The Sustainability of Generics

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The Sustainability of Generics
Dr. Brian W Tempest www.briantempest.com Centr
e for Doctoral Training in Healthcare, University
of Oxford, UK 8 March
2012
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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 when he retired. 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
worked for Glaxo as Regional Director Far East
and Regional Director Middle East Africa from
1985 to 1992. Brian has worked in the
Pharmaceutical Industry for the last 41 years and
has managed Healthcare businesses in North
America, South America, Europe, Africa, Middle
East, Australasia, China, Japan and India. He has
also led many sessions at Investor Meetings held
around the world. He is now Independent Chairman
of Religare Capital Markets PLC , a Non Executive
Director of Fortis Healthcare the leading Asian
Healthcare Company, a Non Executive Director of
SRL the largest Indian Diagnostic Company and a
Non Executive Director of Glenmark
Pharmaceuticals. He is a member of the SCRIP
Global awards panel and is on the Editorial
Board of the Journal of Generic Medicines. Brian
speaks at global conferences 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 in
1971 and in 2009 he became Chairman of the
Advisory Board for the Lancaster University
Management School, UK. He is a Fellow of the
Royal Society of Medicine and a Fellow of the
Royal Society of Chemistry and is a Chartered
Chemist. He is now Chairman and Senior Partner
of Hale Tempest Co Ltd
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Healthcare Pressures Forever - 2050
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Healthcare will explode further in Asia
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Consolidation in Generics 2003 - 2010
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Structural Changes - Big Pharma
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Fewer New Molecules Approved

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2010-21 FDA NCEs Source Fiercebiotech 22 Jan
2011 2011-34 (15 Big Pharma)

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Eventually the cost of capital consumed showed a
poor return

• Nobody endured these lessons harder than Pfizer.
  The company built the worlds largest
  pharmaceutical research centre in Connecticut,
  USA , a 160 acre site with more than 5,000
  employees at its peak and 2.7m sq ft of research
  space. But the only major drug to come out of the
  sprawling facility in the past 20 years was the
  smoking cessation treatment Chantix Source
  Pharmatimes February 2012

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Approvals Reimbursements
Source Pharmatimes UK August 2011

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US 2010 False Claims Fines Chemistry World Jan
2011 2011 False Claims Fines - Pfizer 2.3b,
Lilly 1.4b, JJ 1.b

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Top Five US Industries for layoffs in
09/10 Source Challenger, Gray Christmas

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Merck No 1 Layoffs in 2011 source FiercePharma
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Big Pharma Strategies

• Share repurchase - AZ, Pfizer, Sanofi Aventis
• Shedding businesses Pfizer 1.9b nutrition,
  3.6b animal health, 2.4b Capsugel
• Eye Care - Novartis Alcon
• Consumer Healthcare Sanofi Aventis, GSK
• OTC PG with Teva
• DPI Inhaler Pfizer Mylan
• Generics Pfizer, Sanofi Aventis, AZ
• Pharmemerging GSK, Abbott, Daichi Sankyo

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MA Deals in Pharmemerging Markets Source
Company Filings, Mape Securities

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Structural Changes - Generic Companies
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Pricing Pressures Source Watson

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European Generic Prices
Source Ranbaxy

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Mylan wont follow irrational behavior
Source Generics Bulletin 5 August
2011

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India Pharma Stock has consistently outperformed
Global Peers Bloomberg

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Emerging Market Equities in last 12m Source 30
Jan 2012 Business Standard

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Rising CompetitionSource JM Financials 24
August 2011, Deutche Bank 8 July 2011

• With generic Lotrel higher strengths there was an
  unexpected excessive number of generics
  approved after the exclusive period ended
• Increased competitive activity with para 4
  filings. Multiple players for small
  opportunities.
• Small new Indian players in para 4 - Macleods
  for Lipitor, Hetero for Nexium

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India China Generic Companies
Source FT
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Top 25 Global Generic Companies Source Generics
Bulletin 10 June 2011

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Next 24 Global Generic Companies Source Generics
Bulletin 10 June 2011

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USA Generics Filings
Source Deutsche bank July 2010

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Pending ANDAs source Deutsche Bank Jan 2012

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US Litigation Risks are Substantial

• Patent Challenges on rise - 65 FTFs in 2009
• Generic success rate at 48 (76 with deals)
• 3 courts hold 69, with 36 success 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
  Source RBC
  Capital Markets January 15 2010
• Recent At Risk launch damages include Apotex
  0.44b, Sun 0.9b, Teva 1b Famvir
• Teva rethinking At Risk strategy

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China Pharma Industry Capex Plans Source
Stravencom

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India Pharma Industry Capex Plans Source MAPE

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FDA DMFs from China 3Q 2011

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FDA DMFs from India 3Q 2011

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Indian Generic FDA ANDA Approvals

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Indian Companies Changing Hands Source Mint
Research December 13 2011

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Frost Sullivan forecast the Global Generic
Market at 231b in 2017 FiercePharma

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70 of Top products will be Biologic-2016 Source
Sandoz EGA Conference 2011

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Biosimilar Patent Expiries 17b in 2015 Source
Sandoz

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Biosimilar Patent Expires 64b in 2015 Source IMS

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Number of mABs entering the clinic annually rose
to 54 in 2008 Source Tufts

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How much is a Biosimilar worth? Source
Datamonitor

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Biosimilar Partnerships New Faces

• Cipla Biomab, China 165m 12 products
• Richter Stada mABs
• Celltrion, Korea Hospira, Egis, Hikma, BB
• Biocon Mylan, USA
• Teva Lonza, EU
• Biocon Idec Samsung, Japan
• Watson Amgen, USA
• Fuji Film Kyowa Hakko Kirin
• Baxter Momenta, USA
• Actavis Bioton,Poland
• Pfizer Hisun, China

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A New World Order in Generics is Coming with New
Faces

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