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Commercialisation of Pharmaceuticals
Markets & Opportunities
Agenda
Global market for pharmaceuticals
Differences pharmaceutical vs consumer good markets
Stakeholders
Trends in the Pharma market
Segmentation
Questions
Concepts & Terms in Product Commercialisation
Questions
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Market Size
Global market*
667,653 million ($857,800 million) ex-factory price
Market growth in 2012 1.8%
European market**
163,000 million ex-factory
238,500 million retail prices
126,800 million paid by state insurance systems***
*IMS data
**EFPIA estimate
***Does not include in-patient care
Retail Price vs Ex-Factory
Manufacturer
Wholesaler
Retail Pharmacy
or Hospitals
Patients
Typical Supply Chain Retail Costs (2011)*
Manufacturer 65.2%
Wholesaler 5.6%
Pharmacist 19.3%
Government 9.9%
Sales tax varies
Country
Prescription vs OTC
Patient contribution varies
Source: EFPIA (24 member countries)
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Top-selling Products 2012
Product Active Indication Sales
($billion)
% Growth
Seretide Fluticasone &
Salmeterol
Asthma
COPD
8.9 1.7
Humira Adalimumab Inflammatory diseases 8.5 18.5
Crestor Rosuvastatin Hyperlipidemia 8.3 3.0
Nexium Esomeprazole Ulcers 7.5 (7.2)
Enbrel Etanercept Inflammatory diseases 7.5 9.7
Remicade Infliximab Inflammatory diseases 7.3 10.6
Abilify Aripiprazole Schizophrenia 7.0 11.5
Lantus Insulin glargine Diabetes 6.6 19.3
Source: IMS Health MIDAS, December 2012
Pharmaceuticals vs Consumer Goods
Pharmaceuticals
Highly regulated
Development 10 15 years
Scientific & clinical advances
Stakeholders many
Payer often not patient
No. of buyers
Varies with healthcare system
Price & reimbursement
Manufacturers + other bodies
Patented/Off-patent
Life cycle management
Consumer Goods
Low level of regulation
Development - 0.5 2 years
Technical advances & fashion
Stakeholders 2 4
Payer = customer
No. of buyers many
Pricing
Manufacturer
Market characteristics
Competition/Buyer power
Life cycle management
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Stakeholders in Pharma Market
Governments
EU/WHO
State insurance
systems e.g. NHS
Private health
insurance
companies
Doctors
Dentists
Pharmacists &
other healthcare
staff
Patients
Patient advocacy
groups &
charities
Pharmaceutical
industry
Regulatory
Authorities
Many stakeholders direct payer often not the patient
Trends in Pharma Market
Changing demographics 2010-2050 (WHO data)
65 years 188% increase
65 years 351% increase
Almost same number of children < 5 as those 65 years
Impact
Lower % population of working age
Pressure on national finances & healthcare budgets
Greater demand for medicines
Pressure on drug pricing & reimbursement
Cancer, arthritis, dementia & Parkinsons Disease
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Trends in Pharma Market
Sedentary lifestyle & increased obesity
Increase in patients with metabolic syndrome
New therapies for diabetes Type II
Focus on cancer therapies & specialist areas
Focus on specialist therapies & smaller groups of patients
Orphan drug regulations
% biotech drugs growing especially monoclonals
Drug + diagnostic test co-development
High return on investment
Cost versus prolongation of life & quality of life
Treatment of cancer emove
Separate fund for oncology drugs
Trends in Pharma Market
Increasing generic competition
Small molecules
Biosimilars US/EU regulations
Use of drug delivery technology
Patent strategies
Pipeline issues
High failure rate
Easy targets already targeted
High through-put screening high potency but poor bioavailbility
In-licensing & merger & acquisition activity
Big Pharma-backed venture capital
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Trends in Pharma Market
Increased regulatory scrutiny/regulations
Paediatic regulations
Focus on Quality by Design & validation
Business practice
Globalisation of supply & supply chains
Reduction in number of wholesalers
Increased drug shortages
Healthcare Cost Control
Reimbursement control
Health Technology Assessment
Trends in Pharma Market
Emerging vs established markets
BRIC countries pharmaceucal market growth
Rise of Indian pharmaceutical companies
Big Pharma investment in BRIC countries
Outsourcing
Non-core competences & non-critical activities outsourced
Appearance of virtual companies
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Global Market - Segmentation
Can be divided & sub-divided into segments
Segments of the pharmaceutical market
Therapeutic class
Geographical location
Legal class of medicine (prescription, OTC)
Location of treatment
Hospital/Specialist clinic
Community medical practices
Pharmacies
Niche markets
Small defined market/specific unmet needs no/little competition
High price/profit margin
Global Sales Through Therapeutic Classes
Therapeutic Area Ranking Sales ($billion) % Growth
Oncology 1 61.6 5.1
Pain 2 56.1 2.7
Antihypertensives
(Single/Combination)
3 51.6 (3.5)
Anti-diabetics 4 42.4 8.2
Mental health 5 41.6 (13.8)
Respiratory 6 39.7 1.4
Anti-bacterials 7 38.8 (3.7)
Lipid lowering agents 8 33.6 (14.2)
Autoimmune diseases 9 27.8 15.1
Anti-ulcerants 10 26.0 (2.4)
Source: IMS Health MIDAS, December 2012
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Sub-divisions within Segment
Based on nature of disease
Type I and II diabetes
Mechanism of action
Antacid vs proton pump inhibitor or H
2
antagonist
First line therapy or second line therapy
Stivarga

(regorafenib) tablets - 2 indications

Gastrointestinal stromal tumor (GIST)
Previously treated with imatinib mesylate & sunitinib malate
Monotherapy or Adjunct therapy
Global Sales by Geographical Region
Trends European & US markets shrinking 1-2%
Brazil 16 % growth
China 21 % growth
Ref: IMS Retail Drug Monitor Feb 2013
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Geographical Location Regulatory
USA one regulatory authority one approval
Europe various routes
Centralized procedure for EU + EEA
Human medicines for certain diseases/conditions
Biopharmaceuticals, gene therapy, cell therapies, orphan drugs
Significant therapeutic, scientific or technical innovation
Decentralized procedure/Mutual recognition
National approval for medicines only on one market
Rest of World approval required in each country
Special regulatory requirements e.g. Japan

Geographical Location Payment

Companies Must
Recoup development costs
Fund new research &
development
Protect & defend assets
Pay staff & suppliers
Pay overheads
Make a profit
Satisfy shareholders
Improve/guard image &
reputation
But
Poor countries cannot afford
new medicines
Lack of doctors & healthcare
staff
Poor infrastructure &
distribution channels
Low levels of education
Concerns over patent
protection Novartis in India
Political situation
Focus on diseases of developed world & large markets
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Improving Access to Medicines
Developed World
Regulatory iniaves Orphan drug/paediatric regulaons
Government programs Medicaid
Drug access programs
Developing World
WHO Model list of essenal drugs
Charities/pressure groups
Global Iniaves The Global Polio Eradication Initiative
Drug access programs (Astra Zenecas Do well in Brazil)
Big Pharma investment in research & education
African Malaria Partnership GSK
Abbvie - TB Alliance
33% developing world no regular access to medicines
Geographical Location Other Factors
Level of private versus state-funded medicine
State cost control typically tighter
Private insurance also controls costs
Structure of healthcare system one state body or segmented
Direct advertising of prescription only medicines
Allowed in US
Not allowed in Europe
% prescription versus OTC medicines
US & UK larger number of products are OTC
Germany & Austria fewer
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Prescription Medicines
Advertising & sales effort targeted
Specialist/Doctors/Pharmacists/Other healthcare experts
Clinical data main argument
Information dissemination
Sales force visits + samples
Conferences & scientific publications
Brochures, specialist magazines, internet, apps
Promoonal gis pens, mugs etc.
Adversing in Europe not directly to public
Get buy-in from key opinion leaders early on
Well-known consultants/clinical investigators
Give input into & carry out trials
Create excitement within medical community
Speak at conferences/publish papers
OTC Medicines
Specifically developed fro OTC market
Prescripon OTC switches
Product
Pharmacy or grocery store
Mail order
Point of sale
Pharmacists (scientific information)
Merchandisers
General public (USP)
Advertising
TV/Radio commercials, magazines etc.
Internet
Point-of-sale information
Information
dissemination
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Point of Sale/Use
Specialist hospital/clinic
Specialist sales team
Target consultants/specialists
High level of technical support/specific centres
Oncology products/treatments for specific diseases
Community doctors/General hospital use
Large sales force required expensive
Visits to doctors, hospitals & pharmacies
Pharmacies (large chain vs independent)
Direct advertising to public
Point-of-sale material
Scientific information for pharmacist
Niche Markets Characteristics
Small
Very specific
needs, wants &
requirements
Competition
limited/non-
existent
Current
products/services
not satisfying
needs
Too small to
attract
competitors
Barriers to Entry
Innovation
Technological
Investment
Premium price
Demand steady
Price Inelastic
Sales efforts
specifically
targeted
Attractive to small
companies
Examples: Treatments for rare diseases, gene/cell therapies
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Product Commercialisation
Concepts & Terms
Agenda
Market needs, growth & trends
Segmentation
Market size & market share
USP
Branding
Marketing & market development
Life cycle management
Portfolio management
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Market Size & Market Share
Market size
Volume of sales or revenue
Revenue (Volume x price)
Sales volume vs revenue
Metformin generic high volume but low price
Branded patented medicine high price but lower volume
Market share
% of total market in terms of revenue
% of market in defined segment
100% market share only in a monopoly
Unique Selling Proposition
Real or perceived benefit of a good or service that
differentiates it from the competing brands and gives its
buyer a logical reason to prefer it over other brands. USP is
often a critical component of a promotional theme around
which an advertising campaign is built
http://www.businessdictionary.com
Identify USP of product
Slogans, advertising, logos, packaging & pricing policy
Pharmaceuticals
Promotion tightly controlled
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Branding
Critical for all products especially OTC products
Successful branding transferred to other products
Create image & logo
Emphasis products unique selling proposition
Organoleptic properties & packaging should fit
Target correct segment
Build interest & credibility
Opinion leaders for prescription medicines
Underpin by clinical evidence & surveys
Health professionals on TV/Radio/Print
Brand recognition
Marketing & Selling Medicines
4Ps product, promotion, price & place
Marketing Mix
Presentation of information to doctors
Representative visits or e-mail marketing
Carefully scripted message & samples
Detailing
Legal & ethical control over promotion
No promotion of off-label uses
Financial incentives to doctors
Legal & Ethical
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Market Development
Use of opinion leaders
Detailing
Conferences & sponsored training
Brochures & peer-reviewed articles
Product
Awareness
Process by which a new product or idea
attracts the interest of market leading to
adoption (group process)
Market Diffusion
Customer awareness (individual)
Trial usage
Regular usage
Adoption
Product Life Cycle
Market
Introduction
Growth
Decline
(Generics)
Maturity
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Line Extensions
New formulations
Same route or new route of administration
Improved safety and/or convenience
New indications including paediatric
Combination drugs (e.g. HIV treatment)
OTC switch
Next-generation drugs
New patents
Additional regulatory market/data exclusivity (some cases)
New markets
Portfolio Management
Stars
High market share +
Fast growing market
Invest to fight competitors
& maintain share
Question Marks
Low market share +
growing market
Analyze before further
investment
Cash Cows
High market share + mature
market
Little investment required
Dogs
Low market share +
mature market
Consider sell-off
High Low
Market Share
Market
Growth
High
Low
Boston Consulting Group Matrix