Parallel Session 1. Pharmerging Markets: Chasing Future Growth Opportunity. Alan Harrison, IMS Health, UK

Transcription

1 Parallel Session 1 Markets: Chasing Future Growth Opportunity Alan Harrison, IMS Health, UK

2 Agenda Global Trends and Performance Emerging Market Diversity Implications for Pharma & Market Research 2

3 GDP ($bn, 08) Changes in market dynamics has led IMS to a more nuanced definition of pharmerging markets 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, India Indonesia China Pakistan Ukraine Egypt Vietnam Thailand S. Africa Romania Brazil Bubble size= absolute Pharma growth to 2015 Turkey Argentina Poland Venezuela Russia 0 5,000 10,000 15,000 20,000 Pharma growth: GDP per capita ($, 08) IMS Tier 1, 2 and 3 Markets Tier 1 Tier 2 Tier 3 China India Russia Brazil Turkey Indonesia Poland Argentina Thailand S Africa Mexico CAGR > 10% CAGR 5-10% CAGR < 5% Source: IMS Health Market prognosis, April Provisional, Egypt & Ukraine September Pharma growth requirements +$71bn Growth +$12 to 22bn Growth +$1 to 7bn Growth Pakistan Egypt Venezuela Ukraine Romania Vietnam 3

4 Global Trends Pharma growth expected at 3-6% CAGR to 2015 with value worth over US$ 1 trillion (*) to experience double-digit growth Global Sales and Growth (const.us$) Mature Markets CAGR US 0-3% Japan 2-5% Germany 1-4% France 0-3% Italy 1-4% Canada -2-1% Spain 1-4% UK -1-2% Mature 1-4% Markets CAGR Tier % China 19-22% Tier % Brazil 10-13% Russia 11-14% India 14-17% Tier % 13-16% 4 Source: IMS Health Market Prognosis, March 2011 Provisional forecast. For ROW, Egypt and Ukraine, 2015 sales estimated using CAGR as per Sept 2010 forecasts. (*) at ex-manufacturer price levels, not including rebates and discounts

5 CONTRIBUTION TO GROWTH (CONST US$) Global Trends CONTRIBUTION TO GROWTH (CONST US$) By 2015 countries' contribution to global growth will significantly 100% increase 15% Holding more than a quarter of 90% value sales in % Region Contribution to Global Growth Region 12% Market share 19% of Global Sales % 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% -1% 17% 13% 12% 19% 11% 17% 12% 5% 12% 26% 3% 8% 27% 7% 11% % 60% 50% 40% 30% 20% 10% -1% 11% 17% 12% 15% 30% 5% 10% 12% 26% 3% 8% 2% 8% 9% 15% 27% 7% 11% 11% US Canada EU5 Japan Tier 1 Tier 2 Tier 3 ROW Source: IMS Health Market Prognosis, March *2015 sales estimated using CAGR Sept 2010 for Egypt & Ukraine in Tier 3 and ROW 5

6 Global Trends Current top 5 markets projected to maintain their global rankings through RANK 2010 RANK 2015 RANK 1 United States 1 United States 1 United States 2 Japan 2 Japan 2 Japan 3 France 3 China 3 China 4 Germany 4 Germany 4 Germany 5 Italy 5 France 5 France 6 UK 6 Italy 6 Brazil 7 Spain 7 Brazil 7 Italy 8 Canada 8 Spain 8 India 9 China 9 Canada 9 Spain 10 Brazil 10 UK 10 Russia 11 Mexico 11 Russia 11 Canada 12 Australia 12 India 12 UK 13 South Korea 13 Australia 13 Venezuela 14 Turkey 14 Mexico 14 Turkey 15 India 15 South Korea 15 South Korea 16 Russia 16 Turkey 16 Australia 17 Netherlands 17 Poland 17 Mexico 18 Belgium 18 Netherlands 18 Argentina 19 Poland 19 Belgium 19 Poland 20 Greece 20 Greece 20 Belgium Source: IMS Health, Market Prognosis, Apr Market size ranking in constant US$ 6

7 Emerging markets are mostly volatile individually but as a group have consistently delivered strong growth Markets Growth Variability, Source: IMS Health, Market Prognosis, Apr

8 FORECAST CAGR In, China remains the largest and fast growing LATAM also forging ahead Country Growth Performance 30% Venezuela 20% Pakistan India Argentina China 10% Mexico Poland Turkey Russia Vietnam Egypt Romania Brazil Indonesia 0% Thailand S.Africa 0% 5% 10% 15% 20% 25% 30% 35% CAGR Source: IMS Market Prognosis March Mexico and Brazil in 2010 includes retail + non retail channels. Long term growth from MIDAS Dec 2011 Original brand growth using Mrkt seg data for Brazil, India, Mexico, South Africa, Turkey & Poland. Lic/Gen data for remaining countries 8

9 maintain strong growth as economies recover and healthcare access expands Markets Growth and Market Dynamics, China: Continuing implementation of universal healthcare coverage, but also accompanied by drug cost lowering measures Brazil: Roaring economy and broader access to medicines, despite price controls, sustains double digit growth Russia: Economy recovers and growth fluctuations caused by economic crisis set to stabilize India: Consumer purchasing power enables high pharma growth despite growing burden of chronic diseases Mexico: Continuing genericization of the market fuelled by patient price sensitivity and awareness of low-cost therapies availability Turkey: Negative effect of the pricing reform diminishes as price adjustments are absorbed by the market Tier 3 Tier 3 Markets: Economic recovery lifts pharma growth in mostly out-of-pocket Tier 3 pharmerging markets Source: IMS Health, Market Prognosis, Apr 2011 Tier 3: Mexico, Turkey, Poland, Venezuela, Argentina, Indonesia, S. Africa, Thailand, Romania, Egypt, Ukraine, Pakistan, Vietnam 9

10 : fast growing region but opportunities for R&D players more restricted as original brands have lower share and growth Trends Implications for R&D corps The share of original brands continues to decline and holds a third of market Growth of original brands was 8% in 2010 vs total regional growth of 14% Generics are expected to continue increasing their share of the market, particularly the branded segment, except for Brazil which has seen a surge in unbranded driven by local companies Growth for original brands is challenging and requires customising the local portfolio to meet country needs Pharmacos with differentiated portfolios in lower out of pocket countries will have an advantage. They will however struggle to compete with local generics in strong out of pocket markets such as China and India With increasing price sensitivity, pharmacos will need to include in their future pricing strategy strong discounts and price cuts to gain market access 10

11 China Brazil Russia India Turkey Mexico Poland Venezuela Argentina S. Africa Indonesia Romania Thailand Egypt Pakistan Vietnam % MARKET SHARE (us$) Except China and Vietnam which are highly fragmented, Global top 10 companies account for around half of the market TIER 1 TIER 2 TIER 3 100% 90% 80% 70% 60% 50% 85% 47% 61% 62% 51% 50% 54% 48% 47% 32% 56% 42% 52% 48% 52% 73% 40% 30% 20% 10% 0% 15% 53% 39% 38% 49% 50% 46% 52% 53% 68% 44% 58% 48% 52% 48% 27% Global Top 10 companies Other companies Source: IMS MIDAS, MAT December

12 In markets growth is mostly from generic drugs Spending and Growth China Brazil India Russia Tier Growth to Source: IMS Market Prognosis, Apr 2011 Total spending Brand spending 12

13 Long-term growth (CAGR ) Although underperforming total market growth, top corps are outperforming in original brands segment : Corporation Sales & Growth Evolution, US$ Const 30% Amgen Global CAGR = 5.6% 25% Eisai 20% AZ CAGR = 16.3% Pfizer GSK 15% Takeda 10% J&J MSD Sanofi Daiichi Teva Abbott Novartis Bayer Lilly Roche BI Otsuka Novo Original brands=11.7% 5% BMS 0% -5% 0% 5% 10% 15% Global Long-term growth (CAGR ) Size of bubble = Sales markets Source: IMS MIDAS MAT Dec *Abbott sales include Piramal Healthcare sales; retail panels for Brazil and Mexico

14 There is a fundamental shift in the pharmerging launch environment and companies must adapt to succeed Trends towards earlier launch Time to market has halved Specialist and differentiated products experienced the largest decline Variation in uptake curves Higher variation in uptake curves across countries Differentiated products show steeper and deeper uptake curves vs. Top4 Window of opportunity Less than 20% of launches are able to significantly improve their launch trajectory after 6 months Launch earlier in pharmerging potentially ahead of mature markets Don t underestimate the potential for innovative launches Plan to maximize the 6-month window 14

15 Wide Variation in Financing Sources for Drug Expenditure Implications for stakeholder influence Markets % Drug Expenditure by Finance Source Healthcare Financing source: OECD

16 : how fast is the region moving towards a chronic profile? Urbanisation, diet, smoking, life expectancy driving rise in chronic illnesses Trends Implications for R&D corps By 2030, key pharmerging will show a similar burden of chronic disease to mature markets. Increasing levels of income have resulted in a shift towards chronic therapy; Brazil and Russia have evolved more rapidly; China shows slower trend with healthcare expansion dealing with acute needs. The expansion of chronic volume mostly goes to generics. Original brands volume in China benefiting from slight share gains. Entering the branded generics chronic segment will enable pharma to gain a higher share of top line growth. The growth of chronic can offer opportunities for mature brands to move into. As long as compliance and persistence is held up, chronic segment offers long term opportunities. 16

17 China Market Environment China is becoming a very complex market, and is now requiring sophistication in operating models Price cuts on current off-patent portfolio Government regulations that will continue to favor domestic companies and are inconsistently implemented Regulatory Shrinking price Geographic diversity Need for different commercial models in different provinces Local competition that works under different operating norms Competitive landscape MNC Challenges Price/Volume Trade-off Complex distribution Pricing trade-offs to reach large untreated population Fragmented distribution with many layers 17

18 Brazil Market Environment Brazil is increasingly commoditised in the retail segment Three Fundamental Shifts in Brazil Market Landscape Commoditization in retail market Sophistication of payers in nonretail market MNC portfolio shift to non-retail Similarly to the rest of the world, innovation is declining in the retail segment Out-patient therapies are being addressed by commoditized drugs, notably unbranded generics Generic players are growing stronger, while innovators are seeking opportunities in niche private segments On the public side, the creation of a economic evaluation agency (CITEC) became a technical and political barrier of product inclusion in funding programmes On the private side, payers are becoming more sophisticated, tending to avoid overexpenditure on complex therapies The unmet medical needs in complex diseases favours innovative non-retail drugs, mostly developed by MNCs Commoditization in retail, on the other end, drives the migration of the MNCs to the non-retail arena, where technical differentiation of new products prevails over commercial aggressiveness of local companies Generic wins Source: IMS Health Consulting Cost-effectiveness is unavoidable Multinationals compete in the non-retail arena 18

19 Russia Market Environment The Russian market is still highly volatile Three Fundamental Shifts in Russian Market Landscape Pricing control on Essential Drugs List Drive in increase a domestic production New regulatory environment More stable pricing environment and decreased uncertainty caused by exchange rate fluctuations All products on the EDL were reregistered and started trading at their new prices New method of price growth control at the pharmacy level Proportion of demand met by local production to reach 50% by 2020 Purchasing organizations are encouraged to substitute imported drugs with locally produced equivalents Multinationals continue investments in Russia by building local production facilities Restrictions in promotional activities for sales representatives from the start of 2011 Doctors and pharmacists can t be reached during working hours High uncertainty for pharmaceutical companies New scheme of pricing Business model adjustment for Multinationals New promotional model with innovative methods of communication Source: IMS Health Consulting; EDL: Essential Drugs List 19

20 India Market Environment India has strong growth potential but is highly fragmented and competitive Three Fundamental Shifts in India Market Landscape Healthcare access IPR / Pricing Balancing ROI vs. SOV Market is restricted to urban (70% consumption in 30% of the country) Only 40% population have access to modern medicines Inadequate hospital set-up in lower town classes Poor infrastructure restricting reach Low awareness levels impacting diagnosis & treatment compliance Though affordability is improving, current levels are low Patent implementation improving, although issues remain: -Interpretation of Incremental Innovation -Compulsory licensing -Data exclusivity/protection still a challenge Approval for new drugs requires clinical studies - tighter controls by DCGI Price control -74 molecules under price control -Opportunity for differential pricing exists (particularly specialist markets) Poor counterfeit law enforcement Portfolio needs to be tailored to deal with increase in chronic diseases Market fragmentation & intense competition manufacturers -> brands with little differentiation -Market dominated by local Co s Huge doctor population & numerous small hospitals -Large field force size required for wide coverage -Brand building requires broad coverage of Primary Care Physicians Opportunities for significant market development and access initiatives for MNCs, future outlook is positive Strategic pricing, early and well planned launch critical for success of new molecules Need to adapt to local environment & design local market access strategies 20 Source: IMS Health Consulting

21 Venezuela Market Environment A combination of political, commercial and financial factors are all acting to shape the Venezuelan healthcare market Three Fundamental Shifts in Venezuela Market Landscape Health of the Supply Chain Business rules driven by Geopolitics Changing Healthcare Dynamics Cash-flow issues Fewer wholesalers with greater power Backorder levels of 20% - 30% Controlled access to foreign currency for imports (CADIVI) Registry delays Emphasis on cost control: - New healthcare insurance law - Control on doctor s fees - Pricing watchers - Essentials price control Emphasis on patient access: - Re-launching of Barrio Adentro Program in pre-election times - Mandatory patient access to private hospitals - Public insurance company Rise of chronic diseases Decrease in purchasing power Therapy area protocols New players The patient counts Strategies to maintain presence Increase in demand; Shortages; Strategies to ensure market presence Increased use of generic and branded generic products; New business models to address change of stakeholders Source: IMS Health Consulting 21

22 Implications for pharmacos in Markets Success is elusive without adaptations to the corporate model Corporate functions must adapt to local requirements, e.g. regulatory, pricing, medical affairs/communication Strategic and marketing planning needs to embrace mature and key pharmerging markets The value of the brand and the corporate name key in emerging markets as a guarantor of performance and quality, especially as one molecule may support many brands Promotional investment needs to go where the optimal returns exist and be adaptable to local needs whilst always recognising that a blockbuster mandates a successful US launch A clear portfolio strategy is essential, whether it s sticking with what you have, strengthening the range in core areas, or expanding to fit local needs Clinical trial design needs to involve broader range of ethnic groups to complement wider population groups 22

23 Further implications for International Market Research Diversity & level of maturity require different approaches vs. developed markets Issue Clarity & transparency regarding distribution channels & commercial practices Implication for Market Research Need to be aware of design and coverage of secondary data sources and realise that these will continue to change as emerging markets develop Data gaps in coverage Secondary data sources will need to be supplemented by primary market research 23

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