Stuck In The Middle ? The Way Forward For Malaysian Pharmaceutical - - PowerPoint PPT Presentation
Stuck In The Middle ? The Way Forward For Malaysian Pharmaceutical Industry Disclaimer: All materials are used by permission. Excerpts of data and statements were taken from: Pemandu GBI IMS Reuters BMI MOPI All the
All the views mentioned in the presentation and in the slides are my own individual and personal opinion and views and do NOT reflect views or opinions of Pharmaniaga Berhad or its affiliates.
Import reliance, global dynamics creating opportunity to react
5:1 ratio of imports to exports in Malaysia 10 of the top 15 blockbusters face upcoming patent expiry Attractive OIC markets, where Malaysia has advantage
6.8 4.7 5.0 5.4 2 4 6 8
Import / export ratio for pharmaceuticals 2009 2008 2007 2006
5 10 15 20 25
'08 sales (B$) 2015 13
Seretide fluticasone Nexium esomeprazole
2014 2013 2012 17
Diovan valksartan Seroquel quetiapine Singulair montelukast Enbrel etanercept
2011 27
Lipitor atorvastatin Plavix copidogrel Zyprexa
2010 2009 4
Lovenox enoxaparin
Prioritize local manufacturers for domestic market Tap large market for generic version of drugs with newly-expired patents
Leverage European mfg. standard and good reputation among OIC countries to gain market access
5 10 15
07 pharma import-export ratio (%) 220 180 5 08-’13 pharma market growth (%) Morocco Iran Egypt Algeria Bahrain Jordan Qatar KSA Lebanon UAE Kuwait
Source: IMS; BMI; ESPICOM; USAID; Press search; BCG analysis
Malaysia Generic market growing at a rate of 12% vs 9% for patented Imported drugs in Malaysia growing at a rate of 14% vs 12% for local
0.0 0.5 1.0 1.5 2.0 2.5
2013 2011
USD Bn
2003 2010 2009 2008 2007 2006 2012 2005 2004
+11% CAGR ('03-'13) OTC Patent Generics 9%
12%
13%
500 1,000 1,500 2,000
2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
USD Bn
CAGR ('03-'13)
12 %
14%
500 650 800 1,200 1,100 4,400 1,000 2,000 3,000 4,000 5,000
Public Total Private MYR Mn
150
Private Local Public Local Private Import Public Import
Generics Patented
Financial impact (US$ Bn) Context Proposal
ASEAN harmonization
– RM$4B of imports, vs RM$ 0.8B of exports in 2009
– Portfolio overlap across 32 local players – Low utilization (30%+) – small batches – High raw material cost - small vol. purchase
GNI 4.3 Net income transfer abroad 0.7 Wages 3.3 EBITDA 1.8 Cost 6.3 Revenue 8.0
Inputs & support required
Job creation
12k jobs
manufacturing facilities by 2020
MOH
test, immediately place on national formulary
registration in target markets, allowing direct sale
data for local players
procurement and treatment system
MITI MATRADE
Assumptions
substitution, and higher-value products from existing manufacturers
international benchmark of generic companies
foreign investment in new manufacturing clusters
Contribution to GNI
US$4.3Bn
“High risk high reward” “Misplaced expansion” Evolve or perish “Space Invaders”
Profitability Footprint
Incubate to upgrade; substitute imports
Capable and profitable pharmaceutical and biopharma industry with a large contributes to GNI
Strong domestic share OIC countries footprint Extensive R&D capability “Best in class” High performance sales
'Super' generics
Enhanced generics, e.g. combination, new formulation, etc. (e.g. Panadol ActiFast [2x+ price
amlodipine + tocotrienol)
Generics
"Me-too" version of prescription drugs that have lost patent exclusivity (e.g. Panadol; amlodipine)
Network of facilities to coordinate and
generics New export-focused manufacturing cluster to complement existing resources Current Future
Malaysian players largely producing for domestic market Negligible local participation
Established Malaysian players move up value chain to produce higher value products, e.g. enhanced generics, bio- similars
Increase efficiency to : enable exports, substitute imports, and move into higher value products
Managed risk might fail Mitigate risk incremental success Strong domestic share OIC countries footprint Extensive R&D capabilities
“Best in class”
Sales performance Moderate domestic share Regional footprint Adequate R&D capabilities Efficient facility Sales performance Weak domestic share Domestic footprint Limited R&D capabilities Sufficient facility Sales performance
Capacity and capability Profitability
in-class clustered facilities
domestically
large GNI impact
via acquisition of local players
growth
via acquisition
and Central Asia
and acquisitions
supported by acquisitions (eg, Basics in Germany)
Geographic expansion Portfolio/ Segments Products/ Pipeline Value chain
API and Gx
health division
(Aliud)
strengthen branded Gx segments
patent protected drugs
portfolio/pipeline
challenging
portfolio
regulatory and development know- how
APIs
via 15% share on Bioceuticals
activities via partnerships
R&D for patented/biol. drugs
direct distribution
manufacturing
and distribution
manufacturing to vertically integrated player along value chain
manufacturing, R&D
Diversified, fast- acting global player Regional play with traditional portfolio Multiple activities and geographies (second tier) Partnership model
selected OIC countries due to cost competitiveness and MY's reputational advantages
blockbusters with recent patent expiries
portfolio (concentrated in highest value therapeutic areas) to gain efficiency
manufacturing, with upstream and downstream partnerships Lean, focused model
Malaysia generics players
Establishment of Centre of Excellence for Pharma R&D can drive innovations
National Center
for Pharma R&D Funding options
sales by local players
tenders
from fee-for-service and R&D commercialisation Objectives
coordination failure and high barriers of entry for R&D
innovative pharma industry
bar for business
Services
pharma industry
generics (e.g. combination products, new delivery systems)
advisory, interactions with venture capital
(e.g. grant application)
Governance and staffing
Excellence
universities, MOPI, WHO and international key
and scientists with relevant knowledge and experience Requires high-level support from both MOH and MOHE, as well as policy changes (e.g. allowing academics to hold equity stakes in companies)
Incubate local players and create new facilities for globally competitiveness
Starting point "plateau" 2011-2014 "incubation" 2014-2020 "globally competitive" 5:1 import-export ratio 32 domestic manufacturers with significant portfolio
Outdated facilities below GMP1 standards Limited export due to lack of cost competitiveness Low capacity utilization Large purchase of imported drugs by gov't (~60% of total MOH purchases) Use localisation to incubate upgrade of existing players' capabilities and facilities Move into higher value- added products, e.g. enhanced generics and bio- similars Create a new cluster of export-oriented manufacturing facilities to complement existing resources Export generic version of recently expired blockbuster products, focusing on OIC markets as a starting point
1 2
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Biopharma revenue at risk due to patent expiration1 (as % of 2006 revenue)
Source: BCG case experience; Business Insights; BCG analysis
Abbott Eli Lilly Amgen AZ
Upcoming patent expiries create white space for new generics player
BMS
4.6 6.9 3.6 5.1 14.8 12.9 9.8 13.5 7.2 10. 9 9.6
Wyeth GSK Merck Pfizer S-A Roche Novartis SGP J&J Industry average (%)
US$132 billion2 worth of product by the top 10 pharma companies will face patent expiry by 2014
40% of rev. in single year
Key:
Malaysian generics: US$3.0 B revenue target for blockbusters expiring before 2013
5 10 15
NEXIUM PLAVIX LIPITOR TAZOCIN ARIMIDEX LAMICTAL 2004 ARICEPT ABILIFY KEPPRA CIALIS FLIXOTIDE SERETIDE LOVENOX PULMICORT 2011 CYMBALTA 2009 2012 2008 2010 2007 EFFEXOR BLOPRESS CASODEX PANTOZOL PROGRAF MICARDIS VALTREX GEMZAR COZAAR LOSEC SINGULAIR FEMARA VOLTAREN XALATAN ACTOS REBIF CELLCEPT ZELDOX TAXOTERE DIOVAN ZOMETA COPAXONE RISPERDAL 2000 2008 global revenue (US$ B)
Note: Target revenue calculated by forecasting generics market size in 2020 (accounting for baseline growth, as well as price erosion and volume increase as a result of patent expiration) and applying a 1% aspirational global market share
indication, formulation, etc. patent expiration estimated by adding 12 months to the expiration of the first pediatric patent of a drug Source: FDA Orange book; IMS; BCG analysis
US$ 50M 2020 revenue target for Malaysia Gx
Estimated patent expiry1
Malaysian generics: US$2.9 B revenue target for blockbusters expiring 2013-2020
4 3 2 1
2013
CONCERTA
2015 2017 2019
2,020
GLIVEC HUMALOG LANTUS BENICAR
2016
DETRUSITOL ZETIA CELEBREX ZYVOX LYRICA SPIRIVA EVISTA VIAGRA NASONEX CO-DIOVAN CRESTOR
2014 2012
VYTORIN KALETRA REYATAZ JANUVIA TOPAMAX
2018
2008 global revenue (US$ B) OXYCONTIN US$50M 2020 revenue target for Malaysia Gx
Note: Target revenue calculated by forecasting generics market size in 2020 (accounting for baseline growth, as well as price erosion and volume increase as a result of patent expiration) and applying a 3% aspirational global market share. Aspirational share of 3% (versus 1% for expiries before 2013) used because new Malaysian facilities would be ready and early market entry more likely to gain significant share
indication, formulation, etc. patent expiration estimated by adding 12 months to the expiration of the first pediatric patent of a drug Source: FDA Orange book; IMS; BCG analysis
Estimated patent expiry1
Malaysia's competitive advantages in the OIC countries
– Malaysia is the only OIC country that adheres to PIC/S guidelines (adopting cGMP) – Industry is well regulated by NPCB to ensure compliance to cGMP – Strong existing manufacturing capabilities (i.e. talent, infrastructure)
leadership
– Established leader where "Halal" is concerned
medicine
in place—track record of innovation and leadership
– Bilateral arrangements between Malaysia and other OIC countries
1 2 3 4 5
Halal platform a key differentiator for Malaysia
Unmet need in halal medicine
Halal pharmaceuticals could be worth up to US$500 B, accounting for 22% of global halal products market1 If a halal version of a medicine exists it would be preferred by Muslims, even though medicine is considered lifesaving and hence exempt from halal and haram considerations Halal medicine in very early stages of development due to difficulty of establishing traceability to the source
Competitors on the move, MY must regain the initiative
Brunei launched The Brunei Darussalam Guidelines for Manufacturing and Handling of Halal Medicinal Products, Traditional Medicine & Health Supplements in June 2010 Ambition to attract foreign investment to establish halal pharma manufacturing for export to Muslim world
company to establish facilities Pulau Muara Besar port area to be developed into a Halal Pharmaceutical Hub
Nascent development in MY, need concerted development
Increasing interest and efforts from Malaysian companies
discussions with GSK to produce porcine-free meningitis vaccines for the haj pilgrimage; aiming to build R&D and manufacturing facility in Bandar Ensted by 2011
develop halal vaccines
High potential to develop into a key competitive advantage and differentiator for Malaysian pharma export Needs co-ordinated development + establishment
1 2 3 4 5
Algeria Bahrain Egypt Iran Jordan Kuwait Lebanon Morocco Qatar KSA UAE Tunisia
Pharma Size 2013 ($B)
Source: IMS; EIU; Espicom; BMI; PWC; Expert interviews; BCG analysis
Iraq Libya Oman Sudan Syria Yemen
Attractive core countries Attractive non-core countries Non- attractive countries Low High Market attractiveness1
Fast growing pharma market in 18 MENA countries...
assuming 10% hospital sales on top of retail 4. IMS 2005 forecast values for 2008 (ex-manufacturers' prices, including hospitals) multiplied by 1,3 in order to convert to retail prices 5. US Agency for International Development report Source: IMS; BMI, ESPICOM, USAID, Press search; BCG analysis
Total Pharma market size 2008E ($M)
1,602 2,111 932 1,194 574 564 351 268 1,089 895 760 344 278 404 217 459 116 117 137 200 267 374 650 129 3 23 177 57 99 4 24 68 50 1,000 2,000 3,000 4,000 5,000 Algeria1 142 2,531 KSA1 2,231 130 2,171 Iran1 Egypt2 1,377 Morocco1 145 808 UAE2 Tunisia3 100 500 Lebanon1 53 377 Kuwait1 374 Jordan1 Syria4 Libya4 156 2,820 Qatar1 Iraq5 Sudan4 Oman1 Yemen4 68 204 Bahrain1 OTC Generics Patented No breakdown Pharma market size ($M) 75 2013 additional sales
2008e sales
5.6% CAGR 08-13 15.1% 10.0% 10.3% 5.3% 4.7% 9.0% 7.6% 8.5% 4.2% 2.6% 8.0% 8.9% 6.8% 4.3% 4.9% 3.9% 10.1%
98.0 96.0 95.0 91.0 90.0 86.0 66.0 58.0 33.0 28.0 25.0
% of total domestic market
2.4
Kuwait
19.0
UAE
1.3
Lebano n
6.0
KSA
0.5 106.0
Qatar Jordan
0.3
Bahrain
0.3
Algeria
9.0
Egypt
4.3
Iran
3.0
Morocc
Exports
120 150 30 60 90 120 30 60 90
Imports and exports as a % of domestic market - 2007
Source: BMI reports for 2008; Press search; BCG analysis
Total exports for 2007 in $M Total imports for 2007 in $M
$449M $2,075M $156M $292M $46M $1,366M $571M $495M $284M
$6M $138M $1M $376M $0M $8M $164M $78M $37M $8M
$326M $710M
$138M
Hikma with a plant in Jordan exporting worldwide
Import markets Mix markets local markets
Market protectionism in 6 core countries call for G-to-G negotiations to gain preferential entry
Note: Pharma market attractiveness score based on analysis on three axes: IP laws, Govt policy/reimbursement, and Approval process. See details in next slide Source: BMI Q4 2008 report; BCG Analysis
Elements of pharma market protectionism
Director or majority of board directors to be UAE nationals2
UAE
Egypt, Tunisia, Algeria – to be gradually abolished by 2012
Morocco
pharmacist1
KSA
Iran
Algeria
approved
not enforced) Egypt
High protectionism Lower protectionism
Local players predominantly focused on domestic market... Exports are only 10% of pharmaceutical sales for manufacturers benchmarked
2
150 100
3 2008 sales (RM$ M)
50
Local player 10 Local player 6
26 49 6
Local player 5
44 1 11
Local player 3 Local player 2
24 1
Local player 7
24 99 12
Local player 1
139 2
Local player 9 Local player 8
57 70 12 13
Local player 4
Domestic revenue Export revenue
2% 11% 15% 16% 23% 0% 18% 3% 4% 56% Average 10% Export as % of total sales
Note: Manufacturer's name masked due to data confidentiality; prescription drug sales only Source: MOPI; BCG analysis
2008 sales breakdown
...but domestic market remains dominated by imports
Import growth has outpaced export growth in recent years In contrast with peers, top 10 players in Malaysia are all MNCs
5.4 5.0 4.7 6.8 6.5 2 4 6 8
Imports / Exports ratio
2009 2008 2007 2006 2005
Malaysia Indonesia Thailand
Merck Kalbe Pfizer Pfizer Dexa Siam Sanofi-Aventis Sanbe GSK GSK Tempo GPO Astra Zeneca Pfizer Sanofi-Aventis Roche Soho Novartis Merck Serono Kimia Farma Biolab Abbott Pharos Group AstraZeneca Bayer Bayer Roche Novartis Sanofi-Aventis Berlin Pharma MNC Local
1 2 3 4 5 6 7 8 9 10
# Current status Game plan
countries
Malaysian player's PIC/S manufacturing standards
encourage MNCs to outsource production to local players
Some room to import substitute, but potential limited by product fragmentation
333 110 1,048 155 323 89 200 400 600 800 1,000
2009 MOH drug purchase (RM$ M)
Patented Local generics Imported generics Total 37
433 489 126 1,048
12% of MOH's drug purchase substitutable by local generics... ...but product fragmentation among imported generics limit potential for import substitution
APPL1 Contract
47% 41% 12%
% of total
Source: MOH procurement
1.6 0.6 2.2 1.7 1.1 2.5 1 2 3
Average value per product (RM$ M)
Imported generics Local generics Patented
avg = 1.6 APPL Contract 160 33 207 65 62 149
# of products
Localisation policy already in place, partnerships with MNCs need to be formed
"Increase in purchase of local generics"
National Medicines Policy
"Pharma. to be given the same/equivalent strategic incentives as to the bionexus companies" "Identify off- patent imported products that are viable to be manufactured locally" "MNCs to out- source the manufacturing to Malaysian-
manufacturing companies" "National self reliance: drugs in NEDL including antivirals & vaccines" "Set up national database for drug supply to encourage domestic production "
MNCs Identify and audit potential local partners Local players Approach MNCs, conform to quality audits MOH Create favourable conditions, e.g.
with longer supply duration
Local industry fragmented, production should be rationalised Only 4 players have sales exceeding RM$100 M
233 141 111 108 93 68
2009 revenue (RM$ M)
Tota l Player 7 1,450 Others (~20 companies ) Player 2 Player 9 Player 1 56 34 Player 3 Player 10 25 Player 4 Player 11 Player 8 49 15 57 Player 5 Player 12 460 Player 6
500 1,500
Note: Manufacturer's name masked due to data confidentiality. Revenue figures include prescription drugs, over-the-counter drugs, animal health products, TCM, nutraceuticals, and cosmeceuticals Source: IMS; MOPI; BCG analysis
Migrate to a more focused set of domestic players. Potential levers include:
need to be fulfilled in its entirety encourage production rationalization and partnerships to fulfill tenders, laying the groundwork for mergers and acquisitions
amount of R&D spend build innovation capabilities and decrease number of players concentrating on lower value-added commodity products Current status Game plan