Anlise de mercado Principais concorrentes Unidades %

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A changing landscape the decline of branded
generics and the rise of commodity generic markets
Thursday 17th January 2008 Hilton,Barcelona Ewan
Livesey Executive Vice President Corporate
Development Glenmark Pharmaceuticals Europe
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Agenda

• Background
• A look at some of the generic market models
  currently existing in Europe
• What is the future for the branded generic
  markets of Europe?
• Business development in this changing landscape
• QA

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Agenda

• Background
• A look at some of the generic market models
  currently existing in Europe
• What is the future for the branded generic
  markets of Europe?
• Business development in this changing landscape
• QA

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Background

• In recent years it has been possible to observe
  a growing concern on the part of European
  Governments and public health authorities to
  decrease or at least control rising
  healthcare expenditures.
• Hugo Carradinha
• Health Economic Affairs
• EGA, 2007 market Review, November 2007

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Generic Pricing System

• What type of pricing system is used in EU
  countries?

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Generic Pricing System

• In price regulated systems, prices are based on

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Are doctors legally required to prescribe by INN?
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Are doctors encouraged to prescribe by INN?
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How are doctors encouraged to prescribe generic
medicines?
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Generic Market Shares
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Background

• The pricing of generic medicines is largely
  unregulated in the European Union.
• Where pricing is regulated this is usually
  achieved using a reference price (either the
  originators or an average of certain other EU
  countries).
• In most countries doctors are neither legally
  required nor encouraged to prescribe generics.
• Generic penetration varies widely between EU
  countries and does not appear to directly
  correlate with either incentives or legal
  requirements.

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Agenda

• Background
• A look at some of the generic market models
  currently existing in Europe
• What is the future for the branded generic
  markets of Europe?
• Business development in this changing landscape
• QA

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A look at some of the generic market models

• Czech Republic
• Spain
• Sweden
• Turkey
• United Kingdom

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Czech Republic

• Branded market
• Reference pricing system
• Co-payment above reference price (currently about
  7 of total market)
• Market dominated by Zentiva
• Czech healthcare system currently struggling

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Spain

• Branded, EFG and copies
• First generic must be 30 below originators
  price
• Market dominated by local companies
• Generic substitution depends on brand price in
  comparison to reference price.
• Generic medicines may offer little in the way of
  price advantage.

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Sweden

• Unbranded market
• Monthly tenders
• Need to deliver products within 24 hours of order
• Pharmacy substitution (pharmacies are
  state-owned)
• Branded generics still possible but a difficult
  proposition

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United Kingdom

• Unbranded mature generics market.
• INN scripts
• Highly competitive
• Patient co-payment limited to a prescription
  charge
• First to market key to market share
• Limited opportunities for branded generics

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Turkey

• Branded market
• Dominated by local producers
• First generic must be priced no higher than 80
  of originator
• Generic must be within a 30 price differential
  of the cheapest generic
• Pharmacist gets paid a percentage of the product
  price
• Continued growth expected

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A look at some of the generic market models

• In Europe the principal payer is the state.
• While cost of healthcare is a key concern for
  governments, approaches to cost containment vary.
• As generic markets mature we can see a clear
  progression from a branded model to reference
  pricing, INN prescribing and tenders.

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Agenda

• Background
• A look at some of the generic market models
  currently existing in Europe
• What is the future for the branded generic
  markets of Europe?
• Business development in this changing landscape
• QA

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What is the future for the branded generic
markets of Europe?

• Lessons from Germany

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Lessons from Germany

• Europes biggest generic market
• Until recently a branded market dominated by a
  small number of large players
• Large sales forces with strong brand investment
  in company name
• High barriers to entry

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Lessons from Germany

• 16th February 2006 Dr Reddys acquired Betapharm
  for 480m cash (gt 3x sales!).
• At the time Betapharm
• Germanys 4th largest generics company
• Germanys fastest growing generics company
• 3.5 market share
• However

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Lessons from Germany

• The AVWG (economic optimisation of pharmaceutical
  care) Act came into effect on 1st May 2006
• abolished bonus packs
• no co-payments if product was at least 30 below
  reference level
• The GKV-WSG Act came into effect on 1st April
  2007
• allowed health insurance companies for the first
  time to negotiate prices directly with the
  manufacturers

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Lessons from Germany

• Price reductions.
• Betapharm lost its 4th position to Aliud.
• Supply of many products from Stada suspended
  winter 2006-7 due to commercial dispute.
• AOK tenders commenced (AOK represents 25 million
  of the 70 million publicly insured people in
  Germany).
• Betapharm unable to tender for many products.
• Premium price paid by Dr Reddys to enter market
  looked unreturnable.

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Dr Reddys Vice Chairman CEO GV Prasad,
February 2006

• Betapharm fitted the bill nicely as it had a
  strong sales organization, strong pipeline and
  huge brand equity with the doctors in Germany.
  Hence, it neatly fitted into our plans for
  globalising our generics business
• Overall Germany is a great market for generics
  without the intense price pressures that one
  experiences in the US and the UK. Therefore,
  Germany is an important market from a strategic
  perspective for Dr Reddys.

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What is the future for the branded generic
markets of Europe?
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Bleak?
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What is the future for the branded generic
markets of Europe?

• Likely to be
• Unpredictable
• Decreasing in value.
• Limited in duration.
• But
• Potentially attractive margins short term
• A possible platform for future business?
• A chance to

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Make hay while the sun shines!
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Agenda

• Background
• A look at some of the generic market models
  currently existing in Europe
• What is the future for the branded generic
  markets of Europe?
• Business development in this changing landscape
• QA

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(No Transcript)
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Business Development in this changing landscape

• Price will continue to dictate political and
  legislative change.
• Commodity generic markets are almost inevitable
  but the timescale is uncertain.
• However, their form is far from certain e.g.
  reference pricing, tender markets etc.
• So where to invest?

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Business Development in this changing landscape

• Cost of goods will be a paramount consideration
  in a market of falling prices.
• Acquire to improve vertical integration.
• Consider carefully investment in sales and
  marketing infrastructure.
• Acquire true brands which will survive
  commoditisation.

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Business Development in this changing landscape

• Consider who you want to be
• Brand/Specialty company
• Major generic player, or
• Niche player?
• Have a clear strategy which considers
  opportunities
• Short-term
• Mid-term
• Long-term

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Timing is everything!
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The last laugh

• Dr Reddys
• Betapharm is still a strong platform for the
  German market
• Back integration will be key to success in the
  German market
• India has extremely competitive CoGs
• Scale
• Strong in-house generic pipeline

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Agenda

• Background
• A look at some of the generic market models
  currently existing in Europe
• What is the future for the branded generic
  markets of Europe?
• Business development in this changing landscape
• QA

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Thank you for your attention

• ewanl_at_glenmarkpharma.com