Ims Perfecting Market Access In Apac
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The document discusses market access challenges and opportunities for pharmaceutical companies in the Asia Pacific region. It notes that while the top 10 pharmaceutical companies dominated growth between 2005-2009, their contribution to regional growth has fallen as local generic players take a larger share. The summary discusses three key points: 1) Government policies across Asia Pacific are increasingly focused on cost containment and promoting generic drug substitution, placing pressure on innovative drug companies. 2) However, opportunities remain due to an aging population, rising incomes, and a shift to chronic diseases. The specialist care sector is outperforming primary care in growth. 3) Companies are pursuing strategies like authorized generics, value-based pricing, and risk-sharing agreements to improve market
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Ims Perfecting Market Access In Apac
- 1. Perfecting Market Access: Maintaining Momentum in the APAC Region Amit Backliwal, Principal, IMS Management Consulting, Asia Pacific
- 2. The early giants of the pharmaceutical TRADITIONALLY, TOP 10 MNCs HAVE SEEN STRONG GROWTH RATES IN APAC. industry rose to prominence in the west and in Japan, in countries where patients APAC MAT/Q/09 Top 10 MNCs in APAC* Size: US$66.2 billion and their physicians demanded and by and Annual Growth: 15.8% large could afford premium pharmaceuti- 18% 4-yr CAGR: 14% AZ, US$ 2b cal products. Blockbuster products netting 18% BAYER, US$ 1.3b US $1 billion in sales werent all that rare; WYETH, US$ 0.9b NOVARTIS, 14% US$ 1.9b in fact, many stakeholders came to expect 4-year CAGR (MAT Q3 2005- MAT Q3 2009) them. 12% ROCHE, US$ 1.4b S~A, US$ 2.3b 10% But with blockbuster drugs now eclipsed 8% J&J, US$ 1.2b PFIZER, US$ 2.8b by me-too products and generics, bio- 6% tech innovations forestalled by scarce in- GSK, US$ 2.4b vestment dollars, and patients and insur- 4% MERCK & CO, ers growing increasingly ill-equipped to 2% US$ 1.1b keep pace with rising healthcare costs, 0% MNCs have found themselves assailed by 0% 5% 10% 15% 20% APAC market a number of factors. Annual Growth growth rates The long-term economic decline has, Source: IMS Health MIDAS MAT Sep 2009; APAC* here does not include Vietnam, Brunei and Sri Lanka among other things, complicated attempts to put strategic healthcare initiatives into place. Declining consumer spending has HOWEVER, MOST ARE STARTING TO SEE THEIR triggered changes in the ways patients go CONTRIBUTION TO REGIONAL GROWTH FALL. about taking care of themselvesfilling Growth is increasingly contributed by local generic players fewer prescriptions, for example, and seek- ing less-costly medical alternatives. Finally, Contribution to Regional Growth lower GDP and escalating budget deficits are impeding long-term planning that 95% might safely position healthcare as an af- fordable option not just for some, but for 75% CONTRIBUTION TO GROWTH (%) many. MNCs hoping to grow and survive 69% 67% 71% have been forced to look elsewhere. 75% 55% Emerging markets have captured the eye and imagination of MNCs in recent years. 35% Indeed, IMS Health is now projecting that 8% 7% 9% the APAC region, led by China and in- 7% cluding ASEAN, Australia, and India, will 15% 24% 25% 21% 18% grow to US $66 billion by 2013. Oppor- tunity, it seems, really does lie east. -5% MAT/9/06 MAT/9/07 MAT/9/08 MAT/9/09 This isnt new news. The top ten MNCs TOP 10 TOP 11-20 OTHERS (7329) might have dominated the scene between Source: IMS Health MIDAS MAT Sep 2009; APAC* here does not include Vietnam, Brunei and Sri Lanka 2005 and 2009, but they have lately lost traction to small- and mid-sized players KEEPING PACE WITH A DYNAMIC REGION lishing a three-tier system for healthcare and locals. Nevertheless, emerging marketsand delivery in rural areas, and fortifying urban the opportunities they continue to repre- hospitals and community health centers But even these organisations have felt sentare here to stay, and they are chang- with a dual referral system; increasing pressure as the APAC region ing daily. China, for its part, has taken an Drug supply, which is framed around grows steadily more competitive, and as aggressive leadsignaling a new era with the Essential Drug List (EDL) and features local generics players take a larger piece of sweeping healthcare reforms that stand on open tender purchases and retail prices set the pie. In September 2006, 24% of the four well-defined pillars: by central and regional governments, and regions growth was fueled by the top ten which values innovation by giving price MNCs. Last year, that percentage stood Healthcare financing, with the cor- benefits to first-to-market products; and at 18%. responding increase in the breadth and Hospital reforms, which emphasize the depth of coverage; separation of ownership from manage- Care delivery, which is focused on ment and which seek the gradual elimina- strengthening primary care services, estab- tion of drug margins.
- 3. In the Philippines and Thailand, mean- AFFLUENCE CONTINUES TO INCREASE IN APAC. while, cost cutting has emerged as the top % of population that can afford expensive specialist care treatment is set to increase. priority. In the former, the effort has in- cluded maximum retail price and volun- % of total disposable income accounted for by Decile 10 tary price reductions: Under the Cheaper Medicines Law, five molecules were put under a maximum retail price, while lead- 32% ing brands from sixteen other molecules 26% 32% 34% voluntarily reduced prices. A secondary 34% 34% 23% price cut, also focused on voluntary reduc- 23% 23% 30% tion, was recently announced. 31% 30% 39% 38% 39% In Thailand, the government has been 33% 33% 33% primarily focused on the governmental 28% 21% 21% 27% hospital/Civil Servants Medical Benefits 24% 27% Schemes frontputting pressure on hos- 27% 31% 31% 1990 2000 2007 pitals to adopt generic substitutions where China India Indonesia Malaysia Philippines Singapore Taiwan Thailand Vietnam such products are readily available. Again, the initiatives have resulted in decreased * Decile 10: (Surrogate marker) Percentage of households that can afford luxury products and expensive one-off purchase sales of original and expensive treatments Source: World Income Distribution Report (Euromonitor) and a growing focus on the cheaper alter- natives and generics that are in keeping with constricted budgets. REMAINING OPPORTUNISTIC Despite cost containment pressures and a rising emphasis on generics, the dynamic NOT SURPRISINGLY, THE SPECIALIST CARE SECTOR IN THE nature of the APAC region affords contin- REGION IS OUTPERFORMING PRIMARY CARE IN GROWTH. uing opportunities. Consider the evolving patient profile. At IMS, were seeing a def- Primary Care CAGR vs. Specialty Care CAGR inite shift from acute, communicable dis- eases to chronic ailmentsa result of the 25 China aging population and improved access to Specialty Care CAGR (MAT/9/04 - MAT/9/09) Bangladesh diagnostic testing in the region. The use of 20 Hong Kong Thailand antineoplastics, for example, key in cancer Indonesia India Pakistan therapy along with cholesterol lowering, 15 Korea Australia Philippines hypertension, depression and other simi- Taiwan Malaysia 10 Singapore lar lifestyle and chronic drugs has jumped multi-fold in the last 5 years. New Zealand 5 In Thailand, an aging population and 0 changing lifestyles are likewise driving in- 0 5 10 15 20 25 creasing pressure on chronic carein car- Primary Care CAGR (MAT/9/04 - MAT/9/09) diology, nervous system, oncology, respira- Australia Bangladesh China Hong Kong India Indonesia Korea Malaysia New Zealand Pakistan tory, GU system and sex hormonesover Philippines Singapore Taiwan Thailand acute care. While the growth of anti-in- fectives is slowing, this does remain a sig- Source: IMS Health MIDAS Sep 2009. APAC data excludes Vietnam, Bangladesh, Brunei and Sri Lanka. IMS Market Insights definitions used for Primary care and Specialty care nificant area in value terms in this popula- tion of 65.42 million. Beyond the evolving patient profile is the evolving nature of the APAC consumer, which grows ever-more affluentmore capable of affording luxury products, ex- pensive one-off items, and expensive spe- cialist care.
- 4. This has precipitated the rise of the spe- a rising predilection for generic substitu- LOOKING PAST 2010 cialist care sector, which is now outperform- tion, while in the Philippines, attempts to Weve entered a new decade, and things ing primary care across the board. contain costs in both the public and private arent about to get easier. We project in- sectorsthrough MRP and voluntary price creased pressure on costs and pricing as Finally, there are opportunities emerging reductionshave already resulted in a surge the years unfold, and a world increasingly from the evolving reimbursement landscape of generics growth at the expense of origi- dominated by generics. of the APAC region, though not all changes nal products. The first such implementation will be easy to navigate. The reimbursement of price reductions affected 12% of market At the same time, we believe that gov- story is best told by focusing on clusters. sales. ernments, physicians, and patients will increasingly demand proof of a products Australia, South Korea and Taiwan represent And yet, despite all the emerging reimburse- value, increasingly look to the benefits of the reimbursed markets, where both private ment policies and actions, market access re- personalized healthcare, and expect more and public sector services and drug costs are mains a key issue for patients throughout from new product distribution models. reimbursed by the countrys national health the APAC region. While disposable income Specialty products are here to stay. So are insurance scheme and where decision-mak- has, as we have noted, risen overall, in some emerging markets. And MNCs can expect ing responsibility is shifting to generics and selected Asian markets less than 40% have to be challenged by a rising corps of local third-party payers (via employer insurance disposable income above US $2,000, creat- generics companies who are positioning packages). ing a large unmet demand for cheaper al- themselves to have a measurable impact on ternatives. high-growth therapy areas. Thailand, China, Malaysia and Singapore represent the semi-reimbursed markets, At IMS, we have seen just how critical an af- Going forward, innovator companies seek- where services, especially those relating to fordable threshold price can be to MNCs ing to drive access in reimbursed markets certain public sector treatments and certain seeking to market their products. In the will be forced to focus on the value of drugs in the Essential Drug List, are covered Philippines, for example, the launch of low- medicineand to demonstrate such value by public expenses. Here, the protectionist priced generics led the omeprazole market conclusively. They will need to follow in stance of the government often enables local to a five-fold growth in just three years. the footsteps of their peers, who have faced companies to flout patent protection laws. challenges head on. But lower price is not the only strategy that Finally, there are India, Indonesia and the can play a role in building market access Bayers approach to growing Nexavar, its Philippinesthe self-pay marketswhere for MNCs. Authorized generics have also oral multiple kinase inhibitor for the treat- patients predominately pay for medical proven to be an effective growth factor in ment of patients with unresectable hepa- services and drugs out-of-pocket, although countries like Indonesia, where MNCs are tocellular carcinoma, is a case in point. some segments of the population (includ- effectively leveraging partnerships to build There, Bayer faced Italian authorities who ing government employees) do attain reim- awareness for and adoption of authorized were refusing to reimburse the product for bursement. In these self-pay markets, phy- generics. a broad range of patients. Bayers response? sicians remain highly share-of-voice driven To enter into performance risk-sharing and price sensitive. Patients, for their part, agreements that yielded a 50% discount remain brand conscious, choosing from pharmaceutical alternatives based on their understanding of brand quality and trusting LARGE UNMET DEMAND EXISTS FOR CHEAPER ALTERNATIVES. a good brand to deliver good results. This In Phillipines, patient affordability reaches new levels when the threshold price is met consciousness drives uptake. Omeprazole Price- Volume Interplay: Philippines Throughout the region, a pro-generics 3500 0% stance is being adopted by numerous in- Sudden increase in affordability triggers volume expansion dividual governments, with all the obvious 3000 implications for MNCs. Vol. in SU 2500 -20% % Loss (000) of Value 2000 of In Australia, for example, we are seeing re- -40% Original Product peated efforts to curb spending on the Phar- 1500 maceutical Benefits Scheme, a widespread 1000 -60% preference for generics on the part of phar- 500 macists, generics serving as first-line treat- ment in a number of therapeutic areas, and 0 Q103 Q104 Q105 Q106 Q107 Q108 Q109 -80% a consequent surge in unbranded generics. Omeprazole Volume Price Drop Launch of low priced generics have led to the Omeprazole market having a five fold growth in three years. In Thailand, government efforts to control The threshold price for explosive volume growth is between 50% to 60% below the price of originator costs have resulted in a hospital market with Source: IMS Health Mar 2009
- 5. to hospitals for the first two months of STRATEGIES LIKE AUTHORISED GENERICS HAVE ALSO BEEN therapy. Those patients who positively and demonstrably responded to the treatment USED BY COMPANIES TO DRIVE MARKET ACCESS after two months received reimbursement Using the channels effectively through partnerships in Indonesia by the AIFA (Agenzia Italiana del Farmaco / Italian Medicines Agency), and Bayer was 2nd Brand Strategy: Indonesia no longer required to grant the 50% dis- X MOLECULE MARKET - MARKET TREND IN VALUE OF TOP 5 PRODUCTS 160,000 count. Millions 140,000 In much the same vein, Janssen-Cilag 120,000 found its multiple myeloma product, Vel- cade, blocked by reimbursement authori- 100,000 ties in the United Kingdom. To drive Value in Rp market access, Janssen-Cilag pursued its 80,000 own version of a performance risk-sharing 60,000 agreement, in which patients showing a ORIGINAL full or partial response to the drug after a 40,000 AUTHORISED GENERIC maximum of four treatment cycles would 20,000 OTHER GENERIC OTHER GENERIC be kept on the drug, with the treatment OTHER GENERIC funded by the National Health Service. 0 MAT 1Q05 MAT 1Q06 MAT 1Q07 MAT 1Q08 MAT 1Q09 Those patients who showed minimal or no response to the product would be removed Source: IMS Health Consulting from therapy, with all Janssen-Cilag footing the treatment bills. economic pressureseverything from the Product & Portfolio Strategy, Commercial relevance of patients as key stakeholders to Effectiveness, Pricing and Market Access Sanofi-Aventis faced similar trials in the relevance of economics on market ac- and Primary Market Research. Canada with its oncology product Taxo- cess. No single strategy will ensure growth tere, when provincial formulary authori- in the years to come. We can help you gain and sustain your ties expressed concern over the products competitive edge by choosing the right in- efficacy and cost. But Sanofi-Aventis be- The desire to grow and to survive will re- vestment strategies, strengthening portfo- lieved in its product and proffered an ef- quire MNCs to be structured in a way that lios, optimizing product launches, and sales ficacy guarantee during which patients enables them to act quickly on meaningful force structure and deployment. were tested following six months of treat- information and to take an integrated ap- ment for agreed-upon responder levels. If proach to the three Cs: consumers, custom- For more information, please contact Amit the hoped-for level of progression was not ers, and channels. It will mean that MNCs Backliwal (abackliwal@sg.imshealth.com) reached, Sanofi-Aventis would reimburse will have to recognize, once and for all, that or write us at info.sg@sg.imshealth.com regional players for the cost of the drug. If, the traditional business modelso reliant however, progression levels were achieved, on increasing the field cost and on layering Taxotere would be admitted onto the re- on promotional investmentsis no longer imbursed formulary. working, no longer relevant. The critical juncture has been reached. The game has The coming decade will also be defined by changed. New capabilitiesmultichannel the outcome of efforts to reform health- marketing, mega brand excellence, and ac- care in the United States. The goals, of count managementare essential. course, are straightforward: to expand cov- erage and access, to improve quality and Our purpose at IMS Health is to help efficiency, and to increase affordability via MNCs navigate this new environment cost reductions. The conflicts and chal- to bring our expertise to companies that lenges are, on the other hand, nearly im- recognize that the time is now to set fresh measurable, requiring legislators to enact thinking and new initiatives into motion. a terrific balance among issues spanning We are the only major professional consul- from Medicare price reform, health infor- tancy exclusively focused on the pharma- mation technologies, and comparative ef- ceutical and healthcare industry. The core fectiveness studies to consumer promotion of our business lies in commercial strategy. restrictions, biosimilar encroachments, re- We have leading-edge methodologies and importation, and uninsured coverage. approaches to solve the most complex Beyond all of this, MNCs will be shaped business issues and offer our clients proven by both new and existing stakeholders and value through four distinct practice areas:
- 6. ABOUT IMS IMS HEALTH速 Operating in more than 100 countries, IMS Health is SINGAPORE the worlds leading provider of market intelligence to Regional Office the pharmaceutical and healthcare industries.With 10 Hoe Chiang Road $2.3 billion in 2008 revenue and more than 50 years #23-01/02 Keppel Towers of industry experience, IMS offers leading-edge Singapore 089315 market intelligence products and services that are Tel: 65-6227 3006 integral to clients day-to-day operations, including Email: info.sg@sg.imshealth.com product and portfolio management capabilities; commercial effectiveness innovations; managed care WWW.IMSHEALTH.COM and consumer health offerings; and consulting and services solutions that improve productivity and the delivery of quality healthcare worldwide. Additional information is available at: http://www.imshealth.com