Life Sciences Practice – Pricing, Market Access & Value Proposition Capabilities Overview

February 2017

2Deloitte Asset Playbook

Deloitte and BI 3

Our Point of View 9

Pricing and Market Access: Capabilities 15

Value Proposition: Capabilities 22

Appendix 35

Table of Contents

3Lilly Strategic Consulting Qualified Vendor Pool Response

It is increasingly important to begin developing price-value-access strategies during a product’s clinical developmentTypical Price-Value-Access Strategy Activities/ Deliverables

In-line pricing/access assessments

Negotiating strategy development

Launch price strategy,including launch sequence

and global price policy

Early Pricing landscape assessment for clinical decisions and portfolio

optimization

Phase III clinical evidence evaluation and planning

Initial Pricing considerationsfor forecasting

Product value, positioning options and patient

segmentation

Cross portfolio/indication/LOEstrategy development

Local implementation planning

Value story andmessage development

Globalvalue

dossier

Value evidencegeneration strategy Cost

effectiveness/ budget impact

modelsEndpoint selection/

study design

Epidemiology / burden of disease assessments

Local contracting options, planning and segmentation

Stakeholder mapping

Additional valueevidence generation

Development ofcommunication tools

Infrastructure andlogistics planning

Local inputs on landscape, value and evidence

PHASE I PHASE II PHASE III POST LAUNCH

Our service offerings can be selected and integrated to address BI’s specific needs

PRODUCT LIFECYCLE

Informs HEOR Strategy Activities/ Deliverables

4Deloitte Asset Playbook

An integrated pricing and reimbursement strategy requires developing consistent, mutually reinforcing pricing, HEOR, and contracting strategies

Pricing Strategy Signals the degree of clinical

differentiation vs. competing products

Reflects potential cost-savings from persistent and compliant use

Varies by indication (where possible)

Establishes the starting point for contract negotiations

HEOR Strategy Supplements clinical trial

results through the analysis of “real world” data

Demonstrates the potential cost-savings from persistent and compliant use

Supports the development of clinical dossier submissions

Minimizes the need for an aggressive contracting strategy

Contracting Strategy Achieves profitable formulary

access

Optimizes the level of investment in targeted accounts

Facilitates achieving desired formulary placement

Supports achieving the forecasted gross-to-net (GTN) amounts

Varies across channels (e.g., Commercial, Medicare Part D)

Facilitates pull-through activities

Minimizes prescribing barriers by eliminating formulary restrictions

Minimizes payer risk

Corrects sub-optimal pricing and HEOR strategies

ContractingStrategy

Components of an IntegratedPricing & Reimbursement (P&R) Strategy

- 5 -

Understand payers’ perception of the therapeutic area and the applicable decision making processes

Target the appropriate organization(s) and individuals within those organizations when proposing innovative pricing strategies

– Most organizations are unwilling and/or unable to enter into non-traditional pricing arrangements

– Entering into non-traditional pricing arrangements necessitates interacting with non-traditional contacts (i.e., individuals who are not members of P&T Committees)

Consider the long-term costs and benefits of developing innovative pricing strategies (e.g., implementing Biogen Idec’s UK patient registry for Avonex has been more complicated than expected)

Recognize the potential goodwill from entering into an innovative pricing agreement with one payer and leverage that goodwill with other payers

Test the upper bound of all pricing recommendations (i.e., ensure the pricing and contracting recommendations do not “leave money on the table”)

Recognize the potential public outcry of overly aggressive pricing strategies (e.g., Genentech capped the cost of its breast cancer product, Avastin, after a significant amount of public debate)

Pursue economic differentiation only if the product is not clinically differentiated vs. competing products

Recognize the varying objectives of different types of organizations (e.g., MCOs, PBMs) and stakeholders within those organizations (e.g., Medical Directors, Pharmacy Directors) and develop tactics to address each stakeholder’s specific objectives

Assess the ongoing performance and continued appropriateness of in-force contracts (i.e., perform frequent retrospective analyses)

CriticalSuccessFactors

SelectDeliverables

US pricing strategies (e.g., WAC ranges)

Global pricing strategies

Rebate ranges by channel

Governance strategies and department redesigns

Market sizing

Revenue forecasts

P&L statements and gross-to-net calculations

HEOR analyses and budget impact models

There are numerous critical success factors to consider when developing an integrated pricing & reimbursement strategy

Pricing & AccessCapabilities

- 7 -

Payers Physicians Patients

Willingness-to-Pay Willingness-to-Prescribe Willingness-to-Purchase

Objective: Estimate the likelihood of payers providing formulary access and implementing restrictions at varying WAC and rebate levels

Objective: Estimate the likelihood of physicians prescribing a medication at varying co-payment levels and with varying formulary restrictions

Objective: Estimate the likelihood of patients filling a prescription at varying co-payment levels

Participants: P&T decision makers at MCOs, PBMs, and hospitals

Participants: PCPs, specialists, sub-specialists

Participants: Patients and/or caregivers/advocacy groups for a given condition

Illustrative Methodologies:– Van Westendorp analysis– Discrete choice models

Illustrative Methodologies:– Monadic approach– Adaptive conjoint analysis

Illustrative Methodologies– Garbor Granger– In-depth interviews

Deloitte has a wealth of experience developing pricing recommendations that reflect the interrelated decisions of payers, physicians, and patients

An effective pricing strategy requires analyzing the interrelated decisions of payers, physicians, and patients

- 8 -

Increasing competition from generic entrants and increasing cost to bring products to market Increasing portion of pharmacy spend attributed to specialty and

high-cost treatments

Increasing Margin

Pressures

Increasing government focus on price transparency Manufacturers may be asked to certify the accuracy of data used to

calculate rebates; and provide justification of non-price concessions

Increased utilization of e-prescribing technology will make MCOs even more influential over utilization Growing competitive advantage of reimbursement and customer

support

Shifting competitive landscape Difficult access to accurate data Changing global reimbursement legislation

Step-therapy as a utilization management tactic Increased use of pharmacoeconomic criteria in formulary decisions Rise in evidence-based medicine within the provider segment

Increased education and availability of decision-making tools Holistic and integrated approach for employers to manage care Increasing concern over data management and privacy

Market Forces

Contracting is a top-line sales and revenue driver

A robust methodology will increase the transparency of

contracts and data inputs

Contracting with influential payers will help drive

formulary placement and increase product utilization

Strong contracting processes will enable frequent contract

changes and complexity

Optimized discounting is a win-win for manufacturers

and cost-conscious customers

Formulary availability, aided by contracting, will

encourage consumer interest

Optimized Contracting

Source: Deloitte experience

Increasing Regulation and Transparency

Increasing Payer Influence

Increasing Market

Complexity

Increased Cost Containment by

Payers

Increased Consumer

Involvement

Contracting strategies that are able to drive product utilization and maximize profitability are a key component of an integrated pricing & access strategy

- 9 -

I. DESIGN II. TEST III. OPTIMIZE

Perform Market Assessment

TestHypotheses Develop Strategy

GenerateHypotheses

Develop Primary Research Tools

Field PrimaryResearch Tools

Recommend Optimal Price and Rebate

Guidelines

Arrive at a Market View of Price for Each

Hypothesis

Analyze Pricing Impact on Profitability

Perform internal interviews and conduct secondary research

Generate value hypotheses

Develop primary research tools

Field primary research tools (e.g., discrete choice, conjoint analysis, van Westendorp)

Analyze survey results to arrive at potential WAC, rebate and net price levels

Analyze the impact on profitability using a pricing impact model

Test boundary conditions for each strategy to arrive at an optimal price

Develop contracting guidelines for each strategy

*Note: An SMA is a Subject Matter Advisor

Market Assessment and SMA* interviews

Market Research Results and Pricing Impact ModelINPUTS:

Deloitte utilizes a hypothesis-based approach to develop integrated pricing & access strategies

- 10 -

DiscreteChoice Model

Estimates stakeholders’ choices for covering/prescribing a

product based on varying price and performance scenarios

AdaptiveConjoint Analysis

Van WestendorpAnalysis

MonadicApproach

GarborGranger

Deloitte employs a variety of primary research methodologies when developing pricing and access strategies

Incr

easi

ng L

evel

of C

ompl

exity

METHODOLOGY DESCRIPTION ILLUSTRATIVE POPULATIONS

Assesses stakeholders’ preferences based on varying

combinations of product attributes

Asks stakeholders open-ended questions about their price expectations/ thresholds

Assesses equal sized groups of stakeholders’ usage of a product

at a single price point

Quantifies stakeholder demand under alternative pricing and

market access scenarios

In-depthInterviews

Uncovers how stakeholders’ behavior will affect an

organization’s ability to commercialize a product

Payers Physicians Patients

Aggregate product utility and market share

OUTPUT

Utilities of individualproduct attributes

and a price response curve

Price curves that show a range: Floor, Ceiling

and Optimal price

Prescription percentage (physician) and

utilization percentage (patient)

Price response curve

Summary responses to the discussion guide

questions and verbatim comments

- 11 -

Assumptions

Model

Output

Deloitte has developed a dynamic, user-friendly pricing model to compare the revenue & profitability of alternative pricing & contracting strategies

Expected Tier Spread Based on

Survey Data

PeakShare

Calculation

MarketForecast

by Channel

WAC x(1- Rebate) Uptake

CurveMarket

Forecast(by Channel)

Peak Share

Forecasted Revenue

Market-SpecificUptakeCurve*

*In addition to a market-specific uptake curve, the user also has the ability to select an uptake curve from a library of options

Set WACand

Rebate Amounts

Input Launch Parameters Date of launch

Time to peak

- 12 -

Illustrative Deliverables

MARKET ASSESSMENT

FINANCIAL MODEL MANAGED CARE STRATEGY

QUANTITATIVE SURVEYSSummarizes current and emerging marketplace trends,

healthcare policies and access/reimbursement approachesSolicits input from payers, provider, physicians, and patients

regarding alternative pricing and contracting strategies

Quantifies the financial impact of alternativepricing, contracting and access strategies

Outlines therapeutic area specific strategies and tactics across multiple payer channels (US only)

Value PropositionCapabilities

- 14 -

Deloitte developed the Value Story approach to help its clients defend their products’ value

Quantifies impact of product vs. competitors on healthcare resource utilization and payers’ budget

Conveys a story articulated around simple yet compelling messages, communicating value and savings that matter to payers

Provides a structured menu that enables country teams to select the messages best adapted to each of their local target stakeholders

Leverages client’s Health Economics models to demonstratehow, from local healthcare perspective, product’s value justifies its price in target patient populations

Leverages available real-life data to demonstrate product’sdifferentiated value in routineclinical practice

Logically translates drug’s attributes into value beyond the sole clinical standpoint: operational efficiencies, economic and public health value

A Value Story is a Value Selling tool tailored to one product, that:

- 15 -

The Value Story approach identifies and communicates all the relevant sources of differential value offered by a specific product

Competitor /Traditional

Therapy Value Va

lue

of C

ompa

ny P

rodu

ct

Efficacy

Service Package

Safety

Operational Efficiencies

Relationship

Disease Burden

Disease burdenpresents an unmet

need that needs to be addressed

We use a systematic approach, breaking down the differentiated value vs. competitors

Product Value Company Value

Differential value of a company’s products can come from a number of different sources

The goal is to communicate value and savings that resonate and make the difference to payers, providers and physicians for optimal

access and uptake of the product

- 16 -

The approach systematically “ladders up” clinical benefits into explicit economic, and public health value that matter to payers and customers

Public Health / Political

Value

Economic Value

Clinical Benefits

Measurable clinical benefits of the product or its mode of administration

Quantifiable economic value generated for payers and their healthcare budgets

Tangible public health value for payers, more difficult to quantify in economic terms, but also differentiating the product

Value Ladder Illustrative Example Product

Clinical study results demonstrating significant reduction in number of chemotherapy-induced “events” vs. competitors

Reduction in in- and out-patient costs associated with the “events” avoided

Protection for cancer patients from debilitating “events”

Ability to provide innovative healthcare without burdening healthcare budgets

- 17 -

Each story is structured by key content elements, helping deliver compelling messages, supported by underlying evidence

VALUE STORY ONE-PAGER

One-page summary of overarching value messages, including disease, brand and economic value elements

DATA COMPENDIUM

Supporting data for each value message (detailed clinical evidence and HE data, references to publications, etc.)

SUPPORTING TOOLS & GUIDANCE

Objection Handler

Account Calculator

Pricing Guidance & Calculations

VALUE LADDERS

For each value element: – Clinical benefits – Economic value – Public health, political and

emotional value

+

- 18 -

The Value Story One-Pager summarizes all differentiating value elements offered by the product and its company in addressing a disease…

Events are serious and can be life-threatening

Events incidence is high in specific patient populations

Events history predisposes patients to additional events

Higher efficacy in primary endpoint – x additional months without events

Reduced risk of subsequent events by x% vs. main competitor

Higher efficacy in secondary endpoints

Reduced total costs vs. main competitor –$/€xK in country Y per patient per year

Main competitor has been associated with reports of serious AEs

Dosing with main competitor can be complex and administration time-consuming

Half patients continue to experience events despite main competitor use

Half patients discontinue main competitor use in year 1

Burden of Disease

“Events” are serious and

common

Events impact QoL and are expensive

1 2

Higher Efficacy and Reduction of AEs vs.

Main Competitor

Simplified Admin & Dosing

Favorable Risk-Benefit

Higher efficacy than main competitor

Reduces Adverse Events

(AEs)

5Efficient

administration and simple

dosing

7Use across

broadpopulation with favorable risk-benefit balance

Patients with eventsexperience decreased HRQoL

Events associated with greater risk ofpain progression

Patients with events consumesignificant healthcare resources –$/€xK in country Y per single event

Events are associated with significant loss of productivity for the society

Utilization in a broader patient population due to favorable risk-benefit profile E.g. Lower incidence of serious AE 1 vs. main competitor, allowing use in broader population

Favorable risk-benefit profile vs. main competitor

Majority of physicians and patients would choose Product vs. main competitor

Product is efficient to administer

Less burden on nursing staff due to simple admin and reduced need for patient monitoring

Less burden on patient administration and improved adherence

Product reduces administration and management costs – $/€xK in country Y per patient per year

Delayed onset of AE vs. main competitor by x months

Delays time to AE interfering with daily activities vs. main competitor

Reduces need for costly AE treatment vs. main competitor

HRQoLimprovement inhigher proportion ofpatients than main competitor

Main competitor shows

limitations

3 4

Overall Budget Impact Value of Product

Strong commitment to serving patients

8

World leader in Therapeutic Area

Invested in providing adapted services to patients and payers

Invested in research in diseases withhigh unmet needs

Company Reputation

Value of Company

6

- 19 -

… allowing selection and combination of value messages to best adapt to local stakeholders

Tender Decision-Making Body

Individual stakeholders

President CliniciansRegional Guidelines

REG

ION

HO

SPIT

AL

GM

Pharmacist 2

Administrator

Local Technical Committee: Tenders

Clinicians

Pharmacist 1

Head Specialist

Local Formulary : Usage Recommendations

Decision through– Both pharmacists – Head Specialist (strong

advocate for our product)

Key decision maker(s)

Key influencer(s)

Decision through– One pharmacist– Administrator

Clinicians have some influence, but are not formally included in technical committee

Higher efficacy than main competitor

Delays onset of pain

Efficient administration

and simple dosing

Strong commitment to serving patients

Main competitor shows

limitations

Use across broad pop. with favorable risk-benefit balance

Higher efficacy than main competitor

Higher efficacy than main competitor

Main competitor shows

limitations

4

4

4

3

8

3

5 6

4

Key Stakeholders Tailoring of Messages

- 20 -

The Value Story approach has proven powerful in both external communication and internal alignment process

KEY BENEFITS OF VALUE STORY APPROACH

Identifies disease-, product- and company benefits that are truly differentiatedfrom competitors

Logically translates these benefits into clinical, economic and public health value relevant for different stakeholders

Readily adaptable to stakeholder and country specifics

Created through a process that fosters close alignment across functions on how to sell the product’s value

Efficient communication and capability building through aligned format across brands, well known to the organization

- 21 -

We have established an efficient cross-functional approach to developing and rolling out the value stories

Draft Updated

Value Story

Update value story documents (i.e., one-pager, value ladders and supporting data)

Legal ReviewFinal Updates

and Referencing

Refine and finalize materials

Flag potential gaps which would need to be further tested (internally and / or externally)

Review New Information

Identify new data and market developments

Suggest areas of the story and messages to update

Produce Final Version

Finalize VS documentation

Create a presentation document for training and communication (optional)

Workshop to align on updates

Workshop to validate updates

Internal Roll-out

Train-the-Trainer

E-learning

Functional Orientations

Local Training

Manage legal review process

Explain updates to the value stories

Support value selling capabilities

Cro

ss-fu

nctio

n di

scus

sion

s &

m

ilest

ones

Key

Wor

k S

teps

Exam

ple

R

oll-o

ut O

ptio

ns

- 22 -

Value Story

We see two ways to further develop the Value Stories

How to better use the Value Storiesin Customers Negotiations?

In the current constrained environment, provide: Guidance on the desired market position and fall-back options Analytics and other support for decision-making between options Customer facing materials

How to improve the Value Story itself?

Continuously enhance the value messages and associated data by leveraging, e.g.,– Local data, notably health-economic data

(customers increasing focus on cost)– Cost comparison vs. competitors, notably

generics / biosimilars

A

B

Data Compendium: Clinical & Economic

Value Laddersfor Each Value Element

Value Story One-Pager

0

- 23 -

How to improve the Value Story itself

MORE DATA FURTHER TAILORING SERVICES & CONTRACTING

Health-economic Data

Product experience; e.g., – Usage

Comparative vs. Generics / Biosimilars

Local-specific data; e.g. – vs. standard of care– Treatment pathway

and guidelines

Real-life & Post-launch

Data

Product experience; e.g., – Efficacy– Safety

Local-specific data; e.g. – Population– Treatment

guidelines

Post-launch studies

Testing with Payers

National / regional payer research

Ad boards Local account focus

groups

Competitive Intelligence

Value Story vs. cheaper competitors (i.e., generics / biosimilars)

Competitor’s value stories– Refinement of value

messages– Optimal delivery of

story

Research & Modeling

Customer and payer needs

Value driver assessment

Contracting

Services

Local / account-specific services– Respond to

customer needs

Respond to customers’ needs; e.g. – Increase budget

predictability – Reduce

uncertainties tied to product usage

– Increase budget affordability

– Reduce outcome uncertainties

A

- 24 -

How to better use the Value Story in Customer Negotiations?

NEGOTIATION GUIDANCE CUSTOMER FACING TOOLS ROLL-OUT & PRACTICE

Value Story & Desired Position

HC policy Guidelines Competition…

+

Fallback Options Trade-offs assessment Analytics Decision-making support

Market Environment and Context

Product Value

Price

Access Covenants

TimePatients

Materials & Tools

iPad materials

Leave-behinds

RML slide pack

“Back-of-the-envelope calculation” tools

– Simple and transparent excel tool to be used with customers)

Training

Effectively tailoring value messages to each customer

Negotiations mock-ups / workshops

B

Appendix—Case Studies

- 26 -

Case Study 1: Pricing & Reimbursement Strategy The client was planning a branded

product launch into a highly genericized, undifferentiated product class

The objective was to develop a pricing and reimbursement strategy that would elicit a favorable response from payers, while simultaneously maximizing revenue and profitability

The Deloitte team achieved the project goals by: 1 2 3

1 2

3

Performing a comprehensive assessment of the market and payer landscape

Developing a pricing impact model to test the P&L impact of alternative strategies

Evaluating each strategy for attractiveness across multiple dimensions using a predetermined set of criteria

Developing contracting guidelines, channel strategies, and implementation roadmaps for the recommended strategy

Payer Trendsand Needs

Market Dynamics

Within Product

Class

ProductAttributes

Key insights& hypotheses

• 500 mergers among health insurers between 1998-2010

• In 24 states, the respective top 2 players control 70% of the market

• The average co-pay increased 80% in the preferred drug category and 59% in the non-preferred drugs category from 2000-2009

• The generic prescription rate has increased to ~70% in 2010

• The share of TRx for branded drugs dropped to 28% in 2008 3

• Nearly 33% of all drugs had utilization restrictions in 2008 vs 20% in 2006

The U.S. reimbursement environment is becoming more restrictive

Payer consolidation 1

Increasing cost-sharing by patients

Increasing use of generics 2 Increasing formulary restrictions 4

1018

929

880900920940960980

100010201040

2007 2011

No. o

f firm

s in

indu

stry

43% 40% 36% 32% 28%

57% 60% 64% 68% 72%

2004 2005 2006 2007 2008

Shar

e of T

Rx (%

)

Generic

Branded

0%5%

10%15%20%25%30%35%

Prior Auth Step Therapy

Qty limits Any UM restriction

Shar

e of d

rugs

with

UM re

stric

tion

(%)

2006 2007 2008

$-$20 $40 $60 $80

$100

Generic Preferred Non-preferred 4th Tier

Aver

age c

o-pa

y ($) 2000 2009

44%

+5.3%

-2.3%

+2.5%+6.7%

+4.1%

Other key factors such as aging population, the ‘patent cliff’, and rising healthcare provision costs have also contributed to some of these trends

• Average commercial pharmacy deductibles increased almost 500% in 2 years between 2006 and 20084

$89

$333 $434

$-$100 $200 $300 $400 $500

2006 2007 2008

Aver

age c

omm

ercia

lph

arm

acy d

educ

tible

s ($)

Rising co-pays 5 Increasing deductibles

+274%

+30%

Channels: A dominates in terms ofvolume, while B leads dollar sales

800,000

1,400,000

1,600,000

1,800,0002,000,000

5,800,000

200,000400,000

600,000

1,000,000

08.3x

4.3x1,200,000

Federal FacilitiesClinicsMail OrderRetail

5.8x

5.9x

A

DCB 180

80

20

10

0

8.4x

30

Federal FacilitiesClinicsMail OrderRetail

7.9x

4.8x

90

40

60

70

50

5.4x

DCBA

INS Sales by Channel ($M, Q4 2010) INS Sales by Channel (Units, Q4 2010)

Key Observations

• C in particular does not seem to have a major focus on mail order as a channel (ratio of retail to mail order sales in volume terms is 8.3x)• Compared to peers, generic X and C have a disproportionally larger amount of sales being generated from the retail channel in dollar terms• Compared to peers, B appears to have a mail order focused strategy• Mail order may be an important channel for XX and needs to be explored further in primary research

*Retail includes chain stores, independent and food stores

Product X has been steadily losing market share in spite of high Tier 2 access

X TRx 2010: Distribution by channel, and MOP Market TRx 2010: X share trend by MOP

Commercial70%

Medicaid15%

Medicare Part D11%

Cash2%

Managed Medicaid

2%

100% = 10.1M scripts

• Retail channel provides 74% of X scripts – of these, commercial 3rd party payers provide 70%, resulting in ~25% market share within that segment (annual share)• In contrast, Medicaid and Cash scripts are 15% and 2% respectively of retail X TRx, but provide a 38% share and 18% share respectively within those segments (annual share)• X’s high share in Medicaid could possibly be due to a gap in overall pricing strategy, resulting in providing the drug at very low margin levels

Retail *74%

Mail Order17%

Other**9%

0%10%20%30%40%50%60%

Feb'0

9M

ar'09

Apr'0

9M

ay'09

Jun'0

9Ju

l'09

Aug'0

9Se

p'09

Oct'0

9No

v'09

Dec'0

9Ja

n'10

Feb'1

0M

ar'10

Apr'1

0M

ay'10

Jun'1

0Ju

l'10

Aug'1

0Se

p'10

Oct'1

0No

v'10

Dec'1

0Ja

n'11

Cash Commercial 3rd Party Managed MedicaidMedicaid Medicare Part D

Market TRx 2010: X Share X Tier Placement

0%10%20%30%40%

Q205

Q305

Q405

Q106

Q206

Q306

Q406

Q107

Q207

Q307

Q407

Q108

Q208

Q308

Q408

Q109

Q209

Q309

Q409

Q110

Q210

Q310

Q410

X market share has dropped from 33% in Q12007 to 23% in Q4 2010, and appears to be trending further downwards

33%

23%

8%

78%

6%8%

OtherTier 3Tier 2Tier 1

X enjoys very high access on Tier 2, along with some Tier 1 presence

% o

f cov

ered

live

s

X RestrictionsX enjoys relatively low levels of restrictions, particularly Prior Authorizations

% o

f cov

ered

live

s

11%5%

31%

0%

20%

40%

Prior Auth. Step Therapy Qty. Limits

% o

f TRx

Conducting a payer survey using the van Westendorp methodology to obtain plausible gross and net price ranges

- 27 -

Case Study 2: Market Share Assessment and Resource Allocation for Product Launch The client was one of 2 companies co-

launching Drug X, for the treatment of hospital-acquired infections; the client was facing challenges with obtaining an accurate and reliable forecast of peak market share

The objective was to develop a launch strategy, including a robust forecasting model, for peak market share and revenues

The Deloitte team achieved the project goals by: 1 2 3

1

2 3

Assessing the key drivers of market share (in the US and Japan markets), using both top-down and bottom-up perspectives

Forecasting market share by defining multiple potential scenarios and the interplay with key drivers and variables. Tools used included modeling patient flows and conducting market surveys

Developing a launch strategy for the US market, taking into account the scenario-based forecasts for peak market potential

Top-Down Approach

Bottom-Up Approach

Supply-driven approach based off of actual competitor

sales data

Demand-driven approach based off of hospital admissions and

incidence ratesSegment Based on

Number of Beds

cSSSI

HAP

Other

Therapy Patient

Days TherapyX XPatients

Facilities

Incidence by Segment

Daily Dosage÷Supply

Patient Days

0

20

40

60

80

100

120

Patient Days

Addressable Market

VIBATIV Share

Top-Down Forecast

Bottom-Up Forecast

First Line

Out-patient

Contra-Indications

Market Growth

REMSOral

‘Most Likely’ scenario

- 28 -

Drug Y, used to treat eczema, was experiencing a significant sales impact due to an FDA black box warning

The objective was to identify methods by which the pharmaceutical manufacturer can optimize revenues and bottom-line contribution from their expiring drug

The Deloitte team achieved the project goals by:

Treatment Phase Maintenance Phase

PharmacyPrimary care physician

SpecialistSymptomatic Patients who need 2nd line AD treatment

MCO

PCP

Specialist

Pharmacy

Mail-order pharmacy

Pharmaceutical Manufacturer

Wholesaler / Distributor

AOnly a f raction of all patients are

prescribed Drug X

BOnly a f raction of all prescriptions for

Drug X are actually f illed

COnly a f raction of all users continue to

ref ill their prescriptions

Points of loss in potential Rx

2 1

3

23

1

3

3

L1 L5L2

L8

L6L3 L4 L7

L9

Strategic Lever

Key Recommendations

Peak market potential

Opportunity(% of 08 revenues)

Lever Cost impact APUS Prioritization

Rationalize SKUs

Do away with the 30g SKU for both 0.1% and 0.03% concentration and retain only 60g and 100g SKU

12% 7% - 12.0%

One-time: NA

On-going:$130,000

Interested and will require further analysis

Further analysis will need to cover - Legal impact- Ethical impact- MCO resistance and contracts- Using coupons to counter co-pay increase

TargetPharmacists

Focus on educating pharmacists about Drug X through sales rep ef forts

Educate pharmacies and use them as a channel for Drug X’s patient assistance programs

4% 0.5% - 3%

One-time: $90,500

On-going:$150,000

Opportunity size at face-value seems limited

Proposed means of reaching pharmacists through sales rep calls may be dif f icult to achieve

Sales force re-allocation

Redistribute excess existing sales bandwidth among new PCPs/Pedstargets

2% <1%

One-time: $300,000

On-going:NA

Risky proposition and will require further analysis

Further analysis will need to consider- Persistence of sales call (reducing call

f requency to less than once a month)- Risk of losing existing Rx- Excess sales bandwidth may be diverted

LowMediumHigh

Physician: Sales force optimization, education, drug credentialing etc.

1

2

3

Patient: Assistance , DTC, SKU rationalization, efficient targeting etc.

Channel: Contract assessment, Formulary access etc.

Points of influence

L1 : Sales force re-allocationL2 : Streamline prior-authL3: Use samples effectively

L4 : Target patients L5 : Target pharmacistsL6: Use coupons effectively

L7 : Rationalize SKUsL8 : Increase Drug X priceL9: Address high product return

Levers

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Defining the patient flow and the relevant associated stakeholders for Drug Y.

Identifying the key points of influence and the strategic levers -23 strategic levers were identified at various points in the patient flow, of which 9 were shortlisted for further evaluation

Analyzing the levers in detail to produce actionable recommendations, which would enable the client to achieve its goals for Drug X

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Case Study 3: Revenue Optimization