Patent Cliff Impact on Pharma Industry
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The document discusses the patent cliff that the pharmaceutical industry will face between 2012-2015 as many blockbuster drugs lose patent protection. An estimated $250 billion in annual drug sales will go off-patent during this time period, threatening the business models of major pharmaceutical companies. Generic drug manufacturers are expected to capture a significant share of the market. Companies are pursuing strategies like mergers and acquisitions, expanding into emerging markets, developing new drug pipelines, and patent litigation to mitigate the financial impact of losing drug exclusivity during this period.
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Patent Cliff Impact on Pharma Industry
- 2. PATENT CLIFF(2012-2015) Presentation by Peruka Venkata Ramana Prasad 1st Semester, MBA(Pharm) Department Of Pharmaceutical Management NIPER
- 3. What is patent cliff Global blockbusters by revenue& patent expiration Global drug sales at risk from patent expiration Fall down of companys annual revenue Key drugs in pipeline Frequency of NME approvals may come down Big pharma job cuts announced since 2009 FLOW OF PRESENTATION
- 4. Increasing merges &acquisitions Hatch-waxman act-1984 Patent exclusivity & generic entry regulations Generics will dominate the market ENTERING “pharmering markets” Patent wars Contd..
- 5. It is most often described as an industry-wide expiration of the patents of a number of blockbuster drugs with a combined of $250 billion in annual sales will go off-patent by 2015, creating a life-threatening situation for many of the top companies in pharma sector WHAT IS PATENT CLIFF Source : Evaluate Pharma,2012
- 6. Other sectors, such as software and consumer goods, have patents. But they rely on rapid innovation to maintain sales. In pharmaceuticals, stringent regulations on authorization and marketing impose tighter controls, higher costs and longer lead times, making drug developers more reliant on patent monopolies to recoup their costs Why only pharma field is more worried?
- 7. KEY GLOBAL PLAYERS Source : Individual company financials online 2012
- 8. GLOBAL BLOCKBUSTERS BY REVENUE& PATENT EXPIRATION Source : Bioassociate Consulting & Management Ltd
- 9. Source : Evaluate Pharma,2012
- 10. Patent Expiration Of Drugs By Year
- 11. Source : IMS Global Insight, 2011
- 12. Source : IMS Global Insight, 2011
- 13. Source : IMS Global Insight, 2011
- 14. Source : IMS Global Insight, 2011
- 15. Global drug sales at risk from Patent Expiration Source : Evaluate Pharma Vantage 2010
- 16. Forecasted revenues of few blockbuster Post-generification Source : The Economist,2011
- 17. PFIZER – US$30 Lipitor , viagra Eli lilly- US$13(50%rvnu) Evista , zyprexa &Cymbalta Takeda- 52%revenue loss Actos Forest labs- 52%revenue loss Lexapro Gsk,Novartis,bms,A&Z- 14-40%revenue loss Fall Down Of Companies Annual Revenue Source : Price watercoopers,2011
- 18. 2009-2013 annual patent losses by company Source : Bio associate Consulting & Management Ltd
- 19. Over $280 billion spent on R&D over last decade Source : Bioassociate Consulting & Management Ltd
- 20. Key drugs in Pipeline Source : Analyst and company reports,2012
- 21. Frequency of NME approvals may come down Source : US FDA , 2012 2012 : 28NME’s
- 22. Big Pharma job cuts announced since 2010 Source : FiercePharma.com,2012, Price watercoopers 2010
- 23. Increasing Merges &Acquisitions 2011 –Sanofi-Aventis- Genzyme- -US$20Bn. -Biotech 2011 – Novartis - Aires pharm – US$250Mn -Cystic fibrosis pnemonia 2011 – Amgen - Biovex -- US$1Bn -Cancer vaccine Oncovex 2009 –Pfizer - Wyeth - US$68 -Fill pipeline, Biologics 2009 –Merck -Schering-plough-US$41.1 -18NME’s in pipeline 2009, 563 deals worth US$161.2Bn took place
- 26. Merges in 2012 Source: business-beacon.com, 2012
- 27. Acquisitions in 2012 Source: business-beacon.com, 2012
- 28. Contd..
- 29. 29 For Innovator companies Patent term extension Provides New drug product exclusivity 30 months stay for ANDA approval For Generic manufacturers Created “Abbreviated New drug Application” approval process for generic versions of innovator drugs File ANDAs with bioequivalence data using innovator product 180 day exclusivity for first-to-file Certification regarding each patent listed in the Orange Book for the product: four certification options Hatch-Waxman Act-1984
- 30. 30 Paragraph I Paragraph II Paragraph IV Paragraph III Patent information has not been filed Patent has Expired Patent is invalid or non-infringed by Generic applicant Patent has NOT expired but will expire on a particular date FDA may approve ANDA immediately FDA may approve ANDA on the date that the patent expires Generic applicant provides notice to patent holder & NDA filer; entry of the first filer may or may not occur ANDA Patent certification Options
- 31. Source : Orange book
- 32. Patent exclusivity & Generic entry regulations
- 33. Contd.. Source : DataMonitor,2011:US FDA,2012;
- 34. According to IMS Health, generics drugs accounted for 57.7% of prescriptions dispensed five years ago, and close to 75% today Price of the drugs will be reduced However, while the generic drug industry will certainly benefit in the short term from the patent cliff Generics will dominate the market GENERICS ; US$ 100 Bn/pa ETHICAL MANUFACTURES ; US$ 720 Bn/pa It is estimated that by 2014 generic market will reach US$124Bn. Source : IMS Health, 2012
- 35. LEADING GLOBAL GENERIC PLAYERS Source : Individual company financials 2012
- 36. Generics offer Drugs at low cost
- 37. Contd.. Source : Blue cross blue shield of michigan
- 38. ENTERING “Pharmering Markets” Source : IMS Health,2011
- 39. Contd.. Source : IMS Health,2011
- 40. INDIA has large domestic market. Highest number of US FDAApproved manufacturing Units (74) outside the US. Clinical trial hub Less manufacturing cost High CAGR Contd..
- 41. PATENT WARS Law suits & legal loopholes are the last resort before a patent cliff for innovators 30 Month marketing stay for brand name drugs as part of patent Infringement litigation, which provides immunity against generics. Patent ever greening
- 42. In the end, the financial future of many pharmaceutical companies will depend on how they manage the transition of many of their brand drugs to the generic market, as well as on their own efforts to develop novel therapeutics and diagnostics with significant profit potential, and to adapt to the changing global business climate. However, while the generic drug industry will certainly benefit in the short term(upto 2015) from the patent cliff. CONCLUSION
- 43. T H A N K Y O U Let’s get going …. 43
- 44. BACK UP SLIDES
- 45. During 180 day exclusivity
- 46. AG competition typically reduces a first-filer generic’s revenues during the 180 days of marketing exclusivity by approximately 50 percent. To prevent this loss of revenue, a generic may be willing to delay its entry in return for a brand’s agreement not to launch an authorized generic – that is, a brand’s agreement not to compete with the generic through an AG – during the generic’s 180 days of marketing exclusivity.
- 47. 7. STRATERGIES TO MINIMIZE THE IMPACT OF PATENT CLIFF Most obviously, there has been continued investment in new drug discovery and development of a “pipeline” of promising agents that address unmet medical needs and are profitable. Enhanced advertising over the past decade in an attempt to optimize earnings prior to patent expiration
- 48. A number of drug companies have suggested that they will outsource at least some of their manufacturing to places such as Eastern Europe, India, and China, where drug products can be made at significantly less. But Quality issues will become severe. Some pharmaceutical companies already are entering into agreements with generic manufacturers, licensing them the right to sell “authorized generics” identical to branded drugs that have gone or will go off patent.
- 49. In an Economist article, it is revealed that Pfizer worked with an American firm in order to help break apart a 180 day generic exclusivity period, helping the company compete with often times cheaper generics. These practices have helped to boost sales by over half a billion in the first half of 2012, taking at least some of the pain of the patent expiration out of the equation
- 55. Companies with the biggest cash reserves Novartis $15 billion Roche $13.5 billion Johnson & Johnson $13 billion Merck & Co. $10 billion GlaxoSmithKline $9.5 billion
- 56. HYDERABAD: Dr Reddy's Laboratories has agreed to buy the entire equity holding of the Dutch injectable specialty generics manufacturer OctoPlus NV for 27.39 million euro ( 192 crore) in an all-cash deal. The Hyderabad-based company said on Monday that OctoPlus' expertise in making improved injectable pharmaceuticals based on proprietary drug delivery technologies and focus on medicine ingredients that are difficult to formulate complement it capabilities. Source: business-beacon.com, 2012
Notas do Editor
- And with that as the introduction and background, I’d like to proceed to the panel to ask them each to take as much time as they want (as long as its under 5 minutes) to address these 2 questions:1. What do you think are the leading changes occurring in the CPU/early phase research environment? 2. What are the most pressing pressures that will impact the future of this environment?