The Healthcare Supply Chain: A Look Inside Steve Collis President - - PowerPoint PPT Presentation

The Healthcare Supply Chain:

A Look Inside

Steve Collis President and CEO AmerisourceBergen

Today’s Agenda

AmerisourceBergen: A Quick Primer Four Disruptions in the Healthcare Supply Chain Part 1 Part 2 Where Do We See Opportunities to Shape Healthcare Delivery? Part 3 Q&A Part 4

AmerisourceBergen: A Quick Primer

• Provide more than 70,000

healthcare facilities with the right medication and supplies overnight.

• Deliver over 1.5 million

product lines from our 30+ distribution centers, located in the United States and Puerto Rico.

• Help millions of patients

safely receive the treatments they need for timely, successful care.

Who Are Our Customers?

AmerisourceBergen: By the Numbers

16,000

associates

140+

• ffices

50+

countries

Historic Growth for the Company

FY 2014 FY 2013 Change Revenue Gross Profit Operating Income Adjusted EPS $119,569 $3,306 $1,556 $3.97 $87,959 $2,762 $1,290 $3.21 36% 20% 21% 24%

A Monumental Deal Among Industry Titans

Potentially

transformational for ABC, creating a wholesaler with the broadest global reach.

The long-

term relationship— both smart and unprecedented.

“ “ “ “

Has the

potential to transform the pharmaceutical supply industry

• n a global

basis.

“ “

Deal

transforms global pill pipeline. Groundbreaking global partnership.

“ “

Knowledge, Reach and Partnership on a Global Scale

Local Presence in 50+ Countries

Solutions that Span The Industry’s Needs

• Largest breadth and depth of commercialization services
• #1 provider in virtually every offering

About Me

• Born in South Africa
• Graduate of the University of

Witwatersrand in Johannesburg with a degree in accounting

• Lieutenant in the South African

Air Force

• Came to California in 1989

to work for an orthopedics distribution company

• Joined Alternate Site Distributors

(ASD) Healthcare in 1994 as the general manager

About Me

• President of Bergen Brunswig

Specialty Group in 1999

• President, AmerisourceBergen

Specialty Group (ABSG) following the merger of Amerisource Health and Bergen Brunswig in 2001

• President of AmerisourceBergen

Drug Corporation (ABDC) in 2009

• President and CEO of

AmerisourceBergen (ABC) in 2011

Four Disruptions in the Healthcare Supply Chain

Global Spending on Drugs Will Reach about $1.3 Trillion by 2018

Global Sales and Growth, 2009-2018

Source: IMS Health Market Prognosis, Sept. 2014, at ex-manufacturer price levels, not including rebates and discounts

Spending by Geography

US Pharmaceutical Trends

Specialty Growth

Source: Evaluate Pharma, Team Analysis ; McKinsey data

1 Shifting Site of Care 2 Changing Patient Population 3 Biosimilars 4 Balancing Cost vs. Quality

Provider Consolidation and Integration Continues

Source: Kaufman, Hall and Associates, February 2015 Source: The Health Care M&A Information Source, February 2015

Physician Employment Trends (2008-2013)

• Physicians have

been leaving independent practice for hospital-employment.

• However, majority
• f physicians are

still practicing in an independent setting.

Health System Pharmacy Challenges

• Generic price spikes
• Drug shortages
• Specialty distribution shift
• 340B coordination
• Cost management—especially for specialty medications

Costs for Specialty Care Are Increasing – Regardless of Where the Care Is Administered

Shifting Site of Care: Key Takeaways

• Issue runs deeper than just where products are delivered and

administered

• Regardless of where care is delivered, supply chain partners must be

nimble enough to respond in a value-additive way

• Market change creates increased needs for solutions that align with

customer business goals

1 Shifting Site of Care 2 Changing Patient Population 3 Biosimilars 4 Balancing Cost vs. Quality

Virtual Care and Telehealth

• Telehealth is a potential

solution for challenges created as a result of an aging population and an increase in chronic disease states.

• Additional benefits include

an increase in quality care and decrease in healthcare expenditures.

Source: “Global Markets for Telemedicine Technologies,” BCC Research, available at http://www.bccresearch.com/; “Global Telehealth Market Set to Expand Tenfold by 2018

A Patient-centric Approach to Adherence Services

Changing Patient Population: Key Takeaways

• Patient population growing in size and complexity
• Aligning services with patient expectations will be key—not just for

supply chain partners, but for all healthcare stakeholders

• Reach and scale will still be key

1 Shifting Site of Care 2 Changing Patient Population 3 Biosimilars 4 Balancing Cost vs. Quality

Launch influenced by:

• Regulatory approval
• Patent challenges
• Commercial acceptance
• Interchangeability

Biosimilar Opportunities

Biosimilars: Key Takeaways

• Still playing the waiting game for the big biosimilars rush
• But waiting does not equate with inactivity
• Winners will be determined by who’s best prepared to serve full

spectrum of needs—both distribution and commercialization

1 Shifting Site of Care 2 Changing Patient Population 3 Biosimilars 4 Balancing Cost vs. Quality

Emergency Room Usage by Country

Source: 2013 Commonwealth Fund International Health Policy Survey in Eleven Countries.

Source: National Pharmaceutical Council

An Accountable Care Organization (ACO) is a group of health care providers who work to deliver coordinated care and are collectively accountable for the cost and quality of care. ACOs have the potential to improve the quality of care and lower costs. To show success, ACOs must report on specific quality measures.

A Shift from “Fee-for-service” to “Value-based” Care as a Result of the Affordable Care Act

Source: HIDA: “Healthcare Supply Chain 2015” Source: MM&M-online: Health systems are embracing value-based care: survey, December 2014.

Projected 2015 Private Health Insurance Spending

Inpatient and professional services account for the largest amount of private health insurance spending

Source: PwC Health Research Institute, Medical cost trend: Behind the numbers 2015, June 2014 analysis based on the 2014 Millman Medical Index

The Hepatitis C Marketplace

• A leading manufacturer planned to launch their Hepatitis C drug via

limited distribution

• They made the decision to instead launch full line wholesale
• The result was expanded patient access and arguably the most

successful healthcare product launch of this century

Financial Impact of New Hepatitis C Therapies

2015 – 2016 is the highest cumulative impact on benefit costs for employer plans

Source: PwC Health Research Institute estimate based on National Health and Nutrition Examination Survey and 2012 Truven claims data from employers23

Balancing Cost vs. Quality: Key Takeaways

• Smarter spending—not just reduced spending
• Results matter just as much as (or even more than) procedures
• Support needed for providers entering into ACOs and other care

coordination models

Where Do We See Opportunity to Shape Healthcare Delivery?

• The community pharmacy industry represents 37% of all retail

pharmacies in the US, an estimated $89 billion in annual revenue.

• Top three disease state management services offered at a community

pharmacy are immunizations, blood pressure monitoring and diabetes training.

• Pharmacists play an increasingly important role in public health and

many states are expanding the role of the pharmacist as provider.

The Independent Community Pharmacy

Source: IMS Health Data

Independents Remain a Formidable Presence

Customer Utilization of Pharmacies, by Dispensing Format, 2014

Dispensing Format 2012 2013 % Change 2012 2013 % Change Prescriptions (millions) Share of Prescriptions Chain drugstores 1,885 1,947 +3.3% 44.0% 45.3% +135 b.p. Independent drugstores 723 719

• 0.6%

16.9% 16.7%

• 13 b.p.

Mass merchants with pharmacies 439 442 +0.7% 10.2% 10.3% +5 b.p. Supermarkets with pharmacies 522 536 +2.7% 12.2% 12.5% +30 b.p. Mail pharmacies1 717 651

• 9.2%

16.7% 15.2%

• 157 b.p.

Total 4,286 4,295 +0.2% 100.0% 100.0%

1. Excludes Tricare prescriptions. Prescription data for mail pharmacies show Equivalent Scripts (Actual Scripts x 3) Totals may not sum due to rounding. b.p. = Basis Point (one hundredth of one percent; 0.01%) Source: Pembroke Consulting analysis of IMS Health data; Pembroke Consulting estimates

Source: 2013-14 Economic Report on Retail, Mail, and Specialty Pharmacies, Drug Channels Institute, January 2014.

Independent Community Pharmacy Market

Share of Prescription Revenues, 2013

Customer Satisfaction with Pharmacies

Customer Satisfaction with Pharmacies, by Dispensing Format, 2014

Customer Satisfaction Index Ranking (based on a 1,000-point scale)

Source: Pembroke Consulting analysis of 2014 U.S. National Pharmacy Study, J.D. Power and Associates, September 2014

Commitment to Oncology

Competitive Pricing on Products

• Industry-leading and

industry-pioneering GPO structure in

• ncology
• Ensuring reliable access

to medications

Actionable Data and Analytics

• Helping practices learn

more about themselves so they can care for patients more effectively

• Data-driven care and
• perations

Information and Amplification

• Educating practices on the

latest clinical and

• perational insights
• Amplifying their voice to

communicate their perspective to lawmakers and regulators

• Not a one-size-fits-all approach
• Combine global best practices with localized

expertise and resources to create customized solutions for manufacturers

Unique markets demand unique, tailored approaches

Leveraging global presence to expand commercial operations (Australia 3PL). Leveraging ABC to expand clinical services (Cubixx). Joint venture to merge local knowledge of Brazil market with proven solutions and approaches from U.S. and Canada. Exploring how product commercialization lessons learned in Canada can be applied elsewhere—while continuing to improve

• perational excellence.

Animal Health Market Overview

• The global animal health industry is worth an estimated $100 billion
• The pharma segment globally is ~ $22bn, U.S. Market is $8bn)

Demographics

10,000 baby-boomers turning 65 every day until 2029.

Drug Innovation

New drugs coming to market.

Healthy Drug Pricing Environment

Specific to BRx and GRx.

2/3 of U.S. households now own a pet.

Demographics

10,000 baby-boomers turning 65 every day until 2029.

Aging Population Take More Rx Drugs Live Longer Get A Pet

Questions & Discussion