov’t, IMS Health
    • Australian generics: 2008 Merged with Sigma Acquired by Mylan Acquired by Genepharm Acquired by Apotex Acquired by Novartis Acquired by Hospira
    • Behind the big deals: biogenerics quietly pursued
      • Teva Acquires Cogenesys, Tianjin Hualida
      • Hospira Acquires Bresagen, alliance with STADA
      • STADA Establishes Bioceuticals
      • Barr Acquires Pliva
      • Apotex Continued investment in Cangene
      • Where are Mylan, Watson and others?
      Source: Thomson Reuters Research ©THOMSON REUTERS
    • How is the US generic branded industry faring? Source: Thomson Reuters Research ©THOMSON REUTERS Company Brand Sales Key Branded Products Teva $1700M COPAXONE, AZILECT Watson $370M OXYTROL, ANDRODERM Barr $300M SEASONIQUE, ENJUVIA Mylan $90M Out-licensed nebivolol, divested branded business Covidien $60M RESTORIL, TOFRANIL Par $50M MEGESTROL, span out Strativa Pharma for R&D Lupin $30M SUPRAX Ranbaxy $2M RIOMET APP - Separated from Abraxis Bioscience
    • Generic investment in novel R&D Source: Thomson Pharma © THOMSON REUTERS
    • How much are generics spending on novel R&D? Source: Thomson Reuters Research ©THOMSON REUTERS Company Novel R&D Programs R&D Spend Average Spend/Program Teva 51 $500M $9.8M Hospira 6 $161M $26.8M Watson 4 $47M $11.8M Barr 18 $140M $7.8M Dr Reddy’s 8 $65M $8.1M Ranbaxy 6 $110M $18.3M Gedeon Richter 16 $65M $4M Apotex 7 $50M $21.4M Par 3 $12M $4M Glenmark 9 $10M $1.1M NPIL 13 $32M $2.4M Wockhardt 6 $17M $2.8M Torrent 7 $14M $2M Dabur 9 $10M $1.1M Lupin 6 $35M $5.8M
    • DRL R&D Profile
      • Acquires US dermatology company, Trigenesis for $11M
      • Establishes Perlecan and invests $8M to develop 4 promising candidates
      • Signs deal to co-develop DRF2593 (balaglitazone) for Diabetes with Rheoscience
      • Signs deal to co-develop DRF1042 for oncology indications with ClinTec International
      • Signs deal with Ceragenix for novel dermatology compound
      • Signs deal with Sygnis for development of AX200 biologic API
      • Signs deal with Argenta to co-develop COPD candidates
      • 250 R&D scientists
      • R&D Spend $65M
      2004 2008 Source: Thomson Pharma © THOMSON REUTERS
    • Glenmark R&D Profile
      • Establishes Swiss subsidiary for biologics development
      • Out-licenses melogliptin to Merck KGaA for $31M (since terminated)
      • Sells rights to US development of oglemilast to Forest for $14M
      • Sells rights to Japanese development of oglemilast to Teijin
      • Licenses Napo’s crofelemer for development in India for $1M
      • Eli Lilly acquires TRPV12 antagonist portfolio for $45M
      • Dyax to identify antibodies on Glenmark targets
      • 150 R&D scientists
      • R&D Spend $10M
      • Out-license revenues $35M
      2004 2008 Source: Thomson Pharma © THOMSON REUTERS
    • But are pipelines of ~10 molecules sustainable? Year of entry into phase Success rate 'First pivotal dose' to 'First submission' 'First submission' to 'First launch' 'First human dose' to 'First patient dose' 'First patient dose' to 'First pivotal dose' 'First toxicity dose' to 'First human dose' Source: CMR International © THOMSON REUTERS
    • Generic R&D: balanced but sustainable?
      • Well-balanced portfolios
      • Garnering interest (and revenues) from out-licensing
      • In-licensing and applying sophisticated technologies to identify new candidates
      • Many de-risking by spinning-off R&D (DRL, Sun, Wockhardt)
      • Can pipeline productivity overcome success rates?
      • Are pipelines large enough?
      • Is R&D spend sufficient for large-scale clinical development?
      BUT
    • Where are innovators spending their money?
    • Innovators: also busy with consolidation Source: TS Research Company M&A Spend Targets J&J $2593M Pfizer Consumer, Cordis, Animas, TransForm Pfizer $2480M CoVX, Coley, Biorexis, Rinat, Vicuron GSK $4470M Domantis, Praecis, Pliva Res, CNS, ID Novartis $13170M Chiron, Eon/Hexal , NeuTech Sanofi-Aventis $520M Zentiva (25% stake) Roche $4260M Ventana, BioVeris, NimbleGen, Curagen AZ $16390M Medimmune, CAT, Arrow, Kudos, Atlantis Merck & Co. $1950M Sirna, Novacardia, Glycofi, Abmaxis Abbott $3740M Kos, Isis Wyeth 0 - Bayer 0 -
    • R&D spend continues to mount J&J 7125 Pfizer 7599 Sanofi 4537 Abbott 2255 Roche 6873 Bayer 3032 Wyeth 3109 Merck & Co 4783 GSK 6772 AZ 4042 R&D Spend $M Novartis 6430 BMS 3067 Amgen 3366 Eli Lilly 3132 BI 2293 Source: TS Research, PhRMA © THOMSON REUTERS
    • Cost of launching an NCE continues to rise Source: CMR International © THOMSON REUTERS 25th percentile 75th percentile Average Standard deviation Standard error Industry (n=20) $M 782 1235 1064 311 70
    • US NCE Approvals 2001-2007 Source: Newport Horizon Premium™ © THOMSON REUTERS
    • Too many companies, too few products Source: Newport Horizon Premium™ © THOMSON REUTERS
    • Current pipeline activity looks to continue the trend Source: Thomson Pharma © THOMSON REUTERS
    • How are Top 10 innovators invested in generics? * Estimated figure Source: Thomson Reuters Research ©THOMSON REUTERS Company Sales R&D Generic Sales Strategy J&J $53,300M $7152M Patriot $20M* Authorized generics Pfizer $48,350M $7599M Greenstone $850M* Authorized generics GSK $42,810M $6772M Exited generics in 2005 Novartis $37,020M $6430M Sandoz $5923M Traditional generics Sanofi-Aventis $35,650M $4537M Winthrop $150M* 25% stake in Zentiva ($625M) Roche $33,550M $6873M Authorized generic deals in ARVs AZ $26,500M $4042M Merck & Co. $22,636M $4783M Authorized generic deal with Mylan Abbott $22,476M $2255M Spun out Hospira in 2005 Wyeth $20,351M $3109M Launched generic PROTONIX
    • How about Top 20 innovators? * Estimated figure Source: Thomson Reuters Research ©THOMSON REUTERS Company Sales R&D Generic Sales Strategy Bayer $18,216M $3032M Exited in 2002 BMS $17,914M $3067M Eli Lilly $15,691M $3132M Amgen $14,268M $3366M BI $13,284M $2293M Roxane, etc $825M Traditional generics Nycomed $12,700M $1476M Schering-Plough $10,594M $2188M Warrick $50M* Authorized generics? Takeda $10,285M $1638M Genentech $9,248M $1773M P&G $8964M $250M
    • Conclusions
      • Intra-industry consolidation remains the dominant activity
      • Top generics investing in biogenerics capabilities
      • Little development of branded business at generics
      • Top and mid-tier Indian generics investing small amounts in novel R&D with some success
      • Little interest in generics from innovators
      • Many generics de-merging their novel R&D businesses
    • What’s next?
      • Pattern of intra-industry consolidation likely to continue
        • BRIC countries and other mid-tier markets
      • Biogenerics will open a new growth avenue for generics
        • Will they drop their novel R&D?
      • Is Indian novel R&D sustainable at current levels of productivity and investment?
      • China as the next lowest cost, capable R&D location?
    • Thank You!
      • Mike Chace-Ortiz
      • Senior Director, Product Strategy
      • Thomson Scientific API Intelligence
      • Portland, ME USA
      • Email: [email_address]
      • Phone: +1 207 871 9700 extension 24
      • http:// scientific.thomson.com /generics
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