The document discusses the challenges facing major oncology innovator companies as their traditional cash cow drugs lose market share to biosimilars. It argues that innovators need to look beyond traditional Western markets and consider partnering with emerging markets like India to strengthen their healthcare systems and generate sustainable revenues. This could help build new cash cows to fund future innovation while improving access in populations with high cancer rates. The document outlines how an integrated approach with partners across government, non-profits and hospitals could work to mutually benefit patients, innovators and healthcare systems in emerging markets.

1. Yuvi Gill | https://www.linkedin.com/in/yuvrajgill/
The case for Emerging 9:
Sustaining Oncology Innovation
Yuvi Gill - 09.04.2019
Introduction
By 2020, approximately 21% of worldwide Pharma sales will be comprised of Oncology.
Today the Oncology market is dominated by few key Innovator players, with 80% of
market share being attributed to about 30 products. The business approach and markets
for these Innovator companies hasn’t necessarily changed.
Source: Biosimilars: Company Strategies to Capture Value from the Biologics Market by Bruno Calo-Fernández 1, and Juan Leonardo
Martínez-Hurtado 2,
Innovator companies continue to compete in their traditional markets by trying to
advance evidence engagements, enhancing value proposition through HEOR, using data
to improve outcomes and other commercial activities.
The challenge to innovation
1. Shrinking Cash Cows: Every Innovator needs
Cash Cows which can sustainably fund innovation of
the next generation of stars. With the approval of
Biosimilars in the traditional markets, the number of
Cash Cows for Innovator companies has steadily
started to decrease.
Is the above approach adequate for these companies to remain sustainable?

2. 2
In 2005, under the European Medicines Agency (EMA) the biosimilar regulatory
framework was implemented. Since Sandoz’s somatotropin biosimilar Omnitrope® was
first authorized on April 12, 2006, an additional 59 applications have been approved in
Europe.
With the most recent Biosimilar approvals Hadlima (adalimumab-bwwd) and Ruxience
(rituximab-pvvr) on July 23, 2019 the number of FDA approvals for the US have gone up
to 23 (https://www.fda.gov/drugs/biosimilars/biosimilar-product-information). The RAND
Corporation estimates that biosimilar products can save the U.S. health system
approximately $54 billion over the next decade.
The impact of Biosimilar entrants can be seen in the Annual Shareholder reports with
declining revenues in the traditional markets.
2. Pricing pressures: The impact of biosimilars is/ will be further accentuated by the
pressures from Health Care Systems to make Innovator products more affordable.
In October 2018, the US President announced that Medicare could pay for some
prescription drugs based on prices paid in other industrialized countries. For US IRP, a
demonstration project will be run through the Center for Medicare and Medicaid
Innovation, created under the Affordable Care Act.
Based on a study done on US
Reference Pricing implications, four of
9 reference price policies were
associated with significant reductions
in the price of the targeted drug
classes, with a mean reduction of
11.5% (range 7%-24%).
(Source:https://scholar.harvard.edu/nk
c/files/2012_reference_pricing_system
atic_review_ajmc.pdf)
In addition to the US IRP, the WHO has launched a process to revisit the definition of
“Fair Price” with a focus on price transparency. This process will further challenge the
differential pricing approach Innovator companies undertake while pricing their
products.
3. Industry Pipeline: Every Innovator company is banking on its pipeline and as
discussed in the opening, on its traditional competitive focus hoping to create the next
shooting star. Today there are more than 650 agents in Phase II+ development for
Oncology. The Top 15 Innovators average 5-15 products in pipeline. In addition to the
How do Innovators plan to fund the future Stars and then convert them to
sustainable Cash Cows?

3. 3
competitive pipeline for Innovators, the future of Oncology holds a diverse array of
MOAs and the payer’s willingness to reimburse for the same.
The case for emerging 9
For the sake of simplicity, Oncology markets can be viewed as Traditional (US/ Europe)
and Emerging. The traditional markets account for 70-80% of Oncology revenues for
most Innovator companies. These are the markets for which Innovators are structured
well, have clear approaches around Pricing, Reimbursement, Health Economics which
allow them to effectively negotiate.
Because of internal structures and the success with traditional markets, innovators tend
to take a similar approach to emerging markets but with marginal success. The
traditional innovator approach is product focused and less system focused.
Let’s take the example of India. India has approx. 1.3Bn people and accounts for 18%
of the world’s population. Cancer is the second most common disease in India with
about 0.3Mn deaths every year.
If you dive deeper, you realize that India spends only 4% of its GDP on Healthcare. In
addition, only about 2.5% of the Healthcare budget is used for Oncology treatment. The
affordability challenge is further compounded by lack of infrastructure e.g. There is only
one Oncologist per million On India.
In this scenario, how much of a differentiator will competitive launches or
enhanced value propositions truly deliver in terms of funding sustainable R&D?
Given cancer prevalence in the
world’s second most populous
country you would expect
Innovator products to be
accessible to patients and for this
to be a sustainable business
model. Why have innovator
companies struggled to capitalize
on such a lucrative market?
Hence it is but natural that the standard product based Innovator
approach in such a system is bound to provide marginal returns.

4. 4
What if Innovators approached such markets from the perspective of
generating revenues through strengthening the health system instead of
volume of product sold.
Innovators need to think through what such business models would look like and who
would be key partners for these potentially vast markets. Hypothetically Ministers of
Health (Govt programs), WHO (UHC/ Universal financing), Large Non-Profit foundations,
Hospital systems could be partners in such a business model where incentives can be
clearly outlined and aligned.
These commercial/ access strategies would be no different to approaches other
industries have employed. Medical Diagnostics companies in Africa partner to provide
labs, testing equipment while they generate revenues through diagnostic tests. Apart
from the benefit to the immense patient population, it remains a sustainable revenue
model which funds further innovation.
Integrated strategies with the right partners would need to have clear objectives from
the perspective of each stakeholder. Elements of the approach would need to include:
- Policy focused on increasing Healthcare Spend as a percentage of GDP
- Policy focused on increasing Oncology spend as a percentage of HCExp
- Capability & infrastructure building
- Sustainable revenue generation
Revenues for Innovator products in these markets could be generated as part of bulk
service contracts versus as a sales of standalone product.
Extrapolating the India
scenario to 8 other emerging
markets would cover 51% of
the world population, 26% of
the world’s GDP and 14% of
the world Healthcare
Expenditure. These markets
could help build the cash
cows the industry needs to
fund further innovation.
By outlining and aligning the business model based on incentives we could
move from a lose-lose to a win-win model in these markets.

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