GenericsGenericsand Generic Pricingand Generic Pricing

Charles Joynson

Topics to be coveredTopics to be covered

• Data Sources• Price Decay• Price Bounces• Seasonality• Generic Company Strategy• Generic Data• Exchange Rate• Brand Equalisation• Retail vs. Dispensing• Forecasting• Evergreening

Data SourcesData Sources

Internet Suppliers

Generic Manufacturers

Wholesalers

Ethical Manufacturers

Importers

Dispensing GPs

RetailPharmacy

Price DecayPrice Decay

0

5

10

15

20

25

30

35

40

Feb-0

3

Mar

-03

Apr-0

3

May

-03

Jun-

03

Jul-0

3

Aug-0

3

Sep-0

3

Oct-03

Nov-0

3

Dec-0

3

Jan-

04

Feb-0

4

Mar

-04

Apr-0

4

May

-04

Jun-

04

Jul-0

4

Aug-0

4

Sep-0

4

Oct-04

Nov-0

4

Dec-0

4

Jan-

05

Feb-0

5

Mar

-05

Apr-0

5

May

-05

Jun-

05

Jul-0

5

Aug-0

5

Month

£

Other ProductsOther Products

Price BouncesPrice Bounces

Monthly Average PercentAmoxicillin Caps 250mg 21

0%

20%

40%

60%

80%

100%

120%

140%

160%

Aug

-00

Dec

-00

Apr

-01

Aug

-01

Dec

-01

Apr

-02

Aug

-02

Dec

-02

Apr

-03

Aug

-03

Dec

-03

Apr

-04

Aug

-04

Dec

-04

Apr

-05

Aug

-05

Dec

-05

Apr

-06

Aug

-06

Dec

-06

Month

%

SeasonalitySeasonality

Seasonality - OmeprazoleSeasonality - Omeprazole

Oct 02- Sep 06

Seasonality - CiprofloxacinSeasonality - Ciprofloxacin

Jan 03 – Dec 05

Seasonality - LevothyroxineSeasonality - Levothyroxine

Levothyroxine Tabs 100mcg 28

0.9000

0.9200

0.9400

0.9600

0.9800

1.0000

1.0200

January

Febru

ary

Marc

h

April

May

June

July

August

Septe

mber

Octo

ber

Novem

ber

Decem

ber

Oct 00-Sep 06

Seasonality - AtenololSeasonality - Atenolol

Atenolol Tabs 50mg 28

0.90000.92000.94000.96000.98001.00001.02001.04001.06001.08001.1000

January

Febru

ary

Marc

h

April

May

June

July

August

Septe

mber

Octo

ber

Novem

ber

Decem

ber

Oct 00-Sep 06

Jan 01- Dec 05

Seasonality - SimvastatinSeasonality - Simvastatin

Simvastatin Tabs 80mg 28

0.9600

0.9800

1.0000

1.0200

1.0400

January

Febru

ary

Marc

h

April

May

June

July

August

Septe

mber

Octo

ber

Novem

ber

Decem

ber

Oct 03-Sep 06

Seasonality - LisinoprilSeasonality - Lisinopril

Lisinopril Tabs 5mg 28

0.9000

0.9200

0.9400

0.9600

0.9800

1.0000

1.0200

1.0400

1.0600

January

Febru

ary

Marc

h

April

May

June

July

August

Septe

mber

Octo

ber

Novem

ber

Decem

ber

Jan 01 – Dec 05

Generic Company StrategyGeneric Company Strategy

Growth in numbers of manufacturers

0%

50%

100%

150%

200%

250%

300%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Month after generic launch

%

Generic DataGeneric Data

Exchange RateExchange Rate

Brand EqualisationBrand Equalisation

Retail vs. DispensingRetail vs. Dispensing

ForecastingForecasting

How do companies forecast How do companies forecast generic prices?generic prices?

Some just react to market Some just react to market changeschanges

Fitting trends to pricesFitting trends to prices

But reality was differentBut reality was different

Same Therapeutic CatSame Therapeutic CatSelective Serotonin Re-Uptake Inhibitors

Month after launch

Citalopram Tabs 20mg28Paroxetine Tabs 20mg30

Same TherapeuticCategory,

But DifferentDecay Rates

Selective Serotonin Re-Uptake Inhibitors

Month after launch

Citalopram Tabs 20mg 28

Paroxetine Tabs 20mg 30

Selective Serotonin Re-Uptake Inhibitors

Same Market ValueSame Market Value£450 - £550 000

Months after launch

Quinapril Tabs 10mg 28

Nicardipine Caps 20mg 56

Same Value,But DifferentDecay Rates

£450,000 - £550,000

£450 - £550 000

Months after launch

Quinapril Tabs 10mg 28

Nicardipine Caps 20mg 56

Same moleculeSame moleculeOne Molecule But NO Uniformity!

Fluconazole Caps 150mg 1

Fluconazole Caps 200mg 7

Fluconazole Caps 50mg 7

Same MoleculeBut

No Uniformity

One Molecule But NO Uniformity!

Fluconazole Caps 150mg 1

Fluconazole Caps 200mg 7

Fluconazole Caps 50mg 7

Fluconazole Caps

PatternsPatterns & Relationships& Relationships

£ ?Generic Price

Volume

Market Share

Value

Brand Generic Spilt

No of Manufacturers

Reimbursement

Statisticians found each Statisticians found each product can be modelledproduct can be modelled

0.000

2.000

4.000

6.000

8.000

10.000

12.000

14.000

16.000

18.000

Sep-0

0

Mar

-01

Sep-0

1

Mar

-02

Sep-0

2

Mar

-03

Sep-0

3

Mar

-04

Sep-0

4

Mar

-05

Sep-0

5

Mar

-06

Simvastatin Tabs10mg 28

Predicted

0.000

2.000

4.000

6.000

8.000

10.000

12.000

14.000

May-0

2Sep

-02

Jan-

03May

-03

Sep-0

3Ja

n-04

May-0

4Sep

-04

Jan-

05May

-05

Sep-0

5Ja

n-06

Omeprazole Caps 40mg 7

Predicted

Multiple models were produced,Multiple models were produced,one for each productone for each product

0.000

5.000

10.000

15.000

20.000

25.000

Jun-

04

Aug-0

4

Oct-0

4

Dec

-04

Feb-05

Apr-0

5

Jun-

05

Aug-0

5

Oct-0

5

Dec

-05

Feb-06

Apr-0

6

A1002

Predicted

0.000

5.000

10.000

15.000

20.000

25.000

30.000

Mar

-02

Jul-0

2

Nov

-02

Mar

-03

Jul-0

3

Nov

-03

Mar-04

Jul-04

Nov

-04

Mar-05

Jul-05

Nov

-05

Mar

-06

A1021

Predicted

0

1

2

3

4

5

6

May

-04

Jul-0

4

Sep-0

4

Nov

-04

Jan-

05

Mar

-05

May

-05

Jul-0

5

Sep-0

5

Nov

-05

Jan-

06

Mar

-06

A1010

Predicted

0.000

1.000

2.000

3.000

4.000

5.000

6.000

7.000

Jan-

04

Mar

-04

May

-04

Jul-0

4

Sep

-04

Nov

-04

Jan-

05

Mar

-05

May

-05

Jul-0

5

Sep

-05

Nov

-05

Jan-

06

Mar

-06

A1011

Predicted

0

1

2

3

4

5

6

7

8

9A

ug-0

0

Dec-0

0

Apr-

01

Aug-0

1

Dec-0

1

Apr-

02

Aug-0

2

Dec-0

2

Apr-

03

Aug-0

3

Dec-0

3

Apr-

04

Aug-0

4

Dec-0

4

Apr-

05

Aug-0

5

Dec-0

5

Apr-

06

A1012

Predicted

0

0.5

1

1.5

2

2.5

3

Mar-02

Jul-02

Nov

-02

Mar-03

Jul-03

Nov

-03

Mar-04

Jul-04

Nov

-04

Mar-05

Jul-05

Nov

-05

Mar-06

A1013

Predicted

0

1

2

3

4

5

6

7

Ma

r-0

2

Ju

n-0

2

Se

p-0

2

De

c-0

2

Ma

r-0

3

Ju

n-0

3

Se

p-0

3

De

c-0

3

Ma

r-0

4

Ju

n-0

4

Se

p-0

4

De

c-0

4

Ma

r-0

5

Ju

n-0

5

Se

p-0

5

De

c-0

5

Ma

r-0

6

A1014

Predicted

0.000

2.000

4.000

6.000

8.000

10.000

12.000

14.000

Dec-0

0

Apr-

01

Aug-0

1

Dec-0

1

Apr-

02

Aug-0

2

Dec-0

2

Apr-

03

Aug-0

3

Dec-0

3

Apr-

04

Aug-0

4

Dec-0

4

Apr-

05

Aug-0

5

Dec-0

5

Apr-

06

A1015

Predicted

0.000

2.000

4.000

6.000

8.000

10.000

12.000

14.000

May-0

2Sep

-02

Jan-

03May

-03

Sep-0

3Ja

n-04

May-0

4Sep

-04

Jan-

05May

-05

Sep-0

5Ja

n-06

Omeprazole Caps 40mg 7

Predicted

Each with its own formulaEach with its own formula

0.000

5.000

10.000

15.000

20.000

25.000

Jun-

04

Aug-0

4

Oct-0

4

Dec

-04

Feb-05

Apr-0

5

Jun-

05

Aug-0

5

Oct-0

5

Dec

-05

Feb-06

Apr-0

6

A1002

Predicted

0.000

5.000

10.000

15.000

20.000

25.000

30.000

Mar

-02

Jul-0

2

Nov

-02

Mar

-03

Jul-0

3

Nov

-03

Mar-04

Jul-04

Nov

-04

Mar-05

Jul-05

Nov

-05

Mar

-06

A1021

Predicted

0

1

2

3

4

5

6

May

-04

Jul-0

4

Sep-0

4

Nov

-04

Jan-

05

Mar

-05

May

-05

Jul-0

5

Sep-0

5

Nov

-05

Jan-

06

Mar

-06

A1010

Predicted

0.000

1.000

2.000

3.000

4.000

5.000

6.000

7.000

Jan-

04

Mar

-04

May

-04

Jul-0

4

Sep

-04

Nov

-04

Jan-

05

Mar

-05

May

-05

Jul-0

5

Sep

-05

Nov

-05

Jan-

06

Mar

-06

A1011

Predicted

0

1

2

3

4

5

6

7

8

9A

ug-0

0

Dec-0

0

Apr-

01

Aug-0

1

Dec-0

1

Apr-

02

Aug-0

2

Dec-0

2

Apr-

03

Aug-0

3

Dec-0

3

Apr-

04

Aug-0

4

Dec-0

4

Apr-

05

Aug-0

5

Dec-0

5

Apr-

06

A1012

Predicted

0

0.5

1

1.5

2

2.5

3

Mar-02

Jul-02

Nov

-02

Mar-03

Jul-03

Nov

-03

Mar-04

Jul-04

Nov

-04

Mar-05

Jul-05

Nov

-05

Mar-06

A1013

Predicted

0

1

2

3

4

5

6

7

Ma

r-0

2

Ju

n-0

2

Se

p-0

2

De

c-0

2

Ma

r-0

3

Ju

n-0

3

Se

p-0

3

De

c-0

3

Ma

r-0

4

Ju

n-0

4

Se

p-0

4

De

c-0

4

Ma

r-0

5

Ju

n-0

5

Se

p-0

5

De

c-0

5

Ma

r-0

6

A1014

Predicted

0.000

2.000

4.000

6.000

8.000

10.000

12.000

14.000

Dec-0

0

Apr-

01

Aug-0

1

Dec-0

1

Apr-

02

Aug-0

2

Dec-0

2

Apr-

03

Aug-0

3

Dec-0

3

Apr-

04

Aug-0

4

Dec-0

4

Apr-

05

Aug-0

5

Dec-0

5

Apr-

06

A1015

Predicted

Statistical ModelsStatistical Models

• 2005, 2007 & 2008

• Linear dynamic models

• One for ourselves and two for clients

EvergreeningEvergreening

Many ThanksMany Thanks