Trends in the Global Pharma-Market and its
Impact on the Supply Chain
Dr. Frank Wartenberg
President Central Europe
October, 20th, 2016
Copyright © 2016 QuintilesIMS. All rights reserved.
Top line growth forecast at 4-7% CAGR to 2020
(in constant US$)
Pharmerging growth declines to single digits
Developed Markets
CAGR 2016-2020
Global Sales and Market Growth
1.600
Japan
1.400
10%
6%-9%
(-1)%-2%
Germany
3%-6%
1.200
8%
1.000
800
6%
600
Growth
Sales (Bn LCUS$)
US
12%
4%
400
2%
200
0
UK*
4%-7%
Italy
2%-5%
France
(-2)%-1%
Spain
2%-5%
Canada
3%-6%
Developed
4%-7%
Pharmerging Markets
CAGR 2016-20 LCUS$
China
5%-8%
Brazil
7%-10%
India
10%-13%
Russia
6%-9%
Turkey
12%-15%
Mexico
2%-5%
Pharmerging
LCUS$
6%-9%
Pharmerging
US$
4%-7%
0%
2015
2016
2017
Global sales
Pharmerging growth
2018
2019
At par with region CAGR
2020
Developed growth
Lower than region CAGR
*Subject to clawback
Higher than region CAGR
Source: IMS Market Prognosis March 2016; at ex-manufacturer price levels, not including rebates and discounts. Contains Audited + Unaudited
data; Sept 2015 forecasts used for all countries outside of top 52
© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
1
Over time growth in specialty markets out-performed traditional markets in
terms of value…
2015 value share specialty vs. traditional in TOP 5 EU
+ focus countries
5 year CAGR (’10-’15)
Specialty
Traditional
Average specialty share: 34%
US
CA
JP
RU
UK
DE
IT
ES
FR
35%
65%
32%
68%
25%
75%
21%
79%
34%
66%
41%
59%
39%
61%
43%
57%
37%
Specialty
63%
15%
2%
13%
-2%
10%
2%
11%
11%
14%
2%
11%
0%
11%
1%
10%
-2%
5%
-3%
Traditional
Source: IMS Health, MIDAS, MAT Q4 2015
© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
2
…. and are expected to remain the main growth driver in Europe till 2020
Share of Absolute Growth 2015-2020 and 2020 Sales by Region
Europe
LC$ 42Mrd Growth
North America
LC$ 152Mrd Growth
24%
76%
40%
Asia
LC$ 88Mrd Growth
34%
36%
64%
60%
66%
21%
AFME
79%
LC$ 21Mrd Growth
7%
LATAM
18%
82%
7%
LC$ 20Mrd Growth
7%
93%
6%
93%
93%
94%
Specialty Growth 2015-20
Traditional Growth 2015-20
Specialty 2020 Sales
Traditional 2020 Sales
Source: IMS Health Market Prognosis September 2015; at ex-manufacturer price levels, not including rebates and discounts.
Contains Audited + Unaudited data; IHII analysis
© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
3
At the same time, wholesalers loosing ground amongst European
countries
Q4/2015 value share by channel in TOP 5 EU + focus
countries
PL
78%
DE
76%
HU
Traditional Full
Line Wholesalers
Direct
sales to
hospitals
AT
59%
CZ
57%
ES
IT
36%
5%
-4%
7%
1%
17%
58%
Direct Hospital
-5%
-5%
-4%
2%
58%
35%
-2%
-1%
50%
42%
Traditional FLW
1%
6%
33%
47%
-4%
12%
45%
50%
+3%
33%
36%
53%
FR
3%
26%
62%
BE
DK
13%
73%
UK
Direct sales to retail
19%
Delta WHS
2015 vs 2011
-9%
-7%
7%
-11%
Direct retail
Source: IMS Health, total market, shares are based on value, Q4 2015, direct shares from local affiliates
© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
4
Specialty products require a special handling leading to a rise in new
distribution models
Distribution
•
•
Many specialty products need
refrigeration or freezing
Often requires maintaining cold chain
distribution during the whole delivery
process
Preparation
Rise of Homecare and specialty
pharmacies
• “Total service” to patient
•
Specialty products can require
compounding of individual ingredients in
an exact strength and dosage form
tailored to the patient’s need
• Aseptic services (e.g. oncology)
• Compliance programs/ patient
support
• Elimination of indirect payer costs
Administration
•
•
•
Many specialty products are selfadministered injectable
Requires patient training to administer
Support to achieve adherence needed
Source: ASHP Specialty Pharmacy Resource Guide, available at:
http://www.ashp.org/menu/PracticePolicy/ResourceCenters/Specialty-Pharmacy-Resource
© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
5
Typically specialty products are high price products with simultaneously
low volumes
EU 5 – Concentration of product
sales in bn US$
100.0%
$146.2 Bn
EU 5 – Concentration of product
sales volume in SU bn US$
$142.4 Bn
100.0%
409.9 Bn
411.1 Bn
98.0%
80.0%
94.7%
61.7%
60.0%
73.2%
8.0%
95.4%
6.0%
40.0%
10.2%
20.0%
4.0%
7.8%
16.8%
2.0%
11.3%
0.0%
Top 10 products
7.7%
11.3%
2010
2015
0.0%
Products 11-50
Products 51-100
2.2%
2.8%
1.7%
1.9%
0.7%
0.6%
2010
2015
All others
Source: IMS Health, MIDAS MAT Q4 2015, US$ and SU
© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
7
They have a large impact on WHS margins – manufacturers try to keep
those by direct sales
Mark up
HUMIRA
Price per WHS mark
pack €
up
ENBREL
Price per WHS mark
pack €
up
GLIVEC
Price per WHS mark
pack €
up
AUSTRIA
€23.74 fixed mark-up
975
23.7
858
23.7
2,705
23.7
BELGIUM
€2.30 + 0.9%
951
10.9
918
10.6
2,284
22.9
6.68% for first €450 (with a
minimum mark-up of 0.30€)
0% above €450
829
30.1
732
30.1
1,737
30.1
GERMANY
Fixed fee of €0.70 plus 3.15%
mark-up to a limit of €37.80 on
the percentage mark-up
element.
3,631
38.5
3,164
38.5
5,331
38.5
SPAIN
€7.54 where ex-MNF price excl
sales tax is >€91.63
N/A
845
7.54
1.184
7.54
FRANCE
Why direct sales?
•
•
•
•
Ability to control discounting
Ability to receive information about the dispenser
Eliminate wholesaler exporting
Manage distribution costs
Source: IMS Health
© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
8
Wholesalers offer pre-wholesaling carrying out warehousing & logistic for
manufacturers
Classic distribution system for pharmaceuticals
with pre-wholesalers
Characteristics
Manufacturers
• Manufacturers outsource the warehousing and
logistic to pharmacies, self-dispensing doctors and
hospitals to so called pre-wholesalers
Pre-Wholesalers
Wholesalers
• Wholesalers often offer pre-wholesaling services
Pharmacies
Self-dispensing
doctors
Hospitals
Patients
Source: IMS Health
© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
9
Parallel trade is a huge threat for specialty products due to different price
levels in the EU
European annual parallel trade
Import markets context
6
Size
Growth
€5.2bn
+ 2%
(EU 8)
- 4%
5
- 4% PI
+ 5% Non-PI growth
+ 4% Total market growth
€ PI sales (Bn)
Size
4
- 4%
+ 2%
+ 6%
- 7%
3
2
~60%
1
Share
9% PI
0
(8 main import markets only)
MAT 06'14
3% across EU28
Specialist
MAT 06'15
MAT 06'16
Primary Care
Source: IMS MIDAS and internal database, import markets: DEU, GBR, NLD, Nordics and IRL, All sales at ex-MNF level.
© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
10
The traditional dispensing and distribution model is changing…
Classic distribution system for
pharmaceuticals
Manufacturers
Pharmacies
Manufacturers
• Aim to control the supply chain (reduce distribution
costs – increase margin, control exports)
Pharmacies
• Discounts driven (mainly generics and PI)
• Trend towards dispensing fees
Wholesalers
Self-dispensing
doctors
Trends:
Hospitals
Wholesalers
• Parallel Export important in several markets
• Offer pre-wholesaling to participate in direct sales
business
Patients
New market players
• Homecare and Specialty pharmacies
Source: IMS Health
© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
11
… to a highly complex environment
Manufacturers
Pre-Wholesalers
Parallel trader
Wholesalers
Specialized
pharmacies
Pharmacies
Self-dispensing
doctors
Hospitals
Mail-order
Patients
Pre-wholesaling
Direct sales
Parallel trade
New distribution channels
Source: IMS Health
© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
12
Counterfeits are a high threat leading to another big challenge for
distributing pharmaceuticals
Inside the fake Viagra factory
Which one is the
counterfeit?
Source: The Telegraph “Inside the fake Viagra factory” (23 Aug 2005)
© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
13
Politicians take actions and continue efforts to highly control the
pharmaceutical supply chain
Introduction of Falsified Medicines Directive
Objective: Protection of patients from falsified
medicines in the legal distribution chain
Content: Pan-European system to verify the
authenticity of medicinal products
Scope: All Rx-bound products); OTC-products
cannot be subject to authentication
Due date: Implementation in all countries by
Q1/2019, Non – compliance puts sales at
risk!!!
Additional tasks and new costs for the pharmaceutical supply chain
Source: EU “Falsified Medicines”, ESM “A European Medicines Verification System “
© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
14
Key Insights to Take Away
1
Growth in the pharmaceutical market mainly comes from specialty care
2
Specialty products are typically high cost products with low volumes and require a specific
handling in distribution, preparation and administration
3
Manufacturers seek to fully tap high margins for those products and keep control over the whole
distribution process via direct sales
4
Wholesalers react to this development by expanding their business in offering manufactures prewholesaling services
5
Big threat of counterfeits leads to even stricter regulations (Falsified Medicine Directive) of the
pharmaceutical supply chain in the next years
© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
15
Please contact me for more information
Dr. Frank Wartenberg
President Central Europe
frank.wartenberg@quintilesims.com
+49 (0) 69 6604-4315
Follow me on Twitter: @FrankWartenberg
© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
16
© 2016, IMS HEALTH GmbH & Co. OHG
Alle Rechte vorbehalten. Die Informationen dürfen weder ganz noch teilweise ohne vorherige ausdrückliche Erlaubnis von
IMS HEALTH GmbH & Co. OHG vervielfältigt, gespeichert, weiterverarbeitet und in keiner Weise zugänglich gemacht werden.
Die gegebenenfalls im Zusammenhang mit Daten verwendeten Begriffe „Patient, Arzt, Arztpraxis, Verordner oder Apotheke“ bezeichnen keine personenbezogenen, sondern ausschließlich (nach §
3 Abs. 6 Bundesdatenschutzgesetz) anonyme Informationen.
IMS stellt durch den Einsatz modernster Technologien und Verfahren sicher, dass seine Dienstleistungen, unabhängig davon wie die Daten untereinander verknüpft werden, den
Datenschutzbestimmungen entsprechen.
© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
17
© 2016, IMS HEALTH GmbH & Co. OHG
All rights reserved. The information may not be duplicated, stored, further processed, nor be made accessible in whole or in part to any third party without the prior express written consent of IMS
HEALTH.
In connection with data/figures used terms, such as „patient, doctor, medical practice, prescriber or pharmacy”, do not designate any personal data but exclusively anonymous information (in
accordance with § 3 Abs. 6 “Bundesdatenschutzgesetz” – German Federal Data Protection Act)
IMS employs high sophisticated technologies and methods which ensure all its Information Services to meet the applicable data-protection requirements, regardless the way data are combined with
one another.
© 2016, QuintilesIMS – Dr. Frank Wartenberg (Twitter: @FrankWartenberg)
18