Life Science Challenges and Opportunities in Latin America

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1 Life Science Challenges and Opportunities in Latin America Roy Bateman, Trifermed Latin America One Nucleus Meeting, 29 January 2014

2 Overview of Latin America Basic facts, healthcare issues and the Pharmaceutical Industry Brazil Mexico Argentina Other markets Conclusions

3 Overview of Latina America Brazil Mexico Argentina Other markets Conclusions

5 Population of 600 millón half in Brazil and Mexico - and still growing significantly

6 Partnerships in Life Sciences Strong, stable and growing economies Stable governments with growing GDPs and low inflation, although Argentina and Venezuela are the exceptions Growing middle class, driving economic expansión Brazil, Mexico and Argentina within top ten emerging markets Key trading blocs NAFTA (TLC), Mercosur and Pacific Alliance. Mexico, Colombia, Peru and Chile stand to benefit from the Trans- Pacific Alliance Wide-ranging economies based on oil, petrochemicals, mineral exports, manufacturing (automóbiles, aircraft, electro-domestic goods), cement, steel, and agriculture (major producers of beef, cereals and fruit)

8 Partnerships in Life Sciences The Economist September 2010

9 Healthcare Key Trends Economic growth stimulating spend on healthcare, but low per capita expenditure still Ageing population - increase in the 65+ agegroup Increase in chronic-degenerative diseases, notably diabetes

11 Healthcare Key Trends and Issues Economic growth stimulating spend on healthcare but low per capita expenditure still Ageing population - increase inthe 65+ age group Increase in chronic-degenerative diseases, notably diabetes Healthcare reforms focused on creating greater access to more of the population Rapidly expanding knowledge base, freely available on the Internet, giving patients more power to decide on their healthcare Treatments becoming more genericized as consumers and payers become more price sensitive - growth of generics, outperforming original products Biosimilars? Regulatory authorities increasingly interested in cost of medicines and devices, but also related to cost benefit analysis not just cost Price controls, where they exist, designed to reduce cost not usage of medicines Very high levels of out-of-pocket spend still and there is virtually no reimbursement Private healthcare insurance very small (>5%) Governments play a small role, as a % of total healthcare spend, compared with mature markets (with the exception of Colombia and Argentina)

13 Partnerships in Life Sciences The Pharmaceutical Industry At 15.8%, the Latin American market was the market with greatest growth in the Gobal Pharma market in 2012 Growth in all markets, although generics growing faster than branded products, mainly by volumen Regulatory environment becoming less onerous but complex still in some markets Abolition of local plant requirement is encouraging foreign companies to enter the market through licensing or distribution agreements, purchasing local companies or setting up branches Intellectual property protection has greatly improved but some governments still exercise their prerogative to overrule in extenuating circumstances Multinationals dominate overall but there are strong local players and some, especially from Argentina (Roemmers, Bagó, Tecnofarma, Elea), have significant regional presence

18 Partnerships in Life Sciences Overview of Latin America Basic facts, healthcare issues and the Pharmaceutical Industry Brazil Mexico Argentina Brief comments on the other markets Conclusions

21 Total Market: US$38.3bn (71% private 21% public) Growth: 13.1% CAGR th Largest Global Market Main drivers: Economic expansion 4.5% GDP growth Increased purchasing power Increased life expectancy Government initiatives to allow more people to have access to lower-priced medicines Farmacias Populares Proforma programme incentives to encourage investment and exports through special credits (BNDES) Federal Government Inova Empresa Plan to boost production and competitiveness through technological innovation, focusing on oncology and biotech Growth in acquisitions and mergers greater fire power Government encouraging Public Private Partnerships in the Industry

22 Key Issues Regulatory ANVISA (National Health Surveillance Agency)

23 Partnerships in Life Sciences ANVISA New performance targets are being introduced (Decree 8077) but this will take time, meanwhile the process itself is slowing down normal activity. Aim is to reduce approval time from 1½ - 2 years to 6-9 months New targets prioritising national production to increase availability of generics Working on mutual recognition agreement with USA, Japan, Canada, Australia and European countries for plant inspections CMED (Chamber of Drug Market Regulation) part of ANVISA regulates drug pricing based on a lowest-price referencing system Submission is for either a new drug or a generic (with bioequivalence testing). NDA s usually require local trials.special case of Similares Generic prices are normally fixed by CMED up to a máximum of 65% of the reference product price

24 Key Issues Regulatory ANVISA (National Health Surveillance Agency) SUS, the unified health system, coordinates health-related activities at federal, state and local level and supplies some medicines from government-run pharma companies but most medicines out of pocket (60%) Public sector tenders national companies or foreign companies represented by a national company price is virtually the only consideration Local companies growing faster than foreign companies, partly due to increase in generics but also to Proforma Programme incentives There is effective IP protection consistent with TRIPS but this has only been in force since 1997 Biotech some 100 small biotech companies located in clusters close to science parks and universities National Policy for Biotech Development 2007

25 Opportunities Partnerships or some form of alliance with national company to import or manufacture locally Licensing products to MNCs with local or regional autonomy or national companies (NCE, DDS, Biotech) Distribution agreement, but registration must be presented by the local partner Establish a local office to manage promotion and oversee ditribution Opportunities for generics but this needs to be focused and well-researched to avoid disappointments Biotech alliances

26 Overview of Latin America Basic facts, healthcare issues and the Pharmaceutical Industry Brazil Mexico Argentina Brief comments on the other markets Conclusions

28 Partnerships in Life Sciences Total Market: US$15.3bn Growth: 2.4% CAGR th Largest Global Market Main drivers: Economic expansion 3.5% GDP growth was forecast for 2013 but downgraded to 1.9% in August 2013 Increased purchasing power in the population Increased life expectancy increase in c-g diseases Advances towards universal cover and steps to integrate healthcare systems expanding the market pool Growth of generics Recognition of COFEPRIS by the WHO and PAHO as a National Regulatory Authority of Regional Reference, opening up new opportunities in South America

29 Key Issues Regulatory COFEPRIS (Federal Commission for the Protection against Sanitary Risks)

30 Partnerships in Life Sciences COFEPRIS Approval times improving but cost/benefit becoming more of an issue fast-tracking of generics and innovative products Working with local companies can speed up approvals, especially if some form of clinical investigation considered Innovative products approval reduced from 360 days to 60 days if already approved in Europe, USA, Canada and/or switzerland Reforms in biotech product regulation Recognition of international GMP certificates Authorised third parties to carry out pre-registration review of the dossier accelerates final submission by avoiding hold-ups Deregulation of medical devices OTCs and medical devices from the USA and Canada receive fast-track approval IP protection linked to registration approval

31 Partnerships in Life Sciences Key Issues Regulatory COFEPRIS (Federal Commission for the Protection against Sanitary Risks) Public sector coverage expanding through the Seguro Popular programme towards universal coverage Objective to integrate the various public sector institutions into one overarching system Generics account for 45% in market value and 75% in volume but growth stabilising. 70% less in price than original Changes in the distribution channels consumer has greater say in the product purchased at the pharmacy Biotech still very small in national companies Diabetes accounts for 34% of the public health insurance spend

32 Partnerships in Life Sciences Opportunities MNCs moving away from traditional markets opens up growth opportunities for national companies and alliances with foreign companies to fill these gaps Alliances with local companies improve foreign companies ability to compete in the growing public sector OTC sector still offers growth for new products in a consumer population more aware of wellness and healthcare options Improved drug delivery systems to ensure patient compliance Ageing population and chronic obesity offer opportunities in chronic degenerative diseases, notably diabetes Collaboration with national companies in conducting clinical trials

33 Partnerships in Life Sciences Overview of Latin America Basic facts, healthcare issues and the Pharmaceutical Industry Brazil Mexico Argentina Brief comments on the other markets Conclusions

35 Partnerships in Life Sciences Total Market: US$7.6 bn Growth: 22.7% CAGR Main drivers: High inflation and price is the main driver of consumption has remained stable in recent years growth as Key issues: Dominance presence of national companies several with regional Regulatory ANMIT is friendly towards the Industry but physicians must prescribe all products by their generic name Some form of price control on the horizon Substantial discounts at the pharmacy through services programmes (Obras Sociales and PAMI) the social Poor IP protection

36 Partnerships in Life Sciences Opportunities A growth market, still with no price control and relatively uncomplicated registration of products Greater proportion of the population over 65 compared with the rest of the region It is almost an imperative to work with a national company or through a local acquisition but.. Advantages in working with national companies Easier access to the public sector, especially the Obras Sociales and PAMI Nationals have strong and successful regional presence Roemmers, Bagó, ELEA, Tecnofarma

37 Partnerships in Life Sciences Overview of Latin America Basic facts, healthcare issues and the Pharmaceutical Industry Brazil Mexico Argentina Brief comments on the other markets Conclusions

38 Partnerships in Life Sciences Colombia US$3.2bn market with 8% growth and probably the most successfully integrated public healthcare system in the region and accelerated programme of universal coverage. Some reimbursement at POS through EPS System Key issues - the growth of generics and greater price control Opportunities include a relatively light registration process, a stable market and good local companies to partner with Venezuela US$11.9bn market healthcare spend with 32% growth, stimulated by government financing Key issues - High inflation. Poor public healthcare cover and out of pocket spend close to 90%. Repatriation of income for foreign companies is complicated Opportunities Opportunistic market when in the rest of the region. Best to work with a national company Chile US$1.9bn and 12% growth. Key issues High level of public health coverage (90%) and improving. Pressure for cost containment from public sector with private payers and clinics Opportunities Ease of doing business, acceptable IP protection and regulatory process, government incentives make this an attractive but small market

39 Overall conclusions for companies interested in doing business these markets There is no universal regional strategy; each market has its individual characteristics and entry strategies require knowledge of the issues, threats and opportunities in each market Regional partners are available but national or sub-regional partners with local strength may be better in the long run Size may not be the right answer in a partner share-of-voice is important but having good relations with the authorities and other stakeholders is crucial and local autonomy important Manufacturing in these countries is increasingly less important but could be an issue when competing in the public sector through tenders is desired Understand the financials that work in the region and what deal structures have been possible

40 Thank you! Roy Bateman, BSc (Hons), MBA Director, Latin America Trifermed Partnerships in Life Sciences T: M: Skype: roybatemanatskype

OVERVIEW OF DRUG REGISTRATION REQUIREMENTS FOR PHARMACEUTICALS IN EMERGING MARKET

Badjatya et al Journal of Drug Delivery & Therapeutics; 2013, 3(2), 227-232 227 Available online at http://jddtonline.info REVIEW ARTICLE OVERVIEW OF DRUG REGISTRATION REQUIREMENTS FOR PHARMACEUTICALS