generic medicines ga

Generic Medicines: Essential contributorsto the long-term health of societySECTOR SUSTAINABILITY CHALLENGES IN EUROPE

IMS Generic Medicines 020310 18/3/10 11:29 Page 2

1 IIMMSS HHEEAALLTTHH GENERIC MEDICINES: ESSENTIAL CONTRIBUTORS TO THE LONG-TERM HEALTH OF SOCIETY

country due to low volumes or other issues.Europe is becoming increasingly dependent on a highpercentage of imported generic medicines.Without theappropriate level of control and monitoring, this couldeasily lead to shortages and problems with supplycontinuity in those smaller markets.

Globalisation of the generic medicines industry willbring new challenges to Europe which must be met ifthe sector is not to be marginalised with respect to bothpricing and supply.

Innovation has been traditionally perceived as thedomain of the research-based originator companies.However, generic medicine companies often spendsignificant sums on innovating – improving formulations,enhancing delivery systems and finding solutions topatient compliance issues. In 2007, 7% of revenues fromthe generics medicine industry were spent on researchand development alone. Furthermore, sector investmentsin manufacturing and development facilities have createda solid base of employment (150,000 direct employees inthe EU2) yielding societal benefits that go beyond therealms of healthcare.

The potential benefits of the generics medicine industrywill not be maximised if the focus is on the lowest pricealone. There is a need to increase the volume of genericmedicines penetration in the EU market and optimisesuch key areas as competition with in-patent medicines,co-payment policies, time to market, and ready supply.Ageneric medicine treatment is now available within manyof the major therapeutic classes and this is often the ‘goldstandard’ option for specific diseases. Opportunities existto recommend schedules that encourage initiation oftreatment with these ‘gold standard’ generic medicines.This is a positive sign which should increase the uptakeof these drugs and potentially generate long-term savingsthrough the use of a safe and effective therapy at anaffordable price.

THE RISING COSTS OF HEALTHCARE IN EUROPE

The provision of an effective and efficient healthcaresystem in any country is a complex equation balancingappropriate levels of patient care with resources available.Within this lies the need for infrastructures to supportboth primary and secondary care as well as associatedservices such as social welfare.

Making direct comparisons of costs and best practicesacross EU member states is difficult; inherent politicaldifferences give rise to highly variable systems. No onecountry is the same. However, one element that iscommon to all and often the focus of attention is thecost of medicines.

EXECUTIVE SUMMARY

Sustainability has been defined as the capacity towithstand, endure, nurture and prolong over time.Anability to continue that should not be confused withsimply surviving, but rather maintaining the vitality andstrength to build on, enhance, and thrive.

Today, generic medicines play an essential role in treatingdisease by increasing the accessibility and affordability ofmodern day pharmaceuticals in global healthcare systems.The sustainability of the generic medicines sector is vitalto ensure that these benefits accrue into the future andessential medicines continue to be made available to asmany patients as possible without deference to cost.

The benefits of a healthy and dynamic generic medicinesindustry – historically and in the future - are evident.Currently over half of the volume of medicines aresupplied as generics medicines but this represents just18% in value terms. The EGA have estimated that, todate, generics medicines in the EU have generatedsavings in the order of €30 billion, excluding those madefrom the stimulation of competition with thepharmaceutical sector as a whole. However, with theexpansion of the European Union to 27 member states,the accrued savings could certainly be projected todouble this figure.Any activity that curbs the role ofgeneric medicines could have disastrous consequences,not only for generics manufacturers but also, moreespecially, for patients, as well as governments, payers andall other stakeholders involved in the delivery of healthcare.

The long-term sustainability of the generic medicinessector relies on fair prices and a level playing field.Acceptable margins across the entire generic medicinessupply chain will be essential if their full value is to berealised.The recent paper 'How to Increase Patient Access toGeneric Medicines in European Healthcare Systems' from theEGA Health Economics Committee highlights theimportance of increasing patient access to genericmedicines and the benefits to be gained from their fasteruptake1.Treating them solely as a cost-saving mechanismwill serve only to stifle their ability to deliver continuedbenefits long-term.

In certain countries, particularly where the genericmedicines market is well developed, there are a highnumber of generic medicines companies, thus ensuringhealthy competition. Often there is a mix of largeinternational players and local producers.This is a keybenefit for smaller generic medicines markets which relyon a local presence to ensure a supply of medicines thatwould not otherwise be available from outside the

1 How to Increase Patient Access to Generic Medicines in European Healthcare Systems:A Report by the EGA Health Economics Committee. Frank Bongers,Hugo Carradinha, June 2009. 2 EGA.

Generic Medicines: Essential contributors to the long-term health of societyAUTHOR: ALAN SHEPPARD, PRINCIPAL, GLOBAL GENERICS, THOUGHT LEADERSHIP, IMS HEALTH


IIMMSS HHEEAALLTTHH GENERIC MEDICINES: ESSENTIAL CONTRIBUTORS TO THE LONG-TERM HEALTH OF SOCIETY 2

Although medicines generally constitute only around10% of a country’s total healthcare budget (with genericmedicines only comprising between 1-2%) they are aprime target for cost savings - despite being arguably themost cost-effective part of the healthcare solution.However, even here, the lack of coherent policies andvariations in pricing and reimbursement systems, socio-demographics and the management of healthcare withineach EU member state make comparisons difficult.Whatworks in one country may be totally inappropriate inanother.

One thing is certain, the ageing population and changesin lifestyle automatically bring an increased demand forhealthcare and consequent escalation of costs.Pharmaceutical expenditure has been growing atcomparable rates across all the major Western markets(Figure 1), with the developing markets exhibitinggreater growth due to expanding access to medicines.

FIGURE 1. Top 10 markets pharmaceutical sales andgrowth. Audited markets in MAT Mar 2009.

Prolonged life expectancy in diseases previouslyassociated with high mortality is also extending the useof longer-term chronic therapy treatments, furtherincreasing the burden on healthcare providers. It is afundamental principle in medicine that pharmaceuticalscan delay or even prevent the need for costlyhospitalisation in some patients.Therapies to improvequality of life in patients with terminal diseases are alsoplaying a growing role in the physicians’ armamentarium.

Against this background, it is possible to draw acorrelation between life expectancy and pharmaceuticalconsumption as shown in Figure 2.

FIGURE 2. Link between drug use and life expectancyin an ageing Europe (2005-2010).

Pharmaceuticals undeniably play an essential role inimproving and maintaining health, but managing andcontrolling cost remains a major challenge for society,including governments and payers.Although thepercentage of GDP spent on healthcare is fairlyconsistent in the major EU countries (Figure 3), theabsolute amounts available are straining to deliver thedesired levels of healthcare.

FIGURE 3. Top 15 Countries According To HealthcareSpending in 2008 as a % of GDP.

COUNTRY US$bn 2009

% Mkt Shr 2009

% Growth Const US$

2009 CAGR 04-08

10 Key Markets

United States

Japan

France

Germany

Italy

Spain

United Kingdom

China

Canada

Brazil

$560.6

288.5

71.6

41.0

40.1

25.7

22.0

20.9

20.8

18.0

12.0

77.7%

40.0

9.9

5.7

5.6

3.6

3.0

2.9

2.9

2.5

1.7

3.8

2.4

3.0

2.1

4.2

3.9

7.7

4.1

25.2

5.8

11.9

5.9

6.3

3.0

5.4

4.1

4.1

8.0

3.1

22.0

8.1

11.6

COUNTRY Aust

ria

Belg

ium

Bulg

aria

Croa

tia

Czec

h Re

p.

Denm

ark

Esto

nia

Fran

ce

Irel

and

Ital

y

Latv

ia

Luxe

mbo

urg

Net

herl

ands

Pola

nd

Port

ugal

Rom

ania

Slov

akia

Slov

enia

Spai

n

Swed

en

Average Time Delay for Price Approval Average Time Delay for Reinbursement Approval Are the Applications for P&R of generic medicine’s simultaneous? Average Time Delay for P&R Approval after MA

Source: EGA Market Review 2007

Source: IMS Health, MIDAS, MAT Mar 2009

RANK

US$bn MAT

Dec 2008

% Market Share

% Growth Const US$ CAGR 03-07 2008

Global Biotech Market

1 Autoimmune agents

2 Oncologics

3 Antidiabetics

4 Erythropoietins

5 Immunostim AG EX Intfron

6 Interferons

7 Growth Hormones

8 Blood Coagulation

9 Pure Vaccines

10 Anti-virals excl. Anti-HIV

Top 10

85.1

15.2

13.8

12.4

11.5

6.3

5.6

2.8

2.8

2.5

1.9

74.8

100.0

17.8

16.2

14.5

13.5

7.4

6.5

3.3

3.2

3.0

2.3

87.8

8.3

17.3

17.9

16.6

-13.9

1.6

8.3

2.5

8.5

8.7

-1.7

7.4

16.8

31.8

42.8

14.9

4.6

12.9

7.7

10.4

14.6

32.2

6.6

16.6 Source: IMS Health, MIDAS, MAT Dec 2008

180

180

Yes

180

90

180

Yes

240

90

30

No

120

180

180

No

360

90

90

Yes

180

14

14

Yes

14

90

90

No

180

75

75

Yes

75

45

45

Yes

45

135

135

Yes

135

120

120

No

240

30

180

Yes

180

Na

45

Yes

45

180

180

Yes

180

21

90

No

111

90

180

No

270

120

150

No

270

15

180

Yes

180

75

75

No

150

30

30

Yes

30

Tota

l Yes

Tota

l No

Tota

l

Puerto Rico United States

Canada Greece France

Switzerland Australia Moldova Portugal Germany Belgium

Netherlands Serbia Brazil Italy

0 5 10 15 20

Global average Source: BMI Country Pharmaceuticals & Healthcare Report

85

80

75

70

0 100 300 500 70065

600 400 200

% Volume Generic Market Share of Unprotected Market

Months from LoE

Japan

Italy

Spain

Hungary

Australia

Turkey

France

Czech Republic

Brazil

UK

Poland

Germany

Canada

24%

40%

41%

46%

50%

51%

52%

59%

65%

71%

73%

75%

81%

0% 30% 50% 80% 100% 90% 70% 60% 40% 20% 10%

US 89%

Source: IMS Health, MIDAS, Market Segmentation, MAT Jun 2009, Rx only

Life

Exp

ecta

ncy

Life

Exp

ecta

ncy

Drug Use $/Capita Drug Use $/Capita

85

HUN SVK

FRA

GRC IRL

BEL AUT

PRT DNK

DEU

CHE SWE SWE

FIN GBR NLD

NOR ESP

TUR

RUS

ROM

BGR

POL CZE

80

75

70

65 0 100 200 300 700 600 500 400

Source: Life Expectancy; United Nations (average for the 2005-2010 period) Drug use per capita; IMS market prognosis, 2007, ex -manufacturing price.


FRA

GRC IRL

PRT DNK

DEU AUT FIN

BEL

GBR

CZE

SVK HUN

POL

ROM

BGR

NLD

ESP NOR

CHE ITA ITA

TUR

RUS


Q1 06

Q2 06

Q3 06

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

10

20

30

40

50

60

70

France Spain

UK Italy

Germany Turkey

% S

U M

arke

t sh

are

Source: IMS Health, MIDAS, Market Segmentation, MAT Jun 2009

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 0

5

10

15

20

25

30

40

35

45

50 % of Prior Year’s Sales Const US$bn

Cons

tant

US$

Bn

Source: IMS MIDAS retail panels, each analogue weighted equally

Mo0/ Yr0

Share loss after LoE by country (average of 6 retail products each with lifecycle products)

Value of products at risk 2003-2013

Percentage of first line patients receiving a generic,now and by 2012, in key primary care areas

Mo12/ Yr1

Mo12/ Yr2

Mo12/ Yr3

0

20

40

60

80

100 France Spain UK Italy Germany

Orig

inat

or v

olum

e as

% o

f dr

ug t

otal

SU

0 2005 2006 2007 2008 2009

100

200

300

400

500

600

Valu

e sa

les

US$

Bn

Generic products Non-generic products Generic products Non-generic products

0 2005 2006 2007 2008 2009

100

200

300

400

500

600

700

800

Volu

me

sale

s St

anda

rd U

nits

Bn

395 390 391 387 384

302 325 347 373 397


Drug

Use

/Cap

ita

Euro

s

Life Expectancy

700

HUN SLK

FRA GRC

IRL BEL AUT

PRT

DNK

DEU CHE

SWE FIN

GBR NLD

NOR

ITA

TUR

RUS ROM BGR

POL

CZE

600

500

400

300

200

100

0 65 70 75 80 85

Source: Life Expectancy; United Nationa (average for the 2005-2010 period) Drug use per capita; IMS market prognosis, 2007, ex -manufacturing price

Trader Non-Trader (Scaled)

RSP OLD vERSION

Prot

ecte

d Sa

les

US$

bn

16

14

10

6

2

12

8

4

0

Onco

logics

Angio

tensin

-IIs

Antid

iabeti

cs

Resp

irato

ry

Lipid

regula

tors

HIV a

ntivi

rals

Antip

sych

otics

antir

heum

atics

Antiu

lceran

ts

Platel

et ag

gr inh

ibs

Eryth

ropoie

ntins

Bone

calci

um re

gulat

ors

Antie

pilep

tics

Anti-

Alzhe

imers

Antid

epres

sant

s

Calci

um an

tagon

ists

Onco

logi

cs

Angi

oten

sin-

IIs

Anti

diab

etic

s

Resp

irato

ry

Lipi

d re

gula

tors

HIV

ant

ivira

ls

Anti

psyc

hoti

cs

anti

rheu

mat

ics

Anti

ulce

rant

s

Plat

elet

agg

r in

hibs

Eryt

hrop

oien

tins

Bone

cal

cium

reg

ulat

ors

Anti

epile

ptic

s

Anti

-Alz

heim

ers

Anti

depr

essa

nts

Calc

ium

ant

agon

ists

Source: IMS Health, MIDAS, MArket Segmentation, MAT Mar 2009, Rx only *19 European markets


0

50

100

150

200

250

300

350 Patent Linkage Average time delay for P&R approval after MA

400

Num

ber

of d

ays

Denm

ark

Swed

en

Irela

nd

Neth

erla

nds

Fran

ce

Belg

ium

Bulg

aria

Ital

y

Spai

n

Aust

ria

Czec

h Re

p.

Esto

nia

Luxe

mbo

urg

Pola

nd

Slov

enia

Latv

ia

Rom

ania

Slov

akia

Croa

tiaPo

rtuga

l


0

2

4

6

8

10

12

14

16

Prot

ecte

d Sa

les

US$

bn

Rules and Incentives

Mandatory price reduction

Patient co-pay

Price referencing

Pharmacy-level substitution

At the pharmacy

With the health insurers

With wholesalers

With payers

Favouring brands

Favouring generics

Mar

ket

Rule

s M

arke

t In

cent

ives

0

2

6

4

8

10

% o

f Pr

ior

Year

’s S

ales

Source: IMS Disease Analyser Germany, UK, 1st line use defined as new to pharmacotherapy – ARBs=Angiotensin II receptor antagonists (antihypertensive class)

Hypertension -ARBs

Asthma/Copd Osteoporosis Dyslipidemis Depression 0

20

40

60

80

100

UK Generic first line 2007 UK Generic first line 2012 German Generic first line 2007 German Generic first line 2012

% share expiring 2009-2013 Protected sales Average % expiring 2009-2013


% S

hane

Sal

es E

xpir

ing

100

90

70

50

30

20

10

80

60

40

0

% S

hane

Sal

es E

xpir

ing

100

90

70

50

30

20

10

80

60

40

0

10

16 17 19 24

17

28

24

42

29

14

COUNTRY US$bn 2009

% Mkt Shr 2009

% Growth Const US$

2009 CAGR 04-08

10 Key Markets

United States

Japan

France

Germany

Italy

Spain

United Kingdom

China

Canada

Brizil

$560.6

288.5

71.6

41.0

40.1

25.7

22.0

20.9

20.8

18.0

12.0

77.7%

40.0

9.9

5.7

5.6

3.6

3.0

2.9

2.9

2.5

1.7

3.8

2.4

3.0

2.1

4.2

3.9

7.7

4.1

25.2

5.8

11.9

5.9

6.3

3.0

5.4

4.1

4.1

8.0

3.1

22.0

8.1

11.6

COUNTRY Aust

ria

Belg

ium

Bulg

aria

Croa

tia

Czec

h Re

p.

Denm

ark

Esto

nia

Fran

ce

Irel

and

Ital

y

Latv

ia

Luxe

mbo

urg

Net

herl

ands

Pola

nd

Port

ugal

Rom

ania

Slov

akia

Slov

enia

Spai

n

Swed

en




RANK

US$bn MAT

Dec 2008

% Market Share



1 Autoimmune agents

2 Oncologics

3 Antidiabetics

4 Erythropoietins


6 Interferons

7 Growth Hormones

8 Blood Coagulation

9 Pure Vaccines


Top 10

85.1

15.2

13.8

12.4

11.5

6.3

5.6

2.8

2.8

2.5

1.9

74.8

100.0

17.8

16.2

14.5

13.5

7.4

6.5

3.3

3.2

3.0

2.3

87.8

8.3

17.3

17.9

16.6

-13.9

1.6

8.3

2.5

8.5

8.7

-1.7

7.4

16.8

31.8

42.8

14.9

4.6

12.9

7.7

10.4

14.6

32.2

6.6


180

180

Yes

180

90

180

Yes

240

90

30

No

120

180

180

No

360

90

90

Yes

180

14

14

Yes

14

90

90

No

180

75

75

Yes

75

45

45

Yes

45

135

135

Yes

135

120

120

No

240

30

180

Yes

180

Na

45

Yes

45

180

180

Yes

180

21

90

No

111

90

180

No

270

120

150

No

270

15

180

Yes

180

75

75

No

150

30

30

Yes

30

Tota

l Yes

Tota

l No

Tota

l





0 5 10 15 20


85

80

75

70

0 100 300 500 70065

600 400 200


Months from LoE

Japan

Italy

Spain

Hungary

Australia

Turkey

France

Czech Republic

Brazil

UK

Poland

Germany

Canada

24%

40%

41%

46%

50%

51%

52%

59%

65%

71%

73%

75%

81%

0% 30% 50% 80% 100% 90% 70% 60% 40% 20% 10%

US 89%


Life

Exp

ecta

ncy

Life

Exp

ecta

ncy


85

HUN SVK

FRA

GRC IRL

BEL AUT

PRT DNK

DEU

CHE SWE SWE

FIN GBR NLD

NOR ESP

TUR

RUS

ROM

BGR

POL CZE

80

75

70

65 0 100 200 300 700 600 500 400



FRA

GRC IRL

PRT DNK

DEU AUT FIN

BEL

GBR

CZE

SVK HUN

POL

ROM

BGR

NLD

ESP NOR

CHE ITA ITA

TUR

RUS


Q1 06

Q2 06

Q3 06

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

10

20

30

40

50

60

70

France Spain

UK Italy

Germany Turkey

% S

U M

arke

t sh

are


2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 0

5

10

15

20

25

30

40

35

45


Cons

tant

US$

Bn


Mo0/ Yr0




Mo12/ Yr1

Mo12/ Yr2

Mo12/ Yr3

0

20

40

60

80


Orig

inat

or v

olum

e as

% o

f dr

ug t

otal

SU

0 2005 2006 2007 2008 2009

100

200

300

400

500

600

Valu

e sa

les

US$

Bn


0 2005 2006 2007 2008 2009

100

200

300

400

500

600

700

800

Volu

me

sale

s St

anda

rd U

nits

Bn

395 390 391 387 384

302 325 347 373 397


0 2005 2006 2007 2008 2009

50

100

150

200

Valu

e Sa

les

US$

Bn

Non-generic products Generic products

0 2005 2006 2007 2008 2009

50

100

150

200

250

300

350

400

Volu

me

Sale

s St

anda

rd U

nits

Bn

185 184 186 185 184

135 146

110

25

112

27

127

31

150

37

136

33

156 169 177

Source: IMS Health, MIDAS, Market Segmentation, MAT Sep 2009, Rx only

Drug

Use

/Cap

ita

Euro

s

Life Expectancy

700

HUN SLK

FRA GRC

IRL BEL AUT

PRT

DNK

DEU CHE

SWE FIN

GBR NLD

NOR

ITA

TUR

RUS ROM BGR

POL

CZE

600

500

400

300

200

100

0 65 70 75 80 85



RSP OLD vERSION

Prot

ecte

d Sa

les

US$

bn

16

14

10

6

2

12

8

4

0

Onco

logics

Angio

tensin

-IIs

Antid

iabeti

cs

Resp

irato

ry

Lipid

regula

tors

HIV a

ntivi

rals

Antip

sych

otics

antir

heum

atics

Antiu

lceran

ts

Platel

et ag

gr inh

ibs

Eryth

ropoie

ntins

Bone

calci

um re

gulat

ors

Antie

pilep

tics

Anti-

Alzhe

imers

Antid

epres

sant

s

Calci

um an

tagon

ists

Onco

logi

cs

Angi

oten

sin-

IIs

Anti

diab

etic

s

Resp

irato

ry

Lipi

d re

gula

tors

HIV

ant

ivira

ls

Anti

psyc

hoti

cs

anti

rheu

mat

ics

Anti

ulce

rant

s

Plat

elet

agg

r in

hibs

Eryt

hrop

oien

tins

Bone

cal

cium

reg

ulat

ors

Anti

epile

ptic

s

Anti

-Alz

heim

ers

Anti

depr

essa

nts

Calc

ium

ant

agon

ists



0

50

100

150

200

250

300


400

Num

ber

of d

ays

Denm

ark

Swed

en

Irela

nd

Neth

erla

nds

Fran

ce

Belg

ium

Bulg

aria

Ital

y

Spai

n

Aust

ria

Czec

h Re

p.

Esto

nia

Luxe

mbo

urg

Pola

nd

Slov

enia

Latv

ia

Rom

ania

Slov

akia

Croa

tiaPo

rtuga

l


0

2

4

6

8

10

12

14

16

Prot

ecte

d Sa

les

US$

bn



Patient co-pay

Price referencing


At the pharmacy


With wholesalers

With payers

Favouring brands

Favouring generics

Mar

ket

Rule

s M

arke

t In

cent

ives

0

2

6

4

8

10

% o

f Pr

ior

Year

’s S

ales


Hypertension -ARBs


20

40

60

80

100




% S

hane

Sal

es E

xpir

ing

100

90

70

50

30

20

10

80

60

40

0

% S

hane

Sal

es E

xpir

ing

100

90

70

50

30

20

10

80

60

40

0

10

16 17 19 24

17

28

24

42

29

14

ENBREL

REMICADE

AVASTIN

HUMIRA

LOVENOX

MABTHERA

0.00 3.00 5.00 6.00 4.00 2.00 1.00

LANTUS

Source: IMS 2009

Europe US

3.00

3.00

2.80

2.30

2.60

2.50

2.40

2.00

1.40

1.50

2.00

1.60

1.50

1.00

COUNTRY US$bn 2009

% Mkt Shr 2009

% Growth Const US$

2009 CAGR 04-08

10 Key Markets

United States

Japan

France

Germany

Italy

Spain

United Kingdom

China

Canada

Brizil

$560.6

288.5

71.6

41.0

40.1

25.7

22.0

20.9

20.8

18.0

12.0

77.7%

40.0

9.9

5.7

5.6

3.6

3.0

2.9

2.9

2.5

1.7

3.8

2.4

3.0

2.1

4.2

3.9

7.7

4.1

25.2

5.8

11.9

5.9

6.3

3.0

5.4

4.1

4.1

8.0

3.1

22.0

8.1

11.6

COUNTRY Aust

ria

Belg

ium

Bulg

aria

Croa

tia

Czec

h Re

p.

Denm

ark

Esto

nia

Fran

ce

Irel

and

Ital

y

Latv

ia

Luxe

mbo

urg

Net

herl

ands

Pola

nd

Port

ugal

Rom

ania

Slov

akia

Slov

enia

Spai

n

Swed

en




RANK

US$bn MAT

Dec 2008

% Market Share



1 Autoimmune agents

2 Oncologics

3 Antidiabetics

4 Erythropoietins


6 Interferons

7 Growth Hormones

8 Blood Coagulation

9 Pure Vaccines


Top 10

85.1

15.2

13.8

12.4

11.5

6.3

5.6

2.8

2.8

2.5

1.9

74.8

100.0

17.8

16.2

14.5

13.5

7.4

6.5

3.3

3.2

3.0

2.3

87.8

8.3

17.3

17.9

16.6

-13.9

1.6

8.3

2.5

8.5

8.7

-1.7

7.4

16.8

31.8

42.8

14.9

4.6

12.9

7.7

10.4

14.6

32.2

6.6


180

180

Yes

180

90

180

Yes

240

90

30

No

120

180

180

No

360

90

90

Yes

180

14

14

Yes

14

90

90

No

180

75

75

Yes

75

45

45

Yes

45

135

135

Yes

135

120

120

No

240

30

180

Yes

180

Na

45

Yes

45

180

180

Yes

180

21

90

No

111

90

180

No

270

120

150

No

270

15

180

Yes

180

75

75

No

150

30

30

Yes

30

Tota

l Yes

Tota

l No

Tota

l





0 5 10 15 20


85

80

75

70

0 100 300 500 70065

600 400 200


Months from LoE

Japan

Italy

Spain

Hungary

Australia

Turkey

France

Czech Republic

Brazil

UK

Poland

Germany

Canada

24%

40%

41%

46%

50%

51%

52%

59%

65%

71%

73%

75%

81%

0% 30% 50% 80% 100% 90% 70% 60% 40% 20% 10%

US 89%


Life

Exp

ecta

ncy

Life

Exp

ecta

ncy


85

HUN SVK

FRA

GRC IRL

BEL AUT

PRT DNK

DEU

CHE SWE SWE

FIN GBR NLD

NOR ESP

TUR

RUS

ROM

BGR

POL CZE

80

75

70

65 0 100 200 300 700 600 500 400



FRA

GRC IRL

PRT DNK

DEU AUT FIN

BEL

GBR

CZE

SVK HUN

POL

ROM

BGR

NLD

ESP NOR

CHE ITA ITA

TUR

RUS


Q1 06

Q2 06

Q3 06

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

10

20

30

40

50

60

70

France Spain

UK Italy

Germany Turkey

% S

U M

arke

t sh

are


2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 0

5

10

15

20

25

30

40

35

45


Cons

tant

US$

Bn


Mo0/ Yr0




Mo12/ Yr1

Mo12/ Yr2

Mo12/ Yr3

0

20

40

60

80


Orig

inat

or v

olum

e as

% o

f dr

ug t

otal

SU

0 2005 2006 2007 2008 2009

100

200

300

400

500

600

Valu

e sa

les

US$

Bn


0 2005 2006 2007 2008 2009

100

200

300

400

500

600

700

800

Volu

me

sale

s St

anda

rd U

nits

Bn

395 390 391 387 384

302 325 347 373 397


0 2005 2006 2007 2008 2009

50

100

150

200

Valu

e Sa

les

US$

Bn


0 2005 2006 2007 2008 2009

50

100

150

200

250

300

350

400

Volu

me

Sale

s St

anda

rd U

nits

Bn

185 184 186 185 184

135 146

110

25

112

27

127

31

150

37

136

33

156 169 177


Drug

Use

/Cap

ita

Euro

s

Life Expectancy

700

HUN SLK

FRA GRC

IRL BEL AUT

PRT

DNK

DEU CHE

SWE FIN

GBR NLD

NOR

ITA

TUR

RUS ROM BGR

POL

CZE

600

500

400

300

200

100

0 65 70 75 80 85



RSP OLD vERSION

Prot

ecte

d Sa

les

US$

bn

16

14

10

6

2

12

8

4

0

Onco

logics

Angio

tensin

-IIs

Antid

iabeti

cs

Resp

irato

ry

Lipid

regula

tors

HIV a

ntivi

rals

Antip

sych

otics

antir

heum

atics

Antiu

lceran

ts

Platel

et ag

gr inh

ibs

Eryth

ropoie

ntins

Bone

calci

um re

gulat

ors

Antie

pilep

tics

Anti-

Alzhe

imers

Antid

epres

sant

s

Calci

um an

tagon

ists

Onco

logi

cs

Angi

oten

sin-

IIs

Anti

diab

etic

s

Resp

irato

ry

Lipi

d re

gula

tors

HIV

ant

ivira

ls

Anti

psyc

hoti

cs

anti

rheu

mat

ics

Anti

ulce

rant

s

Plat

elet

agg

r in

hibs

Eryt

hrop

oien

tins

Bone

cal

cium

reg

ulat

ors

Anti

epile

ptic

s

Anti

-Alz

heim

ers

Anti

depr

essa

nts

Calc

ium

ant

agon

ists



0

50

100

150

200

250

300


400

Num

ber

of d

ays

Denm

ark

Swed

en

Irela

nd

Neth

erla

nds

Fran

ce

Belg

ium

Bulg

aria

Ital

y

Spai

n

Aust

ria

Czec

h Re

p.

Esto

nia

Luxe

mbo

urg

Pola

nd

Slov

enia

Latv

ia

Rom

ania

Slov

akia

Croa

tiaPo

rtuga

l


0

2

4

6

8

10

12

14

16

Prot

ecte

d Sa

les

US$

bn



Patient co-pay

Price referencing


At the pharmacy


With wholesalers

With payers

Favouring brands

Favouring generics

Mar

ket

Rule

s M

arke

t In

cent

ives

0

2

6

4

8

10

% o

f Pr

ior

Year

’s S

ales


Hypertension -ARBs


20

40

60

80

100




% S

hane

Sal

es E

xpir

ing

100

90

70

50

30

20

10

80

60

40

0

% S

hane

Sal

es E

xpir

ing

100

90

70

50

30

20

10

80

60

40

0

10

16 17 19 24

17

28

24

42

29

14

ENBREL

REMICADE

AVASTIN

HUMIRA

LOVENOX

MABTHERA

0.00 3.00 5.00 6.00 4.00 2.00 1.00

LANTUS

Source: IMS 2009

Europe US

3.00

3.00

2.80

2.30

2.60

2.50

2.40

2.00

1.40

1.50

2.00

1.60

1.50

1.00



COST AND AFFORDABILITY

A successful and innovative pharmaceutical industrybrings many benefits. However, these have to be balancedwith affordability and external competitive forces inorder to provide the appropriate standards of healthcare.It can be argued that the majority of illnesses now havegold standards of therapy available with which patientscan be adequately, and successfully, managed. However,there still remain significant unmet clinical needs wherethe search for new or improved medicines continues.

Certain clinical challenges require medicines based onbiotechnologies, which are associated with higherresearch and development costs. In order to recoup theincreased investment, and in part because they aregenerally intended for a smaller population base, thesemedicines are often associated with a premium price.

At the same time, development costs for the genericmedicines industry are also rising, due to both theincreasing complexity of the molecules that are losingprotection and the rising burden of regulatoryrequirements.

It is vital that patients have access to the mostappropriate medicines available in order to avoid thelonger-term morbidity issues that can arise from non-treatment. Improved access to medicines throughaffordable generic medicines provides a solution in manytherapeutic areas, and policies should be based not onlyon cost but also on clinical value.

Generic medicines not only offer cost savings but alsothe ability to ensure that patients continue to receivethose gold standard treatments at affordable prices postpatent expiry.

The growing cost of healthcare is unavoidable in today’sclimate; drug expenditure is forecast to increase byaround 5% annually over the next 3-5 years.A long-termapproach involving increased utilisation of genericmedicines could compensate for some of this risingexpenditure without compromising outcomes. In his2006 paper on sustaining generic medicines markets inEurope3, Prof. Dr. Steven Simoens underscored thenecessity for policy intervention to secure thedevelopment of a competitive generic medicines market.However, different measures will need to reinforce eachother and be part of a coherent generic medicines policy.For this to happen, strategies must be planned andimplemented now.

ROLE AND CONTRIBUTION OF THE GENERICMEDICINES SECTOR

The role of generic medicines has been to provideessential medicines that are both high quality andaffordable throughout the EU.There can be no doubtthat their use has increased patient accessibility tomedicines and provided significant savings for EUhealthcare systems – savings that can, among otherthings, be deployed to cover the costs of newer,innovative, and generally more expensive medicines thattruly add increased clinical benefit if managed effectively.

Due to the differences already noted in pricing andreimbursement systems across Europe it is difficult toaccurately project the savings from generic medicines.Toa large extent, the magnitude is dependent on the levelof utilisation in each country (Figure 4) and the pricedifferentials between them and the originator brand. Inthe USA, for example, where the use of generics isalmost 90% within the off-patent (unprotected) market,savings from their use in 2008 alone totalled US$121billion. It can be argued that potential savings in manyEuropean countries are not fully exploited due to lowerutilisation of generic medicines in key therapy areas.

The significant contribution arising from the efficientuse of generic medicine policies within certain countriescannot be denied.The scope for further savings is dependenton a sustainable generic medicines industry and policysupported by governments, stakeholders and patients.

3 Professor Dr Steven Simoens, Sustaining Generic Medicines Market in Europe, Katholieke Universiteit Leuven,April 2006.

COUNTRY US$bn 2009

% Mkt Shr 2009

% Growth Const US$

2009 CAGR 04-08

10 Key Markets

United States

Japan

France

Germany

Italy

Spain

United Kingdom

China

Canada

Brizil

$560.6

288.5

71.6

41.0

40.1

25.7

22.0

20.9

20.8

18.0

12.0

77.7%

40.0

9.9

5.7

5.6

3.6

3.0

2.9

2.9

2.5

1.7

3.8

2.4

3.0

2.1

4.2

3.9

7.7

4.1

25.2

5.8

11.9

5.9

6.3

3.0

5.4

4.1

4.1

8.0

3.1

22.0

8.1

11.6

COUNTRY Aust

ria

Belg

ium

Bulg

aria

Croa

tia

Czec

h Re

p.

Den

mar

k

Esto

nia

Fran

ce

Irel

and

Ital

y

Latv

ia

Luxe

mbo

urg

Net

herl

ands

Pola

nd

Port

ugal

Rom

ania

Slov

akia

Slov

enia

Spai

n

Swed

en




RANK

US$bn MAT

Dec 2008

% Market Share



1 Autoimmune agents

2 Oncologics

3 Antidiabetics

4 Erythropoietins


6 Interferons

7 Growth Hormones

8 Blood Coagulation

9 Pure Vaccines


Top 10

85.1

15.2

13.8

12.4

11.5

6.3

5.6

2.8

2.8

2.5

1.9

74.8

100.0

17.8

16.2

14.5

13.5

7.4

6.5

3.3

3.2

3.0

2.3

87.8

8.3

17.3

17.9

16.6

-13.9

1.6

8.3

2.5

8.5

8.7

-1.7

7.4

16.8

31.8

42.8

14.9

4.6

12.9

7.7

10.4

14.6

32.2

6.6


180

180

Yes

180

90

180

Yes

240

90

30

No

120

180

180

No

360

90

90

Yes

180

14

14

Yes

14

90

90

No

180

75

75

Yes

75

45

45

Yes

45

135

135

Yes

135

120

120

No

240

30

180

Yes

180

Na

45

Yes

45

180

180

Yes

180

21

90

No

111

90

180

No

270

120

150

No

270

15

180

Yes

180

75

75

No

150

30

30

Yes

30

Tota

l Ye

s

Tota

l N

o

Tota

l





0 5 10 15 20


85

80

75

70

0 100 300 500 70065

600 400 200


Months from LoE

Japan

Italy

Spain

Hungary

Australia

Turkey

France

Czech Republic

Brazil

UK

Poland

Germany

Canada

24%

40%

41%

46%

50%

51%

52%

59%

65%

71%

73%

75%

81%

0% 30% 50% 80% 100% 90% 70% 60% 40% 20% 10%

US 89%


Life

Exp

ecta

ncy

Life

Exp

ecta

ncy


85

HUN SVK

FRA

GRC IRL

BEL AUT

PRT DNK

DEU

CHE SWE SWE

FIN GBR NLD

NOR ESP

TUR

RUS

ROM

BGR

POL CZE

80

75

70

65 0 100 200 300 700 600 500 400



FRA

GRC IRL

PRT DNK

DEU AUT FIN

BEL

GBR

CZE

SVK HUN

POL

ROM

BGR

NLD

ESP NOR

CHE ITA ITA

TUR

RUS


Q1 06

Q2 06

Q3 06

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

10

20

30

40

50

60

70

France Spain

UK Italy

Germany Turkey

% S

U M

arke

t sh

are


2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 0

5

10

15

20

25

30

40

35

45


Cons

tant

US$

Bn


Mo0/ Yr0




Mo12/ Yr1

Mo12/ Yr2

Mo12/ Yr3

0

20

40

60

80


Orig

inat

or v

olum

e as

% o

f dr

ug t

otal

SU

0 2005 2006 2007 2008 2009

100

200

300

400

500

600

Valu

e sa

les

US$

Bn


0 2005 2006 2007 2008 2009

100

200

300

400

500

600

700

800

Volu

me

sale

s St

anda

rd U

nits

Bn

395 390 391 387 384

302 325 347 373 397


0 2005 2006 2007 2008 2009

50

100

150

200

Valu

e Sa

les

US$

Bn


0 2005 2006 2007 2008 2009

50

100

150

200

250

300

350

400

Volu

me

Sale

s St

anda

rd U

nits

Bn

185 184 186 185 184

135 146

110

25

112

27

127

31

150

37

136

33

156 169 177


Drug

Use

/Cap

ita

Euro

s

Life Expectancy

700

HUN SLK

FRA GRC

IRL BEL AUT

PRT

DNK

DEU CHE

SWE FIN

GBR NLD

NOR

ITA

TUR

RUS ROM BGR

POL

CZE

600

500

400

300

200

100

0 65 70 75 80 85



RSP OLD vERSION

Prot

ecte

d Sa

les

US$

bn

16

14

10

6

2

12

8

4

0

Onco

logics

Angio

tensin

-IIs

Antid

iabeti

cs

Resp

irato

ry

Lipid

regula

tors

HIV a

ntivi

rals

Antip

sych

otics

antir

heum

atics

Antiu

lceran

ts

Platel

et ag

gr inh

ibs

Eryth

ropoie

ntins

Bone

calci

um re

gulat

ors

Antie

pilep

tics

Anti-

Alzhe

imers

Antid

epres

sant

s

Calci

um an

tagon

ists

Onco

logi

cs

Angi

oten

sin-

IIs

Anti

diab

etic

s

Resp

irato

ry

Lipi

d re

gula

tors

HIV

ant

ivira

ls

Anti

psyc

hoti

cs

anti

rheu

mat

ics

Anti

ulce

rant

s

Plat

elet

agg

r in

hibs

Eryt

hrop

oien

tins

Bone

cal

cium

reg

ulat

ors

Anti

epile

ptic

s

Anti

-Alz

heim

ers

Anti

depr

essa

nts

Calc

ium

ant

agon

ists



0

50

100

150

200

250

300


400

Num

ber

of d

ays

Denm

ark

Swed

en

Irela

nd

Neth

erla

nds

Fran

ce

Belg

ium

Bulg

aria

Ital

y

Spai

n

Aust

ria

Czec

h Re

p.

Esto

nia

Luxe

mbo

urg

Pola

nd

Slov

enia

Latv

ia

Rom

ania

Slov

akia

Croa

tiaPo

rtuga

l


0

2

4

6

8

10

12

14

16

Prot

ecte

d Sa

les

US$

bn



Patient co-pay

Price referencing


At the pharmacy


With wholesalers

With payers

Favouring brands

Favouring generics

Mar

ket

Rule

s M

arke

t In

cent

ives

0

2

6

4

8

10

% o

f Pr

ior

Year

’s S

ales


Hypertension -ARBs


20

40

60

80

100




% S

hane

Sal

es E

xpir

ing

100

90

70

50

30

20

10

80

60

40

0

% S

hane

Sal

es E

xpir

ing

100

90

70

50

30

20

10

80

60

40

0

10

16 17 19 24

17

28

24

42

29

14

ENBREL

REMICADE

AVASTIN

HUMIRA

LOVENOX

MABTHERA

0.00 3.00 5.00 6.00 4.00 2.00 1.00

LANTUS

Source: IMS 2009

Europe US

3.00

3.00

2.80

2.30

2.60

2.50

2.40

2.00

1.40

1.50

2.00

1.60

1.50

1.00

FIGURE 4. Utilisation of generic medicineswithin the unprotected markets.



VOLUME PENETRATION AND PATIENT ACCESS

When considered as a proportion of total pharmaceuticalconsumption within a given country, the volumeconsumption of generic medicines in the EU is at aneven lower level, and highly variable across countries(Figure 5). In the most developed generic medicinesmarkets, such as the UK and Germany, their volume userepresents more than half of the total market. However,in less mature generic medicines markets, such as Spainand Italy, volumes remain low.Thus, in order to deliverthe full benefits of generic medicines, greater importancemust be placed on increasing volume use rather thanfocusing simply on price. Introducing educationalprogrammes for prescribers, dispensers and patients, todemonstrate the benefits of treatment regimensincorporating generic medicines, could be one usefulway of achieving this.

Reducing the price of generic medicines in low volumemarkets can severely challenge the sector’s sustainability.In these countries the cost of maintaining the essentialinfrastructure related to registration costs,pharmacovigilance and other legal requirements will notbe covered by the revenues generated. More affordableand lower-priced treatments will be a natural result ofincreasing the demand for generic medicines and willraise the level of competition in all markets.

FIGURE 5. Contrasting generic medicines volumepenetration in key countries.

VALUE GROWTH AND AFFORDABILITY

Although generic medicines now fulfil over 50% of the demand for medicines in Europe, they still onlyrepresent 18% of the total medicines bill.Value growth inthe sector is the result of new generic medicinesentering the market following patent expiries in theabsence of any price increases. Indeed, significant pricedecreases on many molecules in the major markets,arising from competition or enforced pricing policychanges, has countered value growth each year (Figure 6).

4 Final report on the EU Pharmaceutical Sector Inquiry 2008/09.Accessed http://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/communication_en.pdf

COUNTRY US$bn 2009

% Mkt Shr 2009

% Growth Const US$

2009 CAGR 04-08

10 Key Markets

United States

Japan

France

Germany

Italy

Spain

United Kingdom

China

Canada

Brizil

$560.6

288.5

71.6

41.0

40.1

25.7

22.0

20.9

20.8

18.0

12.0

77.7%

40.0

9.9

5.7

5.6

3.6

3.0

2.9

2.9

2.5

1.7

3.8

2.4

3.0

2.1

4.2

3.9

7.7

4.1

25.2

5.8

11.9

5.9

6.3

3.0

5.4

4.1

4.1

8.0

3.1

22.0

8.1

11.6

COUNTRY Aust

ria

Belg

ium

Bulg

aria

Croa

tia

Czec

h Re

p.

Denm

ark

Esto

nia

Fran

ce

Irel

and

Ital

y

Latv

ia

Luxe

mbo

urg

Net

herl

ands

Pola

nd

Port

ugal

Rom

ania

Slov

akia

Slov

enia

Spai

n

Swed

en




RANK

US$bn MAT

Dec 2008

% Market Share



1 Autoimmune agents

2 Oncologics

3 Antidiabetics

4 Erythropoietins


6 Interferons

7 Growth Hormones

8 Blood Coagulation

9 Pure Vaccines


Top 10

85.1

15.2

13.8

12.4

11.5

6.3

5.6

2.8

2.8

2.5

1.9

74.8

100.0

17.8

16.2

14.5

13.5

7.4

6.5

3.3

3.2

3.0

2.3

87.8

8.3

17.3

17.9

16.6

-13.9

1.6

8.3

2.5

8.5

8.7

-1.7

7.4

16.8

31.8

42.8

14.9

4.6

12.9

7.7

10.4

14.6

32.2

6.6


180

180

Yes

180

90

180

Yes

240

90

30

No

120

180

180

No

360

90

90

Yes

180

14

14

Yes

14

90

90

No

180

75

75

Yes

75

45

45

Yes

45

135

135

Yes

135

120

120

No

240

30

180

Yes

180

Na

45

Yes

45

180

180

Yes

180

21

90

No

111

90

180

No

270

120

150

No

270

15

180

Yes

180

75

75

No

150

30

30

Yes

30

Tota

l Yes

Tota

l No

Tota

l





0 5 10 15 20


85

80

75

70

0 100 300 500 70065

600 400 200


Months from LoE

Japan

Italy

Spain

Hungary

Australia

Turkey

France

Czech Republic

Brazil

UK

Poland

Germany

Canada

24%

40%

41%

46%

50%

51%

52%

59%

65%

71%

73%

75%

81%

0% 30% 50% 80% 100% 90% 70% 60% 40% 20% 10%

US 89%


Life

Exp

ecta

ncy

Life

Exp

ecta

ncy


85

HUN SVK

FRA

GRC IRL

BEL AUT

PRT DNK

DEU

CHE SWE SWE

FIN GBR NLD

NOR ESP

TUR

RUS

ROM

BGR

POL CZE

80

75

70

65 0 100 200 300 700 600 500 400



FRA

GRC IRL

PRT DNK

DEU AUT FIN

BEL

GBR

CZE

SVK HUN

POL

ROM

BGR

NLD

ESP NOR

CHE ITA ITA

TUR

RUS


Q1 06

Q2 06

Q3 06

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

10

20

30

40

50

60

70

France Spain

UK Italy

Germany Turkey

% S

U M

arke

t sh

are


2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 0

5

10

15

20

25

30

40

35

45


Cons

tant

US$

Bn


Mo0/ Yr0




Mo12/ Yr1

Mo12/ Yr2

Mo12/ Yr3

0

20

40

60

80


Orig

inat

or v

olum

e as

% o

f dr

ug t

otal

SU

0 2005 2006 2007 2008 2009

100

200

300

400

500

600

Valu

e sa

les

US$

Bn


0 2005 2006 2007 2008 2009

100

200

300

400

500

600

700

800

Volu

me

sale

s St

anda

rd U

nits

Bn

395 390 391 387 384

302 325 347 373 397


0 2005 2006 2007 2008 2009

50

100

150

200

Valu

e Sa

les

US$

Bn


0 2005 2006 2007 2008 2009

50

100

150

200

250

300

350

400

Volu

me

Sale

s St

anda

rd U

nits

Bn

185 184 186 185 184

135 146

110

25

112

27

127

31

150

37

136

33

156 169 177


Drug

Use

/Cap

ita

Euro

s

Life Expectancy

700

HUN SLK

FRA GRC

IRL BEL AUT

PRT

DNK

DEU CHE

SWE FIN

GBR NLD

NOR

ITA

TUR

RUS ROM BGR

POL

CZE

600

500

400

300

200

100

0 65 70 75 80 85



RSP OLD vERSION

Prot

ecte

d Sa

les

US$

bn

16

14

10

6

2

12

8

4

0

Onco

logics

Angio

tensin

-IIs

Antid

iabeti

cs

Resp

irato

ry

Lipid

regula

tors

HIV a

ntivi

rals

Antip

sych

otics

antir

heum

atics

Antiu

lceran

ts

Platel

et ag

gr inh

ibs

Eryth

ropoie

ntins

Bone

calci

um re

gulat

ors

Antie

pilep

tics

Anti-

Alzhe

imers

Antid

epres

sant

s

Calci

um an

tagon

ists

Onco

logi

cs

Angi

oten

sin-

IIs

Anti

diab

etic

s

Resp

irato

ry

Lipi

d re

gula

tors

HIV

ant

ivira

ls

Anti

psyc

hoti

cs

anti

rheu

mat

ics

Anti

ulce

rant

s

Plat

elet

agg

r in

hibs

Eryt

hrop

oien

tins

Bone

cal

cium

reg

ulat

ors

Anti

epile

ptic

s

Anti

-Alz

heim

ers

Anti

depr

essa

nts

Calc

ium

ant

agon

ists



0

50

100

150

200

250

300


400

Num

ber

of d

ays

Denm

ark

Swed

en

Irela

nd

Neth

erla

nds

Fran

ce

Belg

ium

Bulg

aria

Ital

y

Spai

n

Aust

ria

Czec

h Re

p.

Esto

nia

Luxe

mbo

urg

Pola

nd

Slov

enia

Latv

ia

Rom

ania

Slov

akia

Croa

tiaPo

rtuga

l


0

2

4

6

8

10

12

14

16

Prot

ecte

d Sa

les

US$

bn



Patient co-pay

Price referencing


At the pharmacy


With wholesalers

With payers

Favouring brands

Favouring generics

Mar

ket

Rule

s M

arke

t In

cent

ives

0

2

6

4

8

10

% o

f Pr

ior

Year

’s S

ales


Hypertension -ARBs


20

40

60

80

100




% S

hane

Sal

es E

xpir

ing

100

90

70

50

30

20

10

80

60

40

0

% S

hane

Sal

es E

xpir

ing

100

90

70

50

30

20

10

80

60

40

0

10

16 17 19 24

17

28

24

42

29

14

ENBREL

REMICADE

AVASTIN

HUMIRA

LOVENOX

MABTHERA

0.00 3.00 5.00 6.00 4.00 2.00 1.00

LANTUS

Source: IMS 2009

Europe US

3.00

3.00

2.80

2.30

2.60

2.50

2.40

2.00

1.40

1.50

2.00

1.60

1.50

1.00

COUNTRY US$bn 2009

% Mkt Shr 2009

% Growth Const US$

2009 CAGR 04-08

10 Key Markets

United States

Japan

France

Germany

Italy

Spain

United Kingdom

China

Canada

Brizil

$560.6

288.5

71.6

41.0

40.1

25.7

22.0

20.9

20.8

18.0

12.0

77.7%

40.0

9.9

5.7

5.6

3.6

3.0

2.9

2.9

2.5

1.7

3.8

2.4

3.0

2.1

4.2

3.9

7.7

4.1

25.2

5.8

11.9

5.9

6.3

3.0

5.4

4.1

4.1

8.0

3.1

22.0

8.1

11.6

COUNTRY Aust

ria

Belg

ium

Bulg

aria

Croa

tia

Czec

h Re

p.

Denm

ark

Esto

nia

Fran

ce

Irel

and

Ital

y

Latv

ia

Luxe

mbo

urg

Net

herl

ands

Pola

nd

Port

ugal

Rom

ania

Slov

akia

Slov

enia

Spai

n

Swed

en




RANK

US$bn MAT

Dec 2008

% Market Share



1 Autoimmune agents

2 Oncologics

3 Antidiabetics

4 Erythropoietins


6 Interferons

7 Growth Hormones

8 Blood Coagulation

9 Pure Vaccines


Top 10

85.1

15.2

13.8

12.4

11.5

6.3

5.6

2.8

2.8

2.5

1.9

74.8

100.0

17.8

16.2

14.5

13.5

7.4

6.5

3.3

3.2

3.0

2.3

87.8

8.3

17.3

17.9

16.6

-13.9

1.6

8.3

2.5

8.5

8.7

-1.7

7.4

16.8

31.8

42.8

14.9

4.6

12.9

7.7

10.4

14.6

32.2

6.6


180

180

Yes

180

90

180

Yes

240

90

30

No

120

180

180

No

360

90

90

Yes

180

14

14

Yes

14

90

90

No

180

75

75

Yes

75

45

45

Yes

45

135

135

Yes

135

120

120

No

240

30

180

Yes

180

Na

45

Yes

45

180

180

Yes

180

21

90

No

111

90

180

No

270

120

150

No

270

15

180

Yes

180

75

75

No

150

30

30

Yes

30

Tota

l Yes

Tota

l No

Tota

l





0 5 10 15 20


85

80

75

70

0 100 300 500 70065

600 400 200


Months from LoE

Japan

Italy

Spain

Hungary

Australia

Turkey

France

Czech Republic

Brazil

UK

Poland

Germany

Canada

24%

40%

41%

46%

50%

51%

52%

59%

65%

71%

73%

75%

81%

0% 30% 50% 80% 100% 90% 70% 60% 40% 20% 10%

US 89%


Life

Exp

ecta

ncy

Life

Exp

ecta

ncy


85

HUN SVK

FRA

GRC IRL

BEL AUT

PRT DNK

DEU

CHE SWE SWE

FIN GBR NLD

NOR ESP

TUR

RUS

ROM

BGR

POL CZE

80

75

70

65 0 100 200 300 700 600 500 400



FRA

GRC IRL

PRT DNK

DEU AUT FIN

BEL

GBR

CZE

SVK HUN

POL

ROM

BGR

NLD

ESP NOR

CHE ITA ITA

TUR

RUS


Q1 06

Q2 06

Q3 06

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

10

20

30

40

50

60

70

France Spain

UK Italy

Germany Turkey

% S

U M

arke

t sh

are


2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 0

5

10

15

20

25

30

40

35

45


Cons

tant

US$

Bn


Mo0/ Yr0




Mo12/ Yr1

Mo12/ Yr2

Mo12/ Yr3

0

20

40

60

80


Orig

inat

or v

olum

e as

% o

f dr

ug t

otal

SU

0 2005 2006 2007 2008 2009

100

200

300

400

500

600

Valu

e sa

les

US$

Bn


0 2005 2006 2007 2008 2009

100

200

300

400

500

600

700

800

Volu

me

sale

s St

anda

rd U

nits

Bn

395 390 391 387 384

302 325 347 373 397


0 2005 2006 2007 2008 2009

50

100

150

200

Valu

e Sa

les

US$

Bn


0 2005 2006 2007 2008 2009

50

100

150

200

250

300

350

400

Volu

me

Sale

s St

anda

rd U

nits

Bn

185 184 186 185 184

135 146

110

25

112

27

127

31

150

37

136

33

156 169 177


Drug

Use

/Cap

ita

Euro

s

Life Expectancy

700

HUN SLK

FRA GRC

IRL BEL AUT

PRT

DNK

DEU CHE

SWE FIN

GBR NLD

NOR

ITA

TUR

RUS ROM BGR

POL

CZE

600

500

400

300

200

100

0 65 70 75 80 85



RSP OLD vERSION

Prot

ecte

d Sa

les

US$

bn

16

14

10

6

2

12

8

4

0

Onco

logics

Angio

tensin

-IIs

Antid

iabeti

cs

Resp

irato

ry

Lipid

regula

tors

HIV a

ntivi

rals

Antip

sych

otics

antir

heum

atics

Antiu

lceran

ts

Platel

et ag

gr inh

ibs

Eryth

ropoie

ntins

Bone

calci

um re

gulat

ors

Antie

pilep

tics

Anti-

Alzhe

imers

Antid

epres

sant

s

Calci

um an

tagon

ists

Onco

logi

cs

Angi

oten

sin-

IIs

Anti

diab

etic

s

Resp

irato

ry

Lipi

d re

gula

tors

HIV

ant

ivira

ls

Anti

psyc

hoti

cs

anti

rheu

mat

ics

Anti

ulce

rant

s

Plat

elet

agg

r in

hibs

Eryt

hrop

oien

tins

Bone

cal

cium

reg

ulat

ors

Anti

epile

ptic

s

Anti

-Alz

heim

ers

Anti

depr

essa

nts

Calc

ium

ant

agon

ists



0

50

100

150

200

250

300


400

Num

ber

of d

ays

Denm

ark

Swed

en

Irela

nd

Neth

erla

nds

Fran

ce

Belg

ium

Bulg

aria

Ital

y

Spai

n

Aust

ria

Czec

h Re

p.

Esto

nia

Luxe

mbo

urg

Pola

nd

Slov

enia

Latv

ia

Rom

ania

Slov

akia

Croa

tiaPo

rtuga

l


0

2

4

6

8

10

12

14

16

Prot

ecte

d Sa

les

US$

bn



Patient co-pay

Price referencing


At the pharmacy


With wholesalers

With payers

Favouring brands

Favouring generics

Mar

ket

Rule

s M

arke

t In

cent

ives

0

2

6

4

8

10

% o

f Pr

ior

Year

’s S

ales


Hypertension -ARBs


20

40

60

80

100




% S

hane

Sal

es E

xpir

ing

100

90

70

50

30

20

10

80

60

40

0

% S

hane

Sal

es E

xpir

ing

100

90

70

50

30

20

10

80

60

40

0

10

16 17 19 24

17

28

24

42

29

14

ENBREL

REMICADE

AVASTIN

HUMIRA

LOVENOX

MABTHERA

0.00 3.00 5.00 6.00 4.00 2.00 1.00

LANTUS

Source: IMS 2009

Europe US

3.00

3.00

2.80

2.30

2.60

2.50

2.40

2.00

1.40

1.50

2.00

1.60

1.50

1.00

FIGURE 6. In Europe, generics make up almost one half of volume sales, but merely a fraction of value sales.



KEY FACTORS FOR AN EFFICIENT GENERIC MEDICINES MARKET

To maximize the contribution of generic medicines tothe affordability and sustainability of the healthcaresystem, the generic medicines industry must be able tooperate within a sustainable, competitive and efficientmarket model. In order to derive the maximum benefitfrom a generic medicine it must be available from dayone following patent expiry.This may seem obvious.However, in certain markets, generic medicine entry isoften delayed, partly by the need to gain pricing andreimbursement approval. Depending on the sales value ofthe originator product, lost savings can amount to tensof millions of Euros within the first year. In its finalreport on the EU Pharmaceutical Sector Inquiry(2008/9) the European Commission suggested that theadditional savings on the 219 prescription medicinesinvestigated could have been as much as 20% higher ifthere had been no delays to entry4.

As noted earlier, pricing systems in each country varywidely. Some directly link the price of the genericmedicine to the originator price whereas others have‘dynamic freedom’ of pricing and leave it to competitivemarket forces to dictate prices.Whatever the system, thepotential savings are significant; accrued benefits over theyears from generic medicines are estimated to be inexcess of €100 billion in the major EU markets.

HEALTHY COMPETITION

Stimulating competition between generic manufacturersnot only means lower costs for patients but also drivesproduct improvements, distribution efficiencies andimproved access to all medicines.Whereas an originatorproduct usually comes from a single source, genericmedicines are typically multi-sourced, with severalgeneric medicine manufacturers producing the sameproduct.This generally assists continuity of supply forparticular medicines which can be important at times ofincreased demand, such as unexpected requirements foranti-infectives during an influenza epidemic.

SUPPLY CONTINUITY

A further benefit of generic medicines arises from thesector’s continual provision of products many years afterthe patent has expired.The originator may have exitedfrom the market for several reasons after loss of patentprotection but invariably because of low volume demandleading to limited commercial opportunity. It is often thegeneric medicine that remains on the market, meetingthe needs of patients for whom there may be no suitabletherapeutic alternative for their particular condition.

ESSENTIAL INVESTMENT

Investment and employment within the generic medicinessector is vital for some member states. It is estimated thatthe European generic medicines industry consists of morethan 700 companies directly employing around 150,000people. Research from the largest generic medicinesemployer in Germany has shown that although they ‘only’employ 1,300 staff, by doing so they create a further 2,000jobs locally and in the region of another 1,400 jobsnationally. In economic terms, through direct spending,they generated “value-added” benefits in 2008 ofapproximately €140 million locally or about €243 millionnationwide.A careful extrapolation of this value wouldindicate that the European generics industry representssignificant economic value within the community.

In some cases, it is the local generic medicines industrythat sustains employment in a country’s pharmaceuticalmanufacturing sector as originator products are oftenimported from a central manufacturing site.Consolidation within the generic medicines industry isthreatening this position but countries with low-costmanufacturing potential may benefit, as well as thosecompanies that are able to identify niche or localcountry-specific opportunities.

CHALLENGES TO THE EUROPEAN GENERIC MEDICINESINDUSTRY

Some of the major challenges to the generic medicinesindustry in Europe arise from increasing costs in amarket undergoing constant price erosion, unsustainablepolicies and an unequal playing field compared to othergeographical regions with regard to taxes, regulationsand incentives.All of these limit the competitiveness andsustainability of the European generics sector.

LIMITATIONS ON PRE-EMPTING PATENT EXPIRY

The introduction of the Bolar provision in Europe5 hasnow enabled European manufacturers to develop genericmedicines within Europe prior to patent expiry.Previously, this could only happen in certain countrieswhere different patent positions or non-observance ornon-existence of patents made it possible.

Notwithstanding this advance, certain restrictions stillinhibit such development within Europe - the main onebeing the manufacture of commercial batches within theEU prior to patent expiry.As a result, productsdeveloped and manufactured in those ‘non-patent’position countries can be on the market earlier than anyproduct manufactured in Europe – a position that isachieved by importing finished product on the day ofpatent expiry having already gained approval for itsrelease using samples from the commercial batches. ForEuropean generic medicine companies this has meantcontinually having to develop many key molecules

5 Directive 2004/27/EC:An exception to patent infringement for obtaining EU marketing authorization of a generic or similar medicinal product.



outside the EU – including manufacturing which musttake place in the same country as product developmentto meet the day one launch.

Generally speaking, products are manufactured where theyare developed because of the need to link the regulatorydossier with the site of manufacture.Although not abarrier this does add a further hurdle of complex logistics.

Allowing the manufacture of commercial quantities inthe EU prior to patent expiry, ready to launch on dayone following loss of exclusivity, would encourage thedevelopment and manufacture of more genericmedicines within Europe – and avoid the delays andmissed opportunities for manufacturers and healthcareproviders.

IMPORTATION

Importation into Europe poses few major hurdles foroverseas generic medicines manufacturers. Conversely,exporting into these markets is often far less favourablegiven the strong incentives that exist for the localindustry - including export subsidies, tax breaks andgrants for building production or development facilities.Indeed, many European companies are starting to takeadvantage of these benefits to the detriment ofinvestments in Europe.

INCREASINGLY STRINGENT REGULATIONS

The generic medicines industry also faces an increasingregulatory burden such as pharmacovigilance requirements,periodic safety updates (PSURs) and the introduction ofBraille packaging. Rising costs in quality assurance,anti-counterfeit measures and product security are also amajor challenge and must all be absorbed without theability to counter them with price adjustments.Regulatory authorities gather around 70% of theirincome from generic medicine manufacturers, reflectingnot only the multiplicity of submissions for the samemolecule but also the numerous variations they arerequired to submit.

COSTS AND PRICING

In most instances, manufacturing cost levels for genericmedicines are the same as those for an originatorproduct. Often, the only flexible parameter for reducingcosts lies within the price of the active pharmaceuticalingredient (API) which may fall over time as APImanufacturers face their own competition.All othercosts tend to be fixed, with little room formanoeuvrability.This is the reason why any downwardpricing adjustment by an originator company prior togeneric entry creates problems for the generic medicinesmanufacturer. In this instance, any price linkagerequiring the generic medicine to be set at a permanentfixed percentage discount to the originator will seriouslydisadvantage its introduction and financial viability.

Initial price linkage may be necessary but should not becontinued throughout the lifecycle of a genericmedicine as it can be a major barrier for products withhigh development costs and relatively slow productuptake.This includes, for example, biosimilars orproducts with a ‘narrow therapeutic index’.As pricessink ever lower, the sustainability of some molecules incertain markets becomes increasingly questionable.

In most countries, legislation only allows reimbursementprices to go down and this becomes an issue withinfrastructure costs such as salaries and energy costsincreasing year-on-year. In this event the conflictbecomes self-perpetuating.

Pharmaceutical markets in the EU are national, eachwith their own drivers and systems. Some member statesare taking steps to learn from other healthcare systemswith a view to adopting them in their own country.However, it is important to remember that what worksin one country may not yield the same benefits inanother. Systems are not always compatible with thebasic healthcare infrastructures in other countries. If allcountries were to adopt the lowest price approach,sustaining the current supply of generic medicines in allcountries would be a major challenge.

TENDERING

In this respect, one major threat to the genericmedicines industry is a change in the procurementmethod for generic medicines. Fragile systems have beendisturbed since elements of tendering were adopted inDenmark, Germany and the Netherlands, producingwhat may only be considered as some short-termsavings.This has also had some unsettling financial effectsregarding the stability of some pharmacists andwholesalers as well as problems with continuity ofsupply as seen in the Netherlands and Germany

From the generic medicines manufacturers’ position theimpact of tendering in the long-term could lead tomajor changes in the industry, including reducedinvestment in not only the more complex molecules andbiosimilars but all prospective new generic medicines -especially more traditional molecules which may have alower market value. Few companies could afford to runthe risk of committing large sums only to findthemselves unable to recoup their investments or leftwith large inventories if they are not awarded a supplycontract upon approval.

There is continued interest in the European genericmedicines market from the Indian and Chinese-basedindustry.These countries see Europe as an opportunityto fully utilise their manufacturing capacity for finisheddose forms and APIs at marginal cost.This places theEuropean-based industry at a severe disadvantage as it isoften the low cost overseas players that are able to drivedown prices and maximise their market share throughtendering, which requires little European infrastructure.



BIOSIMILARS

The next category of products considered most likely togenerate significant savings will be biosimilar medicines.Products derived from biotechnology are among thefastest-growing medicines and often consideredexpensive. If savings are to be generated, there is a needfor early clarification of the regulatory approval pathwayfor biosimilar products.Although Europe is seen to leadthe way here, there is still uncertainty around complex,large molecules e.g. monoclonal antibodies. Moretransparent requirements would not only speed theirdevelopment but also encourage more companies toinvest, raising competition in this very important marketsector.

Biosimilar approvals are based on stringent submissionrequirements, including substantial clinical studies.Accordingly, their associated development costs aresignificantly higher than for small molecule genericmedicines; estimates range up to US$150 million foreach molecule.Additional high-cost risk managementplans must also be produced and implemented. Globaldevelopment programs for biosimilar products are also amust; not even large, financially healthy companies canafford to duplicate such expensive pre-clinical andclinical studies in each country or region in the world.There is also a clear need to develop a consistentscientific global approach to regulating these products.

As a novel segment, biosimilar medicines are proving achallenge to bring to market. In addition to the highcosts of development, unfamiliarity with the productclass and misinformation has created a significant needfor promotion. Furthermore, with lack of clarity aroundtheir inter-changeability and substitution with theoriginator reference product they have been generallyslow to gain market share.

The ability of the biosimilar medicines’ company torecoup this investment is vital to secure the developmentof second generation biosimilars and achievement of thefull value and savings they can bring.

Products based on biotechnology are indeed significantcontributors to the rising cost of the drugs bill in allcountries. Savings from traditional generic medicines willnot be able to compensate for this escalation in drugexpenditure, with the resultant inability of payers to controlcosts. Increased competition and market penetration ofbiosimilar medicines provide a major opportunity tocontrol the costs and availability of biopharmaceuticalmedicines. It is estimated that a 20% price reduction couldresult in savings in excess of €1.8 billion.

FIGURE 7. Biopharmaceuticals with High Biosimilar MarketPotential – Top 6 Biopharmaceuticals, in bn USD (2009).

DELAYING TACTICS

The recent EU Pharmaceutical Sector Inquiry highlightedthe issue of practices employed to delay or even block theentry of generic medicine competition. Instruments usedby the originator companies concerning the productsreviewed were found to have delayed entry by more thanseven months post loss of exclusivity (LoE).

The use of patent clusters - allowing a medicine to beprotected by up to 1,300 patents or patents pending -leads to a lack of transparency for the generic medicinedeveloper.The ensuing litigation can take several years(on average 2.8 years in the Inquiry report) and be acostly exercise for the generic medicine company.Thiscost will eventually have to be passed on to the payer orpatient through pricing, which again erodes the potentialsaving from the generic medicine. Furthermore, in 75%of the European Patent Office opposition cases startedby generic medicine companies, patents are revoked orrestricted. Interventions before competent authorities,based on patent linkage or claims of minor quality, havedelayed the generic medicines market entry on averageby four months.

Generics won 62% of the 149 litigations that proceededto trial. Of the 700 total started litigations, 223 weresettled, with 50% of those settlement agreementscontaining what the Commission consider to be alimitation on generic entry. Some were associated with adirect payment from the originator company or a licenseand distribution agreement.

COUNTRY US$bn 2009

% Mkt Shr 2009

% Growth Const US$

2009 CAGR 04-08

10 Key Markets

United States

Japan

France

Germany

Italy

Spain

United Kingdom

China

Canada

Brizil

$560.6

288.5

71.6

41.0

40.1

25.7

22.0

20.9

20.8

18.0

12.0

77.7%

40.0

9.9

5.7

5.6

3.6

3.0

2.9

2.9

2.5

1.7

3.8

2.4

3.0

2.1

4.2

3.9

7.7

4.1

25.2

5.8

11.9

5.9

6.3

3.0

5.4

4.1

4.1

8.0

3.1

22.0

8.1

11.6

COUNTRY Aust

ria

Belg

ium

Bulg

aria

Croa

tia

Czec

h Re

p.

Denm

ark

Esto

nia

Fran

ce

Irel

and

Ital

y

Latv

ia

Luxe

mbo

urg

Net

herl

ands

Pola

nd

Port

ugal

Rom

ania

Slov

akia

Slov

enia

Spai

n

Swed

en




RANK

US$bn MAT

Dec 2008

% Market Share



1 Autoimmune agents

2 Oncologics

3 Antidiabetics

4 Erythropoietins


6 Interferons

7 Growth Hormones

8 Blood Coagulation

9 Pure Vaccines


Top 10

85.1

15.2

13.8

12.4

11.5

6.3

5.6

2.8

2.8

2.5

1.9

74.8

100.0

17.8

16.2

14.5

13.5

7.4

6.5

3.3

3.2

3.0

2.3

87.8

8.3

17.3

17.9

16.6

-13.9

1.6

8.3

2.5

8.5

8.7

-1.7

7.4

16.8

31.8

42.8

14.9

4.6

12.9

7.7

10.4

14.6

32.2

6.6


180

180

Yes

180

90

180

Yes

240

90

30

No

120

180

180

No

360

90

90

Yes

180

14

14

Yes

14

90

90

No

180

75

75

Yes

75

45

45

Yes

45

135

135

Yes

135

120

120

No

240

30

180

Yes

180

Na

45

Yes

45

180

180

Yes

180

21

90

No

111

90

180

No

270

120

150

No

270

15

180

Yes

180

75

75

No

150

30

30

Yes

30

Tota

l Yes

Tota

l No

Tota

l





0 5 10 15 20


85

80

75

70

0 100 300 500 70065

600 400 200


Months from LoE

Japan

Italy

Spain

Hungary

Australia

Turkey

France

Czech Republic

Brazil

UK

Poland

Germany

Canada

24%

40%

41%

46%

50%

51%

52%

59%

65%

71%

73%

75%

81%

0% 30% 50% 80% 100% 90% 70% 60% 40% 20% 10%

US 89%


Life

Exp

ecta

ncy

Life

Exp

ecta

ncy


85

HUN SVK

FRA

GRC IRL

BEL AUT

PRT DNK

DEU

CHE SWE SWE

FIN GBR NLD

NOR ESP

TUR

RUS

ROM

BGR

POL CZE

80

75

70

65 0 100 200 300 700 600 500 400



FRA

GRC IRL

PRT DNK

DEU AUT FIN

BEL

GBR

CZE

SVK HUN

POL

ROM

BGR

NLD

ESP NOR

CHE ITA ITA

TUR

RUS


Q1 06

Q2 06

Q3 06

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

10

20

30

40

50

60

70

France Spain

UK Italy

Germany Turkey

% S

U M

arke

t sh

are


2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 0

5

10

15

20

25

30

40

35

45


Cons

tant

US$

Bn


Mo0/ Yr0




Mo12/ Yr1

Mo12/ Yr2

Mo12/ Yr3

0

20

40

60

80


Orig

inat

or v

olum

e as

% o

f dr

ug t

otal

SU

0 2005 2006 2007 2008 2009

100

200

300

400

500

600

Valu

e sa

les

US$

Bn


0 2005 2006 2007 2008 2009

100

200

300

400

500

600

700

800

Volu

me

sale

s St

anda

rd U

nits

Bn

395 390 391 387 384

302 325 347 373 397


0 2005 2006 2007 2008 2009

50

100

150

200

Valu

e Sa

les

US$

Bn


0 2005 2006 2007 2008 2009

50

100

150

200

250

300

350

400

Volu

me

Sale

s St

anda

rd U

nits

Bn

185 184 186 185 184

135 146

110

25

112

27

127

31

150

37

136

33

156 169 177


Drug

Use

/Cap

ita

Euro

s

Life Expectancy

700

HUN SLK

FRA GRC

IRL BEL AUT

PRT

DNK

DEU CHE

SWE FIN

GBR NLD

NOR

ITA

TUR

RUS ROM BGR

POL

CZE

600

500

400

300

200

100

0 65 70 75 80 85



RSP OLD vERSION

Prot

ecte

d Sa

les

US$

bn

16

14

10

6

2

12

8

4

0

Onco

logics

Angio

tensin

-IIs

Antid

iabeti

cs

Resp

irato

ry

Lipid

regula

tors

HIV a

ntivi

rals

Antip

sych

otics

antir

heum

atics

Antiu

lceran

ts

Platel

et ag

gr inh

ibs

Eryth

ropoie

ntins

Bone

calci

um re

gulat

ors

Antie

pilep

tics

Anti-

Alzhe

imers

Antid

epres

sant

s

Calci

um an

tagon

ists

Onco

logi

cs

Angi

oten

sin-

IIs

Anti

diab

etic

s

Resp

irato

ry

Lipi

d re

gula

tors

HIV

ant

ivira

ls

Anti

psyc

hoti

cs

anti

rheu

mat

ics

Anti

ulce

rant

s

Plat

elet

agg

r in

hibs

Eryt

hrop

oien

tins

Bone

cal

cium

reg

ulat

ors

Anti

epile

ptic

s

Anti

-Alz

heim

ers

Anti

depr

essa

nts

Calc

ium

ant

agon

ists



0

50

100

150

200

250

300


400

Num

ber

of d

ays

Denm

ark

Swed

en

Irela

nd

Neth

erla

nds

Fran

ce

Belg

ium

Bulg

aria

Ital

y

Spai

n

Aust

ria

Czec

h Re

p.

Esto

nia

Luxe

mbo

urg

Pola

nd

Slov

enia

Latv

ia

Rom

ania

Slov

akia

Croa

tiaPo

rtuga

l


0

2

4

6

8

10

12

14

16

Prot

ecte

d Sa

les

US$

bn



Patient co-pay

Price referencing


At the pharmacy


With wholesalers

With payers

Favouring brands

Favouring generics

Mar

ket

Rule

s M

arke

t In

cent

ives

0

2

6

4

8

10

% o

f Pr

ior

Year

’s S

ales


Hypertension -ARBs


20

40

60

80

100




% S

hane

Sal

es E

xpir

ing

100

90

70

50

30

20

10

80

60

40

0

% S

hane

Sal

es E

xpir

ing

100

90

70

50

30

20

10

80

60

40

0

10

16 17 19 24

17

28

24

42

29

14

ENBREL

REMICADE

AVASTIN

HUMIRA

LOVENOX

MABTHERA

0.00 3.00 5.00 6.00 4.00 2.00 1.00

LANTUS

Source: IMS 2009

Europe US

3.00

3.00

2.80

2.30

2.60

2.50

2.40

2.00

1.40

1.50

2.00

1.60

1.50

1.00


COUNTRY US$bn 2009

% Mkt Shr 2009

% Growth Const US$

2009 CAGR 04-08

10 Key Markets

United States

Japan

France

Germany

Italy

Spain

United Kingdom

China

Canada

Brizil

$560.6

288.5

71.6

41.0

40.1

25.7

22.0

20.9

20.8

18.0

12.0

77.7%

40.0

9.9

5.7

5.6

3.6

3.0

2.9

2.9

2.5

1.7

3.8

2.4

3.0

2.1

4.2

3.9

7.7

4.1

25.2

5.8

11.9

5.9

6.3

3.0

5.4

4.1

4.1

8.0

3.1

22.0

8.1

11.6

COUNTRY Aust

ria

Belg

ium

Bulg

aria

Croa

tia

Czec

h Re

p.

Denm

ark

Esto

nia

Fran

ce

Irel

and

Ital

y

Latv

ia

Luxe

mbo

urg

Net

herl

ands

Pola

nd

Port

ugal

Rom

ania

Slov

akia

Slov

enia

Spai

n

Swed

en

Average Time Delayfor Price Approval

Average Time Delay forReimbursement Approval

Are the Applicationsfor P&R of genericmedicine’s simultaneous?

Average Time Delay forP&R Approval after MA



RANK

US$bn MAT

Dec 2008

% Market Share



1 Autoimmune agents

2 Oncologics

3 Antidiabetics

4 Erythropoietins


6 Interferons

7 Growth Hormones

8 Blood Coagulation

9 Pure Vaccines


Top 10

85.1

15.2

13.8

12.4

11.5

6.3

5.6

2.8

2.8

2.5

1.9

74.8

100.0

17.8

16.2

14.5

13.5

7.4

6.5

3.3

3.2

3.0

2.3

87.8

8.3

17.3

17.9

16.6

-13.9

1.6

8.3

2.5

8.5

8.7

-1.7

7.4

16.8

31.8

42.8

14.9

4.6

12.9

7.7

10.4

14.6

32.2

6.6


180

180

Yes

180

90

180

Yes

240

90

30

No

120

180

180

No

360

90

90

Yes

180

14

14

Yes

14

90

90

No

180

75

75

Yes

75

45

45

Yes

45

135

135

Yes

135

120

120

No

240

30

180

Yes

180

N/A

45

Yes

45

180

180

Yes

180

21

90

No

111

90

180

No

270

120

150

No

270

15

180

Yes

180

75

75

No

150

30

30

Yes

30

Tota

l Yes

Tota

l No

Tota

l





0 5 10 15 20


85

80

75

70

0 100 300 500 70065

600 400 200


Months from LoE

Japan

Italy

Spain

Hungary

Australia

Turkey

France

Czech Republic

Brazil

UK

Poland

Germany

Canada

24%

40%

41%

46%

50%

51%

52%

59%

65%

71%

73%

75%

81%

0% 30% 50% 80% 100% 90% 70% 60% 40% 20% 10%

US 89%


Life

Exp

ecta

ncy

Life

Exp

ecta

ncy


85

HUN SVK

FRA

GRC IRL

BEL AUT

PRT DNK

DEU

CHE SWE SWE

FIN GBR NLD

NOR ESP

TUR

RUS

ROM

BGR

POL CZE

80

75

70

65 0 100 200 300 700 600 500 400



FRA

GRC IRL

PRT DNK

DEU AUT FIN

BEL

GBR

CZE

SVK HUN

POL

ROM

BGR

NLD

ESP NOR

CHE ITA ITA

TUR

RUS


Q1 06

Q2 06

Q3 06

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

10

20

30

40

50

60

70

France Spain

UK Italy

Germany Turkey

% S

U M

arke

t sh

are


2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 0

5

10

15

20

25

30

40

35

45


Cons

tant

US$

Bn


Mo0/ Yr0




Mo12/ Yr1

Mo12/ Yr2

Mo12/ Yr3

0

20

40

60

80


Orig

inat

or v

olum

e as

% o

f dr

ug t

otal

SU

0 2005 2006 2007 2008 2009

100

200

300

400

500

600

Valu

e sa

les

US$

Bn


0 2005 2006 2007 2008 2009

100

200

300

400

500

600

700

800

Volu

me

sale

s St

anda

rd U

nits

Bn

395 390 391 387 384

302 325 347 373 397


0 2005 2006 2007 2008 2009

50

100

150

200

Valu

e Sa

les

US$

Bn


0 2005 2006 2007 2008 2009

50

100

150

200

250

300

350

400

Volu

me

Sale

s St

anda

rd U

nits

Bn

185 184 186 185 184

135 146

110

25

112

27

127

31

150

37

136

33

156 169 177


Drug

Use

/Cap

ita

Euro

s

Life Expectancy

700

HUN SLK

FRA GRC

IRL BEL AUT

PRT

DNK

DEU CHE

SWE FIN

GBR NLD

NOR

ITA

TUR

RUS ROM BGR

POL

CZE

600

500

400

300

200

100

0 65 70 75 80 85



RSP OLD vERSION

Prot

ecte

d Sa

les

US$

bn

16

14

10

6

2

12

8

4

0

Onco

logics

Angio

tensin

-IIs

Antid

iabeti

cs

Resp

irato

ry

Lipid

regula

tors

HIV a

ntivi

rals

Antip

sych

otics

antir

heum

atics

Antiu

lceran

ts

Platel

et ag

gr inh

ibs

Eryth

ropoie

ntins

Bone

calci

um re

gulat

ors

Antie

pilep

tics

Anti-

Alzhe

imers

Antid

epres

sant

s

Calci

um an

tagon

ists

Onco

logi

cs

Angi

oten

sin-

IIs

Anti

diab

etic

s

Resp

irato

ry

Lipi

d re

gula

tors

HIV

ant

ivira

ls

Anti

psyc

hoti

cs

anti

rheu

mat

ics

Anti

ulce

rant

s

Plat

elet

agg

r in

hibs

Eryt

hrop

oien

tins

Bone

cal

cium

reg

ulat

ors

Anti

epile

ptic

s

Anti

-Alz

heim

ers

Anti

depr

essa

nts

Calc

ium

ant

agon

ists



0

50

100

150

200

250

300

350Patent Linkage Average time delay for P&R approval after MA

400

Num

ber

of d

ays

Denm

ark

Swed

en

Irela

nd

Neth

erla

nds

Fran

ce

Belg

ium

Bulg

aria

Ital

y

Spai

n

Aust

ria

Czec

h Re

p.

Esto

nia

Luxe

mbo

urg

Pola

nd

Slov

enia

Latv

ia

Rom

ania

Slov

akia

Croa

tiaPo

rtuga

l


0

2

4

6

8

10

12

14

16

Prot

ecte

d Sa

les

US$

bn



Patient co-pay

Price referencing


At the pharmacy


With wholesalers

With payers

Favouring brands

Favouring generics

Mar

ket

Rule

s M

arke

t In

cent

ives

0

2

6

4

8

10

% o

f Pr

ior

Year

’s S

ales


Hypertension -ARBs


20

40

60

80

100




% S

hane

Sal

es E

xpir

ing

100

90

70

50

30

20

10

80

60

40

0

% S

hane

Sal

es E

xpir

ing

100

90

70

50

30

20

10

80

60

40

0

10

16 17 19 24

17

28

24

42

29

14

ENBREL

REMICADE

AVASTIN

HUMIRA

LOVENOX

MABTHERA

0.00 3.00 5.00 6.00 4.00 2.00 1.00

LANTUS

Source: IMS 2009

Europe US

3.00

3.00

2.80

2.30

2.60

2.50

2.40

2.00

1.40

1.50

2.00

1.60

1.50

1.00

0

50

100

150

200

250

300

350Average time delay for P&R approval after MA

400

Num

ber

of d

ays

Denm

ark

Swed

en

Irela

nd

Neth

erla

nds

Fran

ce

Belg

ium

Bulg

aria

Ital

y

Spai

n

Aust

ria

Czec

h Re

p.

Esto

nia

Luxe

mbo

urg

Pola

nd

Slov

enia

Latv

ia

Rom

ania

Slov

akia

Croa

tiaPo

rtuga

l

Patent Linkage


Mean average delay

FIGURE 8. Time delays by country for price and reimbursement approval


The threat of litigation is, for some smaller genericmedicines companies, a major deterrent. For the largercompanies it involves not only cost but lengthy use oflegal resources that could be utilised elsewhere. Clearly,patents and intellectual property should be defended.However, the results of the Inquiry surely indicate thatdefence is often initiated from weak ground in manycases.The existence of a ‘community’ patent and a singleEuropean patent litigation system would go a long way toremoving some of these commercially inspired defensivepatent strategies.Whatever the consequences, the emphasisshould now be on a quick implementation of therecommendations in order to bring transparency to whatis often a delicate area for all concerned.

BIOEQUIVALENCE

Some originator companies continue to imply thatgeneric medicines may be less safe and effective than thebranded counterpart.This is considered to be anunfounded claim. Indeed, a recent review and meta-analysis looking at the clinical equivalence of generic andbrand-name drugs used in cardiovascular disease showedno superiority of the originator medicine over thegeneric medicine6. In the absence of sound clinical data,the use of a ‘fear factor’ in misinforming the public by theoriginator company should be prevented.

PATENT LINKAGE

Delays to generic medicine entry are sometimes causedby regulations in certain countries with regard to pricingapproval following marketing or price and reimbursement

authorisation. Further delays may then be encounteredwhilst waiting for reimbursement status, as shown inFigure 8.

Interpretation of the regulations in some countries mayeven delay granting of the marketing authorisationthrough a mechanism known as ‘patent linkage’.In Portugal there are currently 1407 law suits before theadministrative courts using a specific provision of thePortuguese constitution to delay entry.

Originators have alleged that granting a marketingauthorisation constitutes a violation of their process andproduct patents.This is despite EU legislation which statesthat the granting of a marketing authorisation should bebased solely on quality, safety and efficacy data and not onother criteria such as economic factors.The administrativecourts have even ignored claims from the genericmedicines companies that their products do not infringethe patents.They have recently suspended the granting ofmarketing authorisations and pricing and reimbursementapproval for a wide range of key molecules includingatorvastatin, clopidogrel, escitalopram and others.Theseactions deprive patients in Portugal access to affordablemedicines and delay potential savings for the payers(Figure 9 overleaf ).

The Transparency Directive 89/105/EEC lays downmaximum time-limits of three or six months for pricingand reimbursement decisions.This does not precludeMember States from establishing quicker decision makingprocedures where deemed appropriate.

6 Clinical Equivalence of Generic and Brand-Name Drugs Used in Cardiovascular Disease:A Meta-Analysis. Kesselheim AS, Misono AS, Lee JL, et al. JAMA, 2008; 300(21):2514-26.7 Apogen, 7th December 2009



Commenting on this issue, the EU PharmaceuticalSector Inquiry recommended amendments to policies inthose countries where delays have occurred. TheCommission even went as far as to invite Member Statesto consider the granting of automatic/immediate pricingand reimbursement status to generic medicines wherethe corresponding originator product already benefittedfrom reimbursement based on a higher price.Theyconcluded that this would considerably alleviate theadministrative burden for all concerned and lead to fasteraccess of generic medicines.This should happen sooner,not later.

The Inquiry was also critical of other delaying tacticssuch as 'settlement agreements' between originators andgeneric companies, abuses of a dominant market positionand defensive patenting strategies.

THE GENERIC MEDICINES MARKET AND KEY DYNAMICS

The global pharmaceutical market is currently valued atUS$720 billion, growing at 5% per year (MAT, March2009). In Europe, the market is estimated at US$236billion, growing at 5.8% per year, with a forecastedincrease of a further US$45 billion in the time period2008 to 2013.

Based on IMS MIDAS Market Segmentation data, thegeneric medicines market has an estimated value of €57 billion in the top 8 global markets with growth ofaround 8% in 2009, up from 3% in the prior twelvemonths. In Europe, the EGA estimate that the genericmedicines market size is €31 billion and growing at rateof approximately 6% per annum. However, growthfigures can be misleading for payers because they oftenoverlook the fact that for each €1 increase in the valueof the generic medicines sector, almost €3 on average aresaved on total pharmaceutical expenditure.This reflectsthe lower price of the generic medicine used whencompared to the price of the originator product, had thisbeen prescribed.Thus, the higher the growth in thegeneric medicines market, the greater the savings that are made.

PRICING DYNAMICS

Pricing policies, reimbursement levels and genericmedicines substitution are key dynamics in the genericmedicines market. In some countries, such as Italy andFrance, the price of the generic medicine is directlylinked to the price of the originator product whereas inother markets, such as the UK, there is relative freedomof pricing with competitive forces setting the price.

The pricing level in each country therefore variesconsiderably but generic medicines prices are alwayslower than the originator price, hence the potential forsavings.While it is impossible to have one systemthroughout, for all the reasons we have mentioned, it isimportant to have coherent systems that create room forcompetition.The French system, for example, stimulatescompetition without destroying prices, thus deliveringsignificant savings to the medicines bill yet maintainingadequate margins within the supply chain to provide therequired service levels.

It should be noted, however, that if the price of genericmedicines is very low, the incentive for pharmacists todispense them is minimal since part of theirremuneration is frequently based on the value of eachitem dispensed. Unless they are compensated for this lossin another way, pharmacists may not give full support toany generic medicines initiative. Noting the financialdisincentives to dispense generic medicines that exist inmany EU countries, Prof. Dr. Simoens in his paper goeson to show that where companies offer discounts topharmacists, healthcare payers and patients do notcapture the potential savings from generic medicines.Thus, price and reimbursement levels for genericmedicines are important for all parties.

COUNTRY US$bn 2009

% Mkt Shr 2009

% Growth Const US$

2009 CAGR 04-08

10 Key Markets

United States

Japan

France

Germany

Italy

Spain

United Kingdom

China

Canada

Brizil

$560.6

288.5

71.6

41.0

40.1

25.7

22.0

20.9

20.8

18.0

12.0

77.7%

40.0

9.9

5.7

5.6

3.6

3.0

2.9

2.9

2.5

1.7

3.8

2.4

3.0

2.1

4.2

3.9

7.7

4.1

25.2

5.8

11.9

5.9

6.3

3.0

5.4

4.1

4.1

8.0

3.1

22.0

8.1

11.6

COUNTRY Aust

ria

Belg

ium

Bulg

aria

Croa

tia

Czec

h Re

p.

Denm

ark

Esto

nia

Fran

ce

Irel

and

Ital

y

Latv

ia

Luxe

mbo

urg

Net

herl

ands

Pola

nd

Port

ugal

Rom

ania

Slov

akia

Slov

enia

Spai

n

Swed

en

Average Time Delayfor Price Approval

Average Time Delay forReimbursement Approval

Are the Applicationsfor P&R of genericmedicine’s simultaneous?

Average Time Delay forP&R Approval after MA



RANK

US$bn MAT

Dec 2008

% Market Share



1 Autoimmune agents

2 Oncologics

3 Antidiabetics

4 Erythropoietins


6 Interferons

7 Growth Hormones

8 Blood Coagulation

9 Pure Vaccines


Top 10

85.1

15.2

13.8

12.4

11.5

6.3

5.6

2.8

2.8

2.5

1.9

74.8

100.0

17.8

16.2

14.5

13.5

7.4

6.5

3.3

3.2

3.0

2.3

87.8

8.3

17.3

17.9

16.6

-13.9

1.6

8.3

2.5

8.5

8.7

-1.7

7.4

16.8

31.8

42.8

14.9

4.6

12.9

7.7

10.4

14.6

32.2

6.6


180

180

Yes

180

90

180

Yes

240

90

30

No

120

180

180

No

360

90

90

Yes

180

14

14

Yes

14

90

90

No

180

75

75

Yes

75

45

45

Yes

45

135

135

Yes

135

120

120

No

240

30

180

Yes

180

N/A

45

Yes

45

180

180

Yes

180

21

90

No

111

90

180

No

270

120

150

No

270

15

180

Yes

180

75

75

No

150

30

30

Yes

30

Tota

l Yes

Tota

l No

Tota

l





0 5 10 15 20


85

80

75

70

0 100 300 500 70065

600 400 200


Months from LoE

Japan

Italy

Spain

Hungary

Australia

Turkey

France

Czech Republic

Brazil

UK

Poland

Germany

Canada

24%

40%

41%

46%

50%

51%

52%

59%

65%

71%

73%

75%

81%

0% 30% 50% 80% 100% 90% 70% 60% 40% 20% 10%

US 89%


Life

Exp

ecta

ncy

Life

Exp

ecta

ncy


85

HUN SVK

FRA

GRC IRL

BEL AUT

PRT DNK

DEU

CHE SWE SWE

FIN GBR NLD

NOR ESP

TUR

RUS

ROM

BGR

POL CZE

80

75

70

65 0 100 200 300 700 600 500 400



FRA

GRC IRL

PRT DNK

DEU AUT FIN

BEL

GBR

CZE

SVK HUN

POL

ROM

BGR

NLD

ESP NOR

CHE ITA ITA

TUR

RUS


Q1 06

Q2 06

Q3 06

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

10

20

30

40

50

60

70

France Spain

UK Italy

Germany Turkey

% S

U M

arke

t sh

are


2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 0

5

10

15

20

25

30

40

35

45


Cons

tant

US$

Bn


Mo0/ Yr0




Mo12/ Yr1

Mo12/ Yr2

Mo12/ Yr3

0

20

40

60

80


Orig

inat

or v

olum

e as

% o

f dr

ug t

otal

SU

0 2005 2006 2007 2008 2009

100

200

300

400

500

600

Valu

e sa

les

US$

Bn


0 2005 2006 2007 2008 2009

100

200

300

400

500

600

700

800

Volu

me

sale

s St

anda

rd U

nits

Bn

395 390 391 387 384

302 325 347 373 397


0 2005 2006 2007 2008 2009

50

100

150

200

Valu

e Sa

les

US$

Bn


0 2005 2006 2007 2008 2009

50

100

150

200

250

300

350

400

Volu

me

Sale

s St

anda

rd U

nits

Bn

185 184 186 185 184

135 146

110

25

112

27

127

31

150

37

136

33

156 169 177


Drug

Use

/Cap

ita

Euro

s

Life Expectancy

700

HUN SLK

FRA GRC

IRL BEL AUT

PRT

DNK

DEU CHE

SWE FIN

GBR NLD

NOR

ITA

TUR

RUS ROM BGR

POL

CZE

600

500

400

300

200

100

0 65 70 75 80 85



RSP OLD vERSION

Prot

ecte

d Sa

les

US$

bn

16

14

10

6

2

12

8

4

0

Onco

logics

Angio

tensin

-IIs

Antid

iabeti

cs

Resp

irato

ry

Lipid

regula

tors

HIV a

ntivi

rals

Antip

sych

otics

antir

heum

atics

Antiu

lceran

ts

Platel

et ag

gr inh

ibs

Eryth

ropoie

ntins

Bone

calci

um re

gulat

ors

Antie

pilep

tics

Anti-

Alzhe

imers

Antid

epres

sant

s

Calci

um an

tagon

ists

Onco

logi

cs

Angi

oten

sin-

IIs

Anti

diab

etic

s

Resp

irato

ry

Lipi

d re

gula

tors

HIV

ant

ivira

ls

Anti

psyc

hoti

cs

anti

rheu

mat

ics

Anti

ulce

rant

s

Plat

elet

agg

r in

hibs

Eryt

hrop

oien

tins

Bone

cal

cium

reg

ulat

ors

Anti

epile

ptic

s

Anti

-Alz

heim

ers

Anti

depr

essa

nts

Calc

ium

ant

agon

ists



0

50

100

150

200

250

300

350Patent Linkage Average time delay for P&R approval after MA

400

Num

ber

of d

ays

Denm

ark

Swed

en

Irela

nd

Neth

erla

nds

Fran

ce

Belg

ium

Bulg

aria

Ital

y

Spai

n

Aust

ria

Czec

h Re

p.

Esto

nia

Luxe

mbo

urg

Pola

nd

Slov

enia

Latv

ia

Rom

ania

Slov

akia

Croa

tiaPo

rtuga

l


0

2

4

6

8

10

12

14

16

Prot

ecte

d Sa

les

US$

bn



Patient co-pay

Price referencing


At the pharmacy


With wholesalers

With payers

Favouring brands

Favouring generics

Mar

ket

Rule

s M

arke

t In

cent

ives

0

2

6

4

8

10

% o

f Pr

ior

Year

’s S

ales


Hypertension -ARBs


20

40

60

80

100




% S

hane

Sal

es E

xpir

ing

100

90

70

50

30

20

10

80

60

40

0

% S

hane

Sal

es E

xpir

ing

100

90

70

50

30

20

10

80

60

40

0

10

16 17 19 24

17

28

24

42

29

14

ENBREL

REMICADE

AVASTIN

HUMIRA

LOVENOX

MABTHERA

0.00 3.00 5.00 6.00 4.00 2.00 1.00

LANTUS

Source: IMS 2009

Europe US

3.00

3.00

2.80

2.30

2.60

2.50

2.40

2.00

1.40

1.50

2.00

1.60

1.50

1.00

0

50

100

150

200

250

300

350Average time delay for P&R approval after MA

400

Num

ber

of d

ays

Denm

ark

Swed

en

Irela

nd

Neth

erla

nds

Fran

ce

Belg

ium

Bulg

aria

Ital

y

Spai

n

Aust

ria

Czec

h Re

p.

Esto

nia

Luxe

mbo

urg

Pola

nd

Slov

enia

Latv

ia

Rom

ania

Slov

akia

Croa

tiaPo

rtuga

l

Patent Linkage


Mean average delay

FIGURE 9. Time delay for price andreimbursement approval for a genericmedicine after granting marketauthorisation.



GENERIC SUBSTITUTION

Where patient co-payment policies are in place, genericmedicines offer a lower financial burden for the patientbut may be less attractive for the pharmacist to dispense.This depends on the regulations governing pharmacistreimbursement. For example, where the pharmacistreceives a percentage of the price there is actually anegative incentive to dispense a generic as generics arealways priced lower.This is where substitution rules maybecome important. Compulsory substitution for aprescribed originator medicine requires the pharmacistto dispense a generic medicine in order to bereimbursed. Optional substitution can be less effective asit allows the physician to specifically request that aparticular product is not substituted. Some substitutionrules include a price element whereby only genericmedicines within a certain price band may be used asthe substituted product.

The degree of generic medicine penetration andutilisation therefore also varies widely from country tocountry because of the local dynamics on the supply anddemand side.

CHANGES IN PROCUREMENT

To date, the main focus around generic medicines hasbeen on cost. Indeed, when governments see the growthin this sector they all too often assume that it is thrivingand successful. In reality, many smaller generic medicinecompanies are struggling to stay in business; even themajor ones deliver less than half the net income of theoriginator companies. Enforced price reductions,international reference pricing and procurement throughtendering put the long-term future of the genericmedicines industry at risk.

If ‘tendering’ is to remain then tenders for new genericmolecules should only be considered after a period oftime following launch, to enable a competitive positionto be established. Generally speaking, tendering currentlyresults in selection of the lowest priced product and forreasons explained earlier, supplies will then likely besourced from manufacturers outside of the EU.Tendering currently predisposes to a monopoly supplyposition leaving exposure to all the threats andconsequences associated with such a strategy.

Multi-sourcing of generic medicines within Europe is oneof the competitive forces that ensure low prices, choice andcontinuity of supply. Complex logistics can further increaserisks to continuity of supply especially if demand increases

unexpectedly. Potentially a non-supply situation could ariseif alternative sources of the product are no longer availablein certain countries. Stock-outs with generics are inevitableat some point in time for a variety of reasons. Even ifpayers can contractually recoup costs from themanufacturer in the event of inability to supply, this maystill lead to a patient being unable to access his usualmedicine.Thus, tendering for generic medicines could inthe long-term lead to an increase in costs as playerswithdraw from the market; indeed experience in theNetherlands has already seen manufacturers withdrawingcertain molecules.Tendering also selects the lowest pricedproduct on offer, ignoring all other attributes, which maybe to the long-term detriment of the patient.

Tendering will certainly encourage consolidation whichmay or may not be in the interest of certain countries orplayers.

The ‘Sunset’ clause associated with market authorisations7

could also lead to issues for manufacturers in the event ofbeing unable to find a market for their products.

DISTRIBUTION

One key element in the market is the changing role ofdistributors in the generic medicine supply chain.Verticalintegration (wholesaler acquisition of pharmacies) has seenwholesalers moving over time from logistics providers tocustomers. Some have even adopted their own private labelsupply of generic medicines. However, the major issue isthe margin that generic medicines can offer to wholesalersand this has been exacerbated with the move by originatorcompanies to a direct-to-pharmacy or customer approach.This has limited access to certain products for somewholesalers as well as squeezing margins, meaning thatdistribution costs for generic medicines as part of theiroverall business are causing financial issues.Where the feefor distribution is a fixed percentage of the medicine’s pricethen the cost of distributing a product which cost just afew cents a pack is not financially viable.The challenge fordistributors is compounded when you consider theextremely low prices resulting from tendering of genericmedicines in some markets.

Proposals for a fee for each pack of generic medicinesdelivered have been suggested but, as already indicated,there is little margin within the price of a genericmedicine to cover this additional cost in the absence of aprice increase.This will only further discourage thesupply of generic medicines in a market unless anequitable solution for both manufacturer and distributorcan be found.

8 EC 726/2004: Marketing authorisation lapses if the product is not placed on the market within three years of being granted authorisation or if it was previously on the market and hasnot been for a period of three consecutive years.



MARKET RULES AND INCENTIVES

Market forces vary across the EU depending on whetherthe healthcare system in place focuses attention onphysicians, pharmacists, wholesalers or payers (Figure 10).

Some degree of substitution, whether automatic oroptional, exists in most EU countries which encouragesgeneric medicine utilisation.

Only a few EU countries actively support the genericmedicines industry publicly. Italy and Portugal areamong the main proponents with public campaignsfocused on increasing generic medicine consumptionand changing physicians and pharmacists prescribing anddispensing habits, as well as increasing patient acceptanceof and demand for generic medicines.

GENERIC MEDICINES: MARKET IMPACT

The generic medicines sector is dependent on a thrivingR&D-based industry launching and developing a richpipeline of innovative medicines.

With development costs for new medicines rising(particularly in the field of biotechnology), greaterregulatory hurdles and tougher market conditions, fewernew products are being launched and those attaining‘blockbuster’ sales of over US$1 billion are declining.The introduction of a generic medicine at the time ofpatent expiry puts further pressure on the R&D-basedcompanies. Brand share erosion or switching to a genericmedicine, generally now occurs quicker than ever before,with the UK and Germany being the fastest. However,in certain countries, such as Spain and Italy, erosion not

only takes longer but also ensures that the level ofswitching is kept low (Figure 11).

Some R&D-based companies are finding it difficult toreplace sales lost to generic medicines with salesgenerated from new products.This has led to manycompanies diversifying or consolidating while at thesame time stimulating true innovation in the search fornew medicines.

One thing is certain, in today’s environment the R&D-based industry can no longer depend on the historicalbusiness models delivering the same levels of return.

FIGURE 11. Degree of generic erosion following loss of exclusivity.

COUNTRY US$bn 2009

% Mkt Shr 2009

% Growth Const US$

2009 CAGR 04-08

10 Key Markets

United States

Japan

France

Germany

Italy

Spain

United Kingdom

China

Canada

Brizil

$560.6

288.5

71.6

41.0

40.1

25.7

22.0

20.9

20.8

18.0

12.0

77.7%

40.0

9.9

5.7

5.6

3.6

3.0

2.9

2.9

2.5

1.7

3.8

2.4

3.0

2.1

4.2

3.9

7.7

4.1

25.2

5.8

11.9

5.9

6.3

3.0

5.4

4.1

4.1

8.0

3.1

22.0

8.1

11.6

COUNTRY Aust

ria

Belg

ium

Bulg

aria

Croa

tia

Czec

h Re

p.

Den

mar

k

Esto

nia

Fran

ce

Irel

and

Ital

y

Latv

ia

Luxe

mbo

urg

Net

herl

ands

Pola

nd

Port

ugal

Rom

ania

Slov

akia

Slov

enia

Spai

n

Swed

en




RANK

US$bn MAT

Dec 2008

% Market Share



1 Autoimmune agents

2 Oncologics

3 Antidiabetics

4 Erythropoietins


6 Interferons

7 Growth Hormones

8 Blood Coagulation

9 Pure Vaccines


Top 10

85.1

15.2

13.8

12.4

11.5

6.3

5.6

2.8

2.8

2.5

1.9

74.8

100.0

17.8

16.2

14.5

13.5

7.4

6.5

3.3

3.2

3.0

2.3

87.8

8.3

17.3

17.9

16.6

-13.9

1.6

8.3

2.5

8.5

8.7

-1.7

7.4

16.8

31.8

42.8

14.9

4.6

12.9

7.7

10.4

14.6

32.2

6.6


180

180

Yes

180

90

180

Yes

240

90

30

No

120

180

180

No

360

90

90

Yes

180

14

14

Yes

14

90

90

No

180

75

75

Yes

75

45

45

Yes

45

135

135

Yes

135

120

120

No

240

30

180

Yes

180

Na

45

Yes

45

180

180

Yes

180

21

90

No

111

90

180

No

270

120

150

No

270

15

180

Yes

180

75

75

No

150

30

30

Yes

30

Tota

l Yes

Tota

l No

Tota

l





0 5 10 15 20


85

80

75

70

0 100 300 500 70065

600 400 200


Months from LoE

Japan

Italy

Spain

Hungary

Australia

Turkey

France

Czech Republic

Brazil

UK

Poland

Germany

Canada

24%

40%

41%

46%

50%

51%

52%

59%

65%

71%

73%

75%

81%

0% 30% 50% 80% 100% 90% 70% 60% 40% 20% 10%

US 89%


Life

Exp

ecta

ncy

Life

Exp

ecta

ncy


85

HUN SVK

FRA

GRC IRL

BEL AUT

PRT DNK

DEU

CHE SWE SWE

FIN GBR NLD

NOR ESP

TUR

RUS

ROM

BGR

POL CZE

80

75

70

65 0 100 200 300 700 600 500 400



FRA

GRC IRL

PRT DNK

DEU AUT FIN

BEL

GBR

CZE

SVK HUN

POL

ROM

BGR

NLD

ESP NOR

CHE ITA ITA

TUR

RUS


Q1 06

Q2 06

Q3 06

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

10

20

30

40

50

60

70

France Spain

UK Italy

Germany Turkey

% S

U M

arke

t sh

are


2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 0

5

10

15

20

25

30

40

35

45


Cons

tant

US$

Bn


Mo0/ Yr0




Mo12/ Yr1

Mo12/ Yr2

Mo12/ Yr3

0

20

40

60

80


Orig

inat

or v

olum

e as

% o

f dr

ug t

otal

SU

0 2005 2006 2007 2008 2009

100

200

300

400

500

600

Valu

e sa

les

US$

Bn


0 2005 2006 2007 2008 2009

100

200

300

400

500

600

700

800

Volu

me

sale

s St

anda

rd U

nits

Bn

395 390 391 387 384

302 325 347 373 397


0 2005 2006 2007 2008 2009

50

100

150

200

Valu

e Sa

les

US$

Bn


0 2005 2006 2007 2008 2009

50

100

150

200

250

300

350

400

Volu

me

Sale

s St

anda

rd U

nits

Bn

185 184 186 185 184

135 146

110

25

112

27

127

31

150

37

136

33

156 169 177


Drug

Use

/Cap

ita

Euro

s

Life Expectancy

700

HUN SLK

FRA GRC

IRL BEL AUT

PRT

DNK

DEU CHE

SWE FIN

GBR NLD

NOR

ITA

TUR

RUS ROM BGR

POL

CZE

600

500

400

300

200

100

0 65 70 75 80 85



RSP OLD vERSION

Prot

ecte

d Sa

les

US$

bn

16

14

10

6

2

12

8

4

0

Onco

logics

Angio

tensin

-IIs

Antid

iabeti

cs

Resp

irato

ry

Lipid

regula

tors

HIV a

ntivi

rals

Antip

sych

otics

antir

heum

atics

Antiu

lceran

ts

Platel

et ag

gr inh

ibs

Eryth

ropoie

ntins

Bone

calci

um re

gulat

ors

Antie

pilep

tics

Anti-

Alzhe

imers

Antid

epres

sant

s

Calci

um an

tagon

ists

Onco

logi

cs

Angi

oten

sin-

IIs

Anti

diab

etic

s

Resp

irato

ry

Lipi

d re

gula

tors

HIV

ant

ivira

ls

Anti

psyc

hoti

cs

anti

rheu

mat

ics

Anti

ulce

rant

s

Plat

elet

agg

r in

hibs

Eryt

hrop

oien

tins

Bone

cal

cium

reg

ulat

ors

Anti

epile

ptic

s

Anti

-Alz

heim

ers

Anti

depr

essa

nts

Calc

ium

ant

agon

ists



0

50

100

150

200

250

300


400

Num

ber

of d

ays

Denm

ark

Swed

en

Irela

nd

Neth

erla

nds

Fran

ce

Belg

ium

Bulg

aria

Ital

y

Spai

n

Aust

ria

Czec

h Re

p.

Esto

nia

Luxe

mbo

urg

Pola

nd

Slov

enia

Latv

ia

Rom

ania

Slov

akia

Croa

tiaPo

rtuga

l


0

2

4

6

8

10

12

14

16

Prot

ecte

d Sa

les

US$

bn



Patient co-pay

Price referencing


At the pharmacy


With wholesalers

With payers

Favouring brands

Favouring generics

Mar

ket

Rule

s M

arke

t In

cent

ives

0

2

6

4

8

10

% o

f Pr

ior

Year

’s S

ales


Hypertension -ARBs


20

40

60

80

100




% S

hane

Sal

es E

xpir

ing

100

90

70

50

30

20

10

80

60

40

0

% S

hane

Sal

es E

xpir

ing

100

90

70

50

30

20

10

80

60

40

0

10

16 17 19 24

17

28

24

42

29

14

ENBREL

REMICADE

AVASTIN

HUMIRA

LOVENOX

MABTHERA

0.00 3.00 5.00 6.00 4.00 2.00 1.00

LANTUS

Source: IMS 2009

Europe US

3.00

3.00

2.80

2.30

2.60

2.50

2.40

2.00

1.40

1.50

2.00

1.60

1.50

1.00

FIGURE 10. Differing rules & incentives for use of generic medicines across EU markets leads to different market forces.

COUNTRY US$bn 2009

% Mkt Shr 2009

% Growth Const US$

2009 CAGR 04-08

10 Key Markets

United States

Japan

France

Germany

Italy

Spain

United Kingdom

China

Canada

Brizil

$560.6

288.5

71.6

41.0

40.1

25.7

22.0

20.9

20.8

18.0

12.0

77.7%

40.0

9.9

5.7

5.6

3.6

3.0

2.9

2.9

2.5

1.7

3.8

2.4

3.0

2.1

4.2

3.9

7.7

4.1

25.2

5.8

11.9

5.9

6.3

3.0

5.4

4.1

4.1

8.0

3.1

22.0

8.1

11.6

COUNTRY Aust

ria

Belg

ium

Bulg

aria

Croa

tia

Czec

h Re

p.

Den

mar

k

Esto

nia

Fran

ce

Irel

and

Ital

y

Latv

ia

Luxe

mbo

urg

Net

herl

ands

Pola

nd

Port

ugal

Rom

ania

Slov

akia

Slov

enia

Spai

n

Swed

en




RANK

US$bn MAT

Dec 2008

% Market Share



1 Autoimmune agents

2 Oncologics

3 Antidiabetics

4 Erythropoietins


6 Interferons

7 Growth Hormones

8 Blood Coagulation

9 Pure Vaccines


Top 10

85.1

15.2

13.8

12.4

11.5

6.3

5.6

2.8

2.8

2.5

1.9

74.8

100.0

17.8

16.2

14.5

13.5

7.4

6.5

3.3

3.2

3.0

2.3

87.8

8.3

17.3

17.9

16.6

-13.9

1.6

8.3

2.5

8.5

8.7

-1.7

7.4

16.8

31.8

42.8

14.9

4.6

12.9

7.7

10.4

14.6

32.2

6.6


180

180

Yes

180

90

180

Yes

240

90

30

No

120

180

180

No

360

90

90

Yes

180

14

14

Yes

14

90

90

No

180

75

75

Yes

75

45

45

Yes

45

135

135

Yes

135

120

120

No

240

30

180

Yes

180

Na

45

Yes

45

180

180

Yes

180

21

90

No

111

90

180

No

270

120

150

No

270

15

180

Yes

180

75

75

No

150

30

30

Yes

30

Tota

l Ye

s

Tota

l N

o

Tota

l





0 5 10 15 20


85

80

75

70

0 100 300 500 70065

600 400 200


Months from LoE

Japan

Italy

Spain

Hungary

Australia

Turkey

France

Czech Republic

Brazil

UK

Poland

Germany

Canada

24%

40%

41%

46%

50%

51%

52%

59%

65%

71%

73%

75%

81%

0% 30% 50% 80% 100% 90% 70% 60% 40% 20% 10%

US 89%


Life

Exp

ecta

ncy

Life

Exp

ecta

ncy


85

HUN SVK

FRA

GRC IRL

BEL AUT

PRT DNK

DEU

CHE SWE SWE

FIN GBR NLD

NOR ESP

TUR

RUS

ROM

BGR

POL CZE

80

75

70

65 0 100 200 300 700 600 500 400



FRA

GRC IRL

PRT DNK

DEU AUT FIN

BEL

GBR

CZE

SVK HUN

POL

ROM

BGR

NLD

ESP NOR

CHE ITA ITA

TUR

RUS


Q1 06

Q2 06

Q3 06

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

10

20

30

40

50

60

70

France Spain

UK Italy

Germany Turkey

% S

U M

arke

t sh

are


2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 0

5

10

15

20

25

30

40

35

45


Cons

tant

US$

Bn


Mo0/ Yr0




Mo12/ Yr1

Mo12/ Yr2

Mo12/ Yr3

0

20

40

60

80


Orig

inat

or v

olum

e as

% o

f dr

ug t

otal

SU

0 2005 2006 2007 2008 2009

100

200

300

400

500

600

Valu

e sa

les

US$

Bn


0 2005 2006 2007 2008 2009

100

200

300

400

500

600

700

800

Volu

me

sale

s St

anda

rd U

nits

Bn

395 390 391 387 384

302 325 347 373 397


0 2005 2006 2007 2008 2009

50

100

150

200

Valu

e Sa

les

US$

Bn


0 2005 2006 2007 2008 2009

50

100

150

200

250

300

350

400

Volu

me

Sale

s St

anda

rd U

nits

Bn

185 184 186 185 184

135 146

110

25

112

27

127

31

150

37

136

33

156 169 177


Drug

Use

/Cap

ita

Euro

s

Life Expectancy

700

HUN SLK

FRA GRC

IRL BEL AUT

PRT

DNK

DEU CHE

SWE FIN

GBR NLD

NOR

ITA

TUR

RUS ROM BGR

POL

CZE

600

500

400

300

200

100

0 65 70 75 80 85



RSP OLD vERSION

Prot

ecte

d Sa

les

US$

bn

16

14

10

6

2

12

8

4

0

Onco

logics

Angio

tensin

-IIs

Antid

iabeti

cs

Resp

irato

ry

Lipid

regula

tors

HIV a

ntivi

rals

Antip

sych

otics

antir

heum

atics

Antiu

lceran

ts

Platel

et ag

gr inh

ibs

Eryth

ropoie

ntins

Bone

calci

um re

gulat

ors

Antie

pilep

tics

Anti-

Alzhe

imers

Antid

epres

sant

s

Calci

um an

tagon

ists

Onco

logi

cs

Angi

oten

sin-

IIs

Anti

diab

etic

s

Resp

irato

ry

Lipi

d re

gula

tors

HIV

ant

ivira

ls

Anti

psyc

hoti

cs

anti

rheu

mat

ics

Anti

ulce

rant

s

Plat

elet

agg

r in

hibs

Eryt

hrop

oien

tins

Bone

cal

cium

reg

ulat

ors

Anti

epile

ptic

s

Anti

-Alz

heim

ers

Anti

depr

essa

nts

Calc

ium

ant

agon

ists



0

50

100

150

200

250

300


400

Num

ber

of d

ays

Denm

ark

Swed

en

Irela

nd

Neth

erla

nds

Fran

ce

Belg

ium

Bulg

aria

Ital

y

Spai

n

Aust

ria

Czec

h Re

p.

Esto

nia

Luxe

mbo

urg

Pola

nd

Slov

enia

Latv

ia

Rom

ania

Slov

akia

Croa

tiaPo

rtuga

l


0

2

4

6

8

10

12

14

16

Prot

ecte

d Sa

les

US$

bn



Patient co-pay

Price referencing


At the pharmacy


With wholesalers

With payers

Favouring brands

Favouring generics

Mar

ket

Rule

s M

arke

t In

cent

ives

0

2

6

4

8

10

% o

f Pr

ior

Year

’s S

ales


Hypertension -ARBs


20

40

60

80

100




% S

hane

Sal

es E

xpir

ing

100

90

70

50

30

20

10

80

60

40

0

% S

hane

Sal

es E

xpir

ing

100

90

70

50

30

20

10

80

60

40

0

10

16 17 19 24

17

28

24

42

29

14

ENBREL

REMICADE

AVASTIN

HUMIRA

LOVENOX

MABTHERA

0.00 3.00 5.00 6.00 4.00 2.00 1.00

LANTUS

Source: IMS 2009

Europe US

3.00

3.00

2.80

2.30

2.60

2.50

2.40

2.00

1.40

1.50

2.00

1.60

1.50

1.00



FIGURE 12. Medicines with a value of $137 billion are losing patent protection in 8 key markets(Canada, France, Germany, Japan, Italy, Spain, UK and US) through 2013.

Over the next five years, medicines with a value of overUS$137 billion will lose protection in the eight majorworld markets, bringing further challenges to the R&D-based industry (Figure 12).

Utilisation of generic medicines in place of these patentedmedicines in the future offers a huge potential for savings.

With each new generic launched, additional pressure isbrought to bear on originator products as HealthTechnology Assessments (HTAs) focus on cost oftherapy. Their demands for ever increasing amounts ofdata on cost benefits leaves ‘Me Too’ products with littlespace in today’s markets.

EXTENDING MARKET MONOPOLY BY LIFECYCLE STRATEGIES

The threat of significant revenue losses from patentexpiries has led originators to develop enantiomers ordifferent polymorphs or salts of blockbuster products inorder to prolong the lifecycle of the brand.

Molecules such as omeprazole, citalopram and loratidinehave been replaced by esomeprazole, escitalopram anddesloratidine, respectively. Despite comments that theyoffer only limited advantages, if any, over the originalmedicine, in many instances, supported by largeadvertising and promotional expenditure, they havesuccessfully switched physician prescribing from theoriginal brand to the ‘new’ product.This has resulted inthe loss of significant savings for payers and indeedcontinuing growth in expenditure for these moleculesthrough the extended patent life of the new alternative.

More recently, the pharmaceutical firm Servier wasaccused by the Danish generics industry (IGL)association of using the practice of evergreening inDenmark to extend the life-cycle of their productCoversyl©, an antihypertensive product, by introducingonto the market a “therapeutically identical” version ofCoversyl©, called Coversyl Novum©.As reported in theindustry press:“By promoting Coversyl Novum—whichcontains perindopril arginine rather than the originaltertbutylamine salt—at different strengths to the original,Servier is attempting to protect its monopoly on theACE-inhibitor....”

The costs of Coversyl Novum© to the Danish healthcaresystem in 2007 was €10.7 million.According to the IGL,the use of the generic formulation could potentially havesaved the authorities €8.1 million.9

Generic entrants have the potential to impact a wholetherapeutic category as evidenced when a gold standardtherapy loses patent protection.The launch of a genericmedicine version of the leading anti-ulcer drugomeprazole made the drug affordable for use in lessserious conditions such as gastro-oesophageal reflux, inaddition to the savings in ulcer therapy.A similar effectwas shown when generic simvastatin entered the market.A lower, affordable price supported with positive clinicaldata expanded the statin therapy category, opening uplipid treatment for a whole new population of patients(figure 13).

The potential for greater savings will continue as a rangeof products lose patent protection in many therapy areasover the next five years (Figure 14 overleaf). It is for thisreason that most R&D-based companies are focused ondelaying or preventing the entry of a generic medicine;as soon as it is launched the continuing existence of thebrand is under threat.

COUNTRY US$bn 2009

% Mkt Shr 2009

% Growth Const US$

2009 CAGR 04-08

10 Key Markets

United States

Japan

France

Germany

Italy

Spain

United Kingdom

China

Canada

Brizil

$560.6

288.5

71.6

41.0

40.1

25.7

22.0

20.9

20.8

18.0

12.0

77.7%

40.0

9.9

5.7

5.6

3.6

3.0

2.9

2.9

2.5

1.7

3.8

2.4

3.0

2.1

4.2

3.9

7.7

4.1

25.2

5.8

11.9

5.9

6.3

3.0

5.4

4.1

4.1

8.0

3.1

22.0

8.1

11.6

COUNTRY Aust

ria

Belg

ium

Bulg

aria

Croa

tia

Czec

h Re

p.

Denm

ark

Esto

nia

Fran

ce

Irel

and

Ital

y

Latv

ia

Luxe

mbo

urg

Net

herl

ands

Pola

nd

Port

ugal

Rom

ania

Slov

akia

Slov

enia

Spai

n

Swed

en




RANK

US$bn MAT

Dec 2008

% Market Share



1 Autoimmune agents

2 Oncologics

3 Antidiabetics

4 Erythropoietins


6 Interferons

7 Growth Hormones

8 Blood Coagulation

9 Pure Vaccines


Top 10

85.1

15.2

13.8

12.4

11.5

6.3

5.6

2.8

2.8

2.5

1.9

74.8

100.0

17.8

16.2

14.5

13.5

7.4

6.5

3.3

3.2

3.0

2.3

87.8

8.3

17.3

17.9

16.6

-13.9

1.6

8.3

2.5

8.5

8.7

-1.7

7.4

16.8

31.8

42.8

14.9

4.6

12.9

7.7

10.4

14.6

32.2

6.6


180

180

Yes

180

90

180

Yes

240

90

30

No

120

180

180

No

360

90

90

Yes

180

14

14

Yes

14

90

90

No

180

75

75

Yes

75

45

45

Yes

45

135

135

Yes

135

120

120

No

240

30

180

Yes

180

Na

45

Yes

45

180

180

Yes

180

21

90

No

111

90

180

No

270

120

150

No

270

15

180

Yes

180

75

75

No

150

30

30

Yes

30

Tota

l Yes

Tota

l No

Tota

l





0 5 10 15 20


85

80

75

70

0 100 300 500 70065

600 400 200


Months from LoE

Japan

Italy

Spain

Hungary

Australia

Turkey

France

Czech Republic

Brazil

UK

Poland

Germany

Canada

24%

40%

41%

46%

50%

51%

52%

59%

65%

71%

73%

75%

81%

0% 30% 50% 80% 100% 90% 70% 60% 40% 20% 10%

US 89%


Life

Exp

ecta

ncy

Life

Exp

ecta

ncy


85

HUN SVK

FRA

GRC IRL

BEL AUT

PRT DNK

DEU

CHE SWE SWE

FIN GBR NLD

NOR ESP

TUR

RUS

ROM

BGR

POL CZE

80

75

70

65 0 100 200 300 700 600 500 400



FRA

GRC IRL

PRT DNK

DEU AUT FIN

BEL

GBR

CZE

SVK HUN

POL

ROM

BGR

NLD

ESP NOR

CHE ITA ITA

TUR

RUS


Q1 06

Q2 06

Q3 06

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

10

20

30

40

50

60

70

France Spain

UK Italy

Germany Turkey

% S

U M

arke

t sh

are


2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 0

5

10

15

20

25

30

40

35

45


Cons

tant

US$

Bn


Mo0/ Yr0




Mo12/ Yr1

Mo12/ Yr2

Mo12/ Yr3

0

20

40

60

80


Orig

inat

or v

olum

e as

% o

f dr

ug t

otal

SU

0 2005 2006 2007 2008 2009

100

200

300

400

500

600

Valu

e sa

les

US$

Bn


0 2005 2006 2007 2008 2009

100

200

300

400

500

600

700

800

Volu

me

sale

s St

anda

rd U

nits

Bn

395 390 391 387 384

302 325 347 373 397


0 2005 2006 2007 2008 2009

50

100

150

200

Valu

e Sa

les

US$

Bn


0 2005 2006 2007 2008 2009

50

100

150

200

250

300

350

400

Volu

me

Sale

s St

anda

rd U

nits

Bn

185 184 186 185 184

135 146

110

25

112

27

127

31

150

37

136

33

156 169 177


Drug

Use

/Cap

ita

Euro

s

Life Expectancy

700

HUN SLK

FRA GRC

IRL BEL AUT

PRT

DNK

DEU CHE

SWE FIN

GBR NLD

NOR

ITA

TUR

RUS ROM BGR

POL

CZE

600

500

400

300

200

100

0 65 70 75 80 85



RSP OLD vERSION

Prot

ecte

d Sa

les

US$

bn

16

14

10

6

2

12

8

4

0

Onco

logics

Angio

tensin

-IIs

Antid

iabeti

cs

Resp

irato

ry

Lipid

regula

tors

HIV a

ntivi

rals

Antip

sych

otics

antir

heum

atics

Antiu

lceran

ts

Platel

et ag

gr inh

ibs

Eryth

ropoie

ntins

Bone

calci

um re

gulat

ors

Antie

pilep

tics

Anti-

Alzhe

imers

Antid

epres

sant

s

Calci

um an

tagon

ists

Onco

logi

cs

Angi

oten

sin-

IIs

Anti

diab

etic

s

Resp

irato

ry

Lipi

d re

gula

tors

HIV

ant

ivira

ls

Anti

psyc

hoti

cs

anti

rheu

mat

ics

Anti

ulce

rant

s

Plat

elet

agg

r in

hibs

Eryt

hrop

oien

tins

Bone

cal

cium

reg

ulat

ors

Anti

epile

ptic

s

Anti

-Alz

heim

ers

Anti

depr

essa

nts

Calc

ium

ant

agon

ists



0

50

100

150

200

250

300


400

Num

ber

of d

ays

Denm

ark

Swed

en

Irela

nd

Neth

erla

nds

Fran

ce

Belg

ium

Bulg

aria

Ital

y

Spai

n

Aust

ria

Czec

h Re

p.

Esto

nia

Luxe

mbo

urg

Pola

nd

Slov

enia

Latv

ia

Rom

ania

Slov

akia

Croa

tiaPo

rtuga

l


0

2

4

6

8

10

12

14

16

Prot

ecte

d Sa

les

US$

bn



Patient co-pay

Price referencing


At the pharmacy


With wholesalers

With payers

Favouring brands

Favouring generics

Mar

ket

Rule

s M

arke

t In

cent

ives

0

2

6

4

8

10

% o

f Pr

ior

Year

’s S

ales


Hypertension -ARBs


20

40

60

80

100




% S

hane

Sal

es E

xpir

ing

100

90

70

50

30

20

10

80

60

40

0

% S

hane

Sal

es E

xpir

ing

100

90

70

50

30

20

10

80

60

40

0

10

16 17 19 24

17

28

24

42

29

14

ENBREL

REMICADE

AVASTIN

HUMIRA

LOVENOX

MABTHERA

0.00 3.00 5.00 6.00 4.00 2.00 1.00

LANTUS

Source: IMS 2009

Europe US

3.00

3.00

2.80

2.30

2.60

2.50

2.40

2.00

1.40

1.50

2.00

1.60

1.50

1.00

9 Generic Bulletin, 2008

0

QTR/

6/02

QTR/

9/02

QTR/

12/0

2

QTR/

3/03

QTR/

6/03

QTR/

9/03

QTR/

12/0

3

QTR/

3/04

QTR/

6/04

QTR/

9/04

QTR/

12/0

4

QTR/

3/05

QTR/

6/05

QTR/

9/05

QTR/

12/0

5

QTR/

3/06

QTR/

6/06

QTR/

9/06

QTR/

12/0

6

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000Non-Generic SimvastatinGeneric SimvastatinStatin

FIGURE 13.C10A Cholest&Trigly Regulator market - Volume.



Whatever it takes, the generic medicine industry shouldnot be subject to unfair practices which either reflectabuse of a dominant position or disincentivise the use ofgeneric medicines by R&D-based companies.This maybe applicable if the originator companies find that therisk to their business of lost patent protection on majorproducts over the next three years is sufficiently high towarrant new pricing strategies or changes to the waypatients access these medicines.

OPPORTUNITIES ARISING FROM INCREASED USE OFGENERIC MEDICINES

DRIVING FIRST-LINE USE

One alternative to focusing on the price of genericscould be a treatment regimen approach for some of themajor indications where generic medicines represent thegold standard therapies.The opportunity to commencefirst-line therapy with a generic medicine exists in manyof the most common disease areas (Figure 15).

This formulary-style approach would give confidence inusing the appropriate medicine whilst at the same timeproviding a sound basis for calculating future costs oftherapy in these selected areas. Competition betweengeneric medicine manufacturers would still remain asthey have duplicate product portfolios, and continuity ofsupply would not be an issue.Adequate reimbursementschemes could then be formulated for pharmacists toensure profitability and confidence in dispensing generic medicines.

INCENTIVISING INNOVATION

The development expertise within the genericmedicines industry is recognised as being innovative.Indeed, it is the level of skill in chemistry and processdevelopment that has driven the successful introductionof so many generic medicines. Furthermore, there is anunderstanding within the industry of patient andpharmacist needs in relation to patient-orientedpackaging, arising from the production of a wide rangeof products across many countries. Certain genericmedicine companies have produced packagingspecifically designed to help patients and minimisepharmacy dispensing errors. Others have developed fixedcombinations of routinely co-prescribed off-patentmedicines such as diuretic/potassium conserving andnon-steroidal/proton pump inhibitor combinations toaid patient compliance. If the pressure is only on costswithout any incentive for advancements in this area thenthe potential will never be manifested.

Once an originator product loses exclusivity, mostresearch is terminated; in fact it may cease well beforethis time as the period to recoup any additional researchcosts will be limited. Many older generic medicinemolecules never maximised their therapeutic potentialfor this reason. In some instances, new indications or usesdid appear but much later than might have beenexpected had the appropriate level of research continued.Unless rewarded, opportunities for further developmentwill never be pursued and yet the benefits to patientscould be significant.

COUNTRY US$bn 2009

% Mkt Shr 2009

% Growth Const US$

2009 CAGR 04-08

10 Key Markets

United States

Japan

France

Germany

Italy

Spain

United Kingdom

China

Canada

Brizil

$560.6

288.5

71.6

41.0

40.1

25.7

22.0

20.9

20.8

18.0

12.0

77.7%

40.0

9.9

5.7

5.6

3.6

3.0

2.9

2.9

2.5

1.7

3.8

2.4

3.0

2.1

4.2

3.9

7.7

4.1

25.2

5.8

11.9

5.9

6.3

3.0

5.4

4.1

4.1

8.0

3.1

22.0

8.1

11.6

COUNTRY Aust

ria

Belg

ium

Bulg

aria

Croa

tia

Czec

h Re

p.

Denm

ark

Esto

nia

Fran

ce

Irel

and

Ital

y

Latv

ia

Luxe

mbo

urg

Net

herl

ands

Pola

nd

Port

ugal

Rom

ania

Slov

akia

Slov

enia

Spai

n

Swed

en




RANK

US$bn MAT

Dec 2008

% Market Share



1 Autoimmune agents

2 Oncologics

3 Antidiabetics

4 Erythropoietins


6 Interferons

7 Growth Hormones

8 Blood Coagulation

9 Pure Vaccines


Top 10

85.1

15.2

13.8

12.4

11.5

6.3

5.6

2.8

2.8

2.5

1.9

74.8

100.0

17.8

16.2

14.5

13.5

7.4

6.5

3.3

3.2

3.0

2.3

87.8

8.3

17.3

17.9

16.6

-13.9

1.6

8.3

2.5

8.5

8.7

-1.7

7.4

16.8

31.8

42.8

14.9

4.6

12.9

7.7

10.4

14.6

32.2

6.6


180

180

Yes

180

90

180

Yes

240

90

30

No

120

180

180

No

360

90

90

Yes

180

14

14

Yes

14

90

90

No

180

75

75

Yes

75

45

45

Yes

45

135

135

Yes

135

120

120

No

240

30

180

Yes

180

Na

45

Yes

45

180

180

Yes

180

21

90

No

111

90

180

No

270

120

150

No

270

15

180

Yes

180

75

75

No

150

30

30

Yes

30

Tota

l Yes

Tota

l No

Tota

l





0 5 10 15 20


85

80

75

70

0 100 300 500 70065

600 400 200


Months from LoE

Japan

Italy

Spain

Hungary

Australia

Turkey

France

Czech Republic

Brazil

UK

Poland

Germany

Canada

24%

40%

41%

46%

50%

51%

52%

59%

65%

71%

73%

75%

81%

0% 30% 50% 80% 100% 90% 70% 60% 40% 20% 10%

US 89%


Life

Exp

ecta

ncy

Life

Exp

ecta

ncy


85

HUN SVK

FRA

GRC IRL

BEL AUT

PRT DNK

DEU

CHE SWE SWE

FIN GBR NLD

NOR ESP

TUR

RUS

ROM

BGR

POL CZE

80

75

70

65 0 100 200 300 700 600 500 400



FRA

GRC IRL

PRT DNK

DEU AUT FIN

BEL

GBR

CZE

SVK HUN

POL

ROM

BGR

NLD

ESP NOR

CHE ITA ITA

TUR

RUS


Q1 06

Q2 06

Q3 06

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

10

20

30

40

50

60

70

France Spain

UK Italy

Germany Turkey

% S

U M

arke

t sh

are


2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 0

5

10

15

20

25

30

40

35

45


Cons

tant

US$

Bn


Mo0/ Yr0




Mo12/ Yr1

Mo12/ Yr2

Mo12/ Yr3

0

20

40

60

80


Orig

inat

or v

olum

e as

% o

f dr

ug t

otal

SU

0 2005 2006 2007 2008 2009

100

200

300

400

500

600

Valu

e sa

les

US$

Bn


0 2005 2006 2007 2008 2009

100

200

300

400

500

600

700

800

Volu

me

sale

s St

anda

rd U

nits

Bn

395 390 391 387 384

302 325 347 373 397


0 2005 2006 2007 2008 2009

50

100

150

200

Valu

e Sa

les

US$

Bn


0 2005 2006 2007 2008 2009

50

100

150

200

250

300

350

400

Volu

me

Sale

s St

anda

rd U

nits

Bn

185 184 186 185 184

135 146

110

25

112

27

127

31

150

37

136

33

156 169 177


Drug

Use

/Cap

ita

Euro

s

Life Expectancy

700

HUN SLK

FRA GRC

IRL BEL AUT

PRT

DNK

DEU CHE

SWE FIN

GBR NLD

NOR

ITA

TUR

RUS ROM BGR

POL

CZE

600

500

400

300

200

100

0 65 70 75 80 85



RSP OLD vERSION

Prot

ecte

d Sa

les

US$

bn

16

14

10

6

2

12

8

4

0

Onco

logics

Angio

tensin

-IIs

Antid

iabeti

cs

Resp

irato

ry

Lipid

regula

tors

HIV a

ntivi

rals

Antip

sych

otics

antir

heum

atics

Antiu

lceran

ts

Platel

et ag

gr inh

ibs

Eryth

ropoie

ntins

Bone

calci

um re

gulat

ors

Antie

pilep

tics

Anti-

Alzhe

imers

Antid

epres

sant

s

Calci

um an

tagon

ists

Onco

logi

cs

Angi

oten

sin-

IIs

Anti

diab

etic

s

Resp

irato

ry

Lipi

d re

gula

tors

HIV

ant

ivira

ls

Anti

psyc

hoti

cs

anti

rheu

mat

ics

Anti

ulce

rant

s

Plat

elet

agg

r in

hibs

Eryt

hrop

oien

tins

Bone

cal

cium

reg

ulat

ors

Anti

epile

ptic

s

Anti

-Alz

heim

ers

Anti

depr

essa

nts

Calc

ium

ant

agon

ists



0

50

100

150

200

250

300


400

Num

ber

of d

ays

Denm

ark

Swed

en

Irela

nd

Neth

erla

nds

Fran

ce

Belg

ium

Bulg

aria

Ital

y

Spai

n

Aust

ria

Czec

h Re

p.

Esto

nia

Luxe

mbo

urg

Pola

nd

Slov

enia

Latv

ia

Rom

ania

Slov

akia

Croa

tiaPo

rtuga

l


0

2

4

6

8

10

12

14

16

Prot

ecte

d Sa

les

US$

bn



Patient co-pay

Price referencing


At the pharmacy


With wholesalers

With payers

Favouring brands

Favouring generics

Mar

ket

Rule

s M

arke

t In

cent

ives

0

2

6

4

8

10

% o

f Pr

ior

Year

’s S

ales


Hypertension -ARBs


20

40

60

80

100




% S

hane

Sal

es E

xpir

ing

100

90

70

50

30

20

10

80

60

40

0

% S

hane

Sal

es E

xpir

ing

100

90

70

50

30

20

10

80

60

40

0

10

16 17 19 24

17

28

24

42

29

14

ENBREL

REMICADE

AVASTIN

HUMIRA

LOVENOX

MABTHERA

0.00 3.00 5.00 6.00 4.00 2.00 1.00

LANTUS

Source: IMS 2009

Europe US

3.00

3.00

2.80

2.30

2.60

2.50

2.40

2.00

1.40

1.50

2.00

1.60

1.50

1.00

FIGURE 15. Potential exists for Payers to recommend a generic medicine as first line therapy in key primary care areas.

COUNTRY US$bn 2009

% Mkt Shr 2009

% Growth Const US$

2009 CAGR 04-08

10 Key Markets

United States

Japan

France

Germany

Italy

Spain

United Kingdom

China

Canada

Brizil

$560.6

288.5

71.6

41.0

40.1

25.7

22.0

20.9

20.8

18.0

12.0

77.7%

40.0

9.9

5.7

5.6

3.6

3.0

2.9

2.9

2.5

1.7

3.8

2.4

3.0

2.1

4.2

3.9

7.7

4.1

25.2

5.8

11.9

5.9

6.3

3.0

5.4

4.1

4.1

8.0

3.1

22.0

8.1

11.6

COUNTRY Aust

ria

Belg

ium

Bulg

aria

Croa

tia

Czec

h Re

p.

Denm

ark

Esto

nia

Fran

ce

Irel

and

Ital

y

Latv

ia

Luxe

mbo

urg

Net

herl

ands

Pola

nd

Port

ugal

Rom

ania

Slov

akia

Slov

enia

Spai

n

Swed

en




RANK

US$bn MAT

Dec 2008

% Market Share



1 Autoimmune agents

2 Oncologics

3 Antidiabetics

4 Erythropoietins


6 Interferons

7 Growth Hormones

8 Blood Coagulation

9 Pure Vaccines


Top 10

85.1

15.2

13.8

12.4

11.5

6.3

5.6

2.8

2.8

2.5

1.9

74.8

100.0

17.8

16.2

14.5

13.5

7.4

6.5

3.3

3.2

3.0

2.3

87.8

8.3

17.3

17.9

16.6

-13.9

1.6

8.3

2.5

8.5

8.7

-1.7

7.4

16.8

31.8

42.8

14.9

4.6

12.9

7.7

10.4

14.6

32.2

6.6


180

180

Yes

180

90

180

Yes

240

90

30

No

120

180

180

No

360

90

90

Yes

180

14

14

Yes

14

90

90

No

180

75

75

Yes

75

45

45

Yes

45

135

135

Yes

135

120

120

No

240

30

180

Yes

180

Na

45

Yes

45

180

180

Yes

180

21

90

No

111

90

180

No

270

120

150

No

270

15

180

Yes

180

75

75

No

150

30

30

Yes

30

Tota

l Yes

Tota

l No

Tota

l





0 5 10 15 20


85

80

75

70

0 100 300 500 70065

600 400 200


Months from LoE

Japan

Italy

Spain

Hungary

Australia

Turkey

France

Czech Republic

Brazil

UK

Poland

Germany

Canada

24%

40%

41%

46%

50%

51%

52%

59%

65%

71%

73%

75%

81%

0% 30% 50% 80% 100% 90% 70% 60% 40% 20% 10%

US 89%


Life

Exp

ecta

ncy

Life

Exp

ecta

ncy


85

HUN SVK

FRA

GRC IRL

BEL AUT

PRT DNK

DEU

CHE SWE SWE

FIN GBR NLD

NOR ESP

TUR

RUS

ROM

BGR

POL CZE

80

75

70

65 0 100 200 300 700 600 500 400



FRA

GRC IRL

PRT DNK

DEU AUT FIN

BEL

GBR

CZE

SVK HUN

POL

ROM

BGR

NLD

ESP NOR

CHE ITA ITA

TUR

RUS


Q1 06

Q2 06

Q3 06

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

10

20

30

40

50

60

70

France Spain

UK Italy

Germany Turkey

% S

U M

arke

t sh

are


2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 0

5

10

15

20

25

30

40

35

45


Cons

tant

US$

Bn


Mo0/ Yr0




Mo12/ Yr1

Mo12/ Yr2

Mo12/ Yr3

0

20

40

60

80


Orig

inat

or v

olum

e as

% o

f dr

ug t

otal

SU

0 2005 2006 2007 2008 2009

100

200

300

400

500

600

Valu

e sa

les

US$

Bn


0 2005 2006 2007 2008 2009

100

200

300

400

500

600

700

800

Volu

me

sale

s St

anda

rd U

nits

Bn

395 390 391 387 384

302 325 347 373 397


0 2005 2006 2007 2008 2009

50

100

150

200

Valu

e Sa

les

US$

Bn


0 2005 2006 2007 2008 2009

50

100

150

200

250

300

350

400

Volu

me

Sale

s St

anda

rd U

nits

Bn

185 184 186 185 184

135 146

110

25

112

27

127

31

150

37

136

33

156 169 177


Drug

Use

/Cap

ita

Euro

s

Life Expectancy

700

HUN SLK

FRA GRC

IRL BEL AUT

PRT

DNK

DEU CHE

SWE FIN

GBR NLD

NOR

ITA

TUR

RUS ROM BGR

POL

CZE

600

500

400

300

200

100

0 65 70 75 80 85



RSP OLD vERSION

Prot

ecte

d Sa

les

US$

bn

16

14

10

6

2

12

8

4

0

Onco

logics

Angio

tensin

-IIs

Antid

iabeti

cs

Resp

irato

ry

Lipid

regula

tors

HIV a

ntivi

rals

Antip

sych

otics

antir

heum

atics

Antiu

lceran

ts

Platel

et ag

gr inh

ibs

Eryth

ropoie

ntins

Bone

calci

um re

gulat

ors

Antie

pilep

tics

Anti-

Alzhe

imers

Antid

epres

sant

s

Calci

um an

tagon

ists

Onco

logi

cs

Angi

oten

sin-

IIs

Anti

diab

etic

s

Resp

irato

ry

Lipi

d re

gula

tors

HIV

ant

ivira

ls

Anti

psyc

hoti

cs

anti

rheu

mat

ics

Anti

ulce

rant

s

Plat

elet

agg

r in

hibs

Eryt

hrop

oien

tins

Bone

cal

cium

reg

ulat

ors

Anti

epile

ptic

s

Anti

-Alz

heim

ers

Anti

depr

essa

nts

Calc

ium

ant

agon

ists



0

50

100

150

200

250

300


400

Num

ber

of d

ays

Denm

ark

Swed

en

Irela

nd

Neth

erla

nds

Fran

ce

Belg

ium

Bulg

aria

Ital

y

Spai

n

Aust

ria

Czec

h Re

p.

Esto

nia

Luxe

mbo

urg

Pola

nd

Slov

enia

Latv

ia

Rom

ania

Slov

akia

Croa

tiaPo

rtuga

l


0

2

4

6

8

10

12

14

16

Prot

ecte

d Sa

les

US$

bn



Patient co-pay

Price referencing


At the pharmacy


With wholesalers

With payers

Favouring brands

Favouring generics

Mar

ket

Rule

s M

arke

t In

cent

ives

0

2

6

4

8

10

% o

f Pr

ior

Year

’s S

ales


Hypertension -ARBs


20

40

60

80

100




% S

hane

Sal

es E

xpir

ing

100

90

70

50

30

20

10

80

60

40

0

% S

hane

Sal

es E

xpir

ing

100

90

70

50

30

20

10

80

60

40

0

10

16 17 19 24

17

28

24

42

29

14

ENBREL

REMICADE

AVASTIN

HUMIRA

LOVENOX

MABTHERA

0.00 3.00 5.00 6.00 4.00 2.00 1.00

LANTUS

Source: IMS 2009

Europe US

3.00

3.00

2.80

2.30

2.60

2.50

2.40

2.00

1.40

1.50

2.00

1.60

1.50

1.00

FIGURE 14. Key therapy classes face significant genericexposure in Europe* in the next five years.



ENCOURAGING INVESTMENTThe European generic medicines sector has to competeon a global scale, which includes competition frommanufacturers with facilities outside of Europe. Lack offlexibility in regulatory procedures and financialincentives has sent European-based pharmaceuticaldevelopment and manufacturing into a decline.Althougha positive move, the Bolar provision does not go farenough to level the playing field for European-basedgeneric medicines manufacturers.The existence of grants and low interest loans forbuilding production facilities and export incentives withtax breaks in non-European countries produces costadvantages which cannot be obtained within the EU.The opportunity exists for governments and payers toincentivise the European generics medicine sector inorder to generate a sustainable generics medicineindustry which can deliver cost savings through goodpatient management with gold standard therapies ataffordable prices.CONCLUSIONSThe generic medicines industry is now an essential andintegral part of healthcare delivery across Europe,supplying over half the volume demand for medicinesbut representing less than 18% in cost terms. Itscontribution to savings in pharmaceutical expenditureand broader access to medicines has secured theprovision of quality healthcare across the region.Withoutthe presence and availability of affordable genericmedicines it is doubtful whether governments and payerscould have sustained the growing demand for medicines.The potential savings in the major markets fromutilisation of generic medicines in place of thoseoriginator brands losing exclusivity over the next fouryears is projected at around US$100 billion, the highestever level. Beyond this period, the number and nature ofopportunities for savings diminishes as products frombiotechnology replace small molecule medicines.Withgeneric medicines unable to compensate for the growtharising from innovative products, pharmaceuticalexpenditure will escalate.The savings arising in the next four years should be usedto formulate a longer- term plan for the utilisation ofgeneric medicines.The gold standards of many therapies in the treatmentof cardiovascular disease, CNS disorders, GI problemsand many other chronic ailments are available now (and certainly will be in the near future) as genericmedicines. Initiation and continuation of therapythrough treatment schedules in these disease areas shouldinvolve the use of a generic medicine as first-linetherapy.This would generate sustainable savings allowingfor the use of truly innovative medicines in thosediseases requiring such therapy.

Attempts to control medicine expenditure using price asthe sole parameter not only puts the generics industry atrisk but also all the players involved in healthcaredelivery, including pharmacists and distributors. Enforcedand unpredicted price cuts cause serious damage acrossthe industry, having a destabilising effect and makingplanning impossible.This will be to the detriment of anyhealthcare system in the longer-term.The varied nature of healthcare systems within Europemeans that what is successful in one country may not beapplicable in another. Importing one aspect of healthcarefrom another country could have major consequences.The generic medicines industry is perceived as a threatto the R&D-based sector. However, recent examples ofdiversity witnessed within originator companies reflectthe changing dynamics and will lead to increasedcompetition across all markets.This should be to thebenefit of healthcare providers and ensure sustainablebusiness models for the pharmaceutical industry.What should not be allowed to happen is any abuse of adominant position by the R&D-based companies thatleads to unfair competition or use of delaying tactics thatcannot be defended. Swift implementation of the EUPharmaceutical Sector Inquiry recommendations will beessential to removing hurdles to the timely introductionof new generic medicines, specifically in the area ofpricing and re-imbursement.Sustainability of the generic medicines industry is one ofthe key elements in ensuring the continuity of broadaccess to medicines.To meet the rising demand frommore patients who are living longer lives, requiringchronic therapy and expecting an improved quality oflife, generic medicines offer established treatment at anaffordable price.There is no other single, simple solution.

KEY TAKEAWAYSGENERIC MEDICINES:• Provide an affordable, gold standard medication for

many major illnesses• Allow access to medicines for a greater proportion of

the population• Stimulate healthy competition with the branded sector• Deliver savings to national health bills• Enable future long-term savings in the expanding role

of medicines vs hospitalisation• Are high quality products IMS Health and the EGA have worked closely andcollaboratively over a number of years on issues relatingto the generic medicine industry.

Acknowledgements: The author acknowledges the following for theirassistance in preparing this report: Polly Dryden, IMS Health; EGA for provision of data.


IIMMSS HHEEAALLTTHH

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Operating in more than 100 countries, IMSHealth is the world’s leading provider of marketintelligence to the pharmaceutical and healthcareindustries.With US$2.3 billion in 2008 revenueand more than 50 years of industry experience,IMS offers leading-edge market intelligenceproducts and services that are integral to clients’day-to-day operations, including product andportfolio management capabilities; commercialeffectiveness innovations; managed care andconsumer health offerings; and consulting andservices solutions that improve productivity andthe delivery of quality healthcare worldwide.Additional information is available athttp://www.imshealth.com

EGA

The EGA is the official representative body ofthe European Generic medicines and Biosimilarmedicines pharmaceutical industry, which is atthe forefront of providing high-quality affordablemedicines to millions of Europeans andstimulating competitiveness and innovation inthe pharmaceutical sector.

Formed in 1993, the EGA represents genericpharmaceuticals companies and their subsidiariesfrom throughout Europe, either directly orthrough national associations. Companiesrepresented within the EGA provideapproximately 150,000 jobs in Europe. Cost-effective generic medicines save EU patients andhealthcare systems over €30 billion each year,thus helping to ensure patient access to essentialmedicines and providing urgently needed budgetheadroom for the purchase of new andinnovative treatments.

The EGA plays an important consultative role inEuropean healthcare policy-making.The EGAand its members work with the Europeannational governments and the EU institutions todevelop affordable solutions for pharmaceuticalcare and to increase Europe’s competitivestrength in the global pharmaceutical medicinesmarket.


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