the future of the generc pharma industry & how it impacts business today
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The Generic Market Industry
The future of the generic industry.How it impacts your business today.
Saturday March 9th 2013
The Future
Today low cost generics give much needed access to yesterdays drugs
Tomorrow it will take much more to significantly improve the health of millions
Key Messages
Do not seek to be only the best generic company
Invest 10 times more in R&D than manufacturing
Seek out disruptive technologies that could change your company & the industry
Think about tomorrow when you consider business decisions for today
Yesterday's model
Integration. Scale. Breadth.
Teva. Mylan. Actavis (Watson). Sandoz. Hospira
- International expansion to improve profitability in USA- First-to-launch generates most profits- Operational 'machines' for stock market
[Actavis, fishing company to global leader. Sandoz run like army. Teva strength exploitation]
The Future
Today low cost generics give much needed access to yesterdays drugs
Tomorrow it will take much more to significantly improve the health of millions
Yesterday's Success Model
Integration. Scale. Breadth.
Teva. Mylan. Actavis (Watson). Sandoz. Hospira
- International expansion to improve profitability in USA- First-to-launch generates most profits- Operational 'machines' for stock market
[Actavis, fishing company to global leader. Sandoz run like army. Teva strength exploitation]
Generic Industry Overview
Global EBITDA Growth 2011-2013
Generic Industry Overview
Case Studies
Brazil Apotex- Invested $40m 2002-2006
- Bought facility, Corporate brand entry- ANVISA influenced to delay MA approval
- Built new manufacturing facility ($25m)- Local competition destroyed prices and profits
- Partnered with EMS & sold facility
CIPLA UK- Exclusive partner lacked knowledge of key products
- Regulatory delays removed 1st mover advantage- Partner ran out of cash for clinical studies
- CIPLA Europe plan put back 4-5 years
Case Studies
Dr Reddy's US - Tactical market entry process:
API>CMO>License>Partnership>DirectSimple>Complex, >Risk, >Investment
- “Tagged along” with agent & client = knowledge and contacts- 20 year project
Celltrion- Founded 2002, $5,4bn market cap 2013
- First CMO client 2005, Co-development 2006, FDA approval 2007 (Hospira)- Stock Exchange listing 2008
- Global business development team 2009- First own biosimilar approved 2012 in Korea- India, Brazil expected next, Europe planned
Today's Success Model
Differentiation. Focus. Gap analyis
Fast growth stars:- Momenta: Formulation technology- Alvogen: Emerging market focus- Antares: Biosimilar devices- Reliance Lifescience: Biosimilar focus- Celltrion: First mover advantage
Future Failure?- Sagent: Basic portfolio. Virtual model challenge.
Top Drug Patent Expiration’s
Generic Industry Overview
Top Biologic Therapy Areas - Global Sales 2011
Generic Industry Overview
Tomorrow's Success Model?
Technology. Data. Services
Changes coming:- Dr & Pharmacy interaction (CISCO + vending machine)- Reimbursement criteria (UK NICE performance only)- Personalized medicine (biomarkers & diagnostics)- Intelligent patients (mobile apps)- Big Data (Proteus pill & Splunk)
Where does current generic company fit?
Tomorrow's Success Model?
Timeline <5 years <10 years < 15 years
Pharma focus
Small Molecule Large Molecule Prevention. Repair. Personalisation
Power Authority – Industry & Dr's
Payer – Government,
Insurance
Consumer – Selection, Funds
Efficacy 50.00% 75.00% >90%
Target Volume Value Performance
Gx Model
Pure Gx Gx + Biobetter Services & Systems
Patient acquisition
Rx Model
Patent Life Patent Cliff
Core Capabilities Brand Relationship
Sustainability
Focus Manufacturing R&D Marketing Technology Service
Patient Power
Trends:- Manufacturer transparency (quality, ethics, performance) [clothing, reviewing, EU regs]
- Brand relationships (experiential, 2-way, global) [Treato social, Walmart trust, Mylan & Apotex)
“I love my drug company; improves my life every day”
The Numbers
Market Opportunities:
1) Fully Integrated Small Molecule $250m CDMO/LICENSING
+ Sales & Marketing $1b Global
2) Large Molecule R&D $100m + royalties+ Clinical $500m + royalties+ Sales & Marketing $3b Global
3) Tech, Services & Products $10b ?! China only ?!
Impact on Today
Connect vision with deals and investments
Small Molecule: Foreign revenueLearning! - Big Pharma, LandscapeRelationships – Marketing, Dist, Payors etc
Large Molecule: Emerging market accessManufacturing technology progressClinical experiencePatient centric innovation (side affects,
compliance, cost)
Market Entry Planning
Considerations
- Reason for international activity- Commitment- Time horizon- Alignment with domestic operations- Opportunity to transfer knowledge- Profitability & shareholders
- Start and end point- Investment- Capability- Risk tolerance
Market Entry Planning
Considerations (2)
Value proposition: Best vs cheapest
Cheapest:- To the end (Teva)- Manufacturing assets- Domestic operations
Best:- R&D / Technology / IP- First with product
Looking ahead
What should be looked at now?
Gx is “Red Ocean” business!What could be the “Blue Ocean”?
Breakthrough Innovation & Rapid Disruption- What could happen in the generic industry?
Innovation & Disruption
Could the pharma industry really change?
Traditional industries can be dramatically changed Traditional players can be wiped out – e.g
- Data storage devices; tapes, CDs, zip drive- Music industry; MP3, internet promotion, Youtube- Travel agents; internet comparison websites- Bookstores; Amazon.con & Kindle- GPS devices; smartphones- Credit card machines?; Google wallet, Square
Innovation & Disruption
Breakthrough Innovation & Rapid Disruption
“Pharmaceuticals are too highly regulated”- Banking? - Education? - Government? - all changing!
Environment for rapid disruption:- Mobile phones- Cloud computing- Social Media- Global economics
Innovation & Disruption
New adoption model
Innovation & Disruption
What are realistic generic industry 'game changers'?
Disintermediation of supply chain
- Currently: Patient – Pharmacy – Distributor – Manufacturer
- Future? Patient – Logistics - Manufacturer Online PharmacyElectronic Prescription & Smartphone ordering
- Why? Patient medication & health tracking (Nike band)Insurance company data collectionIncreased margin for manufacturer (priceline.com)
Innovation & Disruption
What are realistic generic industry 'game changers'?
Compliance systems
- Currently: Bottle/blister of pills + patient memory- Waste – Cost of non-compliance - <data
- Future? Smart dose dispensing devicesCompliance pill (like Proteus)Compliance centres for expensive treatments
- Why? <Cost to payers>Treatment success
Innovation & Disruption
Will you lead, follow or be lost?
Idea Watch - Harvard Business Review: March 2013
“The only thing keeping most big companies from creating new categories is their lack of imagination – their inability to see beyond what they're selling today”
Disruption survival strategies: - See it coming & try diversification“Find seers who can predict the future with insight and clarity”
Innovation & Disruption
Ideas for leading
- “Big data”: China has cities the size of countries!- Distribution systems: Scale, access, security (Rpharm)- Software 'App' development: Dedicated industry incubator [Blueprint Health, Rock Health, BD BioVentures] – Export credit for downloads?!
- Industry Investment Co': Pfizer/Lilly/Abbott Venture Funds- Virtual IP development: University+API+FDF+Clinical+Marketing- Invest/partner emerging R&D: >China revenues + learn- Chief Innovation Officer: CISCO free consulting
Summary
Do not seek to be only the best generic company
Invest 10 times more in R&D than manufacturing
Seek out disruptive technologies that could change your company & the industry
Think about tomorrow when you consider business decisions for today
THANK YOU!
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