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South East Asias Pharmerging Landscape

IBC Asia South East Asia Pharmaceutical Forum

Sep 2012

Singapore


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Over the next 30 minutes we will touch briefly upon

The Asian Pharmerging Markets and growth opportunities therein

Dynamics & trends that make South East Asia a unique andchallenging environment

Key success factors in South East Asia

Q&A


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c.55% of this Pharmerging Market growth will be driven by AsiaGrowth prospects in Tier 2 markets, while dwarfed by China, are not insignificant

Tier 1 PharmergingMarkets

Source: IMS MIDAS data; IMSCG

The Asian Pharmerging Markets

Pharmerging Markets in Asia, 2016 (FCAGR %)

Asian Pharmerging Markets will addc.US$97Bn in annualized market value by2016, c.75% of which is in China alone

Tier 2 Pharmerging Markets will add anannualized c.US$8.5Bn by 2016

The expanded SEA region (ASEAN + SouthAsia ex-India) will grow by c.US$11Bn inannualized market value by 2016

This represents over c.US$30Bn incumulative value over the next 5 years!

Tier 2 PharmergingMarkets

143Bn (16%)

4.1Bn (15%)

26Bn (15%)

3.9Bn (3%)

7.6Bn (12%)

4.4Bn (19%)

TH: Retail Pharmacy, UPC | PH: BGx/UGx | MY: Public Hospitals BGx/UGx, Private Sector Ox

So, where will thegrowth opportunities in

this region be?


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Growth opportunities in SEA region are numerous, but diverseConsequently, the cost of achieving success is high

Opportunities and Prospects for Growth

with numerous ways to tap into this growthSplit of forward growth acrossthe expanded SEA region

NHI expansion

Expansion of value-consciousmiddle class + strong retailpharmacy influence

FDI in healthcare

Growth driver P o r t f o l i o b e n e f i ci a r y

HC reform targeting primary

care in cities and provinces

Expansion of specialty careinfrastructure & delivery + FDI

Expansion of value-consciousmiddle class

Broad-based expansionin access & affordability

Pockets of growth in privateand retail pharmacy sectors

Ongoing healthcare reform

SEAs new growth frontier?

Gx, Spec Ox

Gx, Affordable Ox,OTC

Pri + Spec Ox, BGx

$1.9TH $0.6

Malaysia,Thailand &Philippines

PK $2.1

Vietnam $2.6

Indonesia $3.2

Bangladesh& Pakistan

Myanmar

MY $0.6

$0.1 Could be higher?

$2.8

PH $0.8

BD $0.7

Incremental annualizedgrowth by 2016, US$Bn

Source: IMS Analysis, IMS MIDAS Data

Local Gx

Gx, Pri + Spec Ox

BGx, Affordable Ox,OTC

BGx, Affordable Ox,

OTC

Broad Ox + Gx, butlimited in uptake,OTC

MY: 1C1M Priority TAs such as CVM, Onco, COPD/Asthma, MH; Vaccines + Preventative Care; MedicalTourism; Gx in public sector | TH: Retail pharmacy driven Affordable Ox, OTC

Gx, Affordable Ox?


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To leave an imprintPharmergings next frontier?

Asia-Pacific market potential assessment*Countries >10M population

Note: Asia-Pacific region as defined by UNESCO

Source: IMSCG

Nascent markets

Emerging markets

Developed markets

Healthcare

expenditure

percapita

(US$

2009)

10,000

1,000

100

10

1

Market size (US$bn in 2011)

1,000.00100.0010.001.000.100.01

Nepal

Mongolia

Laos

Sri Lanka

Pakistan

Myanmar

Cambodia

Bangladesh

Viet Nam

Thailand

Philippines

Malaysia

Indonesia

India

China

Taiwan

South Korea

JapanAustralia

Opportunities and Prospects for Growth


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The dominant trend impacting the region today is healthcarereform and cost containmentHealthcare is firmly on the agenda in SEA While this drives overall growth, italso entails cost containment to balance budgets

Dynamics and Trends in SEA

Malaysia+10MP plan to expand primary

care sector+1 Care for 1 Malaysia aiming

for universal coverage Generic emphasis for public

sector

Indonesia+Plan to implement universal coverage

by 2014 and beyond (likely run byASKES)

Compulsory prescribing of Gx in 2010

Thailand+Move towards universal coverage NLED de-listings in 2008 CSMBS budget cuts & restrictions on

prescribing & reimbursement, 09 Hospital audits (CSMBS), 10

Singapore+Upgrading primary care sector

(polyclinics & financial support forGPs) with focus on aging popl.

Fast-tracking of Indian Gx, 10

Philippines+KP reform aiming for UC by 2016+Expanded medicines access via

Philippines Medicines policy in 2011 Cheaper medicines act & price cuts in

2009 & 2010 Maximum drug retail price, 2010

Vietnam+Expansion of social health insurance Emphasis on local generics via

tendering system Reductions in hospital budget for

originator products DAV control on price increases

Source: IMS Analysis, IMS Market Prognosis


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Cost containment tools FR DE IT ES UK AUS CH IN JP KR TW ID MY PH TH VN

VBP / Risk sharingagreements

-

HTA/ cost effectivenessassessments

- -

Quality/ innovation/therapeutic value rating

Generics promotion - - - -

International pricereferencing

- - -

Spending caps

Patient contributions

Prescribing controls - -

Mandatory price cuts /controls

-

Only recently implemented/ limited application

EU APAC ASEAN

Complexityofto

ol

FR: France, DE: Germany, IT: Italy,, ES: Spain, UK: United Kingdom, AUS: Australia, CH: China, IN: India, JP: Japan, KR:Korea, TW: Taiwan, ID: Indonesia, MY: Malaysia, PH: Philippines,, TH: Thailand, VN: Vietnam

Source: IMSCG

Mo s t c o st c o n t a i n m e n t t o o l s u s e d a r e a t t h e

r e l a t i v e l y l o w c om p l e x i t y e n d o f t h e s c a le-

ASEAN countries are increasingly adopting more sophisticatedmethods of cost containment



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Reform and containment, coupled with strong local genericsplays, is making SEA an increasingly difficult turf for MNCsMNCs have lost market share to generics firms recently, as patent expiries,pricing pressure and increasingly aggressive generics competitors come into play


6057

4442

39

20

18

8

34

60

56

4341

37

1917

8

32

25

45

20

15

10

65

60

55

50

40

35

PKVNIDTotal BD SG

30

0

-4%

-2%-3%

-4%

-5%

5

-2%

+1%

MYTH

+1%

PH

-4%

20112010

Expanded SEA Top 10 MNC* Market Share by Country (2010 vs 2011)

Share and Share change (%)

Source: IMS Analysis, IMS MIDAS Data; *Top-10 MNCs for 2011 comprise Pfizer, Novartis, Merck, Sanofi, AZ,

Roche, GSK, J&J, Abbott and Lilly

LoE LoE Pri

Branded Generics playershave stolen a march overMNC innovators, supported by

Cost-containment Government emphasis on

and support for generics

Public tendering in manySEA countries

Increasing reputation ofbranded genericmanufacturers

LoE for blockbusterproducts

Prescribing according tonational formulary listing


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Generic penetration varies across SEA and has increased overallacross countries

52%

85%

64%

62%

54%

51%

37%

27%

28%

2.837% 13%

Vietnam 1.731% 15%

Pakistan 1.729% 9%

Indonesia 4.216% 20%

Bangladesh 1.06% 9%

100%90%80%70%60%50%40%30%20%10%0%

Malaysia 1.354% 19%

Thailand 3.049% 14%

Philippines

ASEAN* 16.433% 15%

0.760%Singapore 12%

Originators Branded Generics Generics

USD Billions

Source: IMS Analysis, IMS MIDAS Data

Expanded SEA Ove r a l l Market Originator vs Generic Penetration (2011)

Ox BGx Gx

9% 13% 13%

14% 18% 10%

12% 13% 13%

12% 18% 14%

30% 36% 33%

3% 9% 10%

7% 8% 8%

21% 20% 29%

8% 12% 11%

2006- 2011 CAGR



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MNCs can still win in the SEA regionHowever, winning will entail a tailoring strategies to the regions unique challenges

Key Success Factors

and how MNCs could overcome themChallenges faced by MNCs inthe SEA region

Diverse & heterogeneousmarket landscape

Tailored portfolio strategies, with an openness to adoptalternative commercial models for low priority brands

Active support of ASEAN harmonization, possibly more sothan today

Access & affordability

Willingness to partner with payers to improve access to high-quality primary care medicines

Supporting patient access and innovative pricing schemes to

drive access and compliance for specialty medicines

Competitive, low compliancebusiness environment

Partnering with local competitors possessing complementarycapabilities (ex., local manufacturing, knowledge of localregulatory and tendering complexities, sales & distributionfootprint outside top cities)

Selectivelyleveraging strong MNC brand identity inalternative business models (ex., OTC, BGx)

Working with local industry leaders to develop and adhere tobasic ethical compliance norms

Talent & capability

Openness to acquire talent from regional and leading localgeneric firms, with commitment to training and mouldingto meet global MNC norms and expectations


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About IMS Consulting Group

IMS Consulting Group is present across 70 countries with over 500 consultants across the globe. As itfocuses only on healthcare and life-sciences sector, our team of consultants bring a wide- and in-depthskill set that is unmatched by any other firm.

IMS Consulting Group works with clients to facilitate a wide range of mission critical business decisions.Some typical work includes strategies to enter to specific geographic/ business/ therapy/ productmarkets and operational excellence initiatives to cover sales force as well as internal operations.

If you would like to know more about what we can do for your business, contact us at:

Dr. Srikanth Rajagopal: [email protected]/ +65 6412 7381
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