Presenter. Guy Clark. Searle Pharmaceuticals Sales, Marketing, BD. Business Development Director, IVAX Europe. President, Glenmark Europe

Transcription

1 Presenter Guy Clark Searle Pharmaceuticals Sales, Marketing, BD Business Development Director, IVAX Europe President, Glenmark Europe Business Development Consultant Chief Strategy Officer, AMCo 2010 to date

2 AMCo s Origins G word Mar-12 Rebranding Oct m Jan-13 Aug m Refinancing

3 Generics - Is the Commodity Business Model Sustainable? Guy Clark, Chief Strategy Officer, AMCo

4 IMS Viewpoint Alan Sheppard Global Thought Leader, Generics

5 The Role of Generics Developed Markets: Management of drugs bill Regulated price differences between generic and originator Regulated originator price reduction post LoE Market forces Reimbursement policies Source: Alan Sheppard, Global Thought Leader Generics, IMS health June 2014

6 Europe a diverse market 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 34.2% Product type volume share of the Rx bound un-protected retail market, %, MAT Q Ranked by Generic market share 43.3% 43.3% 48.0% 48.4% 51.6% 53.4% 53.9% 56.0% 56.2% 57.9% 58.8% 61.1% 63.6% 64.6% 69.5% 75.8% 76.0% 80.5% GENERICS NO LONGER PROTECTED BRANDS NEVER PROTECTED BRANDS COPY PRODUCTS Source: Alan Sheppard, Global Thought Leader Generics, IMS health June 2014

7 The Role of Generics Developed Markets: Management of drugs bill Regulated price differences between generic and originator Regulated originator price reduction post LoE Market forces Reimbursement policies Emerging markets: Improving access to medicines Provision of affordable medicines Patients have choice (out of pocket expenditure) Fast-growing middle-classes demanding quality Important industrial sector, competing on world stage Source: Alan Sheppard, Global Thought Leader Generics, IMS health June 2014

8 SALES US$MN Traditional Spending between 2012 and 2017 Growth Outlook Developed Markets Pharmerging Markets 500 $453 $448 $450 $459 $466 $ $ $199 $218 $244 $273 $ Source: Alan Sheppard, Global Thought Leader Generics, IMS health June 2014

9 Global Generics Expansion Global spending on medicines, 2012 and Developed 72% 16% 12% $622Bn 67% 21% 12% $ Bn Pharmerging 31% 58% 11% $224Bn 26% 63% 11% $ Bn RoW 57% 27% 16% $120Bn 52% 31% 17% $ Bn Global 61% 27% 12% $965Bn 52% 36% 12% $1,170-1,200Bn Brand Generic Other Source: Alan Sheppard, Global Thought Leader Generics, IMS health June 2014

10 Generics embracing new areas Generics Branded and Unbranded Biosimilars Vitamins and Minerals Other Consumer Health OTC Portfolio Drivers Brands Generic plus Tail end brands Innovation Vaccines The move is to diversification, away from purely generics Source: Alan Sheppard, Global Thought Leader Generics, IMS health June 2014

11 IMS - Summary Commoditisation is a successful medium-term strategy for: Companies with geographical scale Low cost producers Payors Generics companies need to diversify Pharmerging markets Niche product areas (barriers to entry) Brands

12 Another Perspective Claudio Albrecht Partner, Albrecht & Prock

13 Generics should be essentially similar but nowadays the industry wants to be essentially different Source: Claudio Albrecht, Albrecht & Prock; Keynote Speaker, World Generics Medicines Congress, Barcelona, April 2014

14 Our specialty medicines portfolio generated revenues of $8.2 billion, an increase of 26% compared to 2011 *). = *) 40% of total revenues Source: Teva s annual report 2012 We lead the way in the development and production of differentiated, complex products.. Source: Source: Investor presentation Source: Claudio Albrecht, Albrecht & Prock; Keynote Speaker, World Generics Medicines Congress, Barcelona, April 2014

15 ATORVASTATIN CLOPIDOGREL ESOMEPRAZOLE SALMETEROL/FLUTICA QUETIAPINE ETANERCEPT INFLIXIMAB ROSUVASTATIN OLANZAPINE ADALIMUMAB BEVACIZUMAB MONTELUKAST RITUXIMAB ARIPIPRAZOLE ENOXAPARIN PIOGLITAZONE DONEPEZIL INSULIN GLARGINE VALSARTAN TRASTUZUMAB Top 20 global Products 2011 The pipeline of the Generic industry but what s next? Patent expiries Source: Claudio Albrecht, Albrecht & Prock; Keynote Speaker, World Generics Medicines Congress, Barcelona, April 2014 Biologics

16 Top 20 global Brands 2012 Biologics and other Hard To Make (H2M) drugs take the lead Brands 2012 Sales (Million ) CAGR ( ) SERETIDE 7,631 2% HUMIRA 7,074 20% CRESTOR 6,419 15% ENBREL 6,182 9% NEXIUM 5,784-4% REMICADE 5,644 10% ABILIFY 5,611 15% LANTUS 5,379 17% CYMBALTA 4,728 20% SPIRIVA 4,494 13% MABTHERA 4,485 9% LYRICA 4,125 16% AVASTIN 4,079 3% LIPITOR 4,030-29% PLAVIX 3,893-19% HERCEPTIN 3,809 9% SINGULAIR 3,730-2% COPAXONE 3,633 21% SEROQUEL 3,543-11% GLIVEC 3,425 7% Expensive to replicate Expensive to replicate Biologic Source: Claudio Albrecht, Albrecht & Prock; Keynote Speaker, World Generics Medicines Congress, Barcelona, April 2014

17 Who will have all future H2M Products in time? Source: Claudio Albrecht, Albrecht & Prock; Keynote Speaker, World Generics Medicines Congress, Barcelona, April 2014

18 If your pipeline is not in good shape. What then? One current HYPE = Emerging Markets The gold rush mood is overcoming Big Pharma and Generics Source: Claudio Albrecht, Albrecht & Prock; Keynote Speaker, World Generics Medicines Congress, Barcelona, April

19 Emerging Markets Challenges High growth rates Scientific detailing cost Lower entry hurdles Scientific approach Political/ economic volatility Compliance Pro s & Con s Local Regulatory/ Quality standards Soft Patents Brand loyalty Higher gross margins Protection of local industry Source: Claudio Albrecht, Albrecht & Prock; Keynote Speaker, World Generics Medicines Congress, Barcelona, April 2014 Low cost base 19

20 If your pipeline is not in good shape. What then? Another current trend = convert into a Specialty Company Acquire Forest Labs $25bn $25bn Source: Claudio Albrecht, Albrecht & Prock; Keynote Speaker, World Generics Medicines Congress, Barcelona, April

21 Generic companies must change! Price Aggressiveness Hybrid portfolio Authorized Generics R&D Cooperations Sell Cost Leadership Spend 25 bio Time to Market S & M alliances Alternative Channels / Focus TA s Vertical integration Emerging Markets Broad Range Source: Claudio Albrecht, Albrecht & Prock; Keynote Speaker, World Generics Medicines Congress, Barcelona, April

22 Claudio Albrecht - Summary The old model is broken Traditional target market is declining Playground for old tricks is new markets Perils of competing in emerging markets same tricks don t work Generic industry hasn t moved with the times Generics companies need to diversify Therapeutic focus Spend big biosimilars or brands But be wary of emerging markets hype

23 It is better to be a determined dwarf than a wannabe - giant 23 Source: Claudio Albrecht, Albrecht & Prock; Keynote Speaker, World Generics Medicines Congress, Barcelona, April 2014

24 My Thoughts Guy Clark Chief Strategy Officer, AMCo

25 Typical Market Evolution Brand markets Close relationship between pharma co s and prescribers Branded Generics enter the market Influence same prescribers. What are the differentiators? Price Relationships Compliance INN generics model evolves later Democracies facing healthcare cost pressures Substitution or tender model becomes a vote winner

26 Commodity (INN) Generics Mature, developed generic markets USA Canada UK Germany Scandinavia Netherlands France? Portugal?

27 Price Economic Theory Supply & Demand S p 1 Market equilibrium D q 1 Quantity

28 Price Economic Theory Supply & Demand S p 1 Profit COGs D q 1 Quantity

29 Price Economic Theory Supply Shift new market entrants S 1 S 2 p 1 p 2 Profit COGs D q 1 q 2 Quantity

30 Price Economic Theory Supply Shift new market entrants S 1 S 2 p 1 p 2 S 3 COGs p 3 D q 1 q 2 q 3 Quantity

31 Inelastic Demand Demand for pharmaceuticals is relatively inelastic changes in price have a relatively small effect on the quantity of the good demanded

32 Price Inelastic Demand Supply & Demand S p 1 Profit Market equilibrium COGs D q 1 Quantity

33 Price Inelastic Demand Supply Shift new market entrants S 1 S 2 p 1 p 2 Profit COGs D q 1 q 2 Quantity

34 Price Inelastic Demand Supply Shift new market entrants p 1 S 1 S 2 S 3 p 2 COGs p 3 Loss D q 1 q 2 q 3 Quantity

35 Price Inelastic Demand Rational behaviour S 1 p 1 S 4 S 3 COGs p 4 p 3 D q 1 q 4 q 3 Quantity

36 Commodity (INN) Generics Recent Trends USA Consolidation Canada Consolidation Rational pricing UK Consolidation Exit market Rational pricing Germany Consolidation Exit market Scandinavia Exit market Rational pricing Netherlands Consolidation Exit market France? Consolidation Exit market Portugal? Exit market

37 Generics - Is the Commodity Business Model Sustainable? Larger companies will get larger Economies of scale are critical to success Move manufacturing to low-cost countries Consolidation improves potential market dynamics Creates headroom for next generation YES But not in the same format

38 Companies are Engaging in M&A to Help Offset Declining Margins Due to Mature Markets Less Acquisitive Players in the Generics Sector 47% 10-14: Margins fell by 8.1% 21% 29% 27% 31% 20% 18% 20% 33% 30% 32% 23% Impax KrKa Richter Gedeon Stada Teva Average Acquisitive Players 51% 10-14: Margins grew by 6.3% 21% 32% 30% 28% 38% 40% 25% 30% 38% 21% 29% 29% 35% Actavis Aspen Endo Mylan Valeant Perrigo Average Source: CapIQ as of 26 th March 2014 Source: Tommy Erdei, Managing Director - Healthcare, Jefferies; Keynote Speaker, World Generics Medicines Congress, Barcelona, April 2014

39 An Increasingly Consolidated Market Dominated by the Top 4 Players Total Generic Revenue 2013 Top 4 Cumulative Revenue: $31,692m % of Total Revenue: c.49% (US$m) 14% 86% 10,500 9,900 9,519 Over US $1 billion Under US $1 billion 8,750 7,000 6,367 5,906 Mean Market Cap: Median Market Cap: $8.4 billion $3.6 billion 5,250 3,500 1, ,759 2,744 2,126 2,103 Teva Sandoz Actavis Mylan Hospira Stada Aspen Dr. Reddy's Source: Annual Reports and CapIQ, adjusted to include only Generics revenue where applicable. 19 Public Companies with revenues between $2bn and $500m 39 Source: Tommy Erdei, Managing Director - Healthcare, Jefferies; Keynote Speaker, World Generics Medicines Congress, Barcelona, April 2014 Long Tail of Sub $500m Co s

40 Markets are Rewarding the Generics Segment Indexed Price Performance since January % 300% 200% 100% 0% +300% +99% +67% 3x Growth (100%) Jan-09 Jan-10 Feb-11 Feb-12 Mar-13 Mar-14 Generic Index Large Cap Index S&P 500 (1) Generic index includes Actavis, Aspen, Akorn, Dr. Reddy s Labs, Gedeon Richter, Glenmark, Hikma, Hospira, Impax, Krka, Mylan, Perrigo, Sagent, Stada, Sun Pharmaceutical, and Teva (2) Large Cap Pharma index includes Abbott, AstraZeneca, Bayer, Bristol-Myers Squibb, Eli Lilly, GlaxoSmithKline, Johnson & Johnson, Merck, Novartis, Roche, Pfizer and Sanofi Source: Capital IQ as of 26 th March Source: Tommy Erdei, Managing Director - Healthcare, Jefferies; Keynote Speaker, World Generics Medicines Congress, Barcelona, April 2014

41 Generics - Is the Commodity Business Model Sustainable? Larger companies will get larger Economies of scale are critical to success Move manufacturing to low-cost countries Consolidation improves potential market dynamics Creates headroom for next generation Smaller companies will occupy niche areas Barriers to entry Too small for the big boys Leverage relationships with influencers other than oligopsonists

42 Generics - Is the Commodity Business Model Sustainable? Head Office located in the City of London million Expected Revenues % Revenues in the United Kingdom Countries with commercial presence Rx Established Brands and Generics Asset Light Business Model (R&D, Manufacturing outsourced)

43 Thank You Guy Clark Chief Strategy Officer, AMCo