The Sustainability of Generics
Dr. Brian W Tempest
www.briantempest.com
Centre 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
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“Nobody endured these lessons harder than
Pfizer. The company built the world’s 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, J&J $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
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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 – P&G with Teva
DPI Inhaler – Pfizer & Mylan
Generics – Pfizer, Sanofi Aventis, AZ
Pharmemerging – GSK, Abbott, Daichi Sankyo
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M&A 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 won’t 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 Competition
Source: JM Financials 24 August 2011, Deutche Bank 8 July 2011
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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
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Source – FT
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
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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
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RBC Capital Markets January 15 2010
Recent At Risk launch damages include –
Apotex $0.44b, Sun $0.9b, Teva $1b+ Famvir
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Teva rethinking At Risk strategy
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
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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
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Pfizer & Hisun, China
A New World Order in Generics
is Coming with New Faces
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Thank You
brian.tempest@clara.co.uk
www.briantempest.com
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