Global Govertnmentshare in Pharma

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Tendering & Contracting for generic & branded medicines across Europe – a comparison and benchmarking Birmingham, November 2011 Nico Bacharidis

Globally, Tenders & Contracts cover more than half of the Gx market, and also affect around 14% of the patented pharma market . In Mature markets the share of tenders - both patented and protected – is a bit lower. •Estimated Size1) of Tendered and Contracted Pharma Market ($bn) •27% of total pharma •$210bn 767 160 Tendered Contracted 141 Generics Total Gx Mar ket

•Tendered and Contracted Market by Gx and Patented
($bn)

210

•Over 50% of the global Generics market is tendered
•(52%) 141
129

•USD billions, 2009

52

270

•(67%)

Tendered or

Contracted Not Tendered

555

Not tendered

•~14% of the global Patented market is tendered
69 Patented •(14%) Total Patent 428 69 497 ed Mar ket Tendered or ContractedTendered Not

•(33%)
Total global market USD bn

•Source: Booz & Company analysis, IMS Data, Expert market interviews in 19 markets worldwide

2

The share of generics, as well as tendering and contracting is significantly higher in Emerging Markets than in Mature markets (Western Europe). We expect both to grow in Western Europe over the coming years. •% Market Tendered •Mature vs. Emerging Markets

•(2009)

•% Generic Value Share •Mature vs. Emerging Markets
•(2009) 181 585
27% 62%

•$bn Projected Growth •Mature vs. Emerging Markets
+2% •(2009)

100%

•CAGR
640 585

16% 7% 36% Tendered

Generics

158

196

•CAGR
+11% 310

6%

Contracted

77% 57% Not tendered

73% 427 38% Patented 445 181 112

144 Generics

167 Patented 69 Average mature markets Average Emerging markets Average mature markets Average Emerging markets 2009 2014 •Mature Markets Forecast 2009 2014 •Emerging Markets Forecast

•Source: Booz & Company analysis, IMS Data, Expert market interviews in 19 markets worldwide • Data extrapolated for MM region based on data from Mature markets: USA, Germany, UK, Italy, Canada, Sweden and Norway • Data extrapolated for EM region based on data from EM markets: CHN, BRA; IND; RUS; TUR; MEX; TPE; KSA; CHI; UAE; MYS; SIN

Globally the most important customer groups using Tender & Contracting are Governments, Retail pharmacies and Hospitals

100% 80% 60% 40% 20% 0%
CHN SIN CAN MEX

•Single Largest Buyer Type vs. Other Buyer Types •(% share of total tender & contract market in country) Other buyer types Largest buyer type UAE KSA BRA TPE NOR ITA CHI IND SWE UK TUR MYS GER RUS USA

•Distribution of Buyer Types •(% share of total tender & contracting market value)

•Distribution of Buyer Concentration •(% share of total tender & contracting market value) reduced public spent -> reduced growth dynamic

High public deficit -> lowered credit ratings -> increased interest payments -> higher debt

•Source: IMS; Comm Ops EU

Potential Exposure in Spain and Italy dwarfs that in Portugal, Ireland & Greece

•115

Potential Exposure in Spain and Italy dwarfs that in Portugal, Ireland & Greece

Financing Structure of EU HC Systems: Public Funding to a High Extend

9

EU Under Pressure to Control HC Spent
EU healthcare costs growing unsustainable
160

Significant financial pressure on the EU system

Measures to reduce HC spendings

Index, 2005 = 100

140

•Gap

High levels of public debt in many EU countries

Trend to tendering & Contracting Marketing and sales limitations (Rx, Gx) Reimbursement policies (Rx, Gx) Generics Encouragement (brands - > INN) Pricing controls (Rx, Gx)

120

Under-funding of country level HC costs

100

80

•Significant differences of per capita HC spent across EU countries 2005 20072009 HC cost 2012 2015 20182020 Salaries

GDP

10

What measures do we expect across markets in the coming years •Trend •Examples •Belgium: Implementation of ‘contract procedure’ will increase role and expectation of price-volume agreements with...
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