Pharma industry: present landscape and main trends

Pharma industry- present landscape and main trends

November, 14th 2012

www.pwc.com/es

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The PwC Pharma 2020 Series

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Pharma Industry

End of an era?

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…or a New Beginning?

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Agenda

1.  General landscape and main challenges 2.  What way to choose?

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General landscape and main challenges

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Key growth drivers and resistors facing healthcare payers and pharma

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1 = Growing patient populations stretches existing healthcare resources2 = Economic downturn puts pressure on payers through reduced funding via taxation as a result of growing unemployment3 = Economic downturn results in less out-of-pocket spend on healthcare (e.g. in the US), thereby impacting Pharma4 = The patent cliff and erosion of branded drug sales directly impact Pharma5 = Cost-containment strategies implemented by payers negatively impact Pharma* = Sales loss for the top 50 global pharma companies in the US, Japan, France, Germany, Italy, Spain and the UK

A B = A has a negative impact on B

Global economic downturn Patent cliff

1 2 3 4

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• Aging patient populations• Growing prevalence of chronic diseases• Greater use of expensive treatments• Expanding public healthcare coverage

Rising healthcare costs

Cost-containment and regulatory pressures intensify

• Reducing healthcare budget • Pricing and reimbursement cuts• Driving generic uptake• Growing regulatory scrutiny

• Governments look to pay down debts

• Reduced out-of-pocket spend

• $100bn* in lost branded sales due to generic erosion during 2010–14

• Biosimilar uptake set to accelerate

Pharma’s strategic responsesStrategies to drive profitability• Innovation• Diversification• Cost savings

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Indicative profit potential of the human and animal health care sector

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The avalanche of new biomedicine knowledge at the origin of the growth of healthcare expenditure

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Pharmaceutical &

biotechnology manufacturers

Medical device

makers Medical

suppliers

Information technology

firms

Governments

Employers

Individuals

Insurers

HMO’s

Pharmacy Benefit

Management

Hospitals

Physicians

Integrated delivery

networks

Pharmacies

Wholesalers

Mail order distributors

Group

purchasing organizations

Purchasers Fiscal intermediaries Providers Product

intermediaries Producers

Innovation

Money

Fuente: Lawton R. Burns. “The Health Care Value Chain”. San Francisco. Jossey-Bass. 2002. Fuente: Lawton R. Burns. “The Health Care Value Chain”. San Francisco. Jossey-Bass. 2002.

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Traditional pharmaceutical industry survives thanks to the introduction of new molecules in the sector

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Fuente: Lawton R. Burns. “The Health Care Value Chain”. San Francisco. Jossey-Bass. 2002.

The higher added value of the pharmaceutical industry is generated in pre-clinical and clinical research, particularly in the first, segment of the value chain that originates the intellectual property of the new molecules

Pharmaceutical industry value chain

Marketing Distribution Production Clinic Research

Pre-clinic research

R&D activities

Sophistication of necessary skills

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Pharma is increasing recognition of its interdependence with payers and providers…

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Provider

Payer

Pharmaceutical

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Global Pharma is growing

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Breakdown of global market 2005

Other G7 30%

E7 8%

RoW 20%

US 42%

Breakdown of global market 2020*

Global $520bn

Other G7 23%

E7 18%

RoW 20%

US 39% Global

$1.3trn

• By 2020 ~20% global sales from E7 countries

• E7 nations: Brazil,

China, India, Indonesia, Mexico, Russia and Turkey

• Assumes G7 grow at

mid-singledigits,E7 grow low- to mid-double digits

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Pharma’s Investment Model

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R&D 12 Years Marketing & Sales 7 Years

$

R&D Productivity

Extend Patent Life

Marketing & Sales

$1.0 Billion

Costs

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More people are living longer with chronic diseases which were previously fatal

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0

2

4

6

8

10

12

50-64 65-69 70-74 75-79 80+

US Canada UK Australia Japan Germany Sweden Spain

Age Group

Hea

lthca

re c

ost r

elat

ive

to

50 -

64 a

ge g

roup

Sources: Laurence Kotlikoff and Christian Hagist, “Who’s Going Broke?” National Bureau of Economic Research, Working Paper No. 11833, December 2005, p.25; World Factbook, 2006; OECD Health Data 2006; IMS Sales Data 2005.

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Pharma has to develop medicines the market wants to buy

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0

5

10

15

20

25

30

35

40

45

50

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007*

R&D

spen

d ($

bn)

0

10

20

30

40

50

60

NMEs

and

Bio

logi

cs a

ppro

ved

PhRMA member R&D spend ($bn)

NME and New Biologics Approved by FDA

NME: New Molecular Entity. Excludes vaccines, antigens and combination therapies which do not include at least one new constituents

* PwC estimate

R&D productivity continues to decline

Over last decade:

•  PhRMA member R&D investment almost tripled, reaching an estimated $46bn in 2007

•  FDA approved medicines declined by two thirds - 56 in 1996, 19 in 2007

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Yet the industry is unable to develop affordable innovative treatment to meet these future demands

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•  R&D investment doubled since 1996, to >$55bn p.a. and expected to reach $160bn in 2020 at current growth rates

•  FDA approved medicines declined by 60% - 53 in 1996, 22 in 2006 WHY?

•  Phase III trials typically cost between $135m and $270m

•  20-40% of R&D spend on line extensions

•  Over 40-45% of all drugs fail in phase III

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Main long term trends

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Main long term

trends

From blockbuster

to niche medicines

Changes in the way of launching

Regulatory changes

Changes in marketing

From chemistry to

biotechnology

Changes in the way of

pricing

New Technologies Threats and

Opportunities

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Pharma shifting to Specialty Products

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•  25% US Market is specialty products

•  19% EU market is specialty products

• > 60% of Pharma’s pipeline is specialty products

• $10,000 - $600,000 + cost/patient

•  Imperative specialty products can command premium price

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Which will polarise the industry

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‘Mass market’

Low cost Branded generic /over

the counter treatment

Management High volume

Protocol driven Poly pharmacy & bundles

Direct to Consumer communications

Speciality / Niche

High cost Disease modifying

Cure Price

Physician driven Risk sharing

Specialist targeted Packages of Care

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Marketing strategies tailored for product type

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Mass-market medicines Specialist therapies Marketing implications

Treat common illnesses Treat rare diseases and specific disease subtypes

Smaller target market Generally used with a diagnostic

Relatively simple products Complex products More educated reps & No Samples

Typically prescribed by general practitioners Prescribed by specialists Much smaller sales force

Low price per dose Very high price per treatment

Extensive proof of clinical efficacy Outcomes-based pricing

Usually oral formulations Usually delivered by infusion or injection

Intensive education & monitoring

Easy to manufacture Difficult to manufacture Less vulnerable to generic competition

Easy to transport Usually require cold chain More expensive to ship & store

Generally kept in stock Often delivered to order More flexible supply chain essential

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Linear phase R&D process will progress to in-life testing and live licensing by 2020

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Today – Intensive all-or-nothing regulation

Developing leads

Discovery &

screening

Pre-clinical evaluation Phase I Phase II Phase III Submission

MAA / NDA Phase

IIIb / IV

Scientific advice / pre-IND

Submission of CTA / IND

CIM CIS Launch

2020 – Collaborative, evolving, automated regulation

CIM

Discussion and agreed

plan of action with

Regulators Limited launch

with Living Licence

Instant automated approvals

Development loop for extended indications

and regulatory activities

Patho Physiology

Molecule Development

In-life licensing

trials

Automated submission/

approvals

CIS

CIM = Confidence in mechanism CIS = Confidence in safety IND = Investigative New Drug CTA = Clinical Trial Application MAA = Marketing Authorisation Application

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Linear phase R&D process will progress to in-life testing and live licensing by 2020

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Today – Intensive all-or-nothing regulation

Developing leads

Discovery &

screening

Pre-clinical evaluation Phase I Phase II Phase III Submission

MAA / NDA Phase

IIIb / IV

Scientific advice / pre-IND

Submission of CTA / IND

CIM CIS Launch

2020 – Collaborative, evolving, automated regulation

CIM

Discussion and agreed

plan of action with

Regulators Limited launch

with Living Licence

Instant automated approvals

Development loop for extended indications

and regulatory activities

Patho Physiology

Molecule Development

In-life licensing

trials

Automated submission/

approvals

CIS

CIM = Confidence in mechanism CIS = Confidence in safety IND = Investigative New Drug CTA = Clinical Trial Application MAA = Marketing Authorisation Application

We predict all medicines will be launched with

live licences

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Impact of Regulatory Harmony and Live Licenses

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$

One Big Bang Launch

Multiple Smaller Launches

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Greater international regulatory co-operation

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Access Regulators use risk benefit analyses not average outcomes. Complexity will

increase

Value for Money Payers / providers use Cost-effectiveness /

HTA assessments for all regulatory reviews plus

safety and efficacy

Transparency Public will demand independent

verification of all clinical data

Single global regulator?

Resources

Regulators lack manpower for expanded range of

studies. Greater need / use of

specialist panels or “notified bodies” ~ medical devices

Qualified auditors

Lifecycle regulation Life time monitoring of all treatments (Live License)

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Customers are more complex and ever changing…

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TOMORROW Key Account Managers

TODAY Sales Representatives

Secondary Care Practices •  Management Board •  Professional Executive Committee •  Prescribing Advisor

Primary Care Practices •  Practice Manager •  GPs •  Practice Nurses


Primary Care Practices •  Practice Manager •  Family Practitioners •  Practice Nurses

Retail Pharmacies

Government / Payers

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Customers are more complex and ever changing…

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TOMORROW Key Account Managers

Government / Payers


Primary Care Practices •  Practice Manager •  GPs •  Practice Nurses

Retail Pharmacies

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Multi-channel marketing combines traditional and novel (web–based) approaches

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Expediting Development

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and shift their agenda from treatment to prevention and cure of disease

Nanotherapeutics •  Delivery of Therapeutic agents or repair to specific cells or

organs in the human body

Regenerative Medicine •  Replacement or regeneration of human cells to restore

normal function and potentially reverse the course of a disease

Gene Therapy •  Introduction of modified DNA into a human cell with the

intent to produce a functional protein and improve the effective treatment of some diseases and potentially provide cures for others

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Flexible Pricing

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•  Capitated

•  Pay for Performance

•  Discounts & Rebates

•  Others

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New Technologies Threats and Opportunities

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Disruptive Healthcare Technology Proactive Pharmacovigilance

(Sentinel, SAEC, AMGA) ePrescribing and Interventions

Medvantx Generic Sample Distribution Automated Prescription Delivery System

Electronic Medical Records (EMR) Genomics: Diagnostics and Personal

(23&Me, deCodeGenetics) Health 2.0

(Healia, Patientslikeme, MEDgle) Outcomes Exchanges & Consortiums

(NCCN Oncology, AMGA)

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What way to choose?

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To succeed in the ‘2021’ era choose your business model carefully…

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What is pharmaceutical innovation? More than just products…

Who determines what is innovative? More than just Clinicians…

Commoditised Pharma

Innovative Pharma

Divergent industry

Premium Price Volume not price

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Innovation spans the value chain

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Cures a disease or condition

Prevents a disease or condition

Decreases mortality

Decreases morbidity

Decreases cost of care

Increases QALY’s

Increases safety

Increases ease of use

Increases persistency or compliance

Will command a premium price

Product or / service which…

Etc…

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However the development of medicines alone will not be sufficient

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•  Problems stem from three invalid assumptions •  Movement into healthcare management – health screening,

compliance programmes, nutritional advice, exercise programmes & facilities, etc

•  Requirement for accompanying diagnostics •  A web of alliances will be needed to offer supporting services •  New sources of revenue generation •  Closer relationships with patients, payers & providers •  Build stronger brands and protect value of medicines

Value comes in the form of products

Pharma alone determines

value

Technical data is sufficient for selling products

Good products alone will not guarantee the industry’s long-term future

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Innovation is a team sport: All stakeholders must be convinced the products and services are innovative

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An innovative product or service needs all decision makers to be convinced that it is convenient for their patients

Creating winning strategies requires a new more adaptive business model across the value chain to orchestrate success for all stakeholders

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What does it mean to be a partner?

1.  Better understand the entire value chain 2.  Further integrate in the value chain 3.  Participate in the risk

42 noviembre 2010

El presente documento ha sido preparado a efectos de orientación general sobre materias de interés y no constituye asesoramiento profesional alguno. No deben llevarse a cabo actuaciones en base a la información contenida en este documento, sin obtener el específico asesoramiento profesional. No se efectúa manifestación ni se presta garantía alguna (de carácter expreso o tácito) respecto de la exactitud o integridad de la información contenida en el mismo y, en la medida legalmente permitida PricewaterhouseCoopers Asesores de Negocios, S.L.., sus socios, empleados o colaboradores no aceptan ni asumen obligación, responsabilidad o deber de diligencia alguna respecto de las consecuencias de la actuación u omisión por su parte o de terceros, en base a la información contenida en este documento o respecto de cualquier decisión fundada en la misma.

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Pharma industry: present landscape and main trends

Healthcare

Transcript of Pharma industry: present landscape and main trends