Generics continue to impact the Global Pharmaceutical Marketplace

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Generics continue to impact the Global
Pharmaceutical Marketplace
PBIRG September 8, 2008 By Doug Long VP Industry
Relations, IMS Health
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2008 Strategic management review
The World Pharmaceutical Market
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About IMS Health

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Pharma confronts a new and painful reality And
Pharma has been slow to respond.payers benefit
Evidence
A challenging market for five reasons
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Generics 15 of global value near 30 of
volumeAbout 115 billions
Global Generics Market in Value Volume
MAT March 2006
MAT March 2008
Value Sales US.
Generics
Original Brands
US 626 Bn
US 705 Bn
Volume Sales SU
SU 1, 978 Bn
SU 2, 088 Bn
Source IMS Health Consulting using MIDAS MAT Mar
2008 Generics include unbranded, branded copy
products excludes consumer health alternative
medicines
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Traditional markets account for 60 of generics
Asia Pac next largest large region dominated by
China
Global Generics Geographical Breakdown MAT March
2008
By Value Sales US 108 Bn
By Volume Sales 581 SU Bn
Source IMS Health Consulting using MIDAS MAT Mar
2008 Generics include unbranded, branded copy
products excludes consumer health alternative
medicines
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Generic penetration accelerating in most
countriesThere is room for further growth,
particularly in Europe
Generic Penetration 2007 (Volume)
Total Unprotected Volume (SU)
Generics Market Share (Volume S.U)
VOLUME MARKET SHARE (SU)
Source IMS Health, MIDAS, Market Segmentation
markets only, MAT December 2007 Ethical Market
only. Cardio C1-4 C7--11
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The slower growth major markets shifting towards
unbranded medicines
Major Generic Markets Generic Composition Over
10 Years
MAT June 1999
MAT June 2008
Value Sales US.
Branded
Company Branded
Volume Sales SU
INN Unbranded
Source IMS Health Consulting using MIDAS Market
Segmentation MAT Mar 2008, Generics only Major
Markets North America Top 5 Europe
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Driving many major generic players to
increasingly focus on the unbranded space
Top Generics Corps Commercial Models shifts in
10 Years
SHARE OF VOLUME SALES , SU
RATIO-PHARM
APOTEX
DR REDDYS
TEVA
SANDOZ
MYLAN
NB. OTC defined as non-rx bound sales
Source IMS Health, MIDAS Market Segmentation MAT
March 2008. Market Segmentation Markets only.
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There is a strong correlation between the price
differential of generics/brands and penetration
High Patient Co-Pays
Reference Pricing Markets
INN Prescribing Contracting
Source IMS Health MIDAS MAT March 2007 -
Ethical market only
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Competitive pressure continually increases with
ever more generic players entering the market
Number of Generic Entrants Overtime
Simvastatin Generic Players
Omeprazole Generic Players
NUMBER OF GENERIC CORPS
NUMBER OF GENERIC CORPS
Source IMS Health MIDAS Market Segmentation MAT
June 2008, Generics market only.
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So going Global attractive as emerging markets
havestrong growthOnly Teva, Sandoz, possibly
Sanofi Aventis have the reach
Global Generics Value CAGR 10, MAT Mar 2006-2008
VALUE GROWTH
Source IMS Health Consulting using MIDAS MAT Mar
2008 Generics include unbranded, branded copy
products excludes consumer health alternative
medicines
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And highest growth regions are predominantly
branded markets
Key Growth Markets Generic Compositions 2004 -
2008
Volume
Value
SHARE OF VOLUME SALES , SU
SHARE OF VALUE SALES , US
LATIN AMERICA
LATIN AMERICA
CEEC
ASIA PAC
CEEC
ASIA PAC
BRANDED GENERICS
UNBRANDED GENERICS
Source IMS Health Consulting using MIDAS MAT Mar
2008 Generics include unbranded, branded copy
products excludes consumer health alternative
medicines
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129 billion at risk for generic competition in
the next five years
Dec 2007 update
Value of products at risk 2002-2012
32bn
31bn
28bn
26bn
20bn
19bn
20bn
20bn
16bn
14bn
18bn
18bn
17bn
17bn
11bn
Source IMS Health, MIDAS, Market Segmentation,
MAT Dec 2007
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Leading generic classes are antidepressants and
narcotic analgesics
Dec 2007 update
Source IMS Health, MIDAS, New Market
Segmentation, Rx only, MAT Dec 2007
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Some of the leading generic therapy classes show
strong dollar penetration
Dec 2007 update
MARKET SHARE US
Source IMS Health, MIDAS, New Market
Segmentation, Rx only, MAT Dec 2007
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Generics make an even stronger impact on volume
share in leading classes
Dec 2007 update
MARKET SHARE STANDARD UNITS
Source IMS Health, MIDAS, New Market
Segmentation, Rx only, MAT Dec 2007
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US market growth MAT June 2008 slowed to 1.4
2007 year end 3.7 (286bn) the slowest rate
since 1961
Source IMS Health, National Sales Perspectives,
June 2008
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Major factors impacting the slowing dollar growth
include

• Low volume of sales for new patent-protected
  drugs launched in 2007, with top ten new products
  contributing less average monthly sales
• Low number of FDA approvals in 2007 at 18, and
  delays or non-approvals of potential blockbusters
• Continued high level of patent expiries,
  amounting to 16bn in sales exposed in 2007
• Safety issues were bountiful and impacted key
  markets including EPOs, SSRIs and glitazones
• Several products were withdrawn from the market
  altogether, including Zelnorm, Exubera,
  Pergolide, Premax, and Trasylol
• One-time boost delivered to growth from Medicare
  Part D, impacts 2007 growth rates

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Prescription Demand Drivers

• Demographics
• Doctor Visits
• Details
• Samples
• DTC
• Innovation
• Safety/Value of Medicine
• Copays
• Rx to OTC
• Cough/Cold/Flu
• Compliance Persistence
• Medicare Part D Medicaid
• General Economic Conditions

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US prescription growth drops to 1.4 in MAT
ending June
Source IMS Health, National Prescription Audit
Plus, Jun 2008

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Generic prescription volume has grown steadily
Source IMS Health, National Prescription Audit,
Jun 2008
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Brands hold share of sales(Branded generics are
allocated to brands and generic)
Branded Generics Disaggregated
Source IMS Health, National Sales Perspectives,
Jun 2008, National Prescription Audit, Jun 2008,
Branded generics disaggregated
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Generic efficiency has risen in the last 5
yearsby 6.7
Source IMS HEALTH, National Prescription Audit,
June 2008
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Generics share of top 10 therapeutic classes-TRx
dispensed basis
Source IMS Health, National Prescription Audit,
MAT Jun 2007
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13 billion (4.4 of sales) are at risk to
generic exposure in the US in 2008
March 2008 update
Value of products at risk 2002-2020
Source IMS Health, MIDAS, Market Segmentation,
MAT Mar 2008
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Intellectual property protection is being
undermined on several fronts

• Brazil, Thailand
• HIV/AIDS

Compulsory licensing

• Composition of matter
• Production process

Legal challenges

• Biosimilars pathways

Legislated changes
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Generic manufacturers are becoming more
aggressive as Paragraph IV filings escalate180
day exclusivity under threat China emerging
Source Office of Generic Drugs FDA
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2006 erosion curve Erosion has become steeper in
recent years
June 2007 update
TOTAL RX
MONTHS SINCE GENERIC INTRODUCTION
Source IMS Health, National Prescription Audit
Plus, Jun 2007
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Generic sales have more than doubled since 2000
and now exceed 44 billion in MAT June 2008
Source IMS Health, National Sales Perspectives,
June 2008
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13 billion (4.4 of sales) are at risk to
generic exposure in the US in 2008
March 2008 update
Value of products at risk 2002-2020
Source IMS Health, MIDAS, Market Segmentation,
MAT Mar 2008
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Black box warnings have been prevalent in 2007,
with an estimated 65 in total
Major boxed warnings in 2007

• Glitazones (Avanida, Actos)
• Epoetins (Procrit, Epogen, Aranesp)
• Antidepressants (Wellbutrin, Paxil, Effexor,
  Cymbalta, Prozac)
• Other blockbuster products Humira, Lotrel,
  Diovan, Tekturna, CellCept, Evista

COUNT OF BLACKBOX WARNINGS
2007(e) is an estimate based on FDA Safety Alerts
through December 2007
Source FDA MedWatch, Feb 2008
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Pace of approvals slowed to 18 in 2007, the
lowest point in a decade
2008 YTD 8
2008 YTD 6
Source FDA CDER and CBER, Pharmaceutical
Approvals Monthly, Aug 2008
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NCEs launched in 2007 contributed 441mn to
growth, lowest contribution in over a decade
Source IMS Health, National Sales Perspectives,
Dec 2007
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Growth is strong in classes not impacted by
patent expiration or safety
Source IMS Health, National Sales Perspectives,
Jun 2008
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Codeine combinations, HIV antivirals and human
insulin analogs exceed 20 growth
Source IMS Health, National Sales Perspectives,
Jun 2008
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Absolute growth therapies
Source IMS Health, National Sales Perspectives,
Jun 2008, National Prescription Audit, Jun 2008
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Plavix and Seroquel achieve double digit growth
in MAT June 2008
Source IMS Health, National Sales Perspectives,
Jun 2008
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Double digit growth is still possible even in
this market
Source IMS Health, National Sales Perspectives,
Jun 2008
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Absolute growth products
Source IMS Health, National Sales Perspectives,
Jun 2008, National Prescription Audit, Jun 2008
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Lilly leads with double digit growth
Source IMS Health, National Sales Perspectives,
Jun 2008
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Teva is the only major generic house in the top 20
Source IMS Health, National Sales Perspectives,
Jun 2008
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Teva approaches 20 share of generic sales,
Sandoz closes in on 11
Teva/Barr
6,459 22.9
Source IMS Health, National Sales Perspectives,
Jun 2008
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Absolute growth corporations
Source IMS Health, National Sales Perspectives,
Jun 2008, National Prescription Audit, Jun 2008
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Majority of US growth is coming from companies
outside the top 20
MAT Jun 2008
All others
Top 11-20
Top 10
Source IMS Health, National Sales Perspectives,
Jun 2008
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US market slows as Medicare Part D levels, and
significant patent losses continue
US 2008 market growth 2-3
Growth

• Innovative new products

• Generic competition
• Restrictions on the use of ESA agents

Baseline

• Brand price increases
• Aging demographics
• Medicare Part D
• Increasing demand for existing products
• Biologics growth
• DTC consumer increases

Result 2-3 US 292-295bn
Source IMS Health, Market Prognosis, IMS
Consulting, Sep 2007
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Thank you!

• Doug Long
• Vice President, Industry Relations
• IMS Health
• email dlong_at_us.imshealth.com
• phone [phone]