Life Cycle Management: Value of CI for Asset Maximization Sabih Bekhouche: Director Integrated Insights, Novartis AG Baljit Singh: Director Integrated Insights, Novartis AG Pharma CI Conference 2014 Sabih Bekhouche Director Integrated Insights – Novartis AG “My competitive mindset and passion for understanding how different players operate inspires me to work with teams towards creating winning strategies”  Sabih Bekhouche has over 10 years of experience in the field of competitive intelligence leading and building the Global CI function and capabilities in different organizations.  Education  BA Biochemistry, Psychology  Masters in Business of Bioscience  Harvard Executive Education: Strategy & competition  Contact  Linkedin profile: http://www.linkedin.com/pub/sabih-bekhouche/0/615/a15 2 Baljit Singh Director Integrated Insights – Novartis AG Baljit Singh is the Director, Integrated Insights Diabetes, and based in Basel at Novartis Global Headquarters in Switzerland. His key responsibility is to cocreate brand strategies and facilitate decision-making across top Global/regions/ CPOs  Baljit is of Indian origin, born in Denmark and educated in both in Denmark & England. Baljit has 8 years of experience in the global pharmaceutical, biotech and generics markets optimizing brand, lifecycle and competitive strategies  Education  Ph.D in Pharmaceutics from London School of Pharmacy  Masters in Pharmacy, Royal Danish School of Pharmacy in Copenhagen  Contact  Linkedin profile: http://ch.linkedin.com/pub/baljit-singh/1/611/181 3 Objectives Value and role of CI for asset maximization 1. Pharma overview and issues 2. Life cycle management and asset maximization 3. Differences in value chain between originator and generic’s companies - strategies and timing 4. Key intelligence gathering opportunities 4 1. Pharma Overview and Issues 5 Global Pharma Pressure on profit margins; focus on maximizing asset value  Pharma market is expected to reach $ 1 trillion this year and continues to grow at single digit numbers  NME approval average remains at 28 per year  Increasing pricing pressures and rising costs impacting margins Price Profit Cost 6 Components of change in total spending Branded sales growth offset by LOE loss of >$100Bn  Pharmerging driving the growth; double digit growth forecasted  Brand growth is balanced by Loss of Exclusivity (LOE)  >$100Bn at risk due to LOE mostly from established markets 7 Key issues in Pharma Originator companies continue facing pressure on profit margins  Reputation management & public opinion  Managing regulatory compliance  Pricing pressures  R&D productivity and costs  Low cost generics Differentiation Price Profit Cost Cost leader 8 Response To Pressures on Sales and Margins How to drive profitability? R&D costs and Productivity Price Pressure Patent Cliff New Business Models Refocus pipeline & priorities Innovation Productivity savings Asset maximization 9 2. Life cycle management and asset maximization 10 Originator product life cycle Pressures on sales and profitability -> optimizing area under the curve 2. Sales Growth phase slowed due to payer pressure 4. More intense competition Time Launch 1. Shorter product life-cycle due to longer studies LOE/Gx Launch 3. Mid term decline via therapeutic substitution General Life Cycle Management Strategies LCM strategies to maximize the asset’s value 1 Developmental lifecycle management strategies 2 Commercial lifecycle management strategies 3 LOE lifecycle management strategies These strategies should focus on maximizing patient potential and maximizing patient uptake These strategies can boost patient population but are primarily effective at maximizing the commercial value These strategies can be used to ensure the patents and exclusivity data are respected • • • • • Geographical expansion • Compliance programs • Rx-to-OTC switches • Authorized generics • Brand loyalty programs • Packaging innovation • Exclusivity (data and marketing) • Patent term extension • Pediatric extensions • Patent litigation New indications New dosage forms New formulations New routes of administration • Fixed dose combinations 12 3. Differences in value chain between originator and generic’s companies 13 Profitability Cycle (Originators vs Gx) Product Lifecycle - end of lifecycle at risk losing most of the profits + Profitability Generic’s Originator Gx Approval (EU & US) Gx Launch (IN + EM) In Market - Investment Pre-clinical & Clinical Approval 14 15Y SPC Expiry Key differences in value chain 3 important differences vital for CI purposes Originator Company Generics Company 1 High investment Few companies involved in development and 2 commercialization 3 Long development timeline Relative low investment High # of players in development and commercialization Short development timeline Key differences in value chain 3 important differences vital for CI purposes 1 2 Generics Company Implications Relative low investment More (smaller) players who profit through trade at each step of the value chain High # of players in development and commercialization CI opportunities Highly competitive = Complex strategies CI challenges 3 Short development timeline Narrow window of opportunity 2. Key Intelligence Gathering Opportunities 17 CI Focus – CI Opportunity CI on Gx differs significantly due to business model and strategies + Profitability Generic’s Originator - Profitability Gx (IN + EM) Initiation of Timing and Strategy investigation Initiation of regulatory investigation Gx (EU & US) Initiation of value chain investigation Approval 18 SPC Expiry Clopidogrel Example Value loss $150m in Germany - CI imperative to avoid being blindsided CLOPIDOGREL BACKGROUND - 2008 WW sales ~6bn, Germany ~ 300mn - Plavix® launched July 1998 in EU - Data Exclusivity expiry July 2008 - Patent expired in 2013 IMPACT - Gx launched in Germany May 2008 - Launched 3 months prior to Data exclusivity & 5 years prior to patent expiry Patent Expiry 2013 Plavix Sales Erosion in Germany 350 Sales fell by 19% in 1 year 300 250 MAT Peak Sales 321Mn USD in Q2 2008 200 Sales fell by 75% in 3 years 150 100 50 0 2006 Source: IMS 19 2007 2008 Data exclusivity expiry 2009 2011 Benefits of CI Importance of CI is increasing - start early 1. Avoid surprises 2. Maximize profitability 3. Impact is directly measurable 20