Russia: Market Access Challenges and Opportunities
IMSCG PMA Conference London 2014
Copyright 2014, IMS Health and its affiliates. All rights reserved.
Agenda
• Overview of the Russian pharmaceutical market
• OOP vs. reimbursement
• How to play?
PMA conference Russia Market Access
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Russia is a growing pharmaceutical market, expected to
be ranked 8th Globally by 2017
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
1
1
2
1
1
1
1
11
8
1
3
3
2
4
2007
Index
US
100
Japan
27
France
13
Germany
13
China
11
Italy
8
UK
7
Spain
7
Canada
7
Brazil
5
Mexico
4
Australia
4
South Korea
3
Russia
3
Turkey
2
India
2
Netherlands
2
Greece
2
Poland
2
Belgium
2
Change in ranking over prior 5 years
Source: IMS Market Prognosis, September 2013s
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Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
2
2
4
1
1
2
3
3
3
2
8
2
1
9
2012
US
Japan
China
Germany
France
Brazil
Italy
UK
Canada
Spain
Russia
Australia
India
Mexico
South Korea
Venezuela
Turkey
Poland
Argentina
Belgium
Index
100
27
25
13
11
8
8
7
7
6
5
4
4
4
3
3
3
2
2
2
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
1
1
2
1
1
3
1
1
2
2
1
1
3
1
1
1
2
8
2017
Index
US
100
China
45
Japan
29
Brazil
13
Germany
13
France
10
Italy
8
Russia
7
UK
7
7
Canada
India
6
Spain
5
Mexico
4
South Korea
4
Australia
4
Turkey
3
Venezuela
2
Argentina
2
Indonesia
2
Poland
2
Across 2008-2012 30 NCEs were launched in Russia,
but their share by end of this period was just about 0,5%
Country Innovation profile (NCEs launched vs. Market Share achieved)
US
(2008-12) Market Share of Total Rx market
NCEs (2003-07)
6.5%
Countries with low
# NCEs and strong
penetration
6.0%
5.5%
EU
EUaverage
averagen46
n48
Countries with high # NCEs
and strong penetration
Germany
5.0%
Ireland
Luxembourg
4.5%
France
Slovakia
4.0%
Belgium
EU average 3.3%
2.3%
3.5%
3.0%
Netherlands Slovenia
Countries with low
# NCEs and low
penetration
2.5%
Spain
Switzerland
Greece
Austria
Finland
Sweden
Mexico
Norway
Italy
UK
Czech
Hungary
Estonia Latvia Brazil
South Africa
Russia
Japan
Turkey
Romania
2.0%
1.5%
1.0%
Lithuania
India
China Bulgaria
Croatia
0.5%
Countries with high
# NCEs and low
penetration
Poland
0.0%
0
10
20
30
40
50
60
70
80
Number of NCEs (2003-07)
(2008-12) launched
NCEs (New Chemical Entities)
Source: IMS Health, MIDAS, MAT Jun 2013, Rx only. Denmark and Portugal not included
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90
However, on average all drug prices are relatively low vs.
rest of Europe and a higher generic penetration exists
Average price per pill (LC EUR) MAT3 2014
Share of non-generics (SU) MAT3 2014
0.50
35%
30%
0.40
25%
0.30
20%
0.20
15%
10%
0.10
5%
0.00
0%
Russia
EU5
Russia
Non-Generics
Generics
0.25
Share of non-generics (EUR) MAT3 2014
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
0.20
0.15
0.10
0.05
0.00
Russia
EU5
EU5
70%
60%
50%
40%
30%
20%
10%
0%
Russia
Source: IMS MIDAS
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EU5
Russia
EU5
Future growth will be driven by healthcare priorities,
which includes boosting locally manufactured products
• Priorities declared by the Russian healthcare are as follows
− Improving health indicators (preventive intervention)
− Screening and better disease monitoring/management
− Widening access to high-quality healthcare products and services
− Modernizing the System
− Boosting the share of locally manufactured drugs to 50% of the overall
pharmaceutical market by 2020, and to 90% of products on the
EssentialDrugsList (EDL) by 2018
• Whilst notable space for improvements in terms exist in
− Healthcare access
− Diagnosis
− Unmet treatment needs
• It
−
−
−
is not unusual for the course of action to deviate from the plan
The agenda of the federal institutions is subject to political situation
Presidential elections in 2018 may trigger some actions…
…but some decisions may as well be delayed
Source: Russia Market Prognosis 2014; internal expertise
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Agenda
• Overview of the Russian pharmaceutical market
• OOP vs. reimbursement
• How to play?
PMA conference Russia Market Access
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Russia is a complex and fragmented market with
numerous funding challenges
Niche
Clinics
& Hospitals
National health
Programmes
11%
Federal clinics
Dispensing Channels
Institutions
District hosp.
Other*
3%
Municipal hosp.
Ph. chains
7VZN
7%
ONLS
6%
DLO
Regional
Reimb
11%
RETAIL
63%
Reimbursed
Federal
Reimbursed
Regional
Out-Of-Pocket
Pharmacies
Kiosks
Financing
Fed tender
Reg/Hosp tender
Source: IMS pharmacy panel and tender database
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Private – OOP
Other (gazprom, goscomsport, prisons etc.)
There is a large (63%) component of retail out-of-pocket
payments which patients will pay for
Share by value in TRD prices
Pharmacy purchasing prices, 2013
100%
80%
6%
• Patients are used to paying for
drugs; If properly diagnosed,
treated and have the ability to pay
3%
• Playing in the out-of-pocket field
is relatively rewarding – Russia
has a notable volume of high
income patients, conveniently
concentrated in most wealthy
regions
7%
21%
60%
40%
• Expensive specialty therapies
seek federal or regional funding
to expand patient base
63%
20%
0%
Funding source
Fed. institutions*
Reg. Hospital
Fed. Tender (7VZN)
Retail OOP
Reg. Tender (ONLS)
*E.g. Gazprom, Goscomsport, Prisons
Source: IMS pharmacy panel and tender database
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There is space for playing in out-of pocket even if price
is on the higher end (main examples include $30-45 drugs)
An OOP product should provide unique sales preposition to consumers and be supported by
strong promotional activities directed to specialists and final consumers
Exforge sales
Exforge (45 US$ per pack) is an RX product
for hypertension treatment that was actively
supported by Novartis SF team
Yaz sales
Yaz (30 US$ per pack) is a successful
example of the contraceptive product
uptake in the local market that was
strongly supported by promotional
activities to specialists
43
Sales (USD, M)
50
Yaz Plus that was
launched in 2012
contributed 6 mln
US$ in 2013
40
30
20
10
0
0
1
2
5
8
10
34
24
12
12
0
0
2
2007 2008 2009 2010 2011 2012 2013
2007 2008 2009 2010 2011 2012 2013
Retail
Source: IMS Russia database, trade price (in 2013 Yaz sales together with sales of sub-brand Yaz Plus)
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However, OOP drugs are scarce among top15 launches –
scale, as anywhere comes from reimbursement
Top 15 innovative launches across 2008-2012 (mln USD, full year)
Trade Name
Corporation
Financial sources
(State/OOP)
PREZISTA
J&J
State
59
YAZ
BAYER
OOP
34
ISENTRESS
MSD
State
31
CERAXON
TAKEDA
S&OPP
25
KIVEXA
GSK
State
24
INTELENCE
J&J
State
21
ELAPRASE
SHIRE
State
18
INVIRASE
ROCHE
State
18
LUCENTIS
NOVARTIS
State
15
TELZIR
GSK
State
13
VECTIBIX
AMGEN
State
13
NEXAVAR
BAYER
State
12
EXFORGE
NOVARTIS
OOP
11
GALVUS MET
NOVARTIS
S&OPP
11
SPRYCEL
BMS
State
10
Source: IMS Russia database, trade price (in 2013 Yaz sales together with sales of sub-brand Yaz Plus)
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Sales by value in
2012, mln $
The main channels to achieve reimbursement is EDL,
alternatives include regional programs (retail or hospital)
Listing principles
2-3 years
ONLS
Hospital
Regional
Main steps
Fully based
on EDL
Mainly
municipal
Federal&
Regional
~50%
Fully based
on EDL
EDL listing
2 years
EDL listing
ONLS
listing
0.5-1 year
Hospital
listing
1-2 years
Own listing
Fully based
on EDL
2 years
EDL listing
Own listing
Source: IMS Health experts
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Regional
listing
• 5-7 years
• No known short-cuts
• 2-4 years
• Some activities can be
done in parallel
• Pre-launch activities
• 1-2 years
• Pre-launch activities
Hospital
listing
1-2 years
~50%
no cases since
introduction
First Sales/Shortcuts
0.5-1 year
Regional
listing
• 2-4 years
• Some activities can be
done in parallel
• Pre-launch activities
• 1-2 years
• Pre-launch activities
Reimbursed funding is challenging – ONLS drug list not
updated since 2007 and 7N program limited to 14 INNs
Top reimbursed INN’s on Federal level
Molecule
RITUXIMAB
BORTEZOMIB
FACTOR VIII
GLATIRAMER ACETATE
IMATINIB
INTERFERON BETA-1A
INSULIN GLARGINE
TRASTUZUMAB
INFLIXIMAB
EPTACOG ALFA
(ACTIVATED)
INSULIN HUMAN
ISOPHANE
OCTOCOG ALFA
2013 sales
value (trade
price) –
USD
250
191
158
156
147
92
79
72
60
394
447
285
073
432
149
107
047
002
466
502
746
411
096
841
743
460
590
57 634 794
49 984 228
43 900 226
Source: IMS panel and tender data, IMS Health experts
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2013
sales
volume
(units)
170
110
849
140
89
268
732
32
47
Market
Share TRD
Price in
USD(%)
907
460
910
323
543
042
258
926
126
9,36
7,16
5,92
5,84
5,51
3,45
2,96
2,69
2,24
47 667
2,16
1 936
769
162 170
1,87
1,64
~50%
• Half of federal
reimbursement is
concentrated
among top 12 INNs
(in total about 900
INNs were
reimbursed
federally last year)
• The list includes
drugs from the 7N
program
(hemophilia, cystic
fibrosis, growth
hormone deficiency,
Gaucher’s disease,
Leukemia, MS, and
post-transplant
immune system
suppression
Reimbursed funding is challenging- ONLS drug list not
updated since 2007 and 7N program limited to 14 INNs
Seven Nosologies programe (7N)
Disease condition
Reimbursed molecules
Example brands
Hemophilia
Octocog alpha,
Epatoc alpha (activated), Factor
VIII, Factor IX
Advate, Epatoc alpha
(activated), Alphanate,
Alphanine SD
Cystic fibrosis
Dornase alpha
Pulmozyme
Growth hormone deficiency
Human growth hormone
Somatropin
Gaucher’s disease
Imiglucerase
Cerezyme
Leukemia
Bortezomib,
Imatinib,
Rituximab,
Fludarabine
Velcade, Gleevec,
Rituxan, Fludara
Multiple sclerosis
Glatiramer acetate,
Interferon beta-1a,
Interferon beta 1-b
Copaxone, Avonex,
Betaferon
Post-transplant immune
system suppression
Mycophenolare mofetil,
Mycophenolic acid,
Tacrolimus,
Ciclosporin
CellCept, Myfortic,
Prograf, Neoral
Source: IMS panel and tender data, IMS Health experts
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If not listed within Federal schemes, regional funding is
diverse and may provide opportunities
Federal opportunity is largest, but regional is still important
Regional reimbursement is often obtained prior to federal listing and is an important
component of a product’s overall strategy for Russia
(Regional/Local)
Hospital segment
(Regional)
Regional reimbursement
Funding
Federal/Regional through
Obligatory Medical Insurance
Fund (OMI)
Regional budget
Administration
Hospital tenders
Regional Healthcare Authorities
(Regional MOHs)
Listing
EDL and Standards
of Treatment
Regional formularies based on
EDL and Standards of Treatment;
Orphan diseases
Not only is regional reimbursement a significant contributor to
total revenue, the regional MoH and stakeholders can have significant
influence on federal decisions
Source: IMS Health experts
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Regional funding is less concentrated than federal
(top 12 INN only make 25% of drug spend)
Top reimbursed INN’s on Regional level (national total)
Molecule
2013
2013 sales
sales
value (trade
volume
price) – USD
(units)
Market
Share TRD
Price in
USD(%)
INSULIN GLARGINE
39 026 433
332 182
3,72
IDURSULFASE
31 130 114
4 670
2,96
INSULIN HUMAN
ISOPHANE
26 416 620
982 046
2,52
BUDESONIDE*FORMOTEROL
24 842 684
515 701
2,37
ECULIZUMAB
21 508 148
2 209
2,05
METFORMIN
21 189 391
3 759 854
2,02
FLUTICASONE*SALMETEROL
20 562 094
450 645
1,96
ADALIMUMAB
17 621 388
7 881
1,68
INSULIN HUMAN BASE
17 108 767
618 416
1,63
BOSENTAN
15 707 371
2 419
1,50
~25%
Source: IMS panel and tender data, IMS Health experts
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• Regional
reimbursement is
less concentrated
and spans across
more INNs
(1500 in total)
• There is a stronger
diabetes component
and less presence
of rare diseases
While Federal reimbursement has no preference towards
types of treatments, patterns at regional level are seen
Share of ATC1 in regions’ drug spend, 2013
• The region of Khabarovsk (quite
near to Japan) it is the top
spender in Respiratory
24%
20%
• At the same time, it spends only
7% on Cardio
16%
12%
8%
4%
Max
Average
Source: IMS regional data
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Min
Respiratory
Neuro
Muscle
Oncology
Anti-Inf.
Derma
Cardio
Blood
Alimentary
0%
• A subregion of Volga District
(not far from Ukraine) is a strong
spender on primary care classes
(A, C)
• At the same time, they spend only
3% of their budget on Oncology
(national low)
Erbitux has found some success in hospitals though not
comparable to its competitor Avastin, which is on the EDL
Erbitux sales
Even without federal listing, Erbitux has
been able to grown its hospital channel and
capture regional budget
Avastin sales
Avastin, which is EDL listed, achieves
significant DLO sales but also has grown
its hospital channel sales
54
Sales (USD, M)
60
44
50
34
40
30
20
20
10
0
36
0
0
2
3
6
7
13
12
2006 2007 2008 2009 2010 2011 2012
DLO
Hospital
15
2006 2007 2008 2009 2010 2011 2012
Retail
Note: MIDAS sales audits do not cover some regional sales which would be in addition to the data shown
Source: IMS MIDAS, IMS Health experts
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Similiarly, Humira has also found some success vs.
Remicade: Russia’s top selling TNFi – at the regional level
Humira sales
While not being EDL or DLO listed, Humira
has been able to achieve some success
despite strong competition from Remicade
Remicade sales
Remicade has been very successful
due to its DLO channel and use as an
inpatient infusible
66
70
53
Sales (USD, M)
60
50
39
40
30
17
20
10
0
0
0
0
0
5
8
19
8
2006 2007 2008 2009 2010 2011 2012
DLO
17
44
Hospital
2006 2007 2008 2009 2010 2011 2012
Retail
Note: MIDAS sales audits do not cover some regional sales which would be in addition to the data shown
Source: IMS MIDAS, IMS Health experts
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Over the coming years both federal and regional funding
will still provide growth and opportunity by…
Area
Prospects
Federal –
Funding
Expansion of the federal program to cover new diseases and the use
of orphan drugs is expected to take place from 2015
Federal –
7Nosologies
7N program expected to expand add a number of second line drugs
(moderate impact on sales, but a different mix)
Fed/Reg –
EDL pricing
Price growth in DLO expected to remain restricted in
(EDL pricing methodology restricts increases for most products)
Regional –
New programs
Additional investments expected through special regional programs
aimed to provide more patients with reimbursed products and free
medical services
Source: IMS Health
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Agenda
• Overview of the Russian pharmaceutical market
• OOP vs. reimbursement
• How to play?
PMA conference Russia Market Access
21 IMSCG PMA Conference London 2014
How can you, the multinational manufacture play
on the Russian market in short and long term?
Out –of-pocket as
entry point
Reimbursement as
expansion leverage
•
•
•
•
Should be able to pay
for itself, in case
reimbursement does
not come through
Should target regions
based on key
treatment centers +
local wealth
For less expensive
products it may end
up to be the end-game
• With successful
doctors
promotion,
awareness
campaigns and
stimulation of
diagnostics sales
may grow
notably even
without
reimbursement
•
•
Source: IMS Health
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Federal – work with federal
institutions on getting into
EDL (may turn out to be a
long term initiative and no
guarantee of success, but
the direction is simply to
big to ignore).
Regional – identify regions
with high prevalence/
diagnosis/spend on
therapy…
…and develop customized
tactics on how to make
reimbursement case there
• (i.e. may begin by
driving case studies
through special
committee funding
decisions, and than
based on that drive
inclusion into
formulary)
Be aware…
•
•
•
•
Registration takes time and is
expensive
• Local clinical trials are necessary
favoring local players and fueling
local CRO investments
Price pressure is strong
• Variety of reference countries
Russia looks at (EU, Switzerland,
Turkey and a range of CIS
countries)
• Price cannot be higher than
minimum in reference, nor then
import price from previous year
Given recent sanctions against
Russia, it is speculated that
preference towards local producers
may increase
• 15% price advantage already
• Entry procedure for local
generics may be fast-tracked
The program for increasing share of
local generics (2020) is not moving
as fast as expected – how will the
government adjust?