Transcript Japan ppt - Dr. Brian W. Tempest

Reflections on the Global Generic
Pharmaceuticals Market place
Dr. Brian W Tempest
www.briantempest.com
Barcelona – 17th January 2008
DR. BRIAN W. TEMPEST CSci, CChem, MRSC, BSc, PhD
Dr. Brian Tempest has worked in the pharma industry for the last 36 years. During
this time he has worked for several pharma majors, including Glaxo & Searle,
around the world and joined Ranbaxy 12 years ago. During this period Ranbaxy
has transformed from a small company focused on the India domestic market, to a
top 10 global generic company. Dr. Tempest has lived in New Delhi, India for the
last 8 years, and has been President, Managing Director & Chief Executive Officer
and, until recently, the Chief Mentor & Executive Vice Chairman of the Board. Dr.
Tempest retired from Ranbaxy in December 2007, when he reached 60. Dr. Tempest
is one of a few westerners to have held a leadership position in an Indian blue chip
MNC, and has an unusual insight into India.
Dr Tempest is also a Honorary Professor of the Management School at Lancaster
University, UK, and he sits on the Editorial Board of the Journal of Generic
Medicines and on the Advisory Board of the India Fund held by JM Financial
Investment Managers Ltd in Mumbai.
Dr. Tempest is exclusively supplied by ‘Hale & Tempest Co. Ltd’
[email protected] / [email protected]
Mobile +91-98100-91192 / Tel:+44 1753 864 616
Asia’s Share of the World GDP (at PPP in %)
Year
1870
1913
China
India
Japan
Rest of Asia
17%
12%
2%
7%
9%
8%
3%
5%
Total Asia
38%
25%
1950
5%
4%
3%
7%
19%
Source – WEF
- was 59% in 1820 with India 16%, China 33%
1973
2001
5%
3%
8%
9%
12%
5%
7%
13%
25%
37%
Asia on the Rise
Source – FT
The Global Challenge from Asia
The Asian Race to Prosperity
Reflections
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Market drivers
Competition is rising
Branded generics
IP changes in USA & India
M&A and Private Equity
East-West Alliances
The Productivity Advantage
India
1 chemist
70 hours/week
$ 800 monthly
a usa Pharma view
Better education x 1.3
Longer working time x 1.3
Lower cost x 20
USA
1 chemist
50 hours/week
$ 12,000 monthly
Sources: IPHMR Conferences, New Delhi August 2004
India’s Youthful Advantage
Percentage of Population aged 65 and older
29.2
22.7
21.5
21.4
18.7
14.8
14.7
13.2
2000 A
12.3
2050 E
8.3
6.9
5
China
India
2025 E
Europe
North America
Median Age in Asia
Years
2000
2025
2050
India
24
31
38
China
30
39
44
Japan
41
50
53
Sources: Rand Corporation
The Education Advantage
The Education Advantage
Engineers/Science graduates p.a – India 0.7m, China 0.5m, EU 0.5m, USA 0.4m, Japan 0.3m
Japan’s Wealth Advantage
Taiwan
1%
Switzerland
1%
Spain
1%
Rest of World
10%
Netherlands
2%
Canada
2%
Germany
4%
Italy
4%
France
5%
USA
37%
UK
6%
Japan
Source: The World Distribution of Household Wealth
27%
Top 5 Global Pharmaceutical Markets 2020
Rank
Country
Size
1.
USA
$ 475b
2.
China
$ 125b
3.
Japan
$ 61b
4.
France
$ 51b
5.
India
$ 43b
Sources: Goldman Sachs 2007
Patent Expiry Dates
Company
Expiry
2010
Expiry
2011
Expiry
2012
% at Risk
Pfizer
Aricept - $800m
Lipitor - $12.1bn
Xalatan - $1.6bn
Viagra - $1.7bn
Detrol - $860m
Geodon - $1.1bn
41%
Astra Zeneca
Arimidex - $2.2bn
Seroquel - $4.7bn
Symbicort - $3.7bn
38%
Sanofi-Aventis
Taxotere - $2bn
US Plavix - $3.8bn
Avapro - $2.1bn
Lovenox - $3.1bn
34%
US Plavix - $4.8bn
Avapro - $1.3bn
Abilify - $2.1bn
BMS
GSK
Advair - $3.8bn
Avandia - $2.5bn
30%
23%
Sources: AXA Framlington
Competition is Rising
CPHI Attendees, Milan, 2nd – 4th Oct’07
1.
China
467 – 33%
2.
India
189 – 13%
3.
Germany
96
4.
Italy
80
5.
USA
75
6.
UK
55
7.
France
55
8.
ROW
387
Total
As registered on July 25, 2007
1404
Generics – API’s
USA DMF filings by India
2004
2005
2006
India
187
252
357
China
48
87
128
% Share of USA DMF filings
2004
2005
2006
Q1’07
India
27%
37%
44%
48%
China
9%
10%
14%
17%
Source: US FDA / J P Morgan, 6th August 2006
Source: US FDA / J P Morgan, 2 may 2007
Source: US FDA, Credit Suisse
Generics - ANDAs
ANDA Filings in USA by Indian Companies
300
250
250
200
144
150
100
46
50
64
24
0
2002
2003
2004
2005
2006
- One in every four ANDAs filed by Indian Companies in top
USA FDA filers
Source: KPMG
- No Chinese generic company has yet filed a USA FDA ANDA
but expected in 2008
R&D Productivity is Falling
Global Pharmaceuticals Sales Trends
Global Pharmaceuticals Equity Trends
Speed of Clinical Trials in India
Patients
Sites
Time
EU
India
85
22
36m
650
5
18m
Patients
Sites
Time
Neck Cancer CT

300 patients, 30 sites
$5.6m EU/USA vs $ 1.8m plus
30% faster at $800K per day
savings
Plan
Actual
100
10
5m
130
9
2.5m
Overactive bladder CT

No. of USA investigators:
2001
2006
26,000
18,000
Sources: CT Outsourcing Conference, 24th July 2007, Mumbai
Electronic Data Capture in India
% Trials in EDC
Accuracy
2005
2007
- 300 GSK Staff
25%
45%
- 2.2m Clinical Data sheets
- 450 Trials
Savings
Paper
EDC
- No data security issues
$2.8m
$ 0.5m
- Error rate <0.01 / 100k
2004 data
Sources: CT Outsourcing Conference,
24th July 2007, Mumbai
Source: BCG report “Looking Eastward, Sept’2006”
Branded Generics


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Promotion to doctors rather than pharmacists
Consistent sales year on year
No huge highs & lows for sales and profits
Need field force to promote products
Tend to be profitable
Promoted in conventional manner
Global generic brands
Relevant to Central Europe, East Europe, Latam, Asia
Ranbaxy 50% branded generics & 50% commodity
generics
Branded Generics - the Analyst’s view

“Branded Generics are the most profitable
place to be in generics and there are a few
markets with better branded characteristics
than those of the Middle East and North Africa
region”
Frances Cloud Nomura September 14 2007
Different Global Generic Market Sizes $bn
Region
Sandoz
2006
IMS
2008
USA
23
68
West Europe
14
19
East Europe
13
NA
Japan
3
3
Latam/Canada
10
3 (Canada only)
ROW
37
7
Total
100
100
Ranbaxy 2006 Sales by Geography
API
8%
Africa
7%
Europe & CIS
25%
Americas
33%
Asia
27%
$ 1.34b
Ranbaxy H1 2007 Sales by Market
Developed
Markets
40%
Other
6%
Emerging
Markets
54%
ROW Top 10 Generic Markets - $bn
IP – USA Pendulum
“A key USA Supreme Court ruling KSR VS Teleflex led to
Pharmaceutical patents being more easily challenged on the
grounds of obviousness, a ruling which immediately came into
play when J&J & Merck had a US patent for Pepcid
Complete (Famotodine) found to be obvious”.
Scrip, July 6th 2007, p3
The full beneficial impact of this ruling on the generic industry is yet to be
seen eg Sanofi-Aventis Ramipril was invalidated as obvious by Lupin in
September 2007.
Bilateral FTAs - USA Pendulum
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Democrats now chairing Committees- Ways & Means
USTR legally required to work within TRIPS
USA has been incorporating TRIPS PLUS IP protection into
bilateral free trade agreements
Corrections to bilateral trade agreements eg Peru, Columbia,
Panama FTAs
TRIPS
TRIPS PLUS
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Basic product patent
+ Data exclusivity

Data protection
+ New forms, isomers etc
+ New Indications
+ New Combinations
Should IP be the same across all Countries?
USD
Per Capita Expenditure on Healthcare 2002
6000
5000
4000
3000
2000
1000
0
USA
Brazil
Thai
China
India
Sources: World Health Report 2005
82% of the world population accounts for only
12% of the Global pharmaceutical sales
Region
North America
Europe
Japan
Pharma Sales
$255 b
$158 b
$59 b
47%
30%
11%
Population
332
725
128
88%
Asia/Africa/Aus
Latam
$41 b
$20 b
8%
4%
18%
4711
558
12%
Worldwide
Sources:
1.
IMS Midas, March 2005
2.
Earth Trend Data Tables 2005
$533 b
100%
5%
11%
2%
73%
9%
82%
6454
100%
Enforcement versus Evergreening
in Developing Countries
India IP
Filed
Examined
Granted
-
02/03
11466
9538
1379
06//07
28882
14119
7359
140 patent examiners 2007
600 more planned
Attrition an issue
Weekly patent journal
IP Appellate Court
Source: Business Standard, 16th Aug’2007
•
1995 – 2005 FDA cleared 327 drugs
•
95% pre 1995 – before WTO deal
•
16 basic patent molecules possible
•
However 9000 Pharma applications
- for evergreen changes
- for new indications
Source: Gopa Kumar
“Centre for Trade & Development, Delhi”
PCT Filings
PCT Files from
Developing Countries 2006
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Ranbaxy Patent Filings to 2005
Huawei - China
LG - Korea
Samsung - Korea
LG Cem - Korea
Elec Telecom – Korea
2TE – China
STR – Singapore
Ranbaxy – India
CSIR – India
NHN - Korea
24
32
49
86
146
170
185
M&A Building the Top Players in the
Global Generic Market
PE Deals in Asia (ex-Japan) in H1 2007
Country
No. of deals
Sum Invested - $m
China
103
1489
India
90
1369
Hong Kong
5
186
Australia
26
71
Taiwan
6
33
S.Korea
30
29
Thailand
2
29
Singapore
4
16
New Zealand
9
3
278
3233
Total
Sources: Thomson Financial
% PE/VC Share of all Global M&A Deals
25
21%
20
17%
15
16%
10
9%
5
6%
5%
0
2000
2001
2002
2003
2004
2005
Sources: Thomson One Banker, BCG Analysis
Private Equity Investment in India
Year
Investments
2003
$ 0.5 b
2004
$ 1.6 b
2005
$ 2.2 b
2006
$ 7.5 b
PE Investment in India is rising
How much to acquire big Pharma
Key Challenges to the Asian Scenario
Potential Challenge – Asian Flu*
*50% of world chickens bred in Asia
Potential Challenge – Climate Change
CO2 emission - % of World total in 1990-2000
USA
EU 25
China
Russia
Japan
India
– source: WRI, EIA
23%
17%
14%
7%
5%
4%
Potential Challenge – Infrastructure
“Our greatest potential will be realised only if we can ensure that our
Infrastructure does not become a severe and critical handicap”
Source – Manmohan Singh
Corruption Perception Index
Rank
Country
1
5
11
16
20
42
51
70
121
163
Finland, Iceland, NZ
Singapore
Austria, Luxemburg, UK
Germany
Belgium, Chile, USA
Mauritius, S.Korea
South Africa, Tunisia
Brazil, China, India, Mexico
Philippines, Russia
Haiti
Sources: Transparency International 2006, selected countries only
Potential challenge – Oil prices
Source – BP
• A war against Iran could drive oil > $200 a barrel - ‘Times’ 22nd June 2006
• India is expected to import 85% of crude oil by 2012 from 70% today
Source – Assocham
Potential Challenge – over the border
Potential Challenge - Currency Volatility
The Tempest Crystal Ball
•India will continue to be a Key Driver in the Global Generic Industry
•Competition is rising – Post TRIPs Indian companies will evolve
•Discovery companies will continue to be attracted to India for CT, EDC,
MO. China will be perceived to be stronger in biology/ toxicology
•IP changes in US & India will slowly favor Generics
•Alliances between Western Biotech and Asians companies will expand.
M&A PE deals will grow
•How to use Asia will become the key opportunity
The rise of the Indian Middle Class
Annual Income
< Rs. 90k
Rs. 90 k - Rs.2L
> Rs. 2L
1985 A
1995 A
2005 E
2015 F
2025 F
702 m
742 m
598 m
447 m
314 m
45 m
167 m
454 m
550 m
514 m
8m
19 m
55 m
281 m
600 m
- Assumes GDP growth of 7.3% for next 20 years with no profound shift in economic policy
Sources: McKinsey Quarterly, 3rd November 2007
Perceptions of Asia
“The Indian System looks ramshackle
and improvised. But at its best it is
capable of brilliance”
“When we say the Silicon Valley is
built on ICs we don’t mean integrated
circuits – we mean Indians & Chinese”
“The UK needs to wake up to what
India is becoming”
Source: DEMOS report – January 2007
Summary
Asia economic strength is returning to levels seen in the past
Many advantages for India with some challenges
India is a global strategic asset for developed markets
India is a rich location for R&D alliances and CT outsourcing
MNCs will dip in & out of India & China
South East Asian economies will be driven by India & China
Japan will continue to represent a huge share of global wealth
“China & India represent the future of Asia and quite possibly the future for
the global economy” – Steve Roach, Morgan Stanley
Thank You