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The US Pharmaceutical Market Looking back and looking ahead! Prepared for SLA By Doug Long VP Industry Relations March 19, 2012
All reproduction rights, quotations, broadcasting, publications reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without express written consent of IMS HEALTH.
2012 Strategic management presentation
Copyright IMS Health; All rights reserved 2
7.1% 7.1% 6.4% 7.1% 4.6% 4- 5% 3-5% 4 -6% 5-7% 4-7%
$656 $727 $799 $832 $876 $940-950
$960-970
$990-1,010
$1,055- $1,075
$1,120- $1,150
Global sales growth is 3-6%
•Global Sales and Growth, 2006-2015
•2011-15 CAGR (f) 3-6% •2006-10 CAGR 6.4%
•Source: IMS Health, Market Prognosis, October 2011 2011
Copyright IMS Health; All rights reserved
Key shifts within the pharmaceutical market change the nature and mix of future growth areas
•Stakeholders •Traditional medicines
•Specialty/biologics
•(Niche/orphan)
•Geographic markets •U.S. and other developed
•China and other pharmerging
•Intellectual property •Protected •Generics
•Lower growth
•More constraints •Different drivers / Different constraints •Pharma market
•Product profile •Small molecule/orals/ blockbusters
•Biologics /injectable/ personalized
•Challenges to win on “value”
•But mostly generic
•And new brands compete with generics
•But with greater risk
•Historic drivers •… But •Future drivers
Copyright IMS Health; All rights reserved
Pharmerging markets and generics are the only drivers of global growth
Components of Change in Total Spending
•$1,065-1,095Bn
•*Other includes Rest of World +$27Bn, Other developed market growth +$17Bn, Exchange rate change -$15Bn
•Developed markets
Source: IMS Market Prognosis, Apr 2011
•$856Bn
Copyright IMS Health; All rights reserved
By 2015, China will replace Japan to be the second largest market
•Change in ranking over 5 years
Rank 2005 Index Rank 2010 Index Rank 2015 Index 1 United States 100 1 United States 100 1 United States 100
2 Japan 36 2 Japan 33 2 China 36
3 France 15 3 China 18 3 Japan 35
4 Germany 14 4 Germany 15 4 Germany 15
5 Italy 9 5 France 14 5 Brazil 14
6 China 8 6 Italy 9 6 France 13
7 Spain 7 7 Brazil 8 7 Italy 9
8 UK 7 8 Spain 8 8 India 8
9 Canada 7 9 Canada 7 9 Russia 7
10 Brazil 5 10 United Kingdom 7 10 Spain 7
11 Mexico 4 11 Russia 5 11 Canada 7
12 Australia 4 12 Australia 4 12 United Kingdom 6
13 South Korea 3 13 India 4 13 Venezuela 6
14 India 2 14 Mexico 4 14 Australia 5
15 Turkey 2 15 South Korea 4 15 Turkey 4
16 Russia 2 16 Turkey 3 16 Mexico 4
17 Netherlands 2 17 Poland 2 17 South Korea 4
18 Belgium 2 18 Netherlands 2 18 Argentina 3
19 Poland 2 19 Belgium 2 19 Poland 3
20 Greece 2 20 Greece 2 20 Belgium 2
•3
•2
•1
•3
•1
•2
•5
•3
•2
•1
•2
•1
•1
•2
•1
•5
•2
•2
•2
•2
•9
•1
•2
•2
•9
•2
•1
•1
•1
•3
•1
•3
•4
•1
•2 •7
•12
•2
•1
•1
•1
•1
•2
•Source: IMS Health, Market Prognosis, October 2011. Market size ranking in constant US$
Copyright IMS Health; All rights reserved
Pharmerging markets will show the most growth
•Global Sales and Market Growth Developed Markets
CAGR 2011-2015
US 1 - 4%
Japan 2 - 5%
Germany 1 - 4%
France -1- 2%
Italy 0 - 3%
Canada -2 - 1%
Spain -2 - 1%
UK -1- 2%
S. Korea 1- 4%
Developed 1 - 4%
•Source: IMS Health, Market Prognosis, October 2011
Pharmerging Markets
CAGR 2011-15
Tier 1 (China) 16-19%
Tier 2 12-15%
Brazil 12-15%
Russia 11-14%
India 14-17%
Tier 3 10-13%
Pharmerging 13-16%
Copyright IMS Health; All rights reserved
$5-6Bn
$8-10Bn
$9-11Bn $9-11Bn
$9-11Bn $10-12Bn
$11-13Bn
$12-15Bn
$13-16Bn
$13-16Bn
$18-22Bn
$18-22Bn
$18-22Bn
$20-24Bn $27-32Bn
$28-33Bn $29-34Bn
$41-46Bn $43-48Bn
$75-80Bn
0 10 20 30 40 50 60 70 80 90
Glaucoma
Antivirals excl. HIV
Alzheimer's
Erythropoeisis stimulating agents
Attention Deficit Hyperactivity Disorder
Narcotic analgesics
Osteoporosis
Multiple sclerosis
Anti-epileptics
Antidepressants
Anti-ulcerants
Platelet aggregation inhibitors
Antipsychotics
HIV antivirals
Autoimmune
Angiotensin inhibitors
Lipid regulators
Respiratory
Antidiabetics
Oncology
Leading therapy classes in 2015
Spending in 2015 and 2011-15 CAGR
Source: IMS Institute for Healthcare Informatics; Therapy Forecaster, May 2011
5-8% 4-7% 2-5%
-2 to -5% 1-4% 6-9% 5-8%
-3 to -6% 4-7%
-5 to -8% -5 to -8%
1-4% 5-8%
8-11% 0 to -3%
4-7% 0 to -3%
1-4% 1-4%
0 to -3%
Copyright IMS Health; All rights reserved
3.8%3.2%
1.8%
1.1%
5.3%
2.1%2.6%
1.1%
3.7%
0.8%
0%
5%
10%
Sales TRx
% G
RO
WTH
US$
2007
2008
2009
2010
2011
The total market grew 3.7% in 2011
Source: IMS Health, National Sales Perspectives, Dec 2011 IMS Health, National Prescription Audit, Dec 2011
% Growth of prescription products Total market
Copyright IMS Health; All rights reserved 11
Reasons for Moderation in the Growth of Drug Expenditures
• Increased cost sharing for consumers
• Economic downturn
• Innovation drought
• Safety concerns for various drugs
• Rx to OTC conversions
• Ongoing introduction of first time generic drugs
Copyright IMS Health; All rights reserved 12
Generics and Specialty outperformed the market in 2011
3.2%
4.4%3.7%3.7%
2.1%2.8%
13.8%
6.7%
0%
5%
10%
15%
MAT Dec 2011
% G
RO
WT
H
Total Market Brand Branded Generic
Generic Primary Care Driven Atcs Specialist Driven Atcs
Biologic Molecules Oncologics
Twelve months ending Dec 2011 % Growth US$
Source: IMS Health, National Sales Perspectives, Dec 2011
Copyright IMS Health; All rights reserved 14
Generics continue to post strong growth
3.7%
2.0%
11.6%
0%
5%
10%
15%
YTD Dec 2011
% G
RO
WT
H
0.8%
4.5%
-9.8%
-15%
-10%
-5%
0%
5%
10%
YTD Dec 2011
% G
RO
WT
H
Source: IMS Health, National Prescription Audit, Branded generics disaggregated, Dec 2011
Source: IMS Health, National Sales Perspectives, Branded generics disaggregated, Dec 2011
Jan 2011 to Dec 2011 Jan 2011 to Dec 2011 % Growth US$ % Growth TRx
Total market Brands Generics
Copyright IMS Health; All rights reserved 15
Generics account for 54% of the dollar growth in 2011
2007
Brands
79%
21%
MAT Dec 2011
Brands
46%Generics
54%
Source: IMS Health, National Sales Perspectives, Branded generics disaggregated, Dec 2011
AC = +$11bn AC = +$10bn
% Contribution to growth US$
Copyright IMS Health; All rights reserved 16
Spend grew 3.3% but largest segments grew slower or declined
$0 $50 $100 $150 $200 $250 $300
Total market: +3.3%
Brands: +1.3% Branded generics: +4.3%
Generics: +15.1%
Traditional Pharma: +1.4% Specialty: +6.3%
Small molecules: +1.2% Biologics: +7.0%
Spending Growth (MAT Sep 2011)
Retail: +3.0% Institutional: +4.0%
Copyright IMS Health; All rights reserved 17
Source: IMS Health, National Disease and Therapeutic Index, Nov 2011, 95% confidence interval (+/-3.9%)
Patient visits down 4.1% through Nov 2011 but recent periods consistent with expected recovery
Copyright IMS Health; All rights reserved 18
DollarsAC
US$mn Total Rx dispensed
AC
TRxs mn
Antipsychotics,oth 2039.2 Anti-depressants 9.2
Lipid regulators 1355.8 Codeine & comb 7.4
Analogs of human insulin 1241.3 Synth non-narc analg 6.2
Analeptics 1139.4 Seizure disorders 6.1
Neurological disorders 1137.8 Analeptics 4.1
Antiarth,biol resp mod 962.5 Antiarth,plain 3.4
Hepatitis Antivirals 932.5 Influenza 3.1
Dpp-4 Inhib 792.2 Antinauseant 5HT3 antag 2.5
Platelet Inhibitors 750.8 Calcium blockers 2.4
Platinum coordination 574.1 Dpp-4 Inhib 2.4
Top 10 Therapy Classes- Absolute Growth
Source: IMS Health, National Sales Perspectives, Dec 2011, National Prescription Audit, Dec 2011
Copyright IMS Health; All rights reserved 20
Dollars%
GrowthTotal Rx dispensed
%
Growth
Hepatitis Antivirals 256 Influenza 78
Vitamin K Antagonists 176 Antinauseant 5HT3 antag 31
Antiarth,gout spec 173 Ophth corticoids 25
Potassium suppl,chloride 63 Dpp-4 Inhib 23
Platinum coordination 58 Synth non-narc analg 15
Neurological disorders 49 Non-narc cough alone 13
Antineo enzyme recept 48 Specific antagonists 13
Miscellaneous,oth 40 Hyperosmolar lax 10
Anti-Diab Hormone Analog 38 Morphine/opium deriv 9
Monoclonal antibodies 34 Analeptics 9
Top 10 Therapy Classes- Relative Growth
Source: IMS Health, National Sales Perspectives, Dec 2011, National Prescription Audit, Dec 2011
Copyright IMS Health; All rights reserved 21
DollarsAC
US$mn Total Rx dispensed
AC
TRxs mn
Antihistamines alone -475.1 Quinolones, systemic -1.2
Glitazones -529.7 Diuretics,loop -1.4
Herpes Antivirals -568.1 Hormones,estrogens -1.4
Anti-depressants -703.2 Beta blockers -1.9
Quinolones, systemic -753.5 Diuretics,comb -2.0
UT benign prostate -801.9 Ace inhibitors -3.7
Erythropoietins -985.9 Glitazones -4.0
Angiotensin II antagonists -1061.8 Osteoclast Inhibitors -6.6
Alzheimer-type dementia -1612.8 Antihistamines alone -9.3
Proton pump inhib -1850.5 Synth narc,analg -14.7
Top 10 Therapy Classes- Absolute declines
Source: IMS Health, National Sales Perspectives, Dec 2011, National Prescription Audit, Dec 2011
Copyright IMS Health; All rights reserved 22
Top 10 Therapy Classes- Dollar basis
US$mn% Market
Share% Growth
US Industry 319,849 100.0 3.7
1 Lipid regulators 18,624 5.8 7.9
2 Antipsychotics,oth 18,120 5.7 12.7
3 Anti-depressants 10,878 3.4 -6.1
4 Proton pump inhib 9,601 3.0 -16.2
5 Analogs of human insulin 8,762 2.7 16.5
6 Antineo monoclonal antib 8,619 2.7 3.3
7 Antiarth,biol resp mod 7,957 2.5 13.8
8 Analeptics 7,854 2.5 17.0
9 Platelet Inhibitors 7,764 2.4 10.7
10 Angiotensin II antagonists 7,394 2.3 -12.6
Top 10 105,573 33.0 4.1
MAT Dec 2011
Leading classes
Source: IMS Health, National Sales Perspectives, Dec 2011
Copyright IMS Health; All rights reserved 23
Top 11-20 Therapy Classes- Dollar basis
US$mn% Market
Share% Growth
11 Steroid,inhaled bronch 6,061 1.9 3.3
12 GI anti-inflam 5,885 1.8 9.6
13 HIV antiviral combination 5,849 1.8 10.8
14 Erythropoietins 5,110 1.6 -16.2
15 Codeine & comb 4,789 1.5 -8.3
16 Leukotriene agents 4,656 1.5 12.0
17 Immune system adjuncts 4,365 1.4 7.6
18 Immunologic interferons 4,157 1.3 4.6
19 Glitazones 4,100 1.3 -11.4
20 Seizure disorders 4,034 1.3 1.8
Top 20 154,580 48.3 3.0
MAT Dec 2011
Leading classes
Source: IMS Health, National Sales Perspectives, Dec 2011
Copyright IMS Health; All rights reserved 24
Top 10 Products- Absolute growth
Source: IMS Health, National Sales Perspectives, Dec 2011, National Prescription Audit, Dec 2011
DollarsAC
US$mnTotal Rx Dispensed
ACTRxsmn
Eloxatin® (S.A) 952 simvastatin (a6d) 9.5
enoxaparin sod (sdz) 907 furosemide (rox) 7.3
Incivek® (Vre) 838 amoxicillin (sdz) 6.6
methylphenidate er (wts) 771 hycd/apap (qlt) 6.6
Copaxone® (Tvn) 702 lisinopril (wok) 6.3
Crestor® (Azn) 638 omeprazole (rx) (drl) 6.3
Abilify® (Ots) 631 citalopram hbr (am9) 6.2
Plavix® (Bsa) 626 sertraline hcl (cm7) 6
Humira® (Abt) 602 amoxicillin (w-w) 5.3
gamunex-c (gfl) 556 lisinopril (qlt) 5.3
Copyright IMS Health; All rights reserved 25
Top 10 Products- Relative Growth
Source: IMS Health, National Sales Perspectives, Dec 2011, National Prescription Audit, Dec 2011
Dollars%
GrowthTotal Rx Dispensed
%Growth
Incivek® (Vre) >999 lisinopril (qlt) >999
methylphenidate er (wts) >999 metoprolol succin (wok) 560
Pradaxa® (B.I) >999 lisinopril (wok) 537
gamunex-c (gfl) >999 amoxicillin (w-w) 512
atorvastatin ca (wts) >999 simvastatin (a6d) 499
Gilenya® (Nvr) >999 furosemide (rox) 399
Xgeva® (Aai) >999 zolpidem tart (qlt) 209
Yervoy® (Bmp) >999 fluticasone prop (hit) 167
docetaxel (ho&) >999 alprazolam (qlt) 160
Colcrys® (Asc) 811 citalopram hbr (am9) 140
Copyright IMS Health; All rights reserved 26
Top 10 Products- Dollar basis
Products Company US$mn% Market
Share% Growth
US Industry 319,849 100.0 3.7
1 Lipitor® PFZ 7,664 2.4 5.7
2 Plavix® BSA 6,765 2.1 10.2
3 Nexium® AZN 6,151 1.9 -2.7
4 Abilify® OTS 5,187 1.6 13.9
5 Advair Diskus® GSK 4,633 1.5 -1.8
6 Seroquel® AZN 4,630 1.4 6.4
7 Singulair® MSD 4,588 1.4 12.6
8 Crestor® AZN 4,401 1.4 17.0
9 Cymbalta® LLY 3,663 1.1 16.0
10 Humira® ABT 3,530 1.1 20.5
Top 10 51,211 16.0 8.4
MAT Dec 2011
Source: IMS Health, National Sales Perspectives, Dec 2011
Copyright IMS Health; All rights reserved 27
Top 11-20 Products- Dollar basis
Products Company US$mn% Market
Share% Growth
11 Enbrel® AAI 3,506 1.1 6.5
12 Remicade® CTO 3,472 1.1 5.1
13 Actos® TAK 3,435 1.1 -3.0
14 Neulasta® AAI 3,315 1.0 10.1
15 Rituxan® GTC 3,005 0.9 8.8
16 Zyprexa® LLY 2,963 0.9 0.1
17 Copaxone® TVN 2,955 0.9 31.2
18 Lexapro® FOR 2,923 0.9 3.9
19 Oxycontin PUF 2,877 0.9 -6.8
20 Epogen® AAI 2,770 0.9 -16.7
Top 20 82,433 25.8 6.2
MAT Dec 2011
Source: IMS Health, National Sales Perspectives, Dec 2011
Copyright IMS Health; All rights reserved 28
Top 10 Growth Companies- Absolute Growth
Dollars AC US$BN TRx AC TRx mn
Watson Pharma 1.4 Camber Pharma 22.5
Novartis (incl Sandoz) 1.2 Lupin Pharma 22.5
Bristol-Myers Squibb 1.1 Endo Pharma Inc. 22.1
Mylan Labs, Inc. 0.8 Boehringer Ingelheim 17.9
Gilead Sciences 0.8 Zydus Pharma 17.8
Merck & Co 0.8 Amneal Inc 16.0
Novo Nordisk 0.8 Wockhardt America 15.6
Vertex Pharma 0.8 Watson Pharma 15.3
Roche (incl Genentech) 0.7 Northstar Rx 14.0
Shire Us Corp 0.7 Accord Healthcare 11.3
Source: IMS Health, National Sales Perspectives, Dec 2011, National Prescription Audit, Dec 2011
Copyright IMS Health; All rights reserved 29
2007
Top 11-
20
20.6%
Top 10
59.9%
All
Others
19.5%
Top 10 Pharma only contributed 4.1% of the market’s dollar growth in 2011
MAT Dec 2011
Top 10
4.1%
Top 11-
20
42.7%
All
Others
53.2%
Source: IMS Health, National Sales Perspectives, Dec 2011
% ABSOLUTE CHANGE US$
Copyright IMS Health; All rights reserved 31
52%
-3%
23%
48%
25%
55%
-20%
0%
20%
40%
60%
80%
100%
120%
% Market share US$ % Absolute change US$
All others
Top 11-20
Top 10
Source: IMS Health, National Sales Perspectives, Dec 2011
MAT Dec 2011
Top 10 Pharma posted a 3% loss in 2011
Copyright IMS Health; All rights reserved 32
Top 10 Companies- Dollar Basis
US$mn% Market
Share% Growth
US Industry 319,849 100.0 3.7
1 Pfizer (incl Greenstone) 25,121 7.9 -7.7
2 Astrazeneca 19,897 6.2 2.0
3 Merck & Co 19,343 6.0 4.1
4 Novartis (incl Sandoz) 19,242 6.0 6.9
5 Teva 15,062 4.7 -5.3
6 Lilly 14,868 4.6 4.2
7 Roche (incl Genentech) 14,468 4.5 5.1
8 Amgen Corporation 13,075 4.1 3.1
9 GlaxoSmithKline 12,864 4.0 -6.7
10 Johnson & Johnson 11,948 3.7 -5.9
Top 10 165,888 51.9 -0.3
MAT Dec 2011
Leading corporations
Source: IMS Health, National Sales Perspectives, Dec 2011
Copyright IMS Health; All rights reserved 33
Top 11-20 Companies- Dollar Basis
US$mn% Market
Share% Growth
11 Sanofi-Aventis 11,765 3.7 -3.9
12 Abbott 11,470 3.6 5.6
13 Bristol-Myers Squibb 10,851 3.4 11.2
14 Boehringer Ingelheim 6,970 2.2 9.5
15 Takeda 5,975 1.9 -0.4
16 Gilead Sciences 5,480 1.7 17.2
17 Mylan Labs, Inc. 5,461 1.7 17.1
18 Novo Nordisk 5,253 1.6 17.3
19 Otsuka America Ph 5,250 1.6 13.6
20 Forest Lab 5,185 1.6 9.5
Top 20 239,548 74.9 2.0
MAT Dec 2011
Leading corporations
Source: IMS Health, National Sales Perspectives, Dec 2011
Copyright IMS Health; All rights reserved 34
Top 10 Generic companies- Dollar basis
US$mn% Market
Share% Growth
US Industry 44,112 13.8 13.8
1 Teva 6,313 14.3 -23.0
2 Mylan Labs, Inc. 4,836 11.0 18.0
3 Sandoz (Novartis) 4,774 10.8 15.0
4 Watson Pharma 3,556 8.1 59.7
5 Hospira Inc 1,497 3.4 30.9
6 Greenstone (Pfizer) 1,419 3.2 -2.4
7 Par Pharma 1,363 3.1 2.3
8 Boehringer Ingelheim 1,260 2.9 23.6
9 Fresenius Kabi 999 2.3 19.3
10 Actavis US 905 2.1 -7.3
Top 10 26,922 61.0 5.9
MAT Dec 2011
Sales of unbranded generics by leading corporations
Source: IMS Health, National Sales Perspectives, Dec 2011
Copyright IMS Health; All rights reserved 35
• Can reputation for innovation and value be built or restored?
• What activities need to be stopped and which started? • What partnerships are required to support this position?
• How to tackle R&D spending and raise productivity?
• What commercial footprint is needed (salesforce, social media, inaccessible/closed networks, etc?) • How to cut next 25% of costs to reflect the 2010s, not 90s?
• Stakeholder influence and perceptions are having an increasing
influence on the value of future therapy areas • How do you manage the portfolio when products’ lifecycle is even less certain?
• How is value defined in terms of real world evidence? • Whose perspective of value to balance? • What to do with non-valuable products?
• Few if any launches have been “excellent”
• Market access is critical and includes different approaches for regulators, payers, providers and patients
In this context, manufacturers have five areas to focus on and resolve
Reputation and relationships
Cost reduction
Business portfolio
Definition of “value”
Launch fundamentals
Copyright IMS Health; All rights reserved 36
Retail and Mail grew 0.6% on scripts in 2011
Channels TRxs mn% Market
Share% Growth
Retail 3,695 91.8 0.6
Chain/Mass 2,212 55.0 1.8
Independents 740 18.4 -1.1
Mail service 260 6.5 -1.7
Food stores 483 12.0 -1.1
Non retail channels 329 8.2 3.1
LTC 329 8.2 3.1
Total 4,024 100.0 0.8
MAT Dec 2011
Source: IMS Health, National Prescription Audit, Dec 2011
Copyright IMS Health; All rights reserved 37
Retail grew 3.6% and Institutional 3.7% in 2011
Channels US$bn% Market
Share% Growth
Retail 227.3 71.1 3.6
Chain/Mass 112.5 35.2 4.1
Mail service 55.1 17.2 6.4
Independents 38.1 11.9 0.3
Food stores 21.5 6.7 0.9
Institutional 92.5 28.9 3.7
Clinics 38.4 12.0 4.5
Hospitals 32.4 10.1 1.2
Long-term care 15.2 4.8 3.0
Home health care 2.7 0.9 8.2
HMO 2.7 0.8 27.7
Others 1.0 0.3 0.6
Total 319.8 100.0 3.7
YTD Dec 2011
Source: IMS Health, National Sales Perspectives, Dec 2011
Copyright IMS Health; All rights reserved 38
86.4% 86.1% 85.8% 85.3% 83.1% 81.8%
40.3%36.5%
32.1% 29.4% 26.0% 23.3%
13.6% 13.9% 14.2% 14.7% 16.9% 18.2%
59.7%63.5%
67.9% 70.6% 74.0% 76.7%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006 2007 2008 2009 2010 MAT
Dec 2011
2006 2007 2008 2009 2010 MAT
Dec 2011
% M
AR
KE
T S
HA
RE
%Dollars %Total prescriptions dispensed
Brands Generics
Generics have reached an all-time high share
Source: IMS Health, National Sales Perspectives, Dec 2011, National Prescription Audit, Dec 2011, Branded generics disaggregated
Copyright IMS Health; All rights reserved 39
11.6 13.6
6.4
15.812.4
18.6
30.2
6.2
21.2
10.97.8
2.12.3
2.4
3.6
4.3
3.5
5.4
2.6
3.3
3.8
1.9
0
5
10
15
20
25
30
35
40
45
50
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
SPEN
DIN
IG U
S$BN
Non-retail Retail
16.0
22.1
8.8
Value of products at risk 2006-2016, MAT Sep 2011 (US$B)
Source: IMS Health, MIDAS, Market Segmentation, Sep 2011; For 2006-2011 spending in year prior to expiry shown; For 2012-16 MAT Sep 2011 values are shown and are not projected to reflect expected future sales
$93B exposed to generic competition by 2016, ~80% from retail
13.7
8.9
19.4
16.6
35.6
24.6
14.7
9.7
2012-2016 LOE exposure: $93B
Copyright IMS Health; All rights reserved 40
8
12 12
4 5
1
1
1
2
3
1
4
1
11
9
8
6
2
2 1
108
19
10
2525
15
19
10
1614 13
0
5
10
15
20
25
30
35
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
CO
NSTAN
T U
S$BN
Biologics protection expiries
Small molecule protection expiries
Long term LOE exposure
Value of products at risk 2004-2020
Source: IMS Health, MIDAS, Market Segmentation, Jun 2010
Copyright IMS Health; All rights reserved 41
Expiries in 2010 were largely exclusive; potential exclusivities to trend down through 2015
Source: IMS Institute for Healthcare Informatics, Aug 2011. Sales from prior years included.
US Protection Expiry Exposure And Market Exclusivity Potential 2010-2015
Copyright IMS Health; All rights reserved 42
Prescriptions to become more generic through 2015 with generic share reaching 87%
2015 Market Share, TRX TRX Volume BN (Retail, Mail & Long Term Care)
Source: IMS Institute for Healthcare Informatics, 2011
Copyright IMS Health; All rights reserved 43
Source: IMS National Prescription Audit Weekly, January 6, 2012
2011 expiries continue pattern of rapid brand erosion
Total Total Total Total ATORVASTATIN DISPENSED PRESCRIPTION SHARE (TRx) Brand Prescription Share of Molecule Post-Expiry (Top Expiries 2010/2011)
WEEKS SINCE PATENT EXPIRY
Copyright IMS Health; All rights reserved 44
FDA Approval Highlights- 2011
Highlights
35 new drugs
2nd highest total over the last decade
2 new Hepatitis C drugs
A new drug for late stage prostate cancer
1st new drug for Hodgkin’s lymphoma in 30 years
1st new drug for Lupus in 50 years
7 of the new drugs provide major advances in cancer treatment
Almost 50% were significant advances over existing treatments for heart attack, stroke, and kidney transplant rejection
10 were indicated for orphan diseases, which frequently lack any therapy
2 drugs (1 for melanoma and 1 for lung cancer) represent breakthroughs in personalized medicine
45
Recent and future novel therapies do address unmet patient needs
Selected Product Launches 2009-2013
Source: IMS Institute for Healthcare Informatics, Apr 2011
Disease area Launched Upcoming
Arrhythmia Brinavess™ (vernakalant) Multaq® (dronedarone)
Autoimmune Simponi® (golimumab) Stelara™ (ustekinumab)
tofacitinib (JAK inhibitor)
Diabetes Nesina® (alogliptin, DPPIV) Onglyza™ (saxagliptin, DPPIV) Victoza® (liraglutide, GLP-1) Bydureon™ (exenatide, GLP-1)
canagliflozin (SGLT2) dapagliflozin (SGLT2) lixisenatide (GLP-1) Tradjenta™ (linagliptin, DPPIV)
Hepatitis C Victrelis™ (boceprevir, NS3-4A PI) Incivek® (telaprevir, NS3-4A PI)
Lupus Benlysta® (belimumab)
Melanoma Yervoy™ (ipilimumab) vemurafenib
Multiple sclerosis Ampyra® (fampiridine, oral) Gilenya® (fingolimod, oral)
laquinimod (oral) ocrelizumab teriflunomide (oral)
Osteoporosis Prolia® (denosumab)
Thrombosis/ Acute coronary syndrome
Brilique™ (ticagrelor, P2T), Effient® (prasugrel, Xa) Pradaxa® (dabigatran etexilate, Xa)
Eliquis® (apixaban, Xa)
Prostate cancer Firmagon® (degarelix) Jevtana® (cabazitaxel) Provenge® (sipuleucel-T) Zytiga™ (abiraterone acetate)
Copyright IMS Health, All rights reserved 46
Medicaid Vs All Prescriptions
Vector One ®: Payer (VOPA)
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
300,000,000
350,000,000
Total
Medicaid
9%
91%
FFS Medicaid vs Managed Medicaid
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
Medicaid - Other
Managed Medicaid
Vector One ®: Payer (VOPA)
AZ, GA, KY, MA, MD, MI, NJ, NV, PA, SC
Commercial Third Party and Medicare Part D gained share in 2011
11.5% 10.9% 8.3% 7.7% 6.9% 6.4%
7.5% 6.8%7.0% 7.5% 8.4% 8.1%
66.4%63.9% 64.4% 64.1% 62.9% 63.3%
14.6% 18.4% 20.3% 20.7% 21.8% 22.2%
2006 2007 2008 2009 2010 2011
Cash Medicaid Commerical Third Party Medicare Part D
Source: IMS Health, National Prescription Audit, Dec 2011 ; Note Includes only retail pharmacies
Retail (excluding Mail) Dispensed Prescriptions by Payment Type
+0.4%
Copyright IMS Health; All rights reserved 50
The most certain impacts are negative in the short term but more positive or uncertain longer term
Closure of donut hole
Upside Expanded coverage of current uninsured
Expanded Medicaid coverage
Medicaid rebate increases
Part D donut hole subsidy
Annual fees Biosimilar regulatory pathway
Downside
2010 2019 2014
IM
PA
CT
TIMING
Reform of insurance practices
Independent Payment Advisory Board Patient Centered Outcomes Res. Inst. Pilots, demonstration projects Preventive care incentives Physician payment
sunshine rules
Copyright IMS Health; All rights reserved 51
0
50
100
150
200
250
300
350
400
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
NU
MBER O
F P
EO
PLE (
MIL
LIO
NS) Exchanges
Uninsured
Nongroup/Other
Employer
Medicaid/CHIP
Medicare
Source: CMS, CBO Healthcare Reform Reconciliation Bill Analysis, Mar 2010
25-30mn people will get coverage under reform but questions remain about how they will use it
COVERAGE AFTER REFORM
+24 +24
-32 -27
-5 -2
-4 +8
+16 +11
0 +14
Impact on 2019 (mn)
Vs. no-reform Vs. 2010
Copyright IMS Health; All rights reserved 52
We believe biosimilars will succeed because payers will increasingly see biologics as their main cost driver Savings from small molecule generics to decline after 2015
Source: IMS MIDAS, MAT 12/2010, IMS Institute for Healthcare Informatics
138
+62 200
+53 253
+7.7% 2010-15 CAGR
+4.8% 2015-20 CAGR
Total pharma
+4.5 - 5.0%
Total branded
+0.5 - 1.1%
2010-15 CAGR Conservative estimates –
depending on the successful outcomes of PharmaCos pipeline 2015-20 CAGR could ever exceed
the 2010-15 CAGR figures
What savings from
generics?
Only a few core small
molecules to potentially
yield savings in the future
(Diovan, Lipitor, Seretide, Spiriva,
Seroquel, ...)
Continuous price reduction
of existing generics
Savings from small
molecules to decline
after 2015
Copyright IMS Health; All rights reserved 53
0
20
40
60
80
100
120
118
0
40
4 2 9 6
43
12
30
5 2
15 11
26 20 19
5 2
22
9
Risk Evaluation and Mitigation Strategies (REMS) by Complexity
March 2011-March 2012
Mar-11
Sep-11
Mar-12
MG= Medication Guide CP= Communication Plan ETASU= Elements to Assure Safe Use IS= Implementation System
Complexity
Source: Center for Healthcare Supply Chain Research
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
0
50
100
150
200
250
300
350
400
2005
2006
2007
2008
2009
2010
2011 (
f)
2012 (
f)
2013 (
f)
2014 (
f)
2015 (
f)
GRO
WTH
CO
NST U
S$
SALES U
S$BN
Sales Mar 2011 edition Draft Sep 2011
US forecast to 2015 up slightly; 2011 slightly ahead of prior forecast, HC reform impact up slightly
Source: IMS Health Market Prognosis Mar 2011 and draft Sep 2011
Sales and growth forecast
•Reduced role of brands in therapy areas where high quality generics are available
•Impact of 2010 expiries deeper than expected on brands but generic price discounts were not fully realized
Key drivers of changes to 2010/11
•HC reform incremental demand in 2014 1.9% impact up from 1.5% in prior edition
•Timing of patent expiries shifts; peak impact years now 2012 to 13
•New product contribution improving, but market overall continues to be hampered by the cumulative effects of lower levels of innovation entering 2006-10
Key drivers of changes 2012-14
1-4%
0-3%
Copyright IMS Health; All rights reserved 59
What’s in for Pharmaceuticals?
• Slower market growth
• Generics & Patent Cliff
• Specialty is growing but at a slower pace
• RX to OTC
• Private label OTC
• Chain & Mass, Mail service, Clinics, & LTC
• Medicaid & Medicare Part D
• Cough, Cold and Flu
• Price Increases
• REMS
• Drug Shortages
• Specialty Innovation
• S&D
Copyright IMS Health; All rights reserved 61
What’s out and what’s ahead for Pharmaceuticals???
What’s Out?
• Brand growth
• Primary Care Innovation
• R&D
• Office visits
• Elective surgery
• Adherence???
• Government − Medicaid
− Medicare Part D
− Health Care reform
− Generic User fees
− Generic approval backlogs
− More FDA inspections
− AMP
− Biosimilar Pathway
− REMS
− Patent Settlements
− DEA enforcement
What’s Ahead?
Copyright IMS Health; All rights reserved 62
Branded pharma challenges
Copyright IMS Health; All rights reserved 63
Source: Morgan Stanley Research
Generic pharma challenges
Source: Morgan Stanley Research
Copyright IMS Health; All rights reserved 64
Longer-term upsides to pharma growth are possible
65
Growing share of healthcare budget for
pharmacotherapy
Accelerated uptake of healthcare information
technology
Increased diagnosis of asymptomatic conditions
Improved compliance and persistency rates
Expanded patient access to healthcare
Greater clinical evidence of drug efficacy
Emergence of new therapeutic platforms
Aging population and economic development
Copyright IMS Health; All rights reserved 65
The US Pharmaceutical Market Looking back and looking ahead! Prepared for SLA By Doug Long VP Industry Relations March 19, 2012