US pharmaceutical market: trends, issues, forecast Doug Long Vice President Industry Relations IMS Health
2006 Strategic management review The World Pharmaceutical Market All reproduction rights, quotations, broadcasting, publications reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without express written consent of IMS HEALTH. 2
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The US Pharmaceutical Market Growth is Moderating (Data through May 2007) Percent Change vs. Yr Ago Dollars TRXs 9 8 7 6 5 4 3 2 1 0 8.5 5.4 Latest 12 Months 7.1 4.8 Latest 6 Months 6.5 YTD 5 3.7 3.5 Current Month 4
Generics ahead of brands in Rx and sales dollar growth Sales growth Twelve months ending 1Q 2007 TRx growth Twelve months ending 1Q 2007 30% 25% 20% 15% 26.6% 15% 10% 10% 5% 0% 8.9% 9.9% 6.8% MAT 1Q 2007 5% 0% -5% 5.2% -4.4% 1.2% MAT 1Q 2007 13.2% Total market Brands Branded generics Unbranded generics Source: IMS Health, National Sales Perspectives, Mar 2007 Source: IMS Health, National Prescription Audit, Mar 2007 5
Unbranded generics contributed more to sales growth in the MAT to Q1 2007 than in 2003 Contribution to sales growth percentage of absolute change 2003 MAT 1Q 2007 Unbranded generics 16% Branded generics 12% Brands 73% Unbranded generics 27% Branded generics 11% Brands 62% AC = +$24bn AC = +$23bn Source: IMS Health, National Sales Perspectives, Mar 2007 6
Unbranded generics are gaining traction 100% 90% 80% 70% % Dollars % Total prescriptions dispensed 6% 6% 7% 8% 8% 9% 10% 10% 8% 9% 9% 9% 10% 10% 10% 10% 38% 38% 40% 43% 46% 50% 54% 55% 60% 11% 11% 11% 11% 50% 40% 86% 85% 84% 83% 83% 81% 80% 80% 11% 10% 9% 9% 30% 20% 51% 51% 49% 46% 44% 40% 37% 36% 10% 0% 2000 2001 2002 2003 2004 2005 2006 MAT 1Q 2007 2000 2001 2002 2003 2004 2005 2006 MAT 1Q 2007 Brands Branded generics Unbranded generics Source: IMS Health, National Prescription Audit Plus, National Sales Perspectives, Mar 2007 7
Growth of generic sales is volatile but above brands now for five years Percent change vs. prior year SALES GROWTH % 30% 25% 20% 15% 10% 5% 0% Total market Unbranded generics Brands Branded generics 2000 2001 2002 2003 2004 2005 2006 MAT 1Q 2007 Source: IMS Health, National Sales Perspectives, Mar 2007 8
Generics driving total market recovery in Rx growth; Branded generics growth now positive Percent change vs. prior year TRX GROWTH % 15% 10% 5% 0% Total market Unbranded generics Brands Branded generics 2000 2001 2002 2003 2004 2005 2006 MAT 1Q 2007-5% Source: IMS Health, National Prescription Audit, Mar 2007 9
Absolute growth of unbranded generics takes off in the last four years; brands down Absolute growth of prescriptions 300 Unbranded generics Brands Branded generics 250 200 TRXS MN 150 100 50 0-50 -100 2001 2002 2003 2004 2005 2006 MAT 1Q 2007 Source: IMS Health, National Prescription Audit, Mar 2007 10
Branded Generics Disaggregated Generics continue to gain traction (Branded generics are allocated to brands and generic) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 11% 10% 11% 12% 12% 13% 15% 15% 89% 90% 89% 88% 88% 87% 85% 85% 2000 2001 2002 % Dollars % Total Prescriptions Dispensed 2003 2004 2005 2006 MAT 1Q 2007 47% 47% 48% 51% 53% 57% 61% 62% 54% 53% 52% 50% 47% 43% 39% 38% 2000 2001 2002 2003 2004 2005 2006 MAT 1Q 2007 Brands Generics Source: IMS Health, IMS National Prescription Audit, Plus, IMS National Sales Perspectives, Mar 2007 11
MAT 1Q 2007 absolute growth corporations March 2007 update Dollars AC US$bn Total Rx dispensed AC TRxs mn Roche (incl Genentech) 2.6 Teva 53.0 Amgen 2.4 Mylan 27.1 Teva 2.0 Apotex 18.0 AstraZeneca 1.9 Barr (incl Pliva) 13.9 Apotex 1.2 Lupin Pharma 13.9 GlaxoSmithkline 1.1 Dr Reddys 11.4 Novartis (incl Sandoz) 1.0 Ranbaxy 10.8 Abbott 0.8 Watson 10.8 Lilly 0.7 AstraZeneca 10.6 Dr Reddys 0.7 Lannett 10.1 Source: IMS Health, National Sales Perspectives, National Prescription Audit, Mar 2007 12
MAT 1Q 2007 absolute growth - products March 2007 update Dollars AC AC US$mn Total Rx dispensed TRxs mn simvastatin Teva 1,110 azithromycin Greenstone 14.5 clopidogrel Apotex 1,101 levothyroxine Mylan 14.4 Aranesp Amgen 1,023 simvastatin Teva 14.0 Vytorin Merck & SP 876 lisinopril Lupin 11.4 Avastin Genentech 705 sertraline hcl Greenstone 10.0 Cymbalta Lilly 640 clopidogrel Apotex 9.9 Nexium AstraZeneca 639 fluticasone Par 8.8 sertraline hcl Greenstone 624 sertraline hcl Teva 8.2 Lucentis Genentech 614 azithromycin Teva 8.0 Lyrica Pfizer 581 Vytorin Merck & SP 7.6 Source: IMS Health, National Sales Perspectives, National Prescription Audit Plus, Dec 2006 13
Top launches in 2006: seven of the top 10 are generics based on average monthly sales Top 10 2006 launches by avg mthly sales Mfr Month Avg mthly sales 1 clopidogrel bisulf Apotex Aug-06 137.7 2 simvastatin Teva Jun-06 111.0 3 Lucentis Genentech Jul-06 68.3 4 sertraline hcl Greenstone Jun-06 62.4 5 simvastatin Dr Reddys Jun-06 47.7 6 budeprion xl Teva Dec-06 47.7 7 sertraline hcl Teva Aug-06 46.1 8 Atripla BMS/Merck/Gilead Feb-06 41.4 9 Gardasil Merck Jul-06 38.7 10 fluticasone prop Par Feb-06 31.3 Source: IMS Health, National Sales Perspectives, Mar 2007 14
Key trends and issues
Performance overview
Amgen growing at 19%, Roche at 30% and Pfizer still negative but recovering MAT 1Q 2007 Leading corporations US$mn % Share % Change US industry 280,460 100.0 8.9% 1 Pfizer 26,405 9.4-1.9% 2 GlaxoSmithKline 21,597 7.7 5.4% 3 Merck 16,358 5.8 2.0% 4 Johnson & Johnson 16,241 5.8 2.8% 5 AstraZeneca 14,945 5.3 14.3% 6 Amgen 14,843 5.3 18.9% 7 Novartis (incl. Sandoz) 14,199 5.1 7.8% 8 Sanofi-Aventis 11,328 4.0 3.3% 9 Roche (incl. Genentech) 11,081 4.0 29.9% 10 Lilly 9,485 3.4 7.9% Top 10 156,482 55.8% 7% Source: IMS Health, National Sales Perspectives, Mar 2007 17
Teva moving up; counting Novartis, three major generic companies in the top 20 MAT 1Q 2007 Leading corporations US$mn % Share % Change 11 Abbott 9,008 3.2 9.5% 12 Wyeth 8,445 3.0 1.6% 13 Teva 7,657 2.7 35.2% 14 Bristol Myers Squibb 5,862 2.1-28.8% 15 Boehringer Ingelheim 5,543 2.0 4.8% 16 TAP Pharmaceuticals 4,665 1.7-2.9% 17 Schering-Plough 3,861 1.4 14.7% 18 Forest 3,645 1.3 12.6% 19 Watson 3,337 1.2 11.5% 20 Eisai 2,995 1.1 5.2% Top 20 211,500 75.4 6.2% Source: IMS Health, National Sales Perspectives, Mar 2007 18
Small companies are contributing more to growth 100% Twelve months ending March 2007 80% 25% All others 46% 60% 20% Top 11-20 9% 40% 20% 56% Top 10 45% 0% US sales share Contribution to sales growth Source: IMS Health, National Sales Perspectives, Mar 2007 19
Together, Teva and Ivax create a generics giant controlling a fifth of the generics business Sales of unbranded generics by leading corporations Source: IMS Health, National Sales Perspectives, Mar 2007 MAT 1Q 2007 US$mn % Share % Change US industry 28,929 10.3% 27% 1. Teva (incl Ivax) 5,690 19.7 35% 2. Novartis (Sandoz) 2,725 9.4 1% 3. Mylan 2,308 8.0 15% 4. Watson 1,949 6.7 18% 5. Apotex 1,777 6.1 194% 6. Pfizer (Greenstone) 1,738 6.0 105% 7. Par 1,307 4.5 26% 8. Barr Labs (incl Pliva) 985 3.4 14% 9. Boehringer Ingelheim 955 3.3 32% 10. Dr Reddy s 747 2.6 1247% Top 10 20,180 69.7 37% 20
Generics companies dominated the top 10 on a total prescription basis MAT 1Q 2007 Leading corporations TRxs mn % Share % Change US industry 3,751 100 5.1% 1. Teva 430 11.5 14.0% 2. Pfizer 290 7.7-4.1% 3. Novartis (incl. Sandoz) 279 7.4 1.2% 4. Mylan 262 7 11.5% 5. Watson 214 5.7 5.3% 6. Barr Labs (incl. Pliva) 136 3.6 11.4% 7. Merck 125 3.3-3.0% 8. AstraZeneca 118 3.1 9.8% 9. GlaxoSmithKline 116 3.1-8.6% 10. Mallinckrodt 108 2.9 5.2% Top 10 2,078 55.4% 4.9% Source: IMS Health, National Prescription Audit, MAT March 2007 21
Combination of Teva and Ivax creates a generics giant controlling a fifth of the market Prescriptions of unbranded generics by leading corporations Source: IMS Health, National Prescription Audit, Mar 2007 MAT 1Q 2007 US TRX % Share % Change US industry 2,063 55.0% 13% 1. Teva (incl. Ivax) 411 19.9% 13% 2. Mylan 250 12.1% 12% 3. Novartis (incl. Sandoz) 197 9.5% 1% 4. Watson 180 8.7% 5% 5. Barr Labs (incl Pliva) 106 5.1% 15% 6. Mallinckrodt 105 5.1% 6% 7. Actavis 80 3.9% -2% 8. Qualitest 71 3.4% 7% 9. Par 70 3.4% 6% 10. Pfizer (incl. Greenstone) 65 3.1% 64% Top 10 1,535 89.1% 11% 22
Lipid regulators are still the leading class while cancer therapies show strong growth MAT 1Q 2007 Leading classes US$mn % Share % Growth US industry 280,460 100 8.9% 1. Lipid regulators 21,013 7.5 2.9% 2. Proton pump inhibitors 13,788 4.9 5.3% 3. Anti-depressants 13,083 4.7 3.2% 4. Anti-psychotics 12,038 4.3 11.9% 5. Erythropoietins 10,182 3.6 13.4% 6. Seizure disorders 9,230 3.3 14.1% 7. Monoclonal antibodies 6,262 2.2 39.2% 8. Angiotensin II antagonists 6,000 2.1 15.0% 9. Insulin sensitizers 4,865 1.7 11.6% 10. Calcium blockers 4,834 1.7 4.2% Top 10 101,294 36.1% 9.2% Source: IMS Health, National Sales Perspectives, Mar 2007 23
Lipid lowering agents led all classes by prescription volume in 2006 Leading therapy classes TRXs mn MAT 1Q 2007 % Share % Change US Industry 3,751 100 5.1% 1. Lipid lowering agents 188 5 13.2% 2. Codeine & comb 179 4.8 6.1% 3. Anti-depressants 156 4.2 7.1% 4. Ace inhibitors 156 4.2 6.8% 5. Beta blockers 132 3.5 5.6% 6. Proton pump inhibitors 104 2.8 11.7% 7. Synthetic thyroid hormone 99 2.6 5.3% 8. Seizure disorders 97 2.6 9.7% 9. Calcium blockers 87 2.3 2.6% 10. Benzodiazepines 81 2.2 4.4% Top 10 1,278 34.1% 7.5% Source: IMS Health, National Prescription Audit, MAT Mar 2007 24
Lipitor continues on top; Nexium, Aranesp and Advair Diskus moving up MAT 1Q 2007 Products Company US$mn % Share % Growth US industry 280,460 100 8.9% 1. Lipitor Pfizer 8,578 3.1 0.9% 2. Nexium AstraZeneca 5,223 1.9 13.9% 3. Aranesp Amgen 4,065 1.4 33.6% 4. Advair Diskus GSK 4,047 1.4 8.9% 5. Prevacid TAP 3,530 1.3-6.1% 6. Epogen Amgen 3,214 1.1 7.7% 7. Enbrel Amgen 3,157 1.1 11.4% 8. Singulair Merck 3,127 1.1 18.3% 9. Seroquel AstraZeneca 3,125 1.1 14.1% 10. Neulasta Amgen 3,015 1.1 23.8% Top 10 41,080 14.6% 10.3% Source: IMS Health, National Sales Perspectives, Mar 2007 25
Among leading prescription products, generics show the highest growth MAT 1Q 2007 Leading Products Company TRXs mn % Share % Change US industry 3,751 100 5.1% 1. Lipitor Pfizer 72 1.9-4.1% 2. HYCD/APAP Mallinckrodt 68 1.8 7.7% 3. Toprol-XL AstraZeneca 40 1.1 3.5% 4. Norvasc Pfizer 40 1.1 1.1% 5. HYCD/APAP Watson 36 1 22.7% 6. amoxicillin Teva 34 0.9 1.5% 7. Nexium AstraZeneca 31 0.8 12.8% 8. Lexapro Forest 31 0.8 5.9% 9. Synthroid Abbott 30 0.8-9.1% 10. Singulair Merck 29 0.8 13.8% Top 10 412 11.0% 4.2% Source: IMS Health, National Prescription Audit, MAT Mar 2007 26
Future outlook
US market five year outlook 2006-2011: opportunities and challenges Future NCEs, active pipeline of specialty products, biologics, and vaccines Medicare drug benefit Strong demand fueled by aging population Future patent expirations/generics Weaker than expected performance of NCEs in 2005 Safety concerns Decline of detailing Therapeutic substitution CAGR 5-8% 28
Thank you! Doug Long Vice President Industry Relations IMS Health email: dlong@us.imshealth.com phone: 973 904-6430