Global Generic
Pharmaceutical Industry
Review
CORPORATE RESEARCH (NY)
FEBRUARY 2016
Andreas J. Dirnagl
TEL: (1) 212-782-5694
adirnagl@us.mufg.jp
Myrvet A. Cocoli
TEL: (1) 212-782-4826
mcocoli@us.mufg.jp
Bank of Tokyo-Mitsubishi UFJ
A member of MUFG, a global financial group
Table of Contents
I.
II.
Fundamentals & Background
III.
Major Global Generic Pharmaceutical Markets
1)
Defining Generic Pharmaceuticals (p. 2)
1)
Characteristics by Market (p. 17)
2)
Overview & Drivers (p. 3)
2)
3)
Top 10 Global Generic Companies (p. 4)
An Overview of the US Generic Pharmaceutical
Market (p. 18)
4)
Top 10 Products (p. 5)
3)
An Overview of the European Generic
Pharmaceutical Market (p. 19)
5)
Generic R&D: Hatch-Waxman (p. 6)
4)
6)
Understanding Bioequivalency (p. 7)
An Overview of the Japanese Generic
Pharmaceutical Market (p. 20)
7)
Generic Drug Research & Development Process
(p. 8)
5)
An Overview of the Indian Generic
Pharmaceutical Market (p. 21)
6)
An Overview of the Chinese Pharmaceutical
Market (p. 22)
Trends, Opportunities & Strategy
1)
Generics Drive Global Pharma Growth (p. 9)
2)
Market Exclusivity & Paragraph IV Challenges
(p. 10)
3)
Market Share & Price Erosion After Generic
Entry (p. 11)
4)
The Biosimilar Opportunity (p. 12)
5)
Update on the Global Biosimilars Market (p. 13)
6)
Competitive Strategies: Branded Pharma (p. 14)
7)
Competitive Strategies: Generic Pharma (p. 15)
IV.
Strategic Summary
Outlook for Global Pharmaceutical Players –
Branded & Generics (p. 23)
I. Fundamentals & Background
1) Defining Generic Pharmaceuticals
 Generic drugs are officially approved copies of originals and have the same active ingredients as the branded drug
 US Food and Drug
Administration Definition

Example: Branded, Branded Generic and Generic Labels
“A drug product that is
comparable to a reference
listed [branded] drug product
in dosage form, strength,
route of administration, quality
and performance
characteristics and intended
use.”
 Generics can only be
produced after expiration of
the branded drug’s patent
(usually 20 years)
 The same company that
makes the branded drug
may also produce the
generic
 Alternatively, a different
company might produce it
Source: Corporate Research
Similarities and Differences Between Branded and Generic Pharmaceuticals
 Regulatory authorities have
established standards for
generic drugs that might
seem complicated, but the
differences between the two
types of drugs are relatively
simple to understand
Source: US FDA and Corporate Research
2
I. Fundamentals & Background
2) Overview & Drivers
 The global pharma industry is large, driven by broad demographics, moderated by governments focusing on costs
 Size: Large and expected to
achieve total global sales of
$1 trillion in 2014
Global Pharma Market, 2010-2020
Global Population Aging, 1950-2050
 While generics represent
only 9% - 11% of the total
value of global pharma
sales – it represents the
volume majority (est. 55%)
 Given a cost-savings focus,
generic pharma spending
growth is above the
branded and overall
industry average

Branded Growth Est.: 4.8%

Generic Growth Est.: 8.0%
 Broad demographic drivers

Aging population

Increasing prevalence of
chronic diseases
o
Disease incidence
increases with age.
 Gov’t focus on costs

Increasing gov’t budget
deficits and higher gov’t debt
burdens mean there is an
increased focus on reducing
healthcare spending/pricing
Source: IMS Health, EvaluatePharma and Corporate Research
Global Chronic Disease Prevalence
Source: UN World Population Prospects: The 2012 Revision
Gov’t Debt as a % of GDP, 2008-2015
• Cardiovascular diseases (CVDs): #1 cause of
death / 30% of all global deaths
• Cancer: #2 cause of death / 13% of all global
deaths
• 347 million people worldwide have diabetes
• Worldwide obesity has nearly doubled since 1980:
35% of all adults >20 year old were overweight in
2008 / 11% obese
70% - 80% of all deaths from chronic diseases
occur in low- and middle-income countries
Source: World Health Organization
Source: OECD and Corporate Research
3
I. Fundamentals & Background
3) Top 10 Global Generic Pharmaceutical Companies
 Top 10 Generic Pharmaceutical Companies: large with a great deal of regional diversity
 Top 10 Global Generic
Pharmaceutical Companies




Large, with companies that
rank among the Top 20
Global Pharmaceutical
Companies
o
Teva: #9
o
Allergan: #17
Top 10 Global Generic Pharmaceutical Companies, 2014 (US$bn)
Excl: Branded Companies
Incl: Generic Divisions of Branded Companies
Regionally diverse
o
India: 5
o
EMEA: 3
o
US: 2
Adding divisions of branded
companies that are major
generic players:
o
EMEA: 3→5 (+2)
o
US: 2→3 (+1)
o
India: 5→2 (-3)
Consolidation will be
furthered by the announced
acquisition of Allergan’s
generic business to Teva
Note: Rankings do not include announced sale of Allergan generics division to Teva
Source: Company Reports and Corporate Research
4
I. Fundamentals & Background
4) Top 10 Products
 Cardiac drugs dominate the Top 10 Generic Products and represent some of the biggest branded blockbusters
 Given their relatively low
price, generic drug ranking
is generally not done on
value, rather on the number
of prescriptions written
Top 10 Global Generic Pharma Products, 2013
 Top 10 Products


Relatively dominated by
cardiovascular drugs (5 out of
10)
o
Anti-hypertensives and
anticholinergics
o
Cardiovascular diseases
are the #1 cause of death
worldwide
“Older” generics tend to be
prescribed more
o
The longer a drug is
generic, the more
competition, the lower the
price
o
Lower price drugs in the
same therapeutic class
are always preferred
o
For example, simvastatin
over atorvastatin, lisinopril
over amlodipine
Note: represents US prescriptions as a proxy for global rankings
Source: IMS Health and Corporate Research
5
I. Fundamentals & Background
5) Generic R&D: Hatch-Waxman
 The birth of the modern generic drug industry can be traced back to the US legislation known as the Hatch-Waxman Act
 Passed in 1984, HatchWaxman set the global
standard for generic drug
approval and some
variation is used in most
major jurisdictions


Allowed a manufacturer to
demonstrate only that its
product does not differ
significantly from the existing
(reference) product and
eliminated the need for
duplicative and expensive
clinical trials
Post Hatch-Waxman Steps Involved in the Development of a Potential Generic Drug
Source: USPharmacist and Corporate Research
Hatch-Waxman and ANDA Routes for Sales and Marketing Approval
Liberalized the research
restriction as prior to HatchWaxman, even researching a
drug before its patent had
expired was itself an act of
infringement
 The Abbreviated New Drug
Approval (ANDA) process
offers four routes to
approve generics –
differences revolve around
the status of the underlying
drug’s patent protections
 There is no “global”
approvals process
Source: FTC and Corporate Research
6
I. Fundamentals & Background
6) Understanding Bioequivalency
 Bioequivalency is the proof that pharmacokinetic parameters of a drug (rate & extent of absorption) are the same
 ANDAs must prove that
generic drugs are
bioequivalent to the
branded version
Pharmacokinetic Parameters or an Orally Administered Drug
 Bioequivalent products do
not differ significantly in:

the rate of absorption

the extent of absorption

at the site of action
 A pharmacokinetic study is
based on the LADME model
in which it is determined
how long it takes the body
to:

Liberate or release the drug

Absorb the drug

Distribute the substance

Metabolize the drug

Excrete the drug
 In pharmacokinetic models
the key parameters are
peak drug concentration
(Cmax) and the Area Under
the Curve (AUC), which
characterize absorption rate
and absorption extent,
respectively
Source: Nature and Corporate Research
7
I. Fundamentals & Background
7) Generic Drug Research & Development Process
 While still complex, the generic R&D cycle is easier, shorter and cheaper relative to the branded R&D cycle
 The generic drug R&D
timeline is significantly
shorter than for branded

Safety and efficacy are not
being proved

Steps are less “linear” and
can often be undertaken
simultaneously

Pivotal Bioequivalence is
where the drug is proven to
be identical
o
Branded vs. Generic Research & Development Timeline
Key reduction in timeline
as bioequivalence studies
require much smaller
populations and can be
done in a matter of weeks /
months
 Generic manufacturers
themselves estimate that
the cost of successfully
developing a
commercializable generic
drug ranges from $10m to
$100m
Branded Pharma R&D – Progression Probability
 The latest estimate for the
cost of successfully
commercializing a branded
drug is approximately
US$2.6bn
• The risk of total failure in the R&D process for generic drugs is
extremely low because the safety and efficacy of the active ingredient
has already been established
• The “relative simplicity” vs. the branded pharma R&D process is
integral to the low-cost nature of generic drugs
8
Source: Nature and BTMU
II. Trends, Opportunities & Strategy
1) Generics Drive Global Pharma Growth
 IMS predicts global pharma spending will increase by US$300bn through 2018 – half of which will be generics
 Generics are the largest
driver of pharma spend
everywhere but North
America
Geographic Distribution of Medicine
Spending, 2014 – 2018E
Generic Penetration in Selected
Countries, 2011 (or nearest year)
 Almost all countries see the
development of generics as
a good opportunity to
increase efficiency in
pharma spending
 Beyond encouraging
takeup, it is also important
to promote the lowest
possible price for generics
if the purpose is to contain
costs

For example, the US with one
of the highest generic
penetration rates in the world
also has one of the largest
branded – generic price gaps
Source: IMS Health and Corporate Research
Note: May differ from locally collected data
Source: OECD and Corporate Research
Trend in Generic Penetration in Selected Countries, 2000 – 2011
 Regardless of the
methodologies chosen,
governments can have a
fairly quick and significant
impact on generic
penetration
Note: May differ from locally collected data
Source: OECD and Corporate Research
9
II. Trends, Opportunities & Strategy
2) Market Exclusivity & Paragraph IV Challenges
 Generic drug competition continues to intensify with market exclusivity shrinking and ParaIV challenges growing
 A branded drug is granted a
Market Exclusivity Period
(MEP) by the regulatory
authorities, which is the
timeframe in which the
majority of branded
productivity is generated
Average MEP by Year of 1st Generic
Entry (in months), 1995-2012
Average # of Generic Entrants within
1st year of 1st Generic Entry
 Generic manufacturers
have been becoming
increasingly aggressive and
have successfully
shortened MEPs

Overall the industry is seeing
a gradual decline in MEPs
before generic competition

This is even lower for higher
sales drugs

Better selling branded
drugs attract more
competition after the MEP

ParaIV filing is one in which
a generic manufacturer
sues to invalidate a
branded patent and
therefore the drug’s MEP

Source: IMS Health, Journal of Medical Economics and Corporate Research
Source: IMS Health, Journal of Medical Economics and Corporate Research
Paragraph IV Filing Frequency and Timing (3yr moving average)
ParaIV filings are becoming
more frequent and coming
earlier
Source: IMS Health, Journal of Medical Economics and Corporate Research
10
II. Trends, Opportunities & Strategy
3) Market Share & Price Erosion After Generic Entry
 Rule of thumb: generic competition will reduce pricing / market share of the branded drug by >80% in <12-18 months
 The erosion in brand-name
drugs’ share (by volume)
for the 12 months following
first generic entry has
increased dramatically

The impacts of competition
are bigger and coming faster

On average branded share
erodes to only 16% at 12
months (compared to 51% in
1999-2000)

Average Monthly Brand Share (Volume)
Following 1st Generic Entry
Pfizer Lipitor Sales Following Loss of
Patent Exclusivity, 3Q14 – 2Q15
For larger drugs share erodes
even more to only 11% at 12
months
 Volume loss is driven by
pricing reductions from
generic competitors
 Lipitor is a perfect example
of the dynamics of generic
competition

Almost 50% sales loss in the
first 6 months

80% after 12-18 months of
competition

Sales dropped from
~US$10bn annually to
<US$2bn a single year
Source: IMS Health, Journal of Medical Economics and Corporate Research
Source: Company reports and Corporate Research
11
II. Trends, Opportunities & Strategy
4) The Biosimilar Opportunity
 While we have an optimistic outlook on biosimilars, growth is likely to be slower than the most optimistic view
 Biologics are attractive for
the global pharma industry
given they:

often provide benefit in
therapeutic areas that are
underserved

are more difficult and costly to
develop and manufacture
providing differentiation and,
therefore, higher pricing/
profitability
The Biologics Manufacturing Process
 Given these complexities
biologics are less exposed
to generic (“biosimilar”)
competition
 We view the biosimilar
opportunity as significant
(biologics are almost by
definition high-cost
products) but see growth as
slower than the most
optimistic outlook

Not least of which, the largest
biologics market in the world
(US) does not have a current
pathway towards a regulatory
approval process and
substitution regulations
Source: buildingbiologics.com and Corporate Research
12
II. Trends, Opportunities & Strategy
5) Update on the Global Biosimilars Market
 There are a number of patent expiries on blockbuster biologics coming up
 Patents will expire on
approximately $63bn in
biologics sales between
now and 2022
Patent Expiries of Key Branded Biologics
 Biologics now represent
approximately 70% of the
value of the global Top 10
Pharma Products
 Most analysts estimate
biosimilars could grow to
be a $35bn sector by 2020
 We view this as “optimistic”

Lack of a full competitive
environment

Lack of trust – biosimilar is
not bioequivalent and
physician prescribing of
biosimilars has been slow

To date biosimilar competition
in Europe, Japan and the US
has shown an overall brand
share / price reduction of
~30% vs. ~80% for chemical
drugs
Source: BioPharm International and Corporate Research
Major Countries with Approved Biosimilars, 2015
Source: BioPharm International and Corporate Research
13
II. Trends, Opportunities & Strategy
6) Competitive Strategies: Branded Pharma
 There are a number of branded strategies that generic pharma companies have to face in order to compete
 Divest: cutting all
promotional and research
expenses once a brand
faces direct generic
competition – maximizing
remaining profitability
Impact of Divest Strategy
Impact of Innovate Strategy
 Innovate: launching new
forms, doses and
indications – offers
additional and extended
patent protection
 Evergreening: make small
incremental changes to the
underlying product and
filing for extension of
patent exclusivity
Source: International Journal of Medical Marketing and Corporate Research
Impact of Evergreening Strategy
Source: International Journal of Medical Marketing and Corporate Research
Impact of Flanking Strategy
 Flanking: calls for the
branded company (either
directly or in partnership
with a generics firm) to
allow early competition in
the form of an “authorized
generic”
Source: International Journal of Medical Marketing and Corporate Research
Source: International Journal of Medical Marketing and Corporate Research
14
II. Trends, Opportunities & Strategy
7) Competitive Strategies: Generic Pharma
 The Hallmarks of Success for generic pharma are identical to those of branded pharma
 Focus on areas of strength
while striving for higher
complexity portfolios and
pipelines are the core
strategies we have
previously outlined for
success in the branded
pharmaceutical space
 For generic companies the
strategies are similar –
leverage R&D and
manufacturing expertise to
innovate and launch into
more complex generics
Hallmarks of a Successful Pharmaceutical Company
Source: Corporate Research
Hallmarks of a Successful Pharmaceutical Company
 For some of the larger
companies these strategies
have led into the
SpecPharma sector
 Growing R&D at generics
companies supports this
thesis
Source: R&D Taxsavers and Corporate Research
15
II. Trends, Opportunities & Strategy
7) Competitive Strategies: Generic Pharma
 Innovative strategies that reduce costs and increase efficiencies are crucial to maintaining generics profit margins
 Incremental Innovation –
adjustments to off-patent,
brand-name drugs
 Re-innovation – build upon
a product’s branded
success by improvement
and innovation
Safety and Performance Innovation
• Process innovation is crucial to the
generics industry
• Safety remains a significant concern
with a 2012 survey revealing 42% have
misgivings when it comes to generics
• Significant R&D investments will be
necessary to fully analyze the risk profile
of each generic product
• Vital to consumer sentiment
Incremental Innovation
• Generic manufacturers’ understanding
of patient and pharmacist needs have
led to innovative solutions that help
patients and reduce dispensing errors
• Examples of incremental innovation
include enhancing delivery systems,
developing alternative dosages and
finding solutions to patient compliance
issues
• Differentiation = higher pricing / profit
Re-Innovation
• “Super generics” or New Therapeutic
Entities (NTEs) are enhanced versions of
off-patent branded drugs increasing
quality and efficiency with fewer risks,
side effects and toxicity
• Examples include drugs that: (i) can
avoid previously verified hypersensitivity
through the use of nanoparticles, (ii)
offer more predictable clinical responses
or (iii) oral version of previously
injectable drugs
Risk / Return in Pharma
High
Branded
RISK / TIME / COST
 Safety and Performance
Innovation – assuring
products are safe and
perform inline with
expectations
Generic
Products
from NTE process
Low
Low
High
RETURN
Source: Teva and Corporate Research
16
III. Major Global Generic Pharmaceutical Markets
1) Characteristics by Market
**
Source: IMS Health, various sources and BTMU
* Estimates by IMS Health
** Includes Israel-based Teva
17
III. Major Global Generic Pharmaceutical Markets
2) An Overview of the US Generic Pharmaceutical Market
 Largest Pharma market in the world with high generic penetration. World’s only free-market based drug pricing system.
 US accounts for about 1/3rd
of global pharma sales

4.5% branded projected top
line growth through 2018

6.4% generic projected top
line growth through 2018
US Pharma Spend/Growth , 2010-2018E
US Generic Penetration, 2010-2018E
 US has one of the highest
generic penetration rates in
the world

By volume: >80% (2015
estimate at over 88%)

By value: ~12% reflecting low
pricing of generics

Generic substitution driven by
commercial insurance and
cost-savings benefits
Source: IMS Health and Corporate Research
US Generic Savings (US$bn) 2004-2013
Note: by # of prescriptions
Source: IMS Health and Corporate Research
US Generic Savings by Area, 2013
 World’s only free-market
based drug pricing system


US subsidizes WW pharma
consumption as low prices
associated with non-US
government price controls are
inadequate to support R&D
It is estimated that generics
saved the US almost a
quarter of a billion dollars
in 2013
Note: “Anti-Inf” = Anti-Infective. “CNS” = Central Nervous System. “GU” = Genitourinary. “Musc” = musculoskeletal. “Resp” = Respiratory.
Source: Generic Pharmaceutical Association and Corporate Research
18
III. Major Global Generic Pharmaceutical Markets
3) An Overview of the European Generic Pharmaceutical Market
 2nd largest global pharma market. Cost-containment, value-based & reference pricing make it increasingly challenging.
 In 2014, generic drugs
account for 55% of volume
but only 21% of pharma
value in Europe
EU5 Generic Drug Market Share
Global Biosimilar Sales by Region, 2012
 The largest market for
regulated biosimilars,
occupying 44% of the 2012
global biosimilars market
 Differences in local
healthcare systems have
caused some inter-country
variation in uptake of
biosimilars across Europe
 France, Italy and Spain
have the greatest scope to
increase use of generic
drugs. This is due to their
current penetration rates of
generics (by volume) being
considerably lower than
those in Germany and the
UK.
Source: OECD and Corporate Research
EU5 Biosimilar Uptake, 2007-2013
Source: Frost & Sullivan and Corporate Research
Example: Generics Promotion in France
Announcement The French Ministry of Health presented the country's 'national plan to promote generic drugs' on March 24th 2015
Objectives
• Increase generic prescribing by five percentage points in the three‐
year period 2015–17, with particular focus on increasing prescribing in hospitals and retirement homes
• Deliver savings of €350m (US$393m) by 2017
Measures to be • Implement protocols to encourage the prescription of medicines taken
within the 'Répertoire' (the French substitution list)
• Deliver educational programme about safety, efficacy, and quality
of generic medicines for doctors in training
• A national advertising campaign targeted at the general public and health professionals will be launched at the end of 2015 to build confidence in generic medicines
 In March 2015, France
launched a national plan to
promote the use of generics
as part of the country’s cost
containment efforts
Source: Corporate Research
Source: Government reports and Corporate Research
19
III. Major Global Generic Pharmaceutical Markets
4) An Overview of the Japanese Generic Pharmaceutical Market
 3rd largest pharma market expanding as volume growth offsets pricing declines. Profitability increasingly challenged.
 Japanese generic pharma
industry has estimated
revenues of $9bn, growing
at a FY2009–FY2014E
CAGR of 9.6%
Japanese Generics Usage (US$bn)
Japanese Generics Usage (Volume)
 Generic penetration is
improving, having reached
32.6% of all prescriptions in
FY2014
 This growth is driven by
government policy
measures to promote the
use of generics, as well as
successive patent
expirations of blockbuster
drugs
 In order to contain
healthcare spending, the
national government has
been implementing
measures to promote the
use of generics since 2002.
 Despite this, generic
penetration (volume) in
Japan at approximately 33%
remains significantly lower
than the US (88%) and
Europe (UK: 75%) in 2014E
Source: Japan Generic Medicines Association (JGA), Ministry of Health, Labour and Welfare (MHLW) and Corporate Research
Gov’t Promoting Use of Generic Drugs
Generic Pricing Methodology at Launch
FY
Dispensing Pattern Changes
2002 -Pharmacies awarded 2 points for reimbursement when dispensing generic drugs
-Pharmacies awarded 4 points for additional reimbursement if generic drugs
2008
>30% to total drugs dispensed
-Incentives which correspond to percentage of generic drugs dispensed were
2010 introduced for pharmacies (additional points awarded based on generic volumes:
≥20% / <25%, 6pts., ≥25% / <30%, 13pts., ≥30%, 17pts.)
-Adjustment to generic volume points: ≥22% / <30%, 5pts., ≥30% / <35%, 15pts.,
≥35%, 19pts.
2014 -Adjustment to generic volume points: ≥55% / 65%, 18pts., ≥65%, 22pts.
2012
Source: Motilal Oswal and Corporate Research
Source: Bloomberg and Corporate Research
20
III. Major Global Generic Pharmaceutical Markets
5) An Overview of the Indian Generic Pharmaceutical Market
 Despite a small (but rapidly growing) domestic market – Indian Pharma companies are major players on the global stage
 The US generics business
is now the largest segment
for top Indian generics
players and is expected to
expand further
Indian Pharma Revenue Breakdown (%)
Indian Share of US Generics (US$bn)
 Opportunity from new
patent expirations in the
simplex generics segment
lower in the next five years
as compared to previous
five years, resulting in
lower growth outlook
 Indian companies continue
to file ANDAs both in
simplex and complex
generics to participate in
the longer term opportunity
Source: ICRA Research and Corporate Research
Cumulative ANDA Filings – Indian Cos.
Source: IMS Health, broker reports and Corporate Research
R&D Spend of Indian Pharma Cos.
 Like the rise of simplex
generics in 2008, complex
generics present equivalent
opportunities as large
patent expirations are
expected through 2020
 High R&D spend over the
past 4–5 years, coupled
with M&A improved
positioning of Indian
players in the complex
products market
Source: Motilal Oswal and Corporate Research
Source: Bloomberg and Corporate Research
21
III. Major Global Generic Pharmaceutical Markets
6) An Overview of the Chinese Pharmaceutical Market
 Rising demand for healthcare and expanded supply of institutions has fueled development of the pharma market
 Sector revenue growth has
decelerated due to prices
pressures
Pharma Market Size, 2013–1H15 (US$bn)
Pharma Market Breakdown, 2014
 Generic drugs constitute
the majority of the total
Chinese pharmaceutical
market
 Expansion of the Essential
Drugs List (EDL) is a benefit
for generic drugs
 Stringent quality controls
on generics implemented
 Policy changes have a
mixed impact on the
generic pharmaceutical
industry in China

We expect 7% – 9% industry
growth for the Chinese
pharma market over the next
5 years

Generic drugs on the EDL will
see the strongest growth, with
forecasts of a 2013 – 2020
CAGR of 21%

Branded generics not on the
EDL will continue to post
robust growth, driven by
looming patent expirations
Note: Includes western drugs: API, chemical drugs, biologics and TCM
Source: CEIC and Corporate Research
Chinese Pharma Growth, 2014-2020E
Source: IBIS, BCG and Corporate Research
Source: CEIC, China Healthcare Yearbook and Corporate Research
“Western Drug” Growth, 2013-2020E
Source: IBIS, BCG and Corporate Research
22
IV. Strategic Summary
Outlook for Global Pharmaceutical Players – Branded & Generics
① Fundamentals & Drivers
② Issues & Trends
Negative: ◊ Gov’t focus on cost
◊ Patent Cliffs
◊ R&D long & costly
Positive: ◊ Aging population
◊ Growth of chronic
diseases Global Pipeline: Focus on biologics, quality improving
Pharmerging Markets: High growth to come in emerging markets Big Pharma’s Big Growth Gap: Declining share leads to M&A need
③ Opportunities & Strategies
Risk Sharing / Collaboration
“The dominance of the protected, product dependent, research‐based [pharma] company model in the Top 10 will be broken in the next 5‐10 yrs.” – IMS Health
• Risk sharing R&D Outsourcing
●
• Alliances and JVs
• M&A to fill company pipeline gaps
Expand Laterally
Expand Vertically
Large Molecules
Theranostics
• Differentiated as more difficult/costly to develop/manuf. leading to higher pricing
• Targeting specific patient populations
• Still nascent
• Less exposed to “generic” competition
Vaccines
Pharmerging Markets
• Proj. growth higher than overall market
• Projected to double global share by ‘16
• High demand in Pharmerging Markets
④ Hallmarks of Success for Pharmaceutical Companies
“EMBRACE CHANGE”: THE INDUSTRY IS CHANGING AND COMPANIES MUST CHANGE WITH IT
Smaller Companies: Leveraging up the “Foodchain”
◊ Continue to follow larger players up in complexity
◊ Specialty Pharma → Branded, Generics → Specialty Pharma, etc.
Larger Companies: Break the proprietary R&D model
◊ Leverage R&D & manuf. expertise into more complex drugs (biologics)
◊ Increase alliances and M&A ◊ Focus on fast‐growing Pharmerging
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