This report was presented at the Pharma Tech 2013 Conference - India A Game Changer in the Pharma Industry at Ahmedabad, India in December 2013. The presentation highlights the overview of the global generic pharmaceuticals market, with particular focus on the key market trends and challenges by therapeutic areas and geographies including the U.S, EU and India. List of key blockbuster drugs scheduled to lose patent protection between 2010 and 2020 have been included. Additionally impact of regulation on generic drugs by region and strategic recommendations for the success of market participants are also covered in this report.
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Global Generic Pharmaceutical Market - Qualitative and Quantitative Analysis
1. Global Generic Pharmaceutical Market – Qualitative
and Quantitative Analysis
Aiswariya Chidambaram
Senior Research Analyst - Life Sciences
Pharma Tech, Ahmedabad
12-11-2013
2. 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
Focus Points
Competitive Landscape Analysis
U.S. Generic Pharmaceutical Market Overview & Regulatory Analysis
European Generic Pharmaceutical Market Overview & Regulatory Analysis
Indian Generic Pharmaceutical Market Overview & Regulatory Analysis
Future Trends and Directions – Vision 2025
Strategic Recommendations
2
3. Generics Lead the Way Ahead
The global generic pharmaceutical market worth over $150
billion in 2013, growing at CAGR (2013 – 2018) of 8.4%
U.S world’s largest generics
market (45%).
India and China - huge generic
markets in production volume.
Over the next five
years
Emerging markets 15 % to 20% growth.
Matured markets – 6%
to 10% growth.
The top eight
global markets
comprise 80% of
the total generic
sales.
Blockbuster drugs
($150 billion) to lose
patents between 2010
and 2017.
The top ten global generic companies account for 47%
market share.
Source: Frost and Sullivan
4. Global Generic Pharmaceutical Market – Patent Cliff
Total Pharmaceutical Market: Sales Value of Drugs Losing Patent
Protection (Global), 2007 - 2017
Generic companies have been proactive in
filing for marketing rights and exclusivity
well ahead of patent expiry.
42.11
45
Ranbaxy was the first filer of ANDA for
generic Lipitor in November 2011 while
Watson Pharma was to sell authorised
generic version in the U.S.
Sales ($ Billion)
40
33.43
35
30
25
20
33.18
27.79
24.33
16.95
15.21
15
7.08
10
8.13 7.96
2.96
5
0
Teva was awarded with 180 days
exclusivity to sell generic Losartan while Hi
Tech Pharmacal successfully challenged
J&J’s Levaquin (oral solution).
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Year
The U.S. patent for AstraZeneca’s Crestor
was challenged by Apotex, Mylan and
Sandoz.
5. Key Therapeutic Areas Overview
Generic Pharmaceutical Market: Percent Revenue Contribution by Therapeutic Segments (Global)
16.1%
35.1%
21.7%
0.2%
6.4%
3.4%
CNS
Cardiovascular
Dermatology
8.3%
Genitourinary/Hormonal Drugs
4.5%
4.3%
Respiratory
Rheumatology
Diabetes
Oncology
Others
Note: All figures are rounded;. Source: Frost & Sullivan
Others include Gastro-intestinal, HIV, Immunology and so on.
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.
6. Key Therapeutic Areas – Growth Analysis
20%
14%
The patent expiry of several key
antipsychotics and anti-depressants
contribute to the rapid growth of CNS
drugs market between 2010 and 2017.
Development/
Fast Growing
12%
C
A
G
R
Fast
Growing
10%
8%
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.
Development/
Fast Growing
Fast
Growing
Growing
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
6%
4%
CNS
Oncology
Bubble size represents market value
Rheumatology
Declining
Declining
Stable
Intense
competition,
promotion of branded
drugs
and
new
innovative formulations
such as
inhalable
insulin are all likely to
deter the growth of
generics.
2%
Cardiovascular
Relatively
lesser
number of drugs are
subjected to generic
exposure during the
forecast period and
hence the decline in
growth.
Respiratory
Diabetes
Dermatology Genitourinary
Others
Source: Frost & Sullivan analysis.
7. Key Market Drivers and Challenges
Key Drivers
Patent expiry of key
blockbuster drugs
worth $150 billion.
Access to emerging
markets and niche
therapeutic segments
New provisions
introduced by
governments
Price control measures
introduced by
governments
Changing population
demographics and
lifestyle patterns
Intense price
competition due to
imports from low-cost
markets
Increasingly
stringent
regulations to
safeguard quality
Key Challenges
Source: Frost & Sullivan analysis
8. Mergers & Acquisitions Outlook
Generic Pharmaceutical Market: Number of Deals and Amount Spent on Mergers & Acquisitions (Global), 2000 - 2009
30.00
90
80
70
20.00
60
50
15.00
40
10.00
30
Number of Deals
Total Value of Deals ($ Billion)
25.00
20
5.00
10
0.00
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Year
Total Value of Deals
Number of Deals
Note: All figures are rounded; Source: Frost & Sullivan analysis.
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.
9. Competitive Landscape Analysis
Generic Pharmaceutical Market: Ranking of Top Five Companies by Market Share (Global)
Rank
Company
The top three companies namely Teva, Sandoz and
Mylan registered significant growth rates of 16, 14
and 11% respectively in 2010 - 2011.
1
Most of the big companies prefer mergers and
acquisitions to organic growth as a faster means to
consolidate and expand their market shares.
2
3
The top five generic pharmaceutical companies
accounted for 40% of the share in the global generic
pharmaceutical market.
Mylan
4
5
Source: Frost and Sullivan analysis
10. U.S. Generic Pharmaceutical Market
World’s
largest
generic
pharmaceutical
market
represents 45% of global share.
More
than
500
industry
participants
–
top
five
companies constitute 50% sales
Highly saturated – highest
levels of generic penetration
Most attractive hub for lowcost destinations like India,
China – increased pricing
pressure
Predominantly
unbranded
generics (INN prescribing)
Market Overview
Characterized by high levels of
generic prescribing, strong IP
legislations, retailers purchasing
on price
Blockbuster drugs worth over
$67 billion to lose patent
protection
Aggressive patent challenges
and Paragraph IV filings
Mergers and acquisitions most sought-after trend in the
U.S.
13. Regulatory Impact Analysis – U.S.
Regulatory Environment in the U.S Generic Pharmaceutical Market
Hatch-Waxman Act
Gregg-Schumer Act
Pricing & Reimbursement
• “Generic companies could
obtain market authorisation
by proving bioequivalence
of generics to brands
• “Single 30-month stay”
granted
to
branded
company
for
patent
infringement suit
• Safe Harbour Provision:
experimental
use
of
patented drugs permitted by
generic companies
• Stay to run concurrently
with FDA’s consideration
of application
• 180-day market exclusivity
for
first-to-file
generic
applicant
• 30-month stay for patents
listed in Orange Book
• No significant
generic entry
delay
in
• 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
practiced
bidding
is
Source: Frost and Sullivan analysis
13
14. Europe Generic Pharmaceutical Market
Mature markets (Germany, the
UK) to present sluggish growth
between 5 – 6%
Top five countries – Germany,
the United Kingdom, France, Italy
and Spain represent 50% volume
share and 18% value share
globally.
Italy and Spain are expected to
register higher growth rates
between 18 – 20%
As per EGA, generic drugs
generate savings of €30 billion.
Eastern Europe to contribute
maximum growth
Market Overview
Germany and the UK are highly
penetrated generic markets
Europe primarily dominated by
branded generics except the UK
Represent 64% and 60% of
volume share respectively in
Europe.
Calcium
antagonists,
antiulcerants and platelet inhibitors
to face high generic competition
Germany is the largest generic
market in Europe accounting for
27% sales
Highly fragmented market with
county-specific regulations
Source : Frost & Sullivan analysis.
M74E-52
14
20. Regulatory Impact Analysis - Europe
Regulatory Environment in the European Generic Pharmaceutical Market
Data Exclusivity
• 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
8+2+1 Formula
European Bolar Clause
European Bolar Clause
• Originator companies
are granted 8-year
data exclusivity and 2
years
market
exclusivity
• Permits initiation of
generic R&D activity
prior
to
patent
expiry of brands
• 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
• Withdrawal
of
brands
before
generic entry cannot
stop
generic
companies
from
using
them
as
reference products
Sunset Clause
• 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
Source: Frost & Sullivan analysis.
20
21. Regulatory Policies of Key Generic Markets in Europe Comparative Analysis
Generic Pharmaceutical Market: Impact of Regulatory Policies (Europe)
Policies
Germany
United
Kingdom
France
Spain
Italy
Reference pricing
Patient co-payment
Generic prescribing
Generic substitution
Time delay in market
access
High
Low
Source: Frost & Sullivan analysis.
21
22. Indian Generic Pharmaceutical Market
Branded generics dominate the
Indian pharma market (98%)
valued at over $12.00 billion
Highly fragmented market with
more than 22,000 registered
units
World leader in exporting
generics to foreign countries;
exports growing at 22%
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%
Anti-infectives and GI constitute
30% revenue share
Market Overview
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
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
Source: Frost and Sullivan analysis
23. Export of Indian Generics to the U.S.
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.
Export
52 %
Domestic
India has more than 75 U.S. FDA approved
plants and tops the world in DMF and ANDA
filings in the U.S.
48 %
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
Source: Frost and Sullivan analysis
24. Regulatory Impact Analysis - India
Pharmaceutical Policy
Drug Policy 1996
Pharmaceutical Policy 2002
National Pharmaceuticas Policy 2006
Quality Control
Price Control
On Prices
GMP/cGMP
Drug and Cosmetic Act 1940
Schedule M
Schedule Y
On Margin
Bulk Drugs
Formulations
IPR Protection
Essential Commodities Act 1955
Drug (Price Control) Order 1995
Amended Patents
Patents Amendment Act 2005
Source: Frost and Sullivan analysis
25. Regulatory Impact Analysis – India (continued)
Regulatory Environment in the Indian Generic Pharmaceutical Market
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
Patent Protection/ IP Rights
Quality Control
• Patents Amendment Act
2005 (TRIPS Agreement)
strictly prohibited reverse
engineering of drugs
• The Drug and Cosmetics Act
(D&C)
1940
regulates
import,
manufacture,
distribution and sales
• Covers two types of
generic drugs – off patent
generics and generics of
drugs patented before
1995
• Schedule M – requirements
for factory premises, plant,
materials,
plant
and
equipment
• Introduced
compulsory
licensing for exports
• Schedule Y – legislative
requirements for clinical
trials
• Mainly encourages foreign
companies to trade in
India
• Increasing
regulatory
compliance in India boosts
confidence of MNCs
Source: Frost and Sullivan analysis
25
26. Future Trends and Directions – Vision 2025
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
Key Trends
Technology
Development of Transgenic technologies
Stem cell technologies
Cloning technologies
Generic consumption is likely to be favoured in a big way by the government, payers,
policy-makers and physicians.
Increasing focus on higher value biological therapies, biosimilars,
controlled release products, sterile formulations and niche therapeutic segments.
Source: Frost and Sullivan analysis
27. Strategic Recommendations for Success
Strategy is a style of thinking, a conscious and deliberate process, an intensive implementation system, the science
of insuring future success – Pete Johnson
Differentiated Approach
Explore New Avenues
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.
Analyze prospects for
market globalization
- Strategic alliances
between multinational
generic firms and
domestic participants with
locally restricted
operations.
Medium-sized generic firms
require to focus on
Products with relatively
higher profit margins.
Appropriate time of entry
into the right market.
Strengthen distribution.
Instill Competitive Capabilities
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.
Plan Ahead for the Future
Research customer
needs, preferences,
expectations.
Monitor new
technological
developments to face
the change.
Target therapeutic
areas with high levels
of unmet clinical
needs.
Source: Frost and Sullivan analysis
28. Related Market Research Reports
Global Pharmaceutical Contract Manufacturing Market
Global Next Generation Biosimilars Market
Global Contract Research Outsourcing Market
28
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31. Contact Information
State your need, we would be happy to serve you…
AISWARIYA CHIDAMBARAM
Senior Research Analyst – Life Sciences
Frost & Sullivan (I) Pvt. Ltd.
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Email: AiswariyaC@frost.com
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