Exploring the Structural Changes in the Global Pharmaceutical Marketplace

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Exploring the Structural Changes in the Global
Pharmaceutical Marketplace
Dr. Brian W Tempest www.briantempest.com MAPE
Fund Managers Conference Mumbai, India 29
September 2010
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Dr Brian Tempest advises Companies, Banks, High
Net Worth Individuals and Investment Funds on
their Strategy in the Emerging World based on
his wide experience in China, Japan, South East
Asia and India where he has lived for the last
decade. Brian has worked for Ranbaxy Laboratories
since 1995 holding the position of Managing
Director and Chief Executive Officer until 2005.
He was then Chief Mentor and Non Executive
Director until 2008. He is one of the few
westerners to have led a Sensex Nifty 50 Indian
blue Chip MNC and as a result has a valuable
insight into India. Brian has also been Regional
Director, Far East for Glaxo where he was
responsible for businesses in Japan, China,
Korea, and Taiwan. Brian has worked in the
Pharmaceutical Industry for the last 39 years and
led Healthcare businesses in North America, South
America, Europe, Africa, Middle East, Asia and
India. He has also led sessions at Investor
Meetings across Asia, Europe and USA. He is now
an International Advisor to MAPE India,
Religare -India and UNCTAD - Switzerland. In
addition he is a member of the SCRIP Global
awards panel. Brian speaks at global conferences
on the Challenge from India and China and more
information on these presentations can be found
on his website www.briantempest.com. Brian has a
PhD in Polymer Chemistry from Lancaster
University and is a member of the Royal Society
of Medicine, the Royal Society of Chemistry and
is a Chartered Chemist. He is now Chairman of
Hale Tempest Co Ltd.
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Healthcare Pressures Forever (2050)
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Futuristic Pharma Vending Machines
-currently being test marketed in UK
Hospitals Supermarkets 2010

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The RD Model is failing

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Approvals Reimbursements
Source Pharmatimes UK
July-August 2010

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EU Surprise Anti Trust Raids 2008/9

• 1st - GSK, Astra Zeneca, Sanofi Aventis, Pfizer,
  Wyeth, Teva in January 2008
• 2nd Teva , Servier, Kirka in November 2008
• 3rd Sanofi Aventis France, Novartis France,
  Teva France in October 2009
• 4th Lundbeck Italy, Teva UK in December 2009

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Many Drugs withdrawn this Decade
Source Deutsche bank, FDA

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Generic Exposure

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Sales Force Job Cuts in Press
since 2009 in H1 2010

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82 of the world population accounts for only 12
of the global pharma sales
Region Pharma Sales Population
North America Europe Japan 255 b 47 158 b 30 59 b 11 332 5 725 11 128 2
Asia/Africa/Aus Latam 88 41 b 8 20 b 4 18 4711 73 558 9
12 82
Worldwide 533 b 100 6454 100

• Sources
• IMS Midas, March 2005
• Earth Trend Data Tables 2005

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Emerging World Share of Pharma Growth source IMS
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Emerging World Share of Pharma Sales Source EIU,
OECD, WHO, IMS, Roland Berger

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Profitability in Branded Generic Markets
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Regional Operating Margins - GSK

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Big Pharma the Emerging World
source IMS - BRIC, Mexico, Turkey, South Korea
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Emerging Markets Big Pharma

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Big Pharma - New World Order is Coming

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Patent Expiries 2003-2013 (in 8 Markets)

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USA Generics Filings
Source Deutsche bank July 2010

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USA - First to File Lawsuits
Source RBC Capital Markets January 15 2010
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USA - Litigation Success Rates
Source RBC Capital Markets
January 15 2010

• Patent FTF Challenges on rise
• Success litigation rate at 48 - or 76
  including deals with patent owner
• 3 courts hold 69 of cases with a 36 success
  rate e.g. NJ
• 4 courts never ruled against generics e.g. NY
• At risk launches on the rise 6 in 2009
• Teva has 12 of the 28 at risk launches 2002/9
• Settlements on the rise 54 in 2009

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USA Challenge Size of Product Basket
Source Deutsche Bank

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EU Chain forms a China Generic Factory

• UK Coop a GBP10b UK company
• Worlds largest consumer cooperative
• running food stores, banks, insurance, funeral
  homes, travel agents, farms and pharmacies
• 3rd rank pharmacy chain in UK with 800 stores
• Owns UK pharmaceutical wholesaler Sants
• Offers 113 products under Prospect brand
• Tianjin Tasly Sants Chinese JV opens 2010/11
• With Investment GBP20m, 200 staff
• SAP went live Feb 2010

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Generic Profit Margin Profile
in descending order
source Deutsche Bank July 2010

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Indian Generics have consistently outperformed
USA Generics

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Indian Deals Roaring Ahead
July 2010 Grant Thornton Deal Tracker

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Top 22 Generic Companies over 1b
Source Company Reports Generics
Bulletin 28 May 2010 (excludes Apotex Actavis
Private Companies)

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Next18 Generic Companies lt 1b
Source Company Reports Generics
Bulletin 28 May 2010 (excludes Recalcine Private
Company)

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The Tempest Crystal Ball

• Asia is becoming the Centre of Gravity for global
  business
• Big Pharma will develop Emerging World
  Strategies, Generics Strategies, OTC Strategies,
  Vaccine Strategies, VC Strategies
• Big Pharma will continue to be attracted to India
  for CT, EDC, MO. and to China for
  RM/Biology/Toxicology
• Big Pharma will develop dual IP as well as dual
  pricing
• In Commodity Generics risks and competition will
  rise further. Branded Generics will continue to
  be very attractive
• Many Indian families are reviewing their family
  portfolios. MA will roar ahead
• Oncology Monoclonals could be the next wave after
  HIV

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Thank You brian.tempest_at_clara.co.uk www.briantempe
st.com