a blurring of the lines? is "innovator" or "generic" becoming
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A Blurring Of The Lines?Is “innovator” or “generic” becoming harder to discern?
MARCH 2008
Mike Chace-Ortiz, Director, Product Strategy, TS API IntelligenceSource: THOMSON REUTERS RESEARCH © THOMSON REUTERS
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The word on the street
• The distinction between innovators and generics is narrowing
• Innovators, hungry for profits and struggling against poor pipelines are fighting fire with fire and plunging into generics
• Generics, fighting a hypercompetitive, low margin business and too few patent expiries are being forced to redeploy talented scientific resources into novel R&D
Fact or myth? Following the money…
• To what extent are generics investing in innovative R&D?
• Are brand companies investing in generics?
• What brand revenue do generic companies raise?
• What generic revenues to innovators raise?
• What is the state of novel pipelines at generic companies?
• How does R&D spend compare between innovators and generics?
Where is the generic industry’s money being invested?
Just three short years ago…
Source: Thomson Reuters Research©THOMSON REUTERS
Global IsraelTeva /IVAX 5500
Global AustriaSandoz/Hexal 4600
Global GermanyMerck KGaA 2200
EMEA SloveniaKrka 600
US USMylan 1350
EU Germanyratiopharm 2000
Global IndiaRanbaxy 1150
EU+US GermanySTADA 1200
EMEA CzechZentiva 475
US USPerrigo/Agis 1400
Global CanadaApotex 1000
US USWatson/Andrx 2550
Global IcelandActavis/Pliva 1550
EMEA HungaryGedeon Richter 600
Focus HQSales $M
Global USHospira 2500
US USURL Mutual 500
US USBarr 1050
US USEndo 650
Pending
Pending
2005
Approximately $40bn later…
7500Teva 8831
8700Sandoz 5923
?ratiopharm 2245
?Covidien 1300
2300Barr 1832
?Sigma 2090
1310Actavis 1667
1156STADA 1830
?Krka 960
1900Watson 1980
580Dr Reddy’s 1375
7340Mylan 3810
675Zentiva 1994
1300Gedeon Richter 1359
CumulativeM&A SpendSales $M
2100Hospira 2690
?Apotex 1000
818Perrigo 1490
420Ranbaxy 1360
2008
Source: Thomson Reuters Research©THOMSON REUTERS
M&A among generics has spread quickly to lower tiers
Acquirer Spend TargetSun (India) $450M Taro (proposed)
Ache (Brazil) $200M* Biosintetica
Wockhardt (India) $450M Morton Grove, Pinewood, Negma
Genepharm (Greece) $65M Douglas
Jubilant (India) $20M PSI
Nicholas Piramal (India) $18M Avecia Custom Synthesis Unit
Orchid (India) $4M Bexel US
Alembic (India) $37M Dabur’s non-oncology portfolio
Biocon (India) $43M AxiCorp GmbH (70% stake)
* Estimated figureSource: Thomson Reuters Research©THOMSON REUTERS
The impact of global generic consolidation: Australia
2005 Generic Market US$550M
Source: Australian Gov’t, IMS Health
Australian generics: 2008
Merged with Sigma
Acquired by Mylan
Acquired by Genepharm
Acquired by Apotex
Acquired by Novartis
Acquired by Hospira
Behind the big deals: biogenerics quietly pursued• Teva Acquires Cogenesys, Tianjin Hualida
• Hospira Acquires Bresagen, alliance with STADA
• STADA Establishes Bioceuticals
• Barr Acquires Pliva
• Apotex Continued investment in Cangene
• Where are Mylan, Watson and others?
Source: Thomson Reuters Research©THOMSON REUTERS
How is the US generic branded industry faring?
Company Brand Sales
Key Branded Products
Teva $1700M COPAXONE, AZILECT
Watson $370M OXYTROL, ANDRODERM
Barr $300M SEASONIQUE, ENJUVIA
Mylan $90M Out-licensed nebivolol, divested branded business
Covidien $60M RESTORIL, TOFRANIL
Par $50M MEGESTROL, span out Strativa Pharma for R&D
Lupin $30M SUPRAX
Ranbaxy $2M RIOMET
APP - Separated from Abraxis BioscienceSource: Thomson Reuters Research©THOMSON REUTERS
Generic investment in novel R&D
0
10
20
30
40
50
60Te
vaHo
spira
Wat
son
Barr
Dr R
eddy
'sRa
nbax
yGe
deon
Apot
ex Par
Glen
mar
kNP
ILW
ockh
ardt
Torre
ntBi
ocon
Dabu
rLu
pin
Sun P
harm
aOr
chid
Review
Phase III
Phase II
Phase I
Pre-Clinical
Source: Thomson Pharma © THOMSON REUTERS
How much are generics spending on novel R&D?
Company Novel R&D Programs
R&D Spend
Average Spend/Program
Teva 51 $500M $9.8M
Hospira 6 $161M $26.8M
Watson 4 $47M $11.8M
Barr 18 $140M $7.8M
Dr Reddy’s 8 $65M $8.1M
Ranbaxy 6 $110M $18.3M
Gedeon Richter 16 $65M $4M
Apotex 7 $50M $21.4M
Par 3 $12M $4M
Glenmark 9 $10M $1.1M
NPIL 13 $32M $2.4M
Wockhardt 6 $17M $2.8M
Torrent 7 $14M $2M
Dabur 9 $10M $1.1M
Lupin 6 $35M $5.8M
Source: Thomson Reuters Research©THOMSON REUTERS
DRL R&D ProfileAcquires US dermatology company, Trigenesis for $11M
Establishes Perlecan and invests $8M to develop 4 promising candidates
Signs deal to co-develop DRF2593 (balaglitazone) for Diabetes with Rheoscience
Signs deal to co-develop DRF1042 for oncology indications with ClinTec International
Signs deal with Ceragenix for novel dermatology compound
Signs deal with Sygnis for development of AX200 biologic API
Signs deal with Argenta to co-develop COPD candidates
250 R&D scientists
R&D Spend $65M
2004
2008
Source: Thomson Pharma © THOMSON REUTERS
Glenmark R&D ProfileEstablishes Swiss subsidiary for biologics development
Out-licenses melogliptin to Merck KGaA for $31M (since terminated)
Sells rights to US development of oglemilast to Forest for $14M
Sells rights to Japanese development of oglemilast to Teijin
Licenses Napo’s crofelemer for development in India for $1M
Eli Lilly acquires TRPV12 antagonist portfolio for $45M
Dyax to identify antibodies on Glenmark targets
150 R&D scientists
R&D Spend $10M
Out-license revenues $35M
2004
2008
Source: Thomson Pharma © THOMSON REUTERS
But are pipelines of ~10 molecules sustainable?
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Year of entry into phase
Su
cce
ss r
ate
'First pivotal dose' to 'First submission'
'First submission' to 'First launch'
'First human dose' to 'First patient dose'
'First patient dose' to 'First pivotal dose'
'First toxicity dose' to 'First human dose'
Source: CMR International © THOMSON REUTERS
Generic R&D: balanced but sustainable?
• Well-balanced portfolios
• Garnering interest (and revenues) from out-licensing
• In-licensing and applying sophisticated technologies to identify new candidates
• Many de-risking by spinning-off R&D (DRL, Sun, Wockhardt)
• Can pipeline productivity overcome success rates?
• Are pipelines large enough?
• Is R&D spend sufficient for large-scale clinical development?
BUT
Where are innovators spending their money?
Innovators: also busy with consolidationCompany M&A Spend Targets
J&J $2593M Pfizer Consumer, Cordis, Animas, TransForm
Pfizer $2480M CoVX, Coley, Biorexis, Rinat, Vicuron
GSK $4470M Domantis, Praecis, Pliva Res, CNS, ID
Novartis $13170M Chiron, Eon/Hexal, NeuTech
Sanofi-Aventis $520M Zentiva (25% stake)
Roche $4260M Ventana, BioVeris, NimbleGen, Curagen
AZ $16390M Medimmune, CAT, Arrow, Kudos, Atlantis
Merck & Co. $1950M Sirna, Novacardia, Glycofi, Abmaxis
Abbott $3740M Kos, Isis
Wyeth 0 -
Bayer 0 -Source: TS Research
R&D spend continues to mount
J&J 7125
Pfizer 7599
Sanofi 4537
Abbott 2255
Roche 6873
Bayer 3032
Wyeth 3109
Merck & Co 4783
GSK 6772
AZ 4042
R&D Spend$M
Novartis 6430
BMS 3067
Amgen 3366
Eli Lilly 3132
BI 2293
Source: TS Research, PhRMA© THOMSON REUTERS
Cost of launching an NCE continues to rise
25th percentil
e
75th percentil
eAverage
Standard deviation
Standard error
Industry(n=20)
$M782 1235 1064 311 70
Source: CMR International © THOMSON REUTERS
US NCE Approvals 2001-2007
0
5
10
15
20
25
30
35
2001 2002 2003 2004 2005 2006 2007
Source: Newport Horizon Premium™ © THOMSON REUTERS
Too many companies, too few products
0
10
20
30
40
50
2008 2009 2010 2011 2012 2013 2014 2015
Molecules Losing Exclusivity in Germany and USA2008-2015
US LoE German LoE
Source: Newport Horizon Premium™ © THOMSON REUTERS
Current pipeline activity looks to continue the trend
Source: Thomson Pharma © THOMSON REUTERS
How are Top 10 innovators invested in generics?
Company Sales R&D Generic Sales Strategy
J&J $53,300M $7152M Patriot $20M* Authorized generics
Pfizer $48,350M $7599M Greenstone $850M* Authorized generics
GSK $42,810M $6772M Exited generics in 2005
Novartis $37,020M $6430M Sandoz $5923M Traditional generics
Sanofi-Aventis $35,650M $4537M Winthrop $150M* 25% stake in Zentiva ($625M)
Roche $33,550M $6873M Authorized generic deals in ARVs
AZ $26,500M $4042M
Merck & Co. $22,636M $4783M Authorized generic deal with Mylan
Abbott $22,476M $2255M Spun out Hospira in 2005
Wyeth $20,351M $3109M Launched generic PROTONIX
* Estimated figure
Source: Thomson Reuters Research©THOMSON REUTERS
How about Top 20 innovators?Company Sales R&D Generic Sales Strategy
Bayer $18,216M $3032M Exited in 2002
BMS $17,914M $3067M
Eli Lilly $15,691M $3132M
Amgen $14,268M $3366M
BI $13,284M $2293M Roxane, etc $825M Traditional generics
Nycomed $12,700M $1476M
Schering-Plough $10,594M $2188M Warrick $50M* Authorized generics?
Takeda $10,285M $1638M
Genentech $9,248M $1773M
P&G $8964M $250M
* Estimated figureSource: Thomson Reuters Research©THOMSON REUTERS
Conclusions
• Intra-industry consolidation remains the dominant activity
• Top generics investing in biogenerics capabilities
• Little development of branded business at generics
• Top and mid-tier Indian generics investing small amounts in novel R&D with some success
• Little interest in generics from innovators
• Many generics de-merging their novel R&D businesses
What’s next?
• Pattern of intra-industry consolidation likely to continue
– BRIC countries and other mid-tier markets
• Biogenerics will open a new growth avenue for generics
– Will they drop their novel R&D?
• Is Indian novel R&D sustainable at current levels of productivity and investment?
• China as the next lowest cost, capable R&D location?
Thank You!
Mike Chace-Ortiz
Senior Director, Product Strategy
Thomson Scientific API Intelligence
Portland, ME USA
Email: michael.chace-ortiz@thomson.com
Phone: +1 207 871 9700 extension 24
http://scientific.thomson.com/generics
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