2. 2
Global pharmaceutical market overview and outlook
Agenda
What are
the Growth
drivers?
Transformation
in diseases and
treatments?
How will it
look like?
6. 6
Global overview and outlook
447
289
73
38
245
Americas
Asia / Pac.
Cen. / E. Eur.
M. East / Afr.
West. Eur.
7. Global overview and outlook
Slow but accelerating growth
USD1,280bn
7Global Outlook for Medicines Through 2018, November 2014
2018
8. Global overview and outlook
Slow but accelerating growth
CAGR
Global Outlook for Medicines Through 2018, November 2014 8
9. http://www.worldometers.info/ 9
Global overview and outlook
What are the Growth drivers?
7,282,490,400
Net growth 80M/Year â growth rate is 1.1%
Population growth
Highest growth rate 2.1% for ME&AF
10. Global Outlook for Medicines Through 2018, November 2014 10
Global overview and outlook
Change in life style &
aging population
By 2018
What are the Growth drivers?
11. Global Outlook for Medicines Through 2018, November 2014 11
Global overview and outlook
New Innovations
Oncology
$100bn
Diabetes
$78bn
HepatitisC
$100bn
Fewer patent expiries, launches of more innovative medicines and price increases.
What are the Growth drivers?
12. 12
Global overview and outlook
Improved access to medicine and economic improvement
ä¸ĺ˝
Brasil
India
Đ ĐžŃŃиŃ
Tier 3 pharmerging
Tier 3 Pharmerging :
Algeria, Argentina, Colombia, Egypt, Indonesia, Mexico, Nigeria, Pakistan, Poland, Romania, Saudi Arabia, South
Africa, Thailand, Turkey, Ukraine, Venezuela, Vietnam
ćĽćŹ
AFME
What are the Growth drivers?
13. Sources of growth
13IMS Market Prognosis, September 2014; IMS Institute for Healthcare Informatics, October 2014
North America is leading, Emerging markets are gaining, Europe is losing
How will it look like?
14. 14
Brands Vs Generics Growth
IMS Market Prognosis, September 2014; IMS Institute for Healthcare Informatics, October 2014
Generics continue to drive growth globally and 50% of AFME growth
How will it look like?
15. 15
Specialty Vs Traditional Growth
IMS Market Prognosis, September 2014; IMS Institute for Healthcare Informatics, October 2014
Traditional medicines are the strong growth driver in AFME region
How will it look like?
21. 21
PD-1 targeting drugs that boost immune system response
CDK inhibitors, which inhibit cancer cell proliferation
CAR-T cell therapies are the next generation of personalized medicine, modifying the bodyâs own
T-cells to kill cancer cells
ALK inhibitors address crizotinib resistance and will become the standard of care in the next
five years
CTLA-4 immune activation having proven success with ipilumumab
New immunotherapies
22. 22
Conclusions
Growth patterns in developed markets will continue to flatten or decline
MNCs are shifting more of their focus to find new sources of revenues and
profitability in emerging markets
Traditional branded and Generic pharmaceutical will lead the growth in the next 5
Y vs new specialty products
Pharmaceutical companies have an opportunity to market their traditional global
brands in an extended markets (Emerging markets) (diabetes, oncology, anti-
infectives and antivirals, and cardiovascular diseases)
Major five therapeutic classes will lead the growth over the next five years , diabetes,
oncology, anti-infectives and antivirals, cardiovascular and CNS
24. 24
MEA PEST analysis
Political
MENA remains a region in political transition
Jordan, Morocco and Gulf Cooperation Council (GCC) countries maintained
stability and focused on preserving and furthering social and economic gains
The Arab Spring
War in Iraq & Syria
25. 25
MEAF PEST analysis
Economic
GDP (current US$) $3.90 trillion 2014
Population, total 594 million 2014
Urban population (% of total) 60% 2014
Nevertheless
Oil prices drop greatly affect exporters in
GCC, Libya, Iraq, and Iran
28. 28
MEA PEST analysis
Socio-Cultural Youth % of population and unemployment rates
http://www.usfunds.com/investor-library/frank-talk/why-high-oil-prices-are-likely-here-to-stay/
37. 37
Market Entry challenges
Go to market approaches
Establishment and registration
Pricing and reimbursement
Distribution
Marketing and
sales
Path to Market
Path to Patient
Patient
Awareness
Healthcare
Access
Diagnosis
Treatment
38. 38
Market Entry challenges
Go to market
approaches
78%
75%
58%
41%
29%
43%
46%
19%
1%
41%
28%
22%
16%
0%
42%
Subsidiary/independent
commercial presence
Own sales force Own
manufacturing/packaging
facilities
Own R&D departments Partnerships with local
companies
Which local infrastructure do you consider most relevant for
commercial success in different emerging markets?
BRICMT ME Africa
Survey for Key pharma leader /strategy and analysis pharma merging
40. 40
Competitive analysis of pharmaceutical manufacturing using the Porter's
Five Forces model
Market Entry challenges
Go to market
approaches
⢠High government incentives
⢠High capital requirements / Long payback period
Threat of new
entry
⢠Imported raw materials and machinery
⢠Low supplier concentrationSupplier Power
⢠preference for imported pharmaceuticals
⢠Branded substitutes priced higher / Limited price elasticity
Threat of
Substitutes
⢠Government is the single largest buyer
⢠Low switching costs for consumers / Highly regulated pricing systemBuyers Power
⢠Strong market presence of multinational companies
⢠opportunities arising from expiry drug patentsCompetition
42. 42
What do Free Zones /UAE offer?
100% Foreign ownership
100% Tax exemption for corporate, import/export, personal income
100% Repatriation of capital & profits
State-of-the art purpose built infrastructure
No foreign exchange controls
Residence visas granted for 3 years (renewable
Assistance with labor recruitment, and additional support services, such as
sponsorship and housing
Market Entry challenges
Establishment and
registration Free Zones
45 FZ /UAE , 4 Economic Cities/KSA
43. 43
Market Entry challenges
Establishment and
registration
Journal of Drug Delivery & Therapeutics; 2013
Regulatory
Barriers
⢠Western approval
⢠CPP
⢠GMP
⢠Pricing approval
⢠Document authentication
⢠Harmonization
44. 44
Market Entry challenges
Establishment and
registration RA Challenges
Lack of harmonization in regulatory requirements
Absent, new or changing regulations
health authorities have limited resources
Lack of formal pre-submission meetings or scientific advice.
Long review timelines for registration hence more uncertainty.
More detailed documentation, SOPs, validation requests
More requests for inspections,
45. 45
Market Entry challenges
Establishment and
registration
Frequent and early communication with Health Authorities
Early integration of emerging market strategy into development plans and
integration of regional requirements into a global regulatory plan
Be the first with a product for an unmet medical indication and proper invest
in the region
Strategies for Success
Proper Time management as the registration and company success depends
upon the time taken by product to reach the market first
Know and be compliant with national requirements
Health authority relationships critical, local talent important
Journal of Drug Delivery & Therapeutics; 2013
47. 47
Market Entry challenges
Establishment and
registration
Data requirements
for pharmaceutical
product registration
for different region
Journal of Drug Delivery & Therapeutics; 2013
48. 48
Market Entry challenges
Pricing and
reimbursement
Internal Reference Pricing
Fixed Generic Price Reductions
Internal Reference Pricing
Reference Pricing
Free Pricing and Indirect Control
Value-Based Pricing
49. 49
Reference Pricing
Market Entry challenges
Pricing and
reimbursement
common feature of reference pricing systems is the
desire to reduce the cost of reimbursement for
healthcare providers
refers to the price of a similar medicinal product in a defined basket of countries
Taking the average price
of the pharmaceutical product
in several countries
Percentage reduction on
the mean average
Selecting the lowest price
of the pharmaceutical among
selected countries
Average of the three
External reference
pricing,
50. 50
Market Entry challenges
Pricing and
reimbursement
Internal Reference Pricing
Utilize the prices of drugs already
marketed within the same country
as reference points for the pricing
of new drugs
The reference price established through this type of system is usually the reimbursement
price for a group of drugs, rather than for a single product, this could lead branded drugs
to be effectively forced down to the price of the lowest generic
Fixed Generic Price Reductions
Fix the level of discount of the first
and subsequent generics to enter
the market, in comparison to the
originator product
Saudi Arabia, the price of the originator drug is reduced by 20% upon registration of the
first generic alternative, which itself is priced at 35% less than the originator. Subsequent
generics are priced at 10% less than the previous one
52. 52
Market Entry challenges
Pricing and
reimbursement
pricing and reimbursement decisions are important
in determining the likely commercial success of a
pharmaceutical product in the marketplace
The ultimate goal is to secure the required medicines at the best possible price
Free Pricing and Indirect Control
non-reimbursed medicines and over-the-counter (OTC) products
free pricing for reimbursed pharmaceuticals is unrealistic, In the US prices for prescription
medicines are negotiated with private Health Maintenance Organisations (HMOs) and
Pharmacy Benefit Managers (PBMs) Most HMOs and PBMs use drug formularies, with
around one third using 'closed' formularies that prevent reimbursement of non-listed
drugs
53. 53
Market Entry challenges
Pricing and
reimbursement
Value-Based Pricing
The perceived value of a treatment
central to the German AMNOG (Arzneimittelmarkt Neuordnungsgesetz) system
manufacturers had been free to set their own prices for new medicines in Germany.
However, the new system introduced mandatory pricing assessment for newly
introduced drugs in the German healthcare system, whereby the price of medicines is
determined by the added benefit they bring to patients
http://www.forbes.com/sites/theapothecary/2014/06/17/the-sovaldi-tax-
gilead-cant-justify-the-price-its-asking-americans-to-pay/
54. 54
Market Entry challenges
Pricing and
reimbursement
Wholesale and Pharmacy Mark-ups
The percentage mark-up is regressive and dependent on the ex-factory price
Mark-ups available to wholesalers and pharmacies are controlled by the
government
55. 55
Reimbursement Lists
Market Entry challenges
Pricing and
reimbursement
Positive and Negative Lists
A list of medicines are selected for use in public
healthcare institutions or for ambulatory
prescription under national health systems or for
use by major health insurers
Drugs not onto the positive list are generally not eligible for reimbursement
Negative lists are also employed for non-
reimbursable drugs
56. 56
Market Entry challenges
Pricing and
reimbursement
SAUDI ARABIA
Since July 2009, the Saudi Food and Drug Authority (SFDA) has been responsible for
pharmaceutical pricing
Factors affecting pharmaceutical pricing include:
Therapeutic significance
Pharmacoeconomics studies
Prices of similar, alternative registered drugs
Exâfactory, wholesale and consumer prices in the country of origin
Proposed cost, insurance and freight (CIF) price to Saudi Arabia
Export price to countries where the drug is registered
Drug prices in the official basket of reference countries
Prices for imported drugs are calculated by the country's pricing committee, which
considers manufacturers' wholesale and retail prices in the 'country of origin' along with
export (CIF) prices to Saudi Arabia and 30 other countries. In most cases, the lowest
price is accepted
57. 57
Market Entry challenges
Pricing and
reimbursement
SAUDI ARABIA
Tendering Procedures MoH & governmental and public institutions
Secretariat General of Health (SGH)
The GCC members practice collective purchasing of pharmaceuticals and vaccines
through the Secretariat-General of Health (the SGH Tender).
National Unified Procurement Company for Medical Supplies
NUPCO's major customers are:
MoH
The National Guard Health Affairs;
The Ministry of Defense & Aviation's medical services department
The Ministry of Higher Education's university hospitals and healthcare centres
King Faisal Specialist Hospital and research centers
58. 58
Country Regulatory Authority Pricing Reimbursement
Egypt
Central Administration for
Pharmaceutical Affairs
Reference price system.
Positive list of drugs available for reimbursement in
hospitals and primary care units
Kuwait
MoH, Drug and Food Control
Administration
Decision based on the price in the country
of origin and CIF prices
Public medicines list reimbursed in public sector.
Morocco MoH, Drugs & Pharmacy Directorate
Two pricing structures, for calculation
method of pricing domestic drugs and for
imported drugs.
Positive list, although most pharmaceuticals are privately
funded.
Saudi Arabia SFDA Reference price system.
Pharmaceuticals listed on government formularies are
fully reimbursed, although there is no national policy.
South Africa DoH Pricing Committee
Single exit price set by manufacturers,
incorporates wholesale and distributor
fees Dispensing fees set separately
Essential drugs list. Drugs used in public sector primary
care are 100% reimbursed by the government. For drugs
used in hospital care or those obtained on prescription,
patient co-payments may be required
Turkey
MoH, Department of Pharmaceutical
Pricing; Reimbursement Commission,
Ministry of Finance.
Reference price system based on lowest
price among reference countries for
reimbursable drugs For products not valid
for reimbursement, pricing is set at 100%
of the highest reference country.
Positive list. Since November 2011, prescribed medicines
have been reimbursed at up to 10% above the lowest
priced drug in their category
United Arab
Emirates
MoH
The MoH has implemented a unified
pricing system.
Reimbursement through compulsory private health
insurance. Expatriates can receive 50% discount for
treatment in the public sector on production of a
contributory health card
Market Entry challenges
Pricing and
reimbursement
59. 59
Market Entry challenges
Distribution
What distributor does?
Distributor
RA and
local
authorities
relations
Custom
clearance
Storage and
distribution
Collection
and
payment
Tendering
and market
access
60. 60
Market Entry challenges
Distribution
Manufacturer Distributor
Retail
Pharmacies
Private
Hospitals
Wholesaler
Governmental
tenders
Governmental
hospitals
PC outlets
Retail
consumer
Super markets
End User
What distributor does?
61. 61
Market Entry challenges
Distribution
Manufacturer
Distributor
Exclusive
Non-exclusive
Direct to Market
Terms should be included in the agreement
⢠The products sold
where and to whom the distributor will resell these products
⢠Ownership of inventory
⢠Sales targets
Annual sales & Growth target
Mechanism for reporting sales
⢠Marketing responsibilities
⢠Any consent agreed that the distributor may employ âsub-distributorsâ;
⢠Intellectual property rights
⢠Circumstances in which the contract may be terminated
how the contract may be terminated (for example, by written notice sent to either
partyâs registered office) and
consequences on termination
What happens to the remainder of any stock left?
The return of any confidential information (e.g. contacts
CAGR 3 9 1 7 (1)
West Eur declining 1.4% Asia growing 9%
will be boosted by a combination of rapid population growth due to falling infant mortality rates and increased longevity, along with improved access to subsidized healthcare growth in demand for medicines is expected as incomes rise
totals will exceed 100 for rounding up numbers..
US market, This is a reflection of a shift in the balance of the âinnovation cycleââthe amount of new medicines being launched and utilized compared to the value of branded medicines that are facing new generic competition. an unusually high level of spending on new products is coinciding with an unusually low reduction in the use of brands associated with new generic entrants
Price increases contribute to U.S. market growth
Across the major markets in Europe, economic austerityâled efforts to constrain growth in healthcare spending, and especially medicines, have resulted in spending declines or very low growth, which will continue through 2018
Locally manufactured generics are a key source of affordable drugs in African markets, where domestic manufacturers often enjoy preferential treatment to encourage domestic production
The pharmerging markets will expand at a compound annual growth rate of 8-11% through 2018, a slower pace than over the past five years, which averaged 13.6% growth. China, already the worldâs second largest pharmaceutical market, will reach spending levels of $155-185 billion in 2018. Implementation of health reforms are increasing demand for medicines, while pricing regulations are being used more frequently to manage overall growth levels. Over 80% of growth in pharmerging markets will be attributed to non-branded medicines
Widespread poverty and a heavy disease burden add to the problems faced by patients in many African countries, focusing much growth on
traditional therapies; growth in the AFME region including Egypt and Algeria will be driven by increases in the incidence of chronic, age-related
conditions driving demand for traditional chronic therapies
Changing disease patterns in emerging markets will provide pharmaceutical companies with additional opportunities to market their existing and increasingly global and innovative product portfolios
CNS products as a result for the population aging and increase in life expectancy from 65 years to 73 years
The next four years will see combinations of direct-acting antiviral agents (DAA) that are administered without interferon and ribavirin, and with increased efficacy in pan-genotypic HCV infections, easier dosing, shorter courses of treatment and reduced side effects
DAAs combined with interferon & ribavirin may remain viable options in pharmerging markets
Starting with the entry of AbbVieâs triple combination, manufacturers will innovate around affordability and cost control as they seek to compete with other equally effective therapies.
Competition on list price will likely begin with the entry of BMSâs triple combination regimen.
Significant increase in transportation cost of goods in Iraq to secure shipments
Parallel import to Iraq & Syria from Turkey & others
Primary registration still accepted in Iraq to import new products
(CPP & Price Certificate)
Sanction by US & EU, limits exports to Iran
GCC, regulations to unify prices across GCC markets to the lowest registered price
global pharmaceuticals market is worth US$300 billion a year, a figure expected to rise to US$400 billion within three years. The 10 largest drugs companies control over one-third of this market, several with sales of more than US$10 billion a year and profit margins of about 30%
King Abdullah Economic City (KAEC
The Knowledge Economic City (KEC
Prince Abdulaziz bin Mousaed Economic City (PABMEC
Jazan Economic City (JEC
It is evident that a lack of harmonisation between countries can lead to unnecessary duplication of work and waste of valuable resources and eventually increase drug lag
Gulf have almost harmonized their regulatory environment through Gulf Co-operation Council (GCC) organizations, rest of the regions are yet to come up with the harmonized regulations in their respective region
Ministry of Health of GCC states (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE) are regulatory authorities for the regional pharma sector. They also regulate prices of pharmaceutical products and bring about harmonization of varying prices and the regulatory process, the GCC implemented a centralized system, Gulf Central Committee for Drug Registration (GCC-DR) in May 1999, which currently runs parallel to the regulatory regimes in the region.
The use of Greece has proved particularly contentious and that country has been removed from some reference baskets
in Germany, assess the prices of new drugs in comparison to existing
generics. Under the German pricing rules, a medicine must have an added clinical benefit over
existing therapies in order to avoid being priced under the reference system. Germany is an example
of a scheme whereby drugs are grouped together if they are considered to be equally safe and
effective, rather than bioequivalent, creating a much larger reference group. For example, statins
(atorvastatin, simvastatin, rosuvastatin) are commonly grouped together despite having different
active ingredients, as they all reduce the level of low-density lipoprotein (LDL) cholesterol in the
Blood
Egypt, where there is no distinction between the first,
second, third and subsequent generics. Instead, the price reduction of generic drugs in comparison
to the originator products is related to the licensing and ownership status of the manufacturing plant.
For generics manufactured in a plant licensed by the Ministry of Health and certified by international
agencies, the reduction is 30%. If the plant is licensed by the Ministry of Health alone, the reduction is
40% and, for companies that contract out manufacturing, the price reduction is 60%.
In the UK, pharmaceutical prices are indirectly controlled by the Department of Health, under the
Pharmaceutical Price Regulation Scheme (PPRS). The PPRS does not regulate prices directly, but
limits individual company profits. Manufacturers are free to set specific drug prices, but must not
breach their overall profit limit on sales to the NHS. If they do, the excess must be paid to the
government.
Sovaldi costs about $130 to manufacture
Gilead claims that the pricing reflects the value of Sovaldi and it deserves a premium because of downstream health savings
USA $84,000 for a course of treatment
The irrational pricing of drugs has ginned up anger like I have never seen. Patient groups are protesting, and payers of all kinds â small businesses, large businesses, health plans, Medicaid plans, unions and government agencies â are galvanized to do something about it. No idea is too outlandish and all of them are on the table.
Pricing and reimbursement is not directly linked in Saudi Arabia and there is no national unified
strategy for reimbursement. Registration and pricing of a drug by the SFDA does not guarantee
reimbursement by the healthcare sectors. Decisions on formulary listing and reimbursement are
made by Pharmacy and Therapeutics Committees in the various healthcare sectors. The
organisations involved in reimbursement decisions include the MoH, National Guard Health Affairs,
Ministry of Defence & Aviation, Ministry of the Interior, Ministry of Higher Education (University
Hospitals), and the private sector and health insurance companies