Trends, Issues, Forecasts

Transcription

1 Trends, Issues, Forecasts PRESENTED BY Doug Long Vice President, Industry Relations Copyright 2004, IMS Health. No portion of this document may be reproduced, used or distributed in any form without written authorization. All trademarks assumed.

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4 Agenda Review 2003 Trends Biotech, Generics & Brands Slow Start/Fast Finish Managed Care & Co pays Channel Trends Review Key Issues Innovation, Biologics, Generics, OTC Importation Company, Class & Product Rankings Recap and a look ahead Puerto Rico

5 U.S. Pharmaceutical Market Estimates for 2003 Dollar sales exceeded $217 Billion dollars-marking the first time the market exceeded the $200 billion mark. Total prescriptions dispensed surpassed 3.5 Billion.

6 2003: Complicated Times for Pharma Paxil, Cipro, Remeron lost patents while some generic drugs gained strength (omeprazole, augmentin, metformin) so did OTCs and biotechs Managed care continued to expand tiered co-pay usage and increase differentials; raised premiums Finally some action on Medicare Rx benefit but what will it mean to pharma growth? McClellan settled into FDA role, but now likely to move to CMS Re-importation and counterfeit drugs increasing Pharma image hurt by re-importation and pricing policies. Now, industry under political duress with upcoming elections Prices under intense pressure Some (potentially) significant new drugs were launched: Crestor (cholesterol) Namenda (Alzheimer's) Levitra, Cialis (ED) Amevive, Raptiva (psoriasis) Xolair (asthma)

7 Global Market Size & Growth: Total Market $ B Sales Growth Rate % Growth Source: R&D Focus, December 2003 and prior year SMRs

8 Global Growth Remains Solid Dec 2003 update MAT Dec 2003 % Growth Constant $ World Audited Market US$ Bil % Share 2003 CAGR Latin America $ % Asia/Africa/Australia $ % Japan $ % Europe (All) $ % North America $ % Worldwide $ % Key Markets $ % EU (15) $ % Source: IMS Health: MIDAS, MAT Dec 2003

9 Dec 2003 update Ten Key Markets Still Account for Over 80% of World Market +11.1% US $219.5 Bil +10.7% Canada $10.0 Bil +3.4% Japan $52.4 Bil +21.8% China ** $6.0 Bil +1.7% Mexico* $6.2 Bil % 10 Key Markets $389.2 Bil % Major Europe $95.1 Bil +8.5% Germany $26.3 Bil +6.0% France $24.2 Bil +10.7% UK $16.4 Bil +4.5% Italy $16.5 Bil +12.2% Spain $11.7 Bil * Pharmacy Market Only ** Hospital Market Only % Growth Constant $ Source: IMS Health: MIDAS, MAT Dec 2003

10 Top-Line Growth in 2003 Holds Steady, Despite Tougher Environment Global new product launches not on track to surpass last year Generics continue to erode blockbuster revenues Cost containment measures keep the pressure on Although industry relatively strong, pharmaceutical stocks underperformed Industry image bolstered by good will initiatives, but insufficient to alter perception Performance ~9% Source: IMS Health: MIDAS, MAT Dec 2003

11 2002 & 2003 U.S. Dollar Growth Shows a Return to More Historic Levels 20% 18% 16% 14% 12% 11.5% 10% 8% 6% 4% 2% 0% Percent Change vs. Prior Year Source: IMS National Sales Perspectives. Ex-wholesaler prices. Prescription drugs only, 2/2004 CAGR is 13.8% from

12 Generics and Biologics Continue to Post Strong Dollar Growth (2003 Vs. 2002) 25% 20% 15% 10% 5% 0% Biotech Total Mkt Generics Source: IMS National Sales Perspectives, 2/2004

13 Retail & Mail Prescriptions Grew by 2.6% in MAT March 2004 but Are Continuing to Slow Down 10% 9% 8% 7% 6% 5% 4% 3% 2.6% 2% 1% 0% Percent Change vs. Prior Year Retail and Mail (excludes LTC) Source: IMS Health: National Prescription Audit Plus, 4/19/2004

14 HRT, Antihistamines, & Cold/Flu Contribute to Prescription Dispensed Losses in 2003 Difference in TRxs 2003 vs (000) 2003 vs. Therapeutic Class 2002 Antihistamines Million -25% Hormones, Estrogens Million -25% Oral Cold w/o Analgesic -7.4 Million -25% Calcium Blockers -3.4 Million -4% O/C Estrogen/Progest -1.5 Million -2% Total Million Source: IMS Health: National Prescription Audit Plus, 2/2004

15 % Flu and Cough Cold Helped 2003 TRX % Change vs. Prior Year 15 Selected Cough Cold Flu Remaining Oct '03 Nov '03 Dec '03 Source: IMS Health: National Prescription Audit Plus 2/2004

16 The U.S. Market Exceeded $216 Billion-2003 $ Bil % Share Retail Channels % 10.9% Chains & Mass Independents Mail Service Food Stores % Change Non-Retail Channels % 13.0% Hospitals Clinics LTC/HHC HMOs (Staff Model) Others Total Source: IMS National Sales Perspectives. Ex-wholesaler prices. Prescription drugs only, 2/2004

17 Impacts on Pharmaceutical Growth Prescription Growth 3 Tier Co-Pays Personal Importation From Canada Hormone Replacement Publicity Fewer New Products Mail Service (90 day scripts) Rx to OTC Economic Slowdown Dollar Growth Generic Erosion of Blockbuster Drugs Slowing Prescription Growth 3 Tier Co-Pays Fewer New Products Personal Importation From Canada Hormone Replacement Publicity Rx to OTC

18 Third-Party Prescription Growth Has Slowed & Cash Has Stabilized % NRx Dispensed Cash Medicaid Third Party Source: IMS Health: National Prescription Audit (NPA) Plus 7, Method of Payment Report, January 2003

19 Retail Co-Payments Are Increasing! $35.00 $34.00 $30.00 $29.00 $25.00 $25.00 $20.00 $15.00 $13.00 $17.00 $15.00 $20.00 $17.00 $19.00 $21.00 $10.00 $7.00 $8.00 $9.00 $9.00 $10.00 $5.00 $ Est Generic Preferred Brand Non PreferredBrand Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits 2000,2001,2002& 2003, Goldman Sachs Estimates REVISED

20 What Patients are More Likely to Use Non- Compliant Strategies to Reduce Out-Of- Pocket Expenditures Action Taken Use a Non-compliant strategy Fair/Poor Health Status Incomes <$50K 66% 69% Delay in getting RX filled 59% 58% Don t Fill a RX 50% 48% Take Medication Less Frequently 47% 38% Source: Harris Interactive, NACDS Foundation, & National Pharmaceutical Council September 2003

21 Higher Co-Pays May Take Toll on Health Raising co-pays is a fairly blunt instrument in controlling rising health-care costs. Some worry that tactic could actually increase health-care costs for certain patients, if cutting back on medicines leads to expensive complications. A recent Rand study found that as co-pays doubled for diabetes, asthma, and gastric acid disease Use of Prescription drugs fell between 17% & 23% Visits to Emergency rooms rose 17% Hospital stays increased 10% Source:Rand Study May 19, 2004

22 When co-payments were doubled, average prescription drug used declined among people with: Depression Hypertension 8% 10% Gastric acid disorder Asthma Diabetes Arthritis Allergic rhinitis 17% 22% 23% 27% 31% 0% 10% 20% 30% 40% Source:Rand Study May 19, 2004

23 Some Americans Are Importing Cheaper Drugs Themselves Estimates of US$ Million (at Canadian prices) were imported from Canada in 2003 Only 1% of drugs are confiscated at the Canadian border FDA warned payers that they violate civil and criminal laws by making it possible for Americans to buy from Canada... but position may be softening Pharmacies in Canada are experiencing drug shortages FDA counterfeit cases have increased Five pharmacos are restricting supply to Canada Legislation is moving forward to legalize importation with safety concerns not gaining traction Sources: Varied including Wall Street Journal, The News Press, Canadian Drugstore Inc., IMS Health, 2004

24 The Bottom Line: Safety May Become an Real Issue with Re-Importation Countries other than Canada present a bigger worry: India, Thailand, Philippines, China, Brazil, Peru, Mexico Some imports were: Manufactured in unapproved plants Expired, unapproved or withdrawn Counterfeit Dosing instructions in foreign language Not approved for human consumption Not refrigerated Not reviewed by a pharmacist Missing child-safety caps Source: Varied sources including The Wall Street Journal, February 12, 2004

25 Re-importation Seems Inevitable! Will it save money? Some savings but not what people expect! Will it stifle Pharmaceutical Innovation? Unknown too early to tell! Is it safe? No one has died yet? Will pose a bigger threat to the US Supply Chain! Personal Importation is unfair to US Pharmacies Foreign Pharmacies do not pay US Taxes Foreign Pharmacies are not subject to Federal or State Consumer Protection Laws Foreign Pharmacies are not subject to HIPAA Source: Varied sources including The Wall Street Journal, February 12, 2004

26 Key Drivers of U.S. Forecast (number of checks indicates relative importance) UPWARD Potential blockbusters in pipeline Price increases Under-treated disease states Medicare benefit DTC spending increasing Demographics DOWNWARD Personal importation Slower growth in sales forces Fragile economy (slow job growth) Multi-tier co-pays Weak new products in 2002/early 2003 Generic introductions

27 US Pharmaceutical % of Health Care Is One of the World s Lowest Italy* France Japan Canada* UK** Germany Australia USA % of healthcare spent on pharmaceuticals *Data for ** Data for All other data for Source: OECD Health Data, Table 14, 2003

28 The Cycle of Innovation and Competition Branded Branded Company Company Innovates, Innovates, Creating Creating Value Value for for the the Healthcare Healthcare System System via via Breakthroughs Breakthroughs Branded Branded Company Company Loses Loses Revenue Revenue on on Older Older Products, Products, Necessitating Necessitating Plan Plan to to Replace Replace $ s $ s Branded Branded Company Company Rewarded Rewarded with with Monopoly Monopoly Position Position On On the the Molecule Molecule Patent Patent Expiration Expiration = Generic Generic Industry Industry Opportunity Opportunity to to Create Create Value Value via via Competition Competition

29 Product R&D R&D Productivity Is Increasingly Critical R&D expenditures by US pharma companies continue to rise at a rapid pace. Expenditures have doubled since 99 Cost to develop a new drug = $897M (Tufts) It takes 5-10,000 compounds to result in just 1 approved drug and only 3 of 10 marketed recover R&D costs One out of every 13 drugs tested in animals makes it to market, down from 1 in 8 during (Bain) Time to develop at 15 years has doubled since the 60s The pressure is on from Wall Street to launch successful drugs at a rapid fire pace in order to meet growth expectations

30 Product Launches (NCEs) Were Improved in 2003 NCEs NMEs Biologics

31 The Needs are Still Great Unmet medical needs 70% of 65+ suffer stroke 32% of 85+ suffer from Alzheimer s 4 million in US with hepatitis B or C Sepsis 1.3 million WW, 50+% mortality rate Undiagnosed diseases 30% of diabetics (5.4 million in U.S.) 20% of world pop hypertensive (1/2 undiagnosed) Under-treated illnesses 40% of diagnosed hypertensives do not reach goal Cancer improvements still measured in months of survival

32 U.S. Generic Total Prescriptions Dispensed 1998 to Percent Change Vs. Prior Year 8 Total Market Generics Source: IMS Health: National Prescription Audit Plus, excludes branded generics

33 Generics are Gaining Traction % Dollars % Total Prescriptions Dispensed Brands Branded Generics Generics Source: IMS Health: NPA Plus7, Method of Payment Report, YE 2003 IMS National Sales Perspectives, 2/2004

34 IMS Generic Definition The product manufacturer is not the originator of the product The molecule is off patent and available from multiple sources The product is known by the chemical name, not a trade name Note: Excludes all branded generics

35 Generics Have Rapid Penetration During the First 13 Weeks % Generics Share of New Prescriptions Dispensed High Average Low Week Source: IMS Health: National Prescription Audit Total of 12 Molecules

36 Why Are Generics So Strong? Demographics Increasing size of Generic Opportunity More than 11 Blockbuster drugs lost patent protection since Generic Market Penetration is quite rapid Innovation drought Experienced by Brand Manufacturers Rising Patient Co-pays Political & Economic climate

37 Is the Outlook as Bright for Biogenerics? Lack of clear legislation Complex manufacturing process/immunogenicity = new human trials? Multiple patents Intro of 2 nd generation brand products _ CON PRO EU legislation amended FDA willing to study issue Insulins and Growth Hormones approved under FD&C Act Biogenerics already available in E. Europe/India High cost of brand biotechs make biogenerics attractive Source: IMS Health: IMS Market Prognosis International 2003 (Sept update)

38 The Top 10 Manufacturers Represent 59.4% of the U.S. Rx Industry MAT March 2004 Corp by Rx Drugs $ in Mil % Share % Chg Pfizer 29, % GlaxoSmithKline 18, % Johnson & Johnson 15, % Merck & Co. 14, % AstraZeneca 10, % Bristol-Myers Squibb 9, % Novartis 9, % Amgen 8, % Wyeth 7, % Lilly 7, % Leading corporations. Prescription products and insulin. All Audited Channels. Excludes co-marketing agreements. JVs assigned to product owner. Data run by custom redesign to include completed M&As. Source: IMS National Sales Perspectives, 5/04/2004

39 The Top 20 Represent 77.7% of the Market MAT March 2004 Corp by Legend Drugs $ in Mil % Share % Chg Aventis 6, % Abbott 6, % Roche 5, % TAP Pharmaceuticals 4, % Schering-Plough 3, % Boehringer Ingelheim 3, % Forest 3, % Teva 2, % Sanofi-Synthelabo* 2, % Eisai 2, % Leading corporations. Prescription products and insulin. All Audited Channels. Excludes co-marketing agreements. JVs assigned to product owner. Data run by custom redesign to include completed M&As. Source: IMS National Sales Perspectives, 5/04/2004 *Excludes Plavix, Avapro, Avalide & Arixtra

40 Absolute Growth - Corporations Dollars (MAT March 2004) Inc. $ Bil. TRx Dispensed (MAT March 2004) Inc TRxs Mil. Pfizer Teva Amgen Mallinckrodt Johnson & Johnson Qualitest Merck Par Novartis Barr +8.5 Abbott Pliva +8.5 Roche +.90 Apotex +8.3 GlaxoSmithkline +.80 Forest +7.7 BMS +.74 Ranbaxy +7.6 Lilly +.71 EON +6.9 Leading corporations. Prescription products and insulin. All Audited Channels. Excludes co-marketing agreements. JVs assigned to product owner. Data run by custom redesign to include completed M&As. Source: IMS National Sales Perspectives 5/4/04 & National Prescription Audit, 4/19/04

41 Generics and Biotechs Continue to Dominate the Relative Growth Category Company MAT March 2004 Sales (Mil) % Growth Apotex $ % Otsuka % Clay-Park % Evans Vacc % The Medicines Co % Ligand % Gilead Sciences % Dynagen 96 94% Sicor % Cellgene % Prescription products & insulin. All Audited Channels. Excludes co-marketing agreements. JVs assigned to product owners. Top 100 corps considered. Source: IMS National Sales Perspectives, 5/04/2004

42 1. 2. Cholesterol Reducers are Still the Leading Class by Sales Volume MAT March 2004 Therapeutic Class $ in Mil % Share % Chg Cholesterol Reducers 14, % Proton Pump Inhibitors 12, % SSRI/SNRI 11, % Anti-psychotics 8, % Erythropoietins 7, % Seizure Disorders 7, % COX-2 Inhibitors 5, % Calcium Blockers 4, % Anti-histamines 3, % Codeine & Comb 3, % Leading USC 4 classes. All Audited Channels. Prescription products and insulin Source: IMS National Sales Perspectives 5/4/2004

43 Relative Growth-Therapeutic Classes-2004 Dollars (MAT March 2004) % chg TRX s Dispensed (MAT March 2004) % chg Anti-Arth Bio Resp Modifiers +79% Leukotriene Agents +29% Platinum Coord +59% Angio II Antag Comb +25% Inhaled Bronchial Steroids +45% Anti-Platelets Oral +22% Analogs of Human Insulins +42% Diuretics, Thiazide +21% Leukotriene Agents +37% Angio II Antag Alone +16% Angio II Antag Comb +36% Bisphosphonates +16% Anti-Platelets Oral +34% Anti-Psychotics +12% Morphine/Opium +32% SSRI/SNRI +9% Alzheimer Type Dementia +27% Seizure Disorders +9% Immune System Adjuncts +24% Non-Barb, Others +9% Source: IMS National Sales Perspectives 5/04/04 & National Prescription Audit Plus, 4/19/04

44 Lipitor Still No. 1 for Dollar Sales MAT March 2004 Product Company $ (Mil) % Chg Lipitor Pfizer 6, % Zocor Merck 4,464 +7% Prevacid TAP 3,955 +7% Procrit J&J 3,313 +3% Nexium AstraZeneca 3, % Epogen Amgen 3,139 +6% Zyprexa Lilly 3,109 +1% Zoloft Pfizer 2, % Celebrex Pfizer 2,612 +3% Neurontin Pfizer 2, % Source: IMS National Sales Perspectives, 5/04/2004

45 Absolute Growth-Products-2004 Dollars (MAT March 2004) Inc. $ Mil. TRx Dispensed (MAT March 2004) Inc TRxs Mil. Nexium (AZ) Lexapro (Forest) Lexapro (Forest) +.96 HYCD/APAP (MKR) Aranesp (Amgen) +.79 Lisinopril (Teva) +7.6 Advair Diskus (GSK) +.77 Ortho Evra 3 (J&J) +6.7 Lipitor (Pfizer) +.66 Omeprazole(Schwarz) +6.0 Plavix (Sanofi/BMS) +.65 Toprol-XL (AZ) +5.8 Protonix (Wyeth) +.63 Nexium (AZ) +5.5 Effexor XR (Wyeth) +.62 Paxil CR (Glaxo) +5.4 Neulasta (Amgen) +.59 Singulair (Merck) +5.2 Singulair (Merck) +.55 Protonix (Wyeth) +5.1 Source: IMS National Sales Perspectives 5/04/04 & National Prescription Audit Plus, 4/19/04

46 2003 Pharmaceutical Industry Recap Market growth about 11% on Dollars and 2% on Prescriptions Continued growth of generics and some major patent expirations - but not as many as 2002 Biotechs grew strongly OTC s Improved Innovation Picture Stabilized FDA environment Increased state-level activity with formularies and price controls. Medicare approved late in the year Counterfeit Drugs/Canada/Integrity of Supply Chain Increased pricing pressures Economy is improving

47 A Look Ahead to 2004-WSJ Top 10 Pharmaceutical Trends 1. Wielding the Axe Pharmaceutical Layoffs 2. And Then There Were.Pharmaceutical Company Mergers 3. Blurring the Biotech Divide 4. Going Higher and Higher..Price Increases 5. Putting it on Your Tab.Co-pays 6. The Price Gap: U.S. vs. The World 7. In-Your-Face Advertising 8. What s in a Name?.Generics 9. More OTC Debuts 10. The One-Two Punch.. Combo Products Source: Wall Street Journal The Journal Reports:Trends Feb 9, 2004

48 Puerto Rico Full Year 2003 Pharmaceutical Information Presented by Douglas M. Long VP Industry Relations

49 Puerto Rico Total All Classes of Trade Dollar Size and Growth 2003 $ 1,516.7 $ Growth: 18% 2002 $ 1,285.1 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 Millions Source: IMS Health; DDD Total Puerto Rico Sales

50 Puerto Rico - Dollar Market Size State Rank Comparison Rank State $ 2003 %TTL US 27 Kansas $2,613,007, % 28 Oklahoma $2,480,243, % 29 Arkansas $2,290,778, % 30 Colorado $2,195,022, % 31 Mississippi $2,079,124, % 32 Iowa $1,985,655, % 33 Oregon $1,976,595, % 34 West Virginia $1,537,824, % Puerto Rico $1,518,761, % 35 Nevada $1,376,367, % 36 Nebraska $1,341,634, % 37 Utah $1,260,815, % 38 Maine $1,159,810, % 39 New Mexico $1,000,718, % Source: IMS Health; DDD Total USA and Puerto Rico Sales

51 Puerto Rico 2002 & 2003 Dollar Sales by Channel Millions Growth 9.2% % % 51.6% RETAIL HOSPITAL NON RETAIL NON REPORTING Source: IMS Health; DDD Total Puerto Rico Sales

52 Classes of Trade - Total PR Market Chain Pharmacies & Mass Merchandisers Independent Pharmacies Hospitals Miscellaneous Clinics Nursing Home Mailservice Foodstores w ith Pharmacy $ Millions $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 Source: IMS Health; DDD Total Puerto Rico Sales

53 Puerto Rico Top 20 Corporations 2003 Total Dollar Sales Rank Corporation Name 2003 Growth 1 PFIZER % 2 GLAXOSMITHKLINE % 3 MERCK & CO % 4 ABBOTT % 5 BRISTOL-MYERS SQ % 6 WYETH CORP % 7 JOHNSON & JOHNSON % 8 LILLY % 9 NOVARTIS % 10 ASTRAZENECA CORP % TOP % millions Source: IMS Health; Puerto Rico Sales Audit (PRSA).

54 Puerto Rico Top 20 Corporations 2003 Total Dollar Sales (Cont.) Rank Corporation Name 2003 Growth 11 AMGEN CORPORATION % 12 SCHERING PLOUGH % 13 BAYER CORPORATION % 14 HOFFMANN-LA ROCHE % 15 AVENTIS CORP % 16 SANOFI-SYN INC % 17 MYLAN LABS INC % 18 NESTLE S A % 19 AMER PHARM PARTNER % 20 TEVA PHARM USA % TOP 20 1, % millions Source: IMS Health; Puerto Rico Sales Audit (PRSA).

55 Puerto Rico Top 10 Markets 2003 Total Dollar Sales ANTI-INFECTIVES, SYSTEMIC 95.5 ANTIVIRALS VASCULAR AGENTS PSYCHOTHERAPEUTICS 54.7 GASTROINTESTINAL BLOOD GROWTH FACTORS ANTIHYPERLIPIDEMIC AGENTS ANTIARTHRITICS NEUROLOGICAL DISORDERS HEMOSTATIC MODIFIERS Millions Source: IMS Health; Puerto Rico Sales Audit (PRSA).

56 Puerto Rico Top 10 Leading Products 2003 Total Dollar Sales Rank Product Sales (millions) Growth 1 1 EPOGEN % 2 2 LIPITOR % 3 8 PLAVIX % 4 9 PROCRIT % 5 4 PREVACID % 6 3 ZOCOR % 7 15 SINGULAIR % 8 10 NORVASC % 9 14 NEURONTIN % 10 7 ZYPREXA % TOP % Source: IMS Health; Puerto Rico Sales Audit (PRSA).

57 Puerto Rico Top 20 Leading Products 2003 Total Dollar Sales Rank Product Sales (millions) Growth VIRACEPT % ROCEPHIN % 13 6 CELEBREX % FOSAMAX % 15 5 CIPRO % COMBIVIR % ZOSYN % HUMULIN N % PREVNAR % ZOLOFT % TOP % Source: IMS Health; Puerto Rico Sales Audit (PRSA).

58 Puerto Rico Branded Products Top 10 Dollar Sales and Total Rxs Retail Market Only Product Sales (1000's) Product Total Rxs (1000's) LIPITOR 16,189 SYNTHROID 499 PLAVIX 14,084 LIPITOR 328 PREVACID 12,189 NORVASC 306 SINGULAIR 11,296 ZITHROMAX 258 NORVASC 10,470 HUMULIN N 222 ZOCOR 9,776 SINGULAIR 220 NEURONTIN 9,655 NEURONTIN 195 FOSAMAX 8,938 ZYRTEC 194 HUMULIN N 8,647 AMBIEN 190 CIPRO 8,209 ZOLOFT 187 TOTAL 109,455 TOTAL 2,598 Source: IMS Health; Puerto Rico Sales Audit (PRSA) and Puerto Rico Prescription Audit (PRRX).

59 Puerto Rico Top 10 Generic Products 2003 Dollar Sales METFORMIN HCL AMOX TR/POT CLAVUL FERRLECIT 4.4 ALBUTEROL PEDVAX HIB TOBRADEX ELIGARD MAXIPIME CAPTOPRIL CIPROFLOXACIN $ Millions Source: IMS Health; Puerto Rico Sales Audit (PRSA).

60 Puerto Rican Issues Pressure on Healthcare Budget, especially for the Medically Indigent. Price Pressure and Controls Formularies and Capitated Physicians Promotion fueling Utilization Remaining Leading-edge Manufacturing

61 Key Issues Impacting Latin American Pharma Industry Real incomes remain under pressure shows marginal growth. Access to healthcare not improving - under increasing pressure Generics actively promoted by governments in Argentina; Brazil; Chile; Colombia and Venezuela - less so in Mexico Biotech growth constrained by high prices in low income region. Consolidation of distribution channel - wholesale and retail Growth of "informal" distribution channel HMO's & PBM companies attempting to establish a presence

62 2004: Hopeful Outlook, but Guarded Global forecasts remain at 8-11% for 5-year CAGR US forecast is at 10-13% over same period Analysts expect Pharma stocks to outperform broader market because of Medicare s industry-friendly law More exciting blockbusters expected to fuel consumer interest (e.g., combination therapies) Major patent expirations will continue to threaten profitability Downturn of U.S. dollar will negatively impact some European drugmakers sales Unproductive pipelines and imminent patent expiries may fuel M&A activity

63 Thank You Doug Long IMS Health (973) Copyright 2004, IMS Health. No portion of this document may be reproduced, used or distributed in any form without written authorization. All trademarks assumed.