Strategic Generic Portfolio Selection May 12th 2010

Strategic Portfolio Planning
for Generic Drugs
Asa Cox
Founder genericlicensing.com
May 12, 2010

About me
- 13 years in generics
Manufacturing, Development, Licensing, Consulting
- International projects
- Online networker
- Web business 2.0 believer

Topics
- Overview of typical generic portfolio’s
- Specifics of portfolio planning for generics
- Why strategic planning is important for generic companies
- Introduction to sourcing generic products from 3rd parties
Aim: To understand why strategy and

planning for generic portfolio’s is required!
Overview of typical generic portfolio’s
- Does typical exist?!

Country variables:
Demographic
Population
Market development
Local players
Drug provision policy
Generic incentives
Economy
Does typical exist?!

Typical category portfolio’s?
e.g United Kingdom


e.g United Kingdom
Full : Teva, Actavis, Sandoz, Mylan


e.g United Kingdom
Full : Teva, Actavis, Sandoz, Mylan
Profit: Arrow, Ratiopharm, Winthrop, Stada


e.g United Kingdom
Full : Teva, Actavis, Sandoz, Mylan,
Focused: Rosemont, Hospira, Perrigo


e.g United Kingdom
Full : Teva, Actavis, Sandoz, Mylan,
Focused: Rosemont, Hospira, Perrigo
Manufacturing: Cipla, Ranbaxy, Wockhardt, Aurobindo...

Specifics of portfolio planning for generics
If you were creating a portfolio from scratch... where would you start?!
Cash vs Profit
Business plan/strategy
Cost of entry
Available technology
Risk of competition
Supply chain
Cash vs Profit
IMS top down
Value or volume
Level of competition
- Same data as everyone!
Manufacturing capability
Cash vs Profit
IMS top down
Patent expiries
Originator tactics
Timing
- First in reaps rewards
At risk vs late to the party
- Legal costs & expertise
COGS vs ASP
- Stock vs cash
- Loss vs market share
Cash vs Profit
IMS top down
Patent expiries
Dose forms
Biologics
Capacity
Dedicated units
Supply chain
Cost
Cash vs Profit
IMS top down
Patent expiries
Marketing & Distribution
Rx or OTC
- Branded or Private Label
- Standard or Generic+
Hospital or retail
- Wholesale, Multiples, Independent, Online
Positioning
- Service, Price, Depth, Speciality, Product Type
Cash vs Profit
IMS top down
Patent expiries
Marketing & Distribution
Copy Competition
Which one?!
Response
Attainability
Using IMS – Top Generics
Top 200
- All over $400m
- Very long tail
1. Fentanyl
Launched: January 2005, 2008 sales: $800 million
Branded equivalent: Duragesic, by Janssen 2008 sales of $250 million (from $1.1 billion)
2. Amlodipine besylate and benazepril hydrochloride*

Launched: July 2007, 2008 sales: $779 million
Branded equivalent: Norvasc, by Pfizer 2008 sales <$150m ($1.5 billion)
3. Metoprolol succinate
Launched: May 2008, 2008 sales: $675 million
Branded equivalent: Toprol, by AstraZeneca 2008 sales <$150m ($807 million)
4. Lamotrigine
Launched: February 2005, 2008 sales: $671 million
Branded equivalent: Lamictal, by GlaxoSmithKline 2008 sales $1.6 billion (peak)
5. Risperidone
Launched: September 2008, 2008 sales: $610 million,
Branded equivalent: Risperdal, by Janssen, 2008 sales $1.5b ($2.1 billion)
6. Omeprazole*
Launched: July 2008, 2008 sales: $609.8 million
Branded equivalent: Prilosec, by AstraZeneca, 2008 sales $185m ($1.1 billion)
7. Azithromycin
Launched: November 2005, 2008 sales: $599 million,
Branded equivalent: Zithromax, by Pfizer, 2008 sales <$150m ($1.7 billion)
8. Bupropion
Launched: December 2006, 2008 sales: $521 million
Branded equivalent: Wellbutrin, by Biovail, 2008 sales $579 million ($1.7 billion)
Why difference in generic success?

Brand tactics
Price match
Alternative formulations
Effective anti-generic messages
Doctor perspective
Long term use
Activity limits
EXAMPLE: OMEPRAZOLE – US vs UK
US - $300m value erosion (25%)

UK -
OMEPRAZOLE – UK (£25 to £1)
Targeting patent expiry of a blockbuster?!
CLOPIDOGREL/PLAVIX
CLOPIDOGREL/PLAVIX
SUMMARY:
Commercial strategy
Profit or volume
Market strategy
Distribution channels
Classification type
Product type
Legal & Regulatory expertise
Patent expiry vs long tail
Why strategic planning is important
2009 global generic products generated
$83bn (€59.8bn) in audited sales (IMS)
2009 global generic products generated $83bn
(€59.8bn) in audited sales (IMS)
BCC estimates the global

market to reach $129.3bn
by 2014, representing a
In the $59bn global generics
9% annual growth rate. market in developed
countries, Japan only
accounts for 6%, while the US
holds 42%, and five major
European national markets
account for 23%.
2009 global generic products generated $83bn
(€59.8bn) in audited sales, according to IMS.
BCC estimates the global 29%

market to reach $129.3bn
by 2014, representing a
In the $59bn global generics
9% annual growth rate. market in developed
countries, Japan only
accounts for 6%, while the US
$37.5bn holds 42%, and five major
Undeveloped markets European national markets
account for 23%.
Government debt as % of GDP (2009)
IMS estimates that sales from the top 10 US generic players grew
at an average of 13.2% in 2009
The big are getting bigger!

The big can get bigger still!
"Only those who are agile and strong will survive in this business,"
said Teva president and CEO Shlomo Yanai during the company's
investor meeting last month in Jerusalem.
"About 15% of our business will come from acquisitions. We are

taking the necessary steps and building our infrastructure by getting
assets and know-how either internally, through acquisition or
partnerships."
Teva estimates its 2009 global sales at $13.9bn, of which 70% are from
generic products. Yanai is targeting $31bn in sales by 2015, of which
70% will still come from generics.
Teva estimates its 2009 global sales at

$13.9bn, of which 70% are from generic
products. Yanai is targeting $31bn in sales
by 2015, of which 70% will still come from
generics.
"Only those who

are agile and
strong will survive
in this business,"
Biosimilars/follow on biologics
Approximately one-third of all

newly approved drugs will be
biologics. (2010) Double-digit growth of 20
percent, they generated
Today, total sales of off-patent $95 billion of sales
biologics amount to amounting to
approximately $20 billion approximately 15 percent
of global pharma revenues.
The average costs of biologic drug treatment is about $72,000/year (compared to about
$1,000 for conventional "small molecule" pharmaceuticals)
Biosimilars/follow on biologics
The patent cliff: 2010-15
Of total pharmaceutical sales in 2008 of $643.6bn, a

staggering 30% were derived from patented
products which are “at risk” from generic
competition within five years, almost double the
percentage at risk in 2000 of 17%. Whilst the
industry has already started its slide, the patent
cliff becomes seriously precipitous in 2010 when
9%, or $57.5bn, of total market sales are expected
to lose patent protection within the space of 12
months
The world's top

drugmakers face the
loss of $140 billion in
annual sales by 2016
(of $700bn 2008)
Inhalation market
Approximately 50% of the current $32 billion global market segment for asthma and
COPD medicines is expected to lose patent protection by the end of 2016, according to
industry analysts IMS Health.
The asthma and COPD market segment is projected to grow significantly faster than
the pharmaceutical market, driven by factors including a significant level of under-
diagnosis, and Novartis/Sandoz will hope this acquisition will gain them a large market
share in the future.
Sandoz has signed a definitive agreement to acquire Oriel
Therapeutics, a privately held US pharmaceuticals company,
gaining exclusive rights to a portfolio of generic drug
candidates and related technologies targeting medicines in
the inhalable respiratory drug market.
Holzkirchen, Germany, April 19, 2010
"There is still room to grow in
generics," says Yanai (TEVA).
"Almost $150bn of branded drugs
are going to be off patent in the next
five years. This does not include the
expiration of biologics, which is an
additional $50bn potential.”
Whats the big pharma plan?
- More investment in R&D?

- Clever anti-generic tactics?
- Switch out before expiry strategies?
- Increase legal spend on ever-greening patents?
- Big budget advertising in BRIC markets?
The patent cliff: 2010-15. Whats the big pharma plan?
Astra Zeneca announced today that it has agreed to market 18 of Torrent

Pharmaceuticals Ltd.’s branded generic drugs in 9 emerging markets, marking the
U.K. drugmaker’s first generic-drug partnership.
Unlike some its competitors, Astra Zeneca is very vulnerable to generic competition as
many of its best selling products such as Nexium for ulcers, the antipsychotic
Seroquel and Crestor for cholesterol. are near patent expiry. Industry analysts expect
the company to lose as much as 25% of its sales revenue to generic encroachment by
2014.
Sanofi-Aventis bought Zentiva NV of the Czech Republic, Helvepharm AG of

Switzerland, Medley SA of Brazil and Laboratorios Kendrick SA of Mexico to
bolster its branded generics portfolio.
“Generics are an important part of the health

care system. ????? believes that when there is a
direct generic equivalent to the prescribed brand
name drug, it should be used provided the
doctor agrees it is best for the patient.”
“Generics are an important part of the health

care system. Pfizer believes that when there is a
direct generic equivalent to the prescribed brand
name drug, it should be used provided the
doctor agrees it is best for the patient.”
http://www.pfizer.com/about/public_policy/generics.jsp
NEW YORK, March 18 (Reuters) - Pfizer Inc (PFE.N) may still be eager to buy generic
drugmakers, after being outbid for Germany's Ratiopharm in an effort to shore up revenue as
it braces for evaporating sales of its blockbuster Lipitor cholesterol treatment.
Pfizer’s expanded agreements with Aurobindo Pharma Ltd. will grow its generic product
portfolio within emerging markets to reflect the diverse and often unique market dynamics
and commercial interests of more than 70 countries.
Pfizer entered into agreements with Claris Lifesciences Ltd. (“Claris”) to commercialize
sterile injectable medicines after the products are no longer patent protected, and have
lost market exclusivity in North America, Europe, Australia and New Zealand. The Claris
agreements advance Pfizer’s Established Products strategy, which focuses on the
commercialization of products where market exclusivity has been lost. Pfizer’s global
annual sales of established products are approximately $10 billion.
Pfizer’s global annual sales of established products are approximately $10 billion (?!)
Last year, GlaxoSmithKline entered into joint ventures with the generic manufacturers Dr.
Reddy’s Laboratories (India) and Aspen Pharmacare Ltd (South Africa).
Also, the company paid $246.5 million for Bristol-Myers Squibb’s Pakistan and Egypt
drug units and acquired UCB’s drug portfolio in Africa, the Middle East, Asia Pacific and
Latin America for $702 million; clearing signaling its intention to more aggressively
pursue emerging global markets.
SUMMARY: What is the future going to look like?!
5 year high growth window

Major player strength & depth
Biologics
Big pharma entering generics
Introduction to sourcing from 3rd parties
Creating the portfolio – why look outside
- Manufacturing constraints
- Development capability
- Time to revenue
- Financial status
- Product mix
- Country/region specific products
- Tactical & strategic relationships
Strong and agile Teva in-licenses 30% of products!

Creating the portfolio – where to look
- Emerging markets
- EU ascension states
- High Tech Far East (Korea, Taiwan)
- Well developed Latin America
- Online
- New databases
- Forums and discussion groups
- Virtual partnering events
Creating the portfolio – considerations
- Partner Selection
- Commercial relationship model
- Quality and consistency of supply
- Long term cost position
- Partner’s ambitions
- Beware…
- Regulatory expertise
- Number of dossiers/licenses sold
- IP ownership and supply chain flexibility
Summary
- What type of portfolio do you want?
- Selecting generic products isn’t easy
- Why strategic planning is important for generic companies
- The other option; in-license & partner
That is why strategy and planning for

generic portfolio’s is required!

Strategic Generic Portfolio Selection May 12th 2010

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Strategic Portfolio Planning

for Generic Drugs

May 12, 2010

- Web business 2.0 believer

- Overview of typical generic portfolio’s

- Specifics of portfolio planning for generics

- Why strategic planning is important for generic companies

- Introduction to sourcing generic products from 3rd parties

Aim: To understand why strategy and

- Does typical exist?!

Does typical exist?!

e.g United Kingdom

Does typical exist?!

e.g United Kingdom

Full : Teva, Actavis, Sandoz, Mylan

Does typical exist?!

e.g United Kingdom

Full : Teva, Actavis, Sandoz, Mylan

Profit: Arrow, Ratiopharm, Winthrop, Stada

Does typical exist?!

e.g United Kingdom

Full : Teva, Actavis, Sandoz, Mylan,

Profit: Arrow, Ratiopharm, Winthrop, Stada

Focused: Rosemont, Hospira, Perrigo

Does typical exist?!

e.g United Kingdom

Full : Teva, Actavis, Sandoz, Mylan,

Profit: Arrow, Ratiopharm, Winthrop, Stada

Focused: Rosemont, Hospira, Perrigo

Manufacturing: Cipla, Ranbaxy, Wockhardt, Aurobindo...

2. Amlodipine besylate and benazepril hydrochloride*

Why difference in generic success?

US - $300m value erosion (25%)

BCC estimates the global

BCC estimates the global 29%

The big are getting bigger!

"About 15% of our business will come from acquisitions. We are

Teva estimates its 2009 global sales at

"Only those who

Approximately one-third of all

Of total pharmaceutical sales in 2008 of $643.6bn, a

The world's top

Whats the big pharma plan?

- More investment in R&D?

Astra Zeneca announced today that it has agreed to market 18 of Torrent

Sanofi-Aventis bought Zentiva NV of the Czech Republic, Helvepharm AG of

“Generics are an important part of the health

“Generics are an important part of the health

5 year high growth window

Strong and agile Teva in-licenses 30% of products!

- Selecting generic products isn’t easy

- Why strategic planning is important for generic companies

- The other option; in-license & partner

That is why strategy and planning for

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