Different View on Emerging Markets - The Big Biologic...
Transcript of Different View on Emerging Markets - The Big Biologic...
Different View on Emerging Markets - The Big Biologic Opportunity
Tom Baker, Principal, IMS P&MA
March 3rd, 2011
March 3rd, 2011
29%22%
12%
7%
7%
6%
31%
53%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
CO
NTRIB
UTIO
N T
O G
RO
WTH
(CO
NST U
S$)
US CanadaEU5 Rest of EuropeJapan S. KoreaPharmerging Tier 1-3 Rest of World
Contribution to global growth, Const US$ 2014 Market share, US$
2005-09 2010-14
IMS projects significant overall pharmaceutical market growth from emerging markets throughout the decade
EU5
14%
Pharmerging
Tiers 1-3
26%
Rest of the
world
6%
Canada
3%
United States
33%
S. Korea
2%
Japan
10%
Rest of
Europe
6%
Source: IMS Health Market Prognosis, Sep 2010
Most manufacturers have increased their exposure
to emerging markets
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In addition, the industry is increasingly focusing on biologics and other high cost therapeutics to drive growth
Source: IMS Health, MIDAS MAT 2010
0
20
40
60
80
100
120
140
160
2001 MAT 9-2010
GLO
BAL S
ALES U
S$ B
N
US EU5 Japan
Tier 1 EMs Tier 2 EMs Tier 3 EMs
ROW
Biologics Global Sales Growth
$136 B
$39 B
Rank Product Annual Sales
10’ (in billions)
1 Enbrel $6.1
2 Remicade $5.9
3 Humira $5.7
4 Avastin $5.5
5 Mabthera $5.0
6 Herceptin $4.1
7 Neulasta $3.8
8 Epogen $3.3
9 Copaxone $2.8
10 Lucentis $2.7
Note: sales are based on Q4_2009 to Q3_2010
Leading Biologics and High-Costs Therapies by Global Sales
Growth by 250%
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However, the realization of the biologic opportunity has been very limited in emerging markets
Biologics Retail Products
Price
Reimbursement
$$$ $
• Fewer products are covered • Even covered, patient co-
pay is higher due to co-insurance or coverage caps
Accessibility
• More products are covered
• Patient co-pay portion is lower
• Only in fewer specialized/ advanced
hospitals in rich, urban areas
• Accessible in more primary care clinics
• Low • High Patient
Affordability
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Using China as an example, the price of most biologics is well in excess of the average income – despite an “emerging middle class”
Pric
e p
er m
on
th (
Ex-M
, $
)
Monthly prices in China ($) – select biologic agents
Source: MIDAS data; Economist Intelligence Unit, IMS analysis
$ 566 $ 961
$ 1,864
$ 2,381 $ 2,717
$ 5,389
$ 627
Humira Avastin Herceptin Rebif Remicade PegIntron Monthly GDP per capita
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As OOP rises as a share of expenditure, total per capita expenditure falls, reinforcing the importance of reimbursement
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0%
OOP as % of total healthcare expenditure
Per c
ap
ita t
ota
l exp
en
dit
ure o
n h
ealt
h (
PP
P)
Median: $645
Median:
33.2%
Source: World Health Organization WHOSIS database; IMS analysis
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In some markets, however, reimbursement and OOP costs may also vary by disease or therapeutic area
*Insurance will only subsidize up to 100 RMB/month for Rx drug
Source: provincial government BMI website
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Beijing Shanghai Guangzhou Hangzhou Wuhan Xi'an Chengdu
Ou
t-o
f-p
ock
et
co
pa
ym
en
t
Hepatitis B Hypercholesteremia Diabetes
55% 55%
100%
25%
30%*
35%
100% 100% 100%
15%
Out-of-pocket Copayments for three different classes
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In addition, limited clinic and hospital accessibility in emerging markets further constrains biologics access
0 10 20 30 40
Brazil
India
China
Turkey
Mexico
Poland
Germany
US
Accessibility Diagnosis Treatment
Source: World Health Organization, WHOSIS database
Physicians per 10,000 population Hospital beds per 10,000 population
0 25 50 75 100
Brazil
India
China
Turkey
Mexico
Poland
Germany
US
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… are Emerging Markets ready for high cost biologics?
Therefore, it is critical to identify the real opportunities for biologics in Emerging Markets
0 20,000 40,000
Philippines
Czech
Thailand
Taiwan
Argentina
S. Africa
Indonesia
Venezuela
Mexico
Turkey
S. Korea
Russia
Brazil
India
China
Note: country list defined by IMS, based on data availability
Pharma Market Value - largely driven by retail products
$mil
Although retail products have been the growth engine in Emerging Markets...
… can these traditionally “large” Emerging Markets
deliver a high return for biologics?
… where are the real opportunities for biologics?
Due to limitations on sales data for many biologics in emerging markets, generating an accurate estimate of the size of the
biologics market in many EMs remains problematic
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To address this, we developed an econometric model to predict biologics market size in emerging markets
Total expenditure on
health as % of GDP
Per capita expenditure on
health
OOP expenditure as
% of private
expenditure on health
Per capita health expenditure as % of
per capita GDP
Private expenditure on health as % of
total on health GDP growth rate
Gini coefficient % population living on < $2
Share of income captured by top 10% population
Biologic Sales
Predictive Econometric Model
Biologic market value in emerging markets
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Our analysis identified three key drivers that are closely correlated to the sales of biologics in EMs
% population living on < $2 per day
Per capita government expenditure on health
Per capita total expenditure on health
Top 3 Drivers
• Low poverty level, often associated with a more urbanized setting,
reflects better infrastructure for biologic dispensing
• Government spending highlights the importance of reimbursement
for biologics
Implication on Biologics
• Level of spending highlights the ability to pay for high cost
products
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The model also reveals a different pattern of biologic opportunities of emerging markets from retail products
0 20,000 40,000
Czech
Philippines
Thailand
Mexico
Turkey
Brazil
S. Korea
India
Russia
China
Venezuela
Indonesia
S. Africa
Argentina
Taiwan
Note: country list defined by IMS, based on data availability
Pharma Market Value - largely driven by retail products
$mil
0 500 1,000 1,500
Slovakia
Bulgaria
Venezuela
S. Korea
Argentina
China
Mexico
Russia
Turkey
Brazil
Taiwan
Thailand
Chile
Colombia
Hong Kong
Biologic Market Value
$mil
Not in top 15 Not in top 15
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This shift in ranking highlighted the different level of attractiveness of biologic markets today
Highly Attractive Moderately Attractive Less Attractive
Ranking of biologic sales increases
(e.g., Latin America, Russia)
Ranking of biologic sales decreases but vol is large
(e.g., China)
Ranking of biologic sales significantly decreases
(e.g., India, Indonesia, Vietnam)
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Highly attractive biologic markets present near-term opportunities for meaningful sales – and may represent more fertile ground than many mature markets, such as the UK
Highly Attractive
Market Characteristics
Urbaniza-tion Level
Gov Spending on HC
Patient Spending on HC
Reimbursement for Biologics
High High Med - High Positive
Manufacturer Strategies
Mature and near-term
win
• These markets reflect a decade or more of market development by Western manufacturers
• Formal reimbursement is generally the most desirable – and feasible – strategy
• However, price concessions and other supplementary
programs may be necessary to support access
Success Stories
• In Brazil, biologic sales have been increasing ~20% annually with western brands penetrating ~80% of the market
• High-cost products achieved access, including Glivec, Erbitux, Humira, Enbrel, Remicade, etc
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The moderately attractive biologic markets represent the battlegrounds that require different strategies
Moderately Attractive
Market Characteristics
Urbaniza-tion Level
Gov Spending on HC
Patient Spending on HC
Reimbursement for Biologics
Med-High Low Low – Med Inconsistent
Manufacturer Strategies
Battle
grounds
• Targeted reimbursement strategies to negotiate sub-national deals with economically-advanced cities or
provinces • Develop a strong brand identity to support private and
public strategies
• Province-by-province reimbursement strategy
Success Stories
• In China, Glivec increased market penetration and achieved regional reimbursement via Patient Assistance Program (GIPAP)
• China became the second-largest market after the US for Xeloda after lengthy yet successful negotiation for access in select regions
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The less attractive biologic markets present limited opportunities today and may require significant investment to grow the market in the long run
Less Attractive
Market Characteristics
Urbaniza-tion Level
Gov Spending on HC
Patient Spending on HC
Reimbursement for Biologics
Low Low Low Negative
Manufacturer Strategies
Near-term return not
warranted
• Despite often large populations, near-term opportunities have been limited due to poor reimbursement and low
affordability relative to per capita incomes • Skimming represents the most common strategy • Markets require significant investment to achieve long-
term returns
Success Stories
• Limited opportunities exist for high cost western brands yet biosimilars or local brands often achieved significant sales
16 ▪ 2011 IMS US Market Access Conference ▪ Emerging Markets
© 2011 Tarun Khanna
Winning in Emerging Markets
IMS 2011 Market Access
Conference New York
March 3, 2011
Tarun Khanna
HBS
© 2011 Tarun Khanna
© 2011 Tarun Khanna
© 2011 Tarun Khanna 20 ▪ 2011 IMS US Market Access Conference ▪ Emerging Markets
© 2011 Tarun Khanna 21 ▪ 2011 IMS US Market Access Conference ▪ Emerging Markets
© 2011 Tarun Khanna
© 2011 Tarun Khanna 23 ▪ 2011 IMS US Market Access Conference ▪ Emerging Markets
© 2011 Tarun Khanna
© 2011 Tarun Khanna
Transaction Facilitator
Credibility Enhancer
Information Analyzer
Aggregator
Adjudicator
© 2011 Tarun Khanna
Is that really Decaf?
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© 2011 Tarun Khanna
For current 16 global biologic performers, most launched in Brazil after
2003; all have secured reimbursement over time
Launch time Product
1992 Neupogen
1997 Rebif
1999 Herceptin
1999 MabThera
2001 Glivec
2001 PegIntron
2001 Remicade
2003 Enbrel
2004 Humira
2005 Baraclude
2005 Xolair
2006 Nexavar
2006 Sutent
2007 Avastin
2007 Erbitux
2007 Orencia
Timeline: Cumulative availability of 16
select biologics in Brazil
16
13
11
98
77
44
99 07 03 04 05 00 06 01 02
These high-cost
products achieved
reimbursement under
CEAF or APACs*
*CEAF is the high cost medicines list managed by the national health insurance plan;
APAC (Authorization for High Complexity Treatments) operates similarly as DRG in the US
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© 2011 Tarun Khanna
Brazil China Costa Rica
Research Charity Press &
Institute Foundation Public Opinion
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© 2011 Tarun Khanna
29
Health care in Brazil
Core Actors
1. Ministry of Health
2. CENEPI – coordination of national epidemiological surveillance
system and collection of data on incidence of various diseases
Peripheral Actors
1. Fiocruz – production of vaccines, research, education, field services
2. Anvisa - sanitary surveillance
3. Hemobras – production of blood components
4. INTO – treatment of patients with orthopedic trauma
5. ANS – health insurance regulation
6. INCA – treatment of cancer patients
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© 2011 Tarun Khanna
30
Ministry of Health
CENEPI
Fiocruz
Anvisa
ANS
Hemobras
INTO
INCA
VETO-POINTS CORE
Genzyme
Exchange resources
(transfer of employees)
Exchange information on disease incidence
PERIPHERY OF INFLUENCE
Genzyme in Brazil
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© 2011 Tarun Khanna
31
Health care in China
Core Actors
1. State food and drug administration (SFDA) - registration of
drugs and medical devices
2. Ministry of health - pricing of medical services
3. Development and reform commission – Tendering drugs and
medical devices
4. Human resource and social/labor security agency (HRSLA) –
preparing catalogue of drugs eligible for government
reimbursement.
Peripheral Actors
1. Chinese Charity federation (CCF) - government endorsed
‘NGO’ affiliated to ministry of civil affairs
2. State run hospitals 31 ▪ 2011 IMS US Market Access Conference ▪ Emerging Markets
© 2011 Tarun Khanna
32
Food & Drug Authority
Ministry of Health
HR & Social/ Labor security agency
Dev. & Reform Commission
Chinese Charity Foundation
Hospitals
Genzyme in China
PERIPHERY OF INFLUENCE
VETO-POINTS CORE
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33 ▪ 2011 IMS US Market Access Conference ▪ Emerging Markets
© 2011 Tarun Khanna
34
Ministry of Health
National Ombudsman
Constitutional Court
Genzyme in Costa Rica
PERIPHERY OF INFLUENCE
VETO-POINTS CORE
Committee of doctors in Children’s hospital
Genzyme
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© 2011 Tarun Khanna
Courtesy: Juan Alcacer, HBS
35 ▪ 2011 IMS US Market Access Conference ▪ Emerging Markets
© 2011 Tarun Khanna Courtesy: Juan Alcacer, HBS
© 2011 Tarun Khanna Courtesy: Juan Alcacer, HBS
© 2011 Tarun Khanna Courtesy: Juan Alcacer, HBS
© 2011 Tarun Khanna 39 ▪ 2011 IMS US Market Access Conference ▪ Emerging Markets
© 2011 Tarun Khanna
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-00
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l-0
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v-0
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n-0
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-05
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r-0
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Wilmar
Olam
Bunge
ADM
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g-0
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r-08
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g-0
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r-1
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Comp. Brasileira
Distribuicao
Wal Mart
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Qingdao Haier
Whirlpool
Maytag
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© 2011 Tarun Khanna
Winning in Emerging Markets
• Mapping the institutional voids provides a template
for understanding the role that an organization has
played, and the evolving roles it will play going
forward.
• Entrepreneurs have an opportunity to shape the
institutional context, preferably in conjunction with
the state.
41 ▪ 2011 IMS US Market Access Conference ▪ Emerging Markets
© 2011 Tarun Khanna
© 2011 Tarun Khanna