AAM Annual Meeting 2017

Transcription

1 AAM Annual Meeting 2017 The US Pharmaceutical Market: Trends, Issues, and Outlook Doug Long VP Industry Relations QuintilesIMS Copyright 2016 QuintilesIMS. All rights reserved.

2 Disclaimer The analyses, their interpretation, and related information contained herein are made and provided subject to the assumptions, methodologies, caveats, and variables described in this report and are based on third party sources and data reasonably believed to be reliable. No warranty is made as to the completeness or accuracy of such third party sources or data. As with any attempt to estimate future events, the forecasts, projections, conclusions, and other information included herein are subject to certain risks and uncertainties, and are not to be considered guarantees of any particular outcome. All reproduction rights, quotations, broadcasting, publications reserved. No part of this presentation may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without express written consent of QuintilesIMS QuintilesIMS Incorporated and its affiliates. All rights reserved. Trademarks are registered in the United States and in various other countries. 1

3 US$ Billions Global generics are growing 8% in value, but growth is slowing $350 $300 CAGR +9.6% 20% 18% 16% PPG % Japan $250 14% Top 5 Europe $200 12% ROW 10% $150 8% Pharmerging $100 6% US $50 4% 2% Global Generics growth $ % Source: QuintilesIMS MIDAS Q3 2016, TLP groupings; Retail and Hospital channels 2

4 Standard Units BN Global generics are growing in 4% in volume 1,600 1,400 1,200 CAGR +5.4% 20% 18% 16% 14% PPG % Japan Top 5 Europe 1,000 12% US % 600 8% ROW % 4% 2% Pharmerging Global Generics growth % Source: QuintilesIMS MIDAS Q3 2016, TLP groupings; Retail and Hospital channels 3

5 Global generic competition is more fragmented Generic volumes bn SU Generic volumes bn SU others 67% TEVA 7% NOVARTIS 6% MYLAN 3% GSK 3% CIPLA 3% 3% SANOFI 3% ALLERGAN 2% 2% SUN PHARMA 2% PFIZER ABBOTT others 71% TEVA NOVARTIS 5% GSK 5% CIPLA 3% 3% SANOFI 3% HYPERMARCAS 3% 2% MYLAN 2% SUN PHARMA 2% 2% ALLERGAN LUPIN Source: QuintilesIMS MIDAS

6 Significant generic and biosimilars events in 2016 Price Deflation led to a decrease in unbranded Generics $ sales in 2016 Department of Justice and State Attorney General investigations of price fixing Walgreens and Rite Aid merger Another buying consortium-mckesson and Walmart Record level of ANDA Approvals but fewer NDA and Biologic approvals 4 biosimilar approvals with 2 biosimilar launches Teva/Actavis merger with divestitures to other generic companies Management changes at many companies FDA adds Black-Box warning to opioids President Trump 5

7 What s happened since last year? Snapshot of key happenings in the industry Market Performance Dollar growth is decelerating TRX growth is improving 90 day scripts are 14% of scripts Mergers / Alliances Walgreens and Rite Aid Ahold and Delhaize Target pharmacies are now CVS pharmacies Walmart and McKesson Alliance Anthem/Express Scripts dispute Anthem and Cigna Aetna and Humana Reimbursement AMP finally arrives Generic Deflation DIR fees Pharmacists can prescribe in more places Generic Launches Regulation Price / Politics Crestor Gleevec Benicar, Tamiflu Seroquel XR, Nuvigil, Asacol New FDA/DEA guidelines on Controlled Substances Turing, Valeant and now Epipen 2016 Elections and public anger DOJ investigations 6

8 Growth (%) Growth (%) US market sales growth is decelerating Total Market Growth (%) of Sales Retail and Mail 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -3.2% 4.3% 14.2% 12.3% MAT Nov % 5.7% YTD Nov % 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -3.2% 3.5% 10.6% 9.5% MAT Nov % 4.5% YTD Nov 2016 SOURCE: QuintilesIMS, National Sales Perspectives, NOV

9 Contribution to Growth Specialty spending growth is slowing from the record high growth rates reached in with Hep C Specialty growth would have been 3.5% lower in 2015 without HCV Contribution to Specialty Spending Growth by Therapy Area 35% 30% 25% Oncology Autoimmune Viral Hepatitis Multiple Sclerosis HIV Antivirals Other Specialty Specialty Growth % 29% 29% 27% 25% 26% 21% 20% 19% 20% 15% 10% 5% 9% 9% 9% 12% 9% 9% 8% 5% 7% 9% 13% 14% 12% 12% 9% 0% -5% Source: QuintilesIMS, National Sales Perspectives, Sep 2016 U.S. Market Overview - December

10 Growth US$BN Spending on specialty medicines increased $3.7Bn in Q Traditional spending increased only $848mn in Q Traditional and Specialty Spending Growth Dynamics Protected Brands Volume Protected Brands Price New Brands Generics Patent Expiries Growth 10 Traditional Medicines 10 Specialty Medicines Specialty medicines are defined by the IMS Institute as products which treat chronic/complex or rare diseases and which meet at least four of the following six criteria: not-self-administerable, patient monitoring/counseling/rems program, specialist-initiated, special handling requirements, unique/narrow distribution, cost in excess of $6K/year, require reimbursement assistance. Source: QuintilesIMS, National Sales Perspectives, Sep 2016 U.S. Market Overview - December

11 Global New Active Substances (NAS) Available Since 1996 Cumulative Total Since year NAS Earlier NAS Infection Oncology Neurology Cardiovascular Blood & related disorders Diabetes Orphan Others 23% 14% Specialty Biologics Specialty Small molecules Traditional Biologics Traditional Small Molecules 15% % 7% 5% 6% 13% 8% 47% 12% 26% Note: Disease categories based on therapy areas and expected launches Orphan drugs are those to treat small populations with rare diseases, and are defined separately by US FDA and the European Medicines Agency (EMA). Any medicine with an orphan designation for an approved use within the first year after global launch are categorized as Orphan. Half of designated orphan indications are granted more than a year after original approval. Source: QuintilesIMS, IMS Institute for Healthcare Informatics, October

12 Spending on brands launched in the last 24 months grew $18Bn to $42Bn in sales in the last 12 months Drivers: Opdivo, Ibrance, Daklinza, Triumeq, Genvoya, Gardasil 9 New Brand Spending Growth ($BN) Diabetes Other Traditional Multiple Sclerosis Oncology Autoimmune HIV Antivirals Viral Hepatitis Other Specialty MAT Sep 2016 Source: QuintilesIMS, National Sales Perspectives, Sep 2016 U.S. Market Overview - December

13 Specialty classes Hepatitis, Autoimmune, Oncology drive non-discounted spending growth Diabetes growth from new brands, list price growth offset by rebates Leading Therapy Classes Non-Discounted Spending Growth by Segment ($BN) MAT Sep 2016 Protected Brands Volume Protected Brands Price New Brands Generics Volume Generics Price LOE Antidiabetics Oncologics Autoimmune Diseases Respiratory Agents Pain Multiple Sclerosis Hiv Antivirals Mental Health Viral Hepatitis Lipid Regulators Nervous System Disorders Anticoagulants Source: QuintilesIMS, National Sales Perspectives, Sep 2016 U.S. Market Overview - December

14 Growth (%) AC TRx MN Unbranded Generics are driving dispensed prescription growth Absolute Growth of Unbranded Generics (TRx) Total Market TRx Growth % 3.5% % 2.0% 2.1% 1.0% 1.8% 2.1% MAT Nov % MAT Nov 2016 YTD Nov 2016 Source: QuintilesIMS, National Prescription Audit, Nov

15 Growth (%) Growth (%) Unbranded Generics grew by 3.3% on a TRX basis but posted a 2.8% loss in 2016 Growth (%) of Sales and Dispensed Prescriptions By Product Type Sales ($) Dispensed Prescriptions (TRx) 10.0% 8.0% 6.0% 4.0% 2.0% 6.0% 7.7% 10.0% 8.0% 6.0% 4.0% 2.0% 1.8% 3.3% 0.0% 0.0% -2.0% -2.0% -4.0% -2.8% -4.0% -6.0% -8.0% Branded Generics Brands Unbranded generics -6.0% -8.0% Branded Generics -5.4% Brands Unbranded generics SOURCE: LEFT: QuintilesIMS, National Sales Perspectives, NOV 2016 RIGHT: QuintilesIMS, National Prescription Audit, NOV

16 Generics are experiencing Price Deflation since early 2016 according to the Barclay s Price Monitor 25 Generics Q Q2 Q3 Q4 Q Q2 Q3 Q4 Q Q2 Q3 Q4 Jan-17 Generics -10 Source: Barclay s Phrarma Pricing Monitor 15

17 25 Generics are experiencing Price Deflation since early 2016 according to the Barclay s Price Monitor Brands Q Q2 Q3 Q4 Q Q2 Q3 Q4 Q Q2 Q3 Q4 Jan-17 Generics -10 Source: Barclay s Phrarma Pricing Monitor 16

18 Biologics and Injectables are the fastest growing segments Growth (%) in US$ 17.0% 12.0% 14.9% 12.5% 7.0% 6.0% 7.7% 5.9% 6.1% 7.3% 2.0% 1.6% -3.0% -2.8% -8.0% Total Market Brand Generic Primary Care Driven ATCs Specialist Driven ATCs Biologic Molecules Orals Injectables Other Forms SOURCE: QuintilesIMS, National Sales Perspectives, NOV

19 Non-Discounted Spend Growth (%) US$BN Non discounted Unbranded Generic sales were $67 Billion in 2016 but there was negative growth $80 KEY Medicine Spend 30% $70 Spend Growth $65 $69 $67 25% $60 $50 $52 $57 20% 15% $40 $30 10% $20 5% $10 0% $ MAT Nov % Source: QuintilesIMS, National Sales Perspectives, Nov

20 Non-Discounted Spend Growth (%) TRx MN Americans filled 3.8 Billion Unbranded prescriptions in 2016 KEY Prescriptions 3,800 TRx Growth 3,761 12% 3,700 3,644 10% 3,600 3,552 8% 3,500 6% 3,400 3,411 4% 3,300 3,200 3, MAT Nov % 0% Source: QuintilesIMS, National Prescription Audit, Nov

21 Market Share (%) Unbranded Generics have captured 84.3% of scripts 100% 90% % Dollars % Total Prescriptions Dispensed 13.6% 16.1% 16.9% 16.9% 16.0% 14.8% 80% 70% 60% 50% 11.9% 12.2% 12.1% 11.1% 10.7% 10.8% 72.8% 77.8% 80.5% 82.0% 83.3% 84.3% 40% 30% 20% 10% 0% 74.5% 71.7% 71.0% 72.1% 73.3% 74.4% MAT Nov % 20.2% 6.3% Brands Branded generics Unbranded generics 5.9% 5.7% 5.3% 5.0% 15.9% 13.6% 12.3% 11.4% 10.6% MAT Nov 2016 Source: QuintilesIMS, National Sales Perspectives, Nov 2016, National Prescription Audit, Nov

22 Generics share of sales growth % Contribution to growth US$ 2012 Generics 7% MAT NOV 2016 Generics 28% Brand 72% Brand 93% AC = +$-10bn AC = +$25bn Source: QuintilesIMS, National Sales Perspectives, Branded generics disaggregated, Nov

23 2016 was a record year for ANDA Approvals FDA Fiscal Year Basis Received Approved 1,600 1,473 1,600 1,400 1,400 1,200 1,103 1,200 1, , Source: FDA,

24 Top 10 Total Retail and Mail therapeutic areas (2016) 2016 Dispensed (TRx in millions) Market Share (%) Δchange in TRx (in millions) Growth (Δ 2015 to 2016) ANTIDEPRESSANTS % % RENIN ANGIOTENSIN ANTAG % % CHOLESTEROL RED % % ANALG NARCOTIC % % ANTNFCT,BROAD/MED SPEC % % ADRENERGIC BLOCKER % % ANTI-ULCERANTS % % DIABETES,NON-INSULIN % % SEIZURE DISORDERS % % THYROID HORMONE % % TOP 10 1, % % SOURCE: QuintilesIMS, National Prescription Audit, DEC

25 TRx Millions Rescheduling and other factors are causing a decline of HYCD/APAP scripts year over year 35% lower than the peak or 47 million fewer scripts Growth (%) $ % % $ % $ % $ % $80 $60 $40 $20 $ % -12.0% -14.0% -16.0% -18.0% -20.0% SOURCE: QuintilesIMS, National Prescription Audit, DEC

26 Top Total Retail and Mail therapeutic areas (2016) 2016 Dispensed (TRx in millions) Market Share (%) Δchange in TRx (in millions) Growth (Δ 2015 to 2016) DIURETICS % % ANTIARTH,SYSTEMIC % % HORMONES,CORTICOIDS,PLAIN % % CALCIUM BLOCKERS % % ANTIANXIETY % % ORAL CONTRACEPTIVES % % BRONCHODILATORS GENERAL % % STEROID,INHALED % % ANALEPTICS % % MUSCLE RELAXANTS % % TOP 20 2, % % SOURCE: QuintilesIMS, National Prescription Audit, DEC

27 Top 10 Total Retail and Mail dispensed molecules (2016) 2016 Dispensed (TRx in millions) Market Share (%) Δchange in TRx (in millions) Growth (Δ 2015 to 2016) LISINOPRIL % % ATORVASTATIN CA % % LEVOTHYROXINE SOD % % HYCD/APAP % % AMLODIPINE BESY % % OMEPRAZOLE (RX) % % METFORMIN HCL % % AMOXICILLIN % % GABAPENTIN % % SIMVASTATIN % % TOP % % SOURCE: QuintilesIMS, National Prescription Audit, DEC

28 Top Total Retail and Mail dispensed molecules (2016) 2016 Dispensed (TRx in millions) Market Share (%) Δchange in TRx (in millions) Growth (Δ 2015 to 2016) HYDROCHLOROTHIAZIDE % % LOSARTAN POT % % AZITHROMYCIN % % ALPRAZOLAM % % SERTRALINE HCL % % IBUPROFEN (RX) % % PREDNISONE % % METOPROLOL SUCCIN % % FLUTICASONE PROP % % TRAMADOL HCL % % TOP 20 1, % % SOURCE: QuintilesIMS, National Prescription Audit, DEC

29 Retail Market Snapshot Top 10 Retail Therapeutic Areas Drug Chain Mass Merch Independent Food Store ANTIDEPRESSANTS* ANTNFCT,BROAD/MED SPEC* RENIN ANGIOTENSIN ANTAG* ANALG NARCOTIC* RENIN ANGIOTENSIN ANTAG* ANTIDEPRESSANTS* CHOLESTEROL RED* ANTNFCT,BROAD/MED SPEC* ANTIDEPRESSANTS* ANALG NARCOTIC* RENIN ANGIOTENSIN ANTAG* CHOLESTEROL RED* ANTIDEPRESSANTS* RENIN ANGIOTENSIN ANTAG* CHOLESTEROL RED* ANTNFCT,BROAD/MED SPEC* CHOLESTEROL RED* ANALG NARCOTIC* ANTI-ULCERANTS* ANALG NARCOTIC* ADRENERGIC BLOCKER* ADRENERGIC BLOCKER* ADRENERGIC BLOCKER* ADRENERGIC BLOCKER* ANTI-ULCERANTS* DIABETES,NON-INSULIN* ANTNFCT,BROAD/MED SPEC* DIABETES,NON-INSULIN* SEIZURE DISORDERS* ANTI-ULCERANTS* SEIZURE DISORDERS* ANTI-ULCERANTS* DIABETES,NON-INSULIN* THYROID HORMONE* DIABETES,NON-INSULIN* SEIZURE DISORDERS* HORMONES,CORTICOIDS, PLAIN DIURETICS ANTIANXIETY THYROID HORMONE* Note: * indicates the therapeutic area (TA) is a top 10 TA for total dispensed retail TRxs in SOURCE: QuintilesIMS, National Prescription Audit, DEC

30 Retail Market Snapshot Top 10 Retail Molecules Drug Chain Mass Merch Independent Food Store LISINOPRIL* LISINOPRIL* HYCD/APAP* LISINOPRIL* LEVOTHYROXINE SOD* LEVOTHYROXINE SOD* LISINOPRIL* LEVOTHYROXINE SOD* ATORVASTATIN CA* ATORVASTATIN CA* ATORVASTATIN CA* ATORVASTATIN CA* HYCD/APAP* METFORMIN HCL* AMLODIPINE BESY* HYCD/APAP* AMLODIPINE BESY* HYCD/APAP* OMEPRAZOLE (RX)* AMLODIPINE BESY* AMOXICILLIN* AMLODIPINE BESY* LEVOTHYROXINE SOD* METFORMIN HCL* OMEPRAZOLE (RX)* OMEPRAZOLE (RX)* GABAPENTIN* OMEPRAZOLE (RX)* GABAPENTIN* SIMVASTATIN* METFORMIN HCL* AMOXICILLIN* METFORMIN HCL* AMOXICILLIN* SIMVASTATIN* SIMVASTATIN* AZITHROMYCIN GABAPENTIN* ALPRAZOLAM GABAPENTIN* Note: * indicates the molecule is a top 10 molecule for total dispensed retail TRxs in SOURCE: QuintilesIMS, National Prescription Audit, DEC

31 Dispensed prescriptions of leading products Leading Products Company MAT NOV 2016 Dispensed (TRx in millions) Market Share (%) Growth (Δ MAT NOV 2015 to MAT NOV 2016) US Industry 4, % 1.8% lisinopril LU % 5.0% levothyroxine MYN % 1.6% atorvastatin ca ATX % 38.4% hycd/apap MKR % -12.3% levothyroxine LNN % 5.5% trazodone hcl TEV % -3.7% Proair Hfa T9V % -14.5% azithromycin TEV % 5.2% atorvastatin ca MYN % 14.5% omeprazole (rx) SDZ % 21.8% TOP % 4.8% SOURCE: QuintilesIMS, National Prescription Audit, NOV

32 Dispensed prescriptions of leading products Leading Products Company MAT NOV 2016 Dispensed (TRx in millions) Market Share (%) Growth (Δ MAT NOV 2015 to MAT NOV 2016) metoprolol tart MYN % 2.4% Ventolin Hfa GSK % 21.3% amoxicillin TEV % 5.2% hycd/apap ATV % -11.0% ibuprofen (rx) AM % 2.3% prednisone W-W % 5.5% hycd/apap QLT % -10.4% simvastatin LU % -7.9% levothyroxine SDZ % 3.4% lisinopril/hctz LU % 7.2% TOP % 3.3% SOURCE: QuintilesIMS, National Prescription Audit, NOV

33 Mail Market Snapshot Top 10 Mail Therapeutic Areas Mail Service CHOLESTEROL RED* RENIN ANGIOTENSIN ANTAG* ANTIDEPRESSANTS* ADRENERGIC BLOCKER* DIABETES,NON-INSULIN* ANTI-ULCERANTS* DIURETICS* CALCIUM BLOCKERS* THYROID HORMONE* SEIZURE DISORDERS Specialty Mail ANTIARTH,SYSTEMIC* HIV ANTIVIRALS NEUROLOGICAL/NEUROMUSC,OTH IMMUNOMODULATORS IMMUNOSUP/TRANSPLANT AGENTS RENIN ANGIOTENSIN ANTAG* ANTIDEPRESSANTS* ANTINEO ENZYME INHIBITORS THYROID HORMONE* CHOLESTEROL RED* Note: * indicates the therapeutic area (TA) is a top 10 TA for total dispensed mail TRxs in SOURCE: QuintilesIMS, National Prescription Audit, DEC

34 Mail Market Snapshot Top 10 Mail Molecules Mail Service ATORVASTATIN CA* LISINOPRIL* AMLODIPINE BESY* SIMVASTATIN* SYNTHROID* OMEPRAZOLE (RX)* METFORMIN HCL* HYDROCHLOROTHIAZIDE* LOSARTAN POT* METOPROLOL SUCCIN Specialty Mail HUMIRA ENBREL COPAXONE LEVOTHYROXINE SOD* TECFIDERA XOLAIR TACROLIMUS LISINOPRIL* OTEZLA MYCOPHENOLATE MOF Note: * indicates the molecule is a top 10 molecule for total dispensed mail TRxs in SOURCE: QuintilesIMS, National Prescription Audit, DEC

35 Brands facing LOE in the next 5 years are valued at $91.9Bn Biggest 2016 expiries: Crestor, Gleevec, Benicar, Zytiga U.S. Small Molecule Patent Expiry Exposure 35 $91.9Bn at Risk in Next 5 Years 30 $32.0 $ $ $ $17.8 $15.7 $17.9 $14.0 $11.0 $15.4 $12.8 $ * 2017* 2018* 2019* 2020* *Sales in year prior to expiry used for years ; sales in MAT Sep 2016 used for years Source: QuintilesIMS, National Sales Perspectives, Sep

36 Many key biologics losing protection by 2020 Top 10 biologics total $79Bn sales globally Global Top 10 Biologics sales by region US expiry date EU expiry date 66% 34% Adalimumab (Humira) % 23% Insulin Glargine (Lantus) Expired Expired 66% 34% Etanercept (Enbrel) 2028 (extended) Expired 57% 43% Infliximab (Remicade) 2018 Expired 55% 45% Rituximab (Mabthera) 2018 Expired 48% 52% Bevacizumab (Avastin) % 59% Trastuzumab (Herceptin) 2019 Expired 78% 22% Insulin Aspart (Novorapid) Expired Expired 84% 16% Glatiramer Acetate (Copaxone) Expired % 16% Pegfilgrastim (Neulasta) US Sales Non US Source: QuintilesIMS, MIDAS, MAT Q Sales 2015 US$ 35

37 Significant advances occurred in 2016 for biosimilars, including three more approvals and a growing pipeline in development US Biosimilar Pipeline for Biologics with the Greatest Number of Biosimilar Candidates filgrastim adalimumab infliximab rituximab Launch pegfilgrastim etanercept Marketed Pre-Registration Phase 3 Phase 1/2 Pre-Clinical/Clinical trastuzumab bevacizumab Source: QuintilesIMS, LifeCycle R&D Focus, Dec 2015; IMS Institute for Healthcare Informatics, Mar

38 Three regions make up 88% of global biologic sales and 98% of biosimilar sales* US, Japan, Europe Biosimilar molecule approvals to date 60% of biologic sales 3% of biosimilar sales 6% of biologic sales 8% of biosimilar sales % of biologic sales 87% of biosimilar sales somatropin somatropin 2008 epoetin alfa epoetin zeta filgrastim epoetin alfa 2010 filgrastim-sndz insulin glargine injection* filgrastim darbepeotin alfa infliximab insulin glargine infliximab follitropin alfa insulin glargine infliximab etanercept adalimumab 2016 etanercept enoxaparin sodium Source: QuintilesIMS MIDAS Q (Europe excludes Russia and Turkey); EMA website Jan 2017; FDA website June 2016; Japan approval dates from Gabionline April 2016; *Basaglar is not a biosimilar in the USA, it is a follow-on biologic; excludes Non-original biologics 37

39 Europe has paved the way for biosimilar development As of the end of 2016, the EMA has approved 23 biosimilars (8 molecules) 2016 marks the tenth anniversary of the launch of the first biosimilar in Europe and Medicines for Europe claims: Across Europe, nearly 90% of doctors now know what Biosimilar medicines are and nearly 60% have already prescribed them Since the first biosimilar medicine was launched in 2006, EU-approved biosimilars have generated more than 400 million patient days of positive clinical experience Between 2006 and 2014, biosimilar medicines have increased patient access by 44% overall within in the EU-5 countries*^ * France, Germany, Italy, Spain, United Kingdom References ^1. Biosimilar News, 28 April Years of biosimilar medicines in Europe: transforming healthcare. Accessed 29 December

40 The FDA is catching up It took longer for US FDA to formulate its guidance for biosimilar development and some guidance's are still being developed As of 2016, the FDA: Approved four biosimilars: filgrastim, infliximab, etanercept and adalimumab Also approved extrapolation of data submitted for all other licensed indications of the originator (in most cases) Increased internal resources to handle the volume of biosimilar applications Canada, Australia, Japan and South Korea are demonstrating a similar commitment to introducing biosimilars recognizing the significant benefits of making important biologic therapies more affordable and thereby increasing patient access within their populations Biosimilar News, 28 April Years of biosimilar medicines in Europe: transforming healthcare. Accessed 29 December

41 Learnings from QuintilesIMS 2016 The Impact of Biosimilar Competition report in Europe Competition drives down the price > In order to achieve long-term savings, there should be a competition with multiple players The correlation between biosimilars MS and price reduction is weak > High savings can be achieved even if the market share is low Competition can also influence the originator s behaviour > Originators are launching innovative long-acting/pegylated products without a price premium versus the short-acting. This changes the treatment paradigm and therefore usage patterns. Lower prices has the most impact on usage in countries with low initial usage > There are significant increases in consumption for countries with low starting volumes The product profile differences can explain differences in impact on the KPIs Source: QuintilesIMS Institute, The Impact of Biosimilar Competition,

42 Formulation spend (US$) Total Market Generic Formulation 2016 Sales (US$) Market Share (%) Δchange in US$ (BN) 5 Year CAGR (%) 2016 Sales (US$) Formulation Share (%) Δchange in US$ (BN) Oral Solids $ % $ % $ % -$2.58 Injectables $ % $ % $ % $0.89 Inhalants $ % $ % $ % -$0.23 Derms $ % $ % $ % -$0.40 Ophthalmics $ % $ % $ % $0.01 Oral Liquids $ % $ % $ % $0.02 Transdermals $ % -$ % $ % -$0.14 Nasal Therapy $ % -$ % $ % $0.14 SOURCE: QuintilesIMS, National Sales Perspective, DEC

43 Evolution of formulation spend (US$) Formulation Sales (US$ BN) Generic Sales (US$ BN) Generic Share (%) Sales (US$ BN) Generic Sales (US$ BN) Generic Share (%) Oral Solids $186.7 $ % $214.3 $ % Injectables $85.8 $ % $148.6 $ % Inhalants $9.6 $ % $17.0 $ % Derms $6.6 $ % $12.2 $ % Ophthalmics $5.0 $ % $7.6 $ % Oral Liquids $3.4 $ % $4.4 $ % Transdermals $4.1 $ % $3.3 $ % Nasal Therapy $2.8 $ % $1.8 $ % SOURCE: QuintilesIMS, National Sales Perspective, DEC

44 Formulation dispensed prescriptions (TRx) Total Market Generic Formulation 2016 TRx (MN) Market Share (%) Δchange in TRx (MN) 5 Year CAGR (%) 2016 TRx (MN) Formulation Share (%) Δchange in TRx (MN) Oral Solids 3, % % 3, % Derms % % % 6.0 Oral Liquids % % % -0.4 Inhalants % % % -0.1 Injectables % % % 0.4 Ophthalmics % % % 4.9 Nasal Therapy % % % 0.0 Transdermals % % % 0.4 SOURCE: QuintilesIMS, National Prescription Audit, DEC

45 Evolution of dispensed prescriptions (TRx) Formulation Dispensed (MN TRx) Dispensed Generics (MN TRx) Generic Share (%) Dispensed (MN TRx) Dispensed Generics (MN TRx) Generic Share (%) Oral Solids 3, , % 3, , % Derms % % Oral Liquids % % Inhalants % % Injectables % % Ophthalmics % % Nasal Therapy % % Transdermals % % SOURCE: QuintilesIMS, National Prescription Audit, DEC

46 Biggest players in unbranded generics (Unofficial) 2016 Dispensed Prescriptions (TRx) TEVA MYLAN SANDOZ PAR LUPIN AUROBINDO AMNEAL APOTEX ZYDUS HIKMA Δchange Dispensed TRx between 2015 and 2016 CIPLA AUROBINDO SOLCO CITRON ACCORD APOTEX GLENMARK HIKMA STRIDES BIONPHARMA 2016 Non- Discounted Spend (US$) TEVA MYLAN SANDOZ PAR SUN GREENSTONE LUPIN PRASCO HIKMA DR REDDYS SOURCE: QuintilesIMS, National Sales Perspective and National Prescription Audit, DEC

47 Growth Rate Growth Rate Billions of TRx Executive Summary TRxs are forecast to grow slightly less than 2% per year through TRx 90 day Adj TRx Retail Mail 0 4% 3% 2% 1% 0% % TRx 90 day Adj TRx 0% -5% 2.6% 2.5% 3.3% 3.1% 3.0% 2.9% -10% 2.5% 2.3% 1.9% 2.1% 1.8% 1.9% 1.8% -15% 1.2% % 2.8% 1.6% 3.1% 1.7% 1.8% 1.8% 2.1% 1.5% 0.5% 0.0% -2.5% -9.4% -12.0% SOURCE: QuintilesIMS, National Prescription Audit, DEC

48 Forecast Summary Class of Trade: Chain TRx growth of >2% is expected to exceed market growth (<2.0%) Rx Length: 90 day prescriptions continue to outpace market growth and capture share Rx Length by Class of Trade: 90 day TRxs are growing rapidly across all classes of trade; share growth of 90 day Rxs is greatest in Chains Method of Payment: Growth of Medicaid / Medicare D continues to outpace other payment categories driven by ACA and aging population; potential decline in Medicaid due to presidential outcome Brand and Generic: Brand growth rates are expected to climb as generics reach saturation Acute and Chronic Therapies: Chronic therapies continue to dominate the market and are expected to continue growing faster than acute therapies Specialty and Traditional: Specialty areas continue to grow but do not outpace traditional therapies; MS and oncologics are most dominant specialty category Age Group: Aging population (age 50+) continues to have an increasing demand for TRxs SOURCE: QuintilesIMS, National Prescription Audit, DEC

49 Thoughts for 2016 and Beyond Medicaid expansion, HIX and Medicare eligible population growth will continue to drive shifts in coverage in 2016 and beyond, but much of the change has already taken place Demand remains robust in general but is shifting from mail to retail pharmacy, from brands to generics, acute to chronic and from traditional to specialty products--the shift to specialty products has a minor effect on TRx volume, but has a significant effect in terms of costs, both to patients and payors Patients rising exposure to costs, when not using generics, puts them at risk for worse adherence, and the relatively low percentage of 90d Rx in chronic conditions represents a substantial cost savings opportunity The modest growth trends in TRxs (for the foreseeable future) US TRx Market Outlook The potential for ACA reform is currently seen to have a neutral effect on TRx growth due to the expectation of continued coverage 48

50 The U.S. healthcare system has saved $1.46 trillion in the last ten years due to the availability of low cost generics Savings from generics launched total $626Bn over last 10 years Cumulative Ten Year Savings from Older and Newer Generics ($BN) 1,800 1,600 1,400 1,200 1, Older Generics Newer Generics Launched Pre-2006 Launched $1,456Bn $626Bn $829Bn Source: QuintilesIMS, National Sales Perspectives, Jun

51 Annual savings from generics that entered the U.S. market in the last ten years totaled $227Bn in 2015 Generics launched have generated $626Bn in cumulative savings Annual Savings from Generics ($BN) Older Generics Newer Generics Launched Pre-2006 Launched Source: QuintilesIMS, National Sales Perspectives, Jun

52 Generic mental health, hypertension, cholesterol, ulcer, pain medications account for half of the savings in last ten years Generics saved the U.S. healthcare system $1.46 trillion since 2006 Cumulative Savings from Generics from 2006 to 2015 ($BN) Anticoagulants Respiratory Diabetes Oncology Cancer Anti-Nauseants Other CNS Antibacterials All Others Nervous System Disorders Mental Health $189 Pain $114 Hypertension $179 Cholesterol $153 Anti-Ulcerants $119 Mental Health Hypertension Cholesterol Anti-Ulcerants Pain Nervous System Disorders Antibacterials Other CNS Cancer Anti-Nauseants Oncology Respiratory Anticoagulants BPH Ophthalmology Antifungals Dermatologics ADHD Herpes Antivirals Topical Nasal Preps All Others Source: QuintilesIMS, National Sales Perspectives, Jun

53 Medicines Account for a STABLE SHARE OF HEALTH CARE SPENDING 52

54 GROWTH IN OTHER HEALTH CARE SERVICES WILL BE FIVE TIMES Total Medicine Spending Growth Through Next Decade Projected Annual Growth in Spending ($ Billions) 53

55 Insurers Data Show MEDICINES ARE NOT MAIN DRIVER OF PREMIUM INCREASES Average Dollar Increase in Monthly Premium by Category, 2016 Individual and Small Group Plans 54

56 Medical Procedures Become More Expensive Over Time, BUT COST CONTAINMENT IS BUILT INTO MEDICINE LIFE CYCLE 55

57 Share of Commercial Plans with a PRESCRIPTION DRUG DEDUCTIBLE IS INCREASING 56

58 What are People Thinking About? Pharmacies Reimbursement Controlled Substances abuse Access to Specialty Drugs Purchasing Alliances Track and Trace Wholesalers Purchasing Alliances Controlled Substances abuse Access to Specialty Drugs Generic Price Deflation Track and Trace Payers Exploding costs of Specialty Drugs Rising Oncology costs Formularies blocks and exclusive launches Generic Manufacturers Purchasing Alliances Price increase backlash/price Deflation Portfolio Optimization Brand /niche drugs Proposed labeling changes Tax Inversion Brand/Specialty Manufacturers Price backlash Becoming more specialized Oral Specialty Orphan Drugs Tax Inversion Rising costs Specialty Tiers Losing Insurance Consumers 57

59 Millions FAN Current Season to Date vs. Prior Seasons Season Comparison Current Season to Date vs. Prior Season: affected population down 2.7% Current Season to Date vs. Recent 3 Season Average: affected population down 8.6% Season Average (2013/14, 2014/15 & 2015/16) SOURCE: QuintilesIMS, FAN, 1/14/

60 Significant generic and biosimilars events in 2017 Price Deflation???? Department of Justice and State Attorney General investigations of price fixing Walgreens and Rite Aid merger ANDA Approvals?? Other biosimilar approvals with more biosimilar launches GDUFA II approval Trump presidency and new political environment and possible Obamacare changes plus Brexit Amgen-Sandoz in the Supreme Court Generic labeling rule Medicaid CPI Generic rebate Copaxone 40 MG 59

61 AAM Annual Meeting 2017 The US Pharmaceutical Market: Trends, Issues, and Outlook Doug Long VP Industry Relations QuintilesIMS Copyright 2017 QuintilesIMS. All rights reserved.