South East Asias Pharmerging Landscape

IBC Asia South East Asia Pharmaceutical Forum

Sep 2012
Singapore
2
Over the next 30 minutes we will touch briefly upon
The Asian Pharmerging Markets and growth opportunities therein
Dynamics & trends that make South East Asia a unique and
challenging environment
Key success factors in South East Asia
Q&A
3
Pharmerging Markets will drive c.65% of global pharma growth
over the coming 5 year horizon.
The Asian Pharmerging Markets
Global pharmaceutical market by region in USD Billions, 2011-2016

Note: *China, Brazil, Russia, India, Venezuela, P oland, Argentina, Turkey, Mexico, Ukraine, Vietnam,
S.Africa, Thailand, Indonesia, Romania, Egypt, Pakistan
Source: IMS Health Market Prognosis, May 2012; IMSCG analysis
United States
Size: US$322Bn
CAGR 2011-16: 2.4 %
Japan
Size: US$115Bn
CAGR 2011-16: 2.6%
Top-5 Europe
Size: US$154Bn
CAGR 2011-16: 0.6%
Pharmerging Markets*
Size: US$186Bn
CAGR 2011-16: 14.3%
Rest of World
Size: US$165Bn
CAGR 2011-16: 3.5%
Pharmerging

markets redefined
in 2010 from 7 to
17 countries*
Mature markets
expected to see
minimal growth
Positive growth expected, as
economies recover from the
Global Economic Crisis

Global Market
2011 Size: US$942Bn
2016 Size: c.US$1211Bn
CAGR 2011-16: c.5.2%
Pharmerging Markets , US and RoW Emerging
Markets are expected to drive growth
Historical growth (2006-2011) was c.6% but
distributed across all regions
Aging population and
price reforms
benefitting patent
brands to drive growth
4
c.55% of this Pharmerging Market growth will be driven by Asia
Growth prospects in Tier 2 markets, while dwarfed by China, are not insignificant
Tier 1 Pharmerging
Markets
Source: IMS MIDAS data; IMSCG
The Asian Pharmerging Markets
Pharmerging Markets in Asia, 2016 (FCAGR %)

Asian Pharmerging Markets will add
c.US$97Bn in annualized market value by
2016, c.75% of which is in China alone

Tier 2 Pharmerging Markets will add an
annualized c.US$8.5Bn by 2016

The expanded SEA region (ASEAN + South
Asia ex-India) will grow by c.US$11Bn in
annualized market value by 2016

This represents over c.US$30Bn in
cumulative value over the next 5 years!



Tier 2 Pharmerging
Markets
143Bn (16%)
4.1Bn (15%)
26Bn (15%)
3.9Bn (3%)
7.6Bn (12%)
4.4Bn (19%)
TH: Retail Pharmacy, UPC | PH: BGx/UGx | MY: Public Hospitals BGx/UGx, Private Sector Ox
So, where will the
growth opportunities in
this region be?
5
Growth opportunities in SEA region are numerous, but diverse
Consequently, the cost of achieving success is high
Opportunities and Prospects for Growth
with numerous ways to tap into this growth Split of forward growth across
the expanded SEA region
NHI expansion

Expansion of value-conscious
middle class + strong retail
pharmacy influence

FDI in healthcare

Growth driver Portfolio beneficiary
HC reform targeting primary
care in cities and provinces

Expansion of specialty care
infrastructure & delivery + FDI

Expansion of value-conscious
middle class

Broad-based expansion
in access & affordability

Pockets of growth in private
and retail pharmacy sectors

Ongoing healthcare reform
SEAs new growth frontier?

Gx, Spec Ox

Gx, Affordable Ox,
OTC


Pri + Spec Ox, BGx


$1.9
TH $0.6
Malaysia,
Thailand &
Philippines
PK $2.1
Vietnam $2.6
Indonesia $3.2
Bangladesh
& Pakistan
Myanmar
MY $0.6
$0.1 Could be higher?
$2.8
PH $0.8
BD $0.7
Incremental annualized
growth by 2016, US$Bn
Source: IMS Analysis, IMS MIDAS Data
Local Gx


Gx, Pri + Spec Ox


BGx, Affordable Ox,
OTC



BGx, Affordable Ox,
OTC


Broad Ox + Gx, but
limited in uptake,
OTC


MY: 1C1M Priority TAs such as CVM, Onco, COPD/Asthma, MH; Vaccines + Preventative Care; Medical
Tourism; Gx in public sector | TH: Retail pharmacy driven Affordable Ox, OTC


Gx, Affordable Ox?
6
To leave an imprint
Pharmergings next frontier?
Asia-Pacific market potential assessment*
Countries >10M population

Note: Asia-Pacific region as defined by UNESCO
Source: IMSCG
Nascent markets
Emerging markets
Developed markets
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10,000
1,000
100
10
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Market size (US$bn in 2011)
1,000.00 100.00 10.00 1.00 0.10 0.01
Nepal
Mongolia
Laos
Sri Lanka
Pakistan
Myanmar
Cambodia
Bangladesh
Viet Nam
Thailand
Philippines
Malaysia
Indonesia
India
China
Taiwan
South Korea
Japan Australia
Opportunities and Prospects for Growth
7
The dominant trend impacting the region today is healthcare
reform and cost containment
Healthcare is firmly on the agenda in SEA While this drives overall growth, it
also entails cost containment to balance budgets
Dynamics and Trends in SEA
Malaysia
+ 10MP plan to expand primary
care sector
+ 1 Care for 1 Malaysia aiming
for universal coverage
Generic emphasis for public
sector

Indonesia
+ Plan to implement universal coverage
by 2014 and beyond (likely run by
ASKES)
Compulsory prescribing of Gx in 2010

Thailand
+ Move towards universal coverage
NLED de-listings in 2008
CSMBS budget cuts & restrictions on
prescribing & reimbursement, 09
Hospital audits (CSMBS), 10
Singapore
+ Upgrading primary care sector
(polyclinics & financial support for
GPs) with focus on aging popl.
Fast-tracking of Indian Gx, 10
Philippines
+ KP reform aiming for UC by 2016
+ Expanded medicines access via
Philippines Medicines policy in 2011
Cheaper medicines act & price cuts in
2009 & 2010
Maximum drug retail price, 2010

Vietnam
+ Expansion of social health insurance
Emphasis on local generics via
tendering system
Reductions in hospital budget for
originator products
DAV control on price increases
Source: IMS Analysis, IMS Market Prognosis
8
Cost containment tools FR DE IT ES UK AUS CH IN JP KR TW ID MY PH TH VN
VBP / Risk sharing
agreements
-
HTA/ cost effectiveness
assessments
- -
Quality/ innovation/
therapeutic value rating

Generics promotion - - - -
International price
referencing
- - -
Spending caps
Patient contributions
Prescribing controls - -
Mandatory price cuts /
controls
-
Only recently implemented/ limited application
EU APAC ASEAN
C
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f

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FR: France, DE: Germany, IT: Italy,, ES: Spain, UK: United Kingdom, AUS: Australia, CH: China, IN: India, JP: Japan, KR:
Korea, TW: Taiwan, ID: Indonesia, MY: Malaysia, PH: Philippines,, TH: Thailand, VN: Vietnam
Source: IMSCG
Most cost containment tools used are at the
relatively low complexity end of the scale
-
ASEAN countries are increasingly adopting more sophisticated
methods of cost containment
Dynamics and Trends in SEA
9
Reform and containment, coupled with strong local generics
plays, is making SEA an increasingly difficult turf for MNCs
MNCs have lost market share to generics firms recently, as patent expiries,
pricing pressure and increasingly aggressive generics competitors come into play

Dynamics and Trends in SEA
60
57
44
42
39
20
18
8
34
60
56
43
41
37
19
17
8
32
25
45
20
15
10
65
60
55
50
40
35
PK VN ID Total BD SG
30
0
-4%
-2%
-3%
-4%
-5%
5
-2%
+1%
MY TH
+1%
PH
-4%
2011 2010
Expanded SEA Top 10 MNC* Market Share by Country (2010 vs 2011)
Share and Share change (%)
Source: IMS Analysis, IMS MIDAS Data; *Top-10 MNCs for 2011 comprise Pfizer, Novartis, Merck, Sanofi, AZ,
Roche, GSK, J&J, Abbott and Lilly
LoE LoE Pri
Branded Generics players
have stolen a march over
MNC innovators, supported by
Cost-containment
Government emphasis on
and support for generics
Public tendering in many
SEA countries
Increasing reputation of
branded generic
manufacturers
LoE for blockbuster
products
Prescribing according to
national formulary listing
10
Generic penetration varies across SEA and has increased overall
across countries
52%
85%
64%
62%
54%
51%
37%
27%
28%
2.8 37% 13%
Vietnam 1.7 31% 15%
Pakistan 1.7 29% 9%
Indonesia 4.2 16% 20%
Bangladesh 1.0 6% 9%
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Malaysia 1.3 54% 19%
Thailand 3.0 49% 14%
Philippines
ASEAN* 16.4 33% 15%
0.7 60% Singapore 12%
Originators Branded Generics Generics
USD Billions
Source: IMS Analysis, IMS MIDAS Data
Expanded SEA Overall Market Originator vs Generic Penetration (2011)
Ox BGx Gx
9% 13% 13%
14% 18% 10%
12% 13% 13%
12% 18% 14%
30% 36% 33%
3% 9% 10%
7% 8% 8%
21% 20% 29%
8% 12% 11%
2006- 2011 CAGR
Dynamics and Trends in SEA
11
MNCs can still win in the SEA region
However, winning will entail a tailoring strategies to the regions unique challenges
Key Success Factors
and how MNCs could overcome them Challenges faced by MNCs in
the SEA region
Diverse & heterogeneous
market landscape
Tailored portfolio strategies, with an openness to adopt
alternative commercial models for low priority brands
Active support of ASEAN harmonization, possibly more so
than today
Access & affordability
Willingness to partner with payers to improve access to high-
quality primary care medicines
Supporting patient access and innovative pricing schemes to
drive access and compliance for specialty medicines
Competitive, low compliance
business environment
Partnering with local competitors possessing complementary
capabilities (ex., local manufacturing, knowledge of local
regulatory and tendering complexities, sales & distribution
footprint outside top cities)
Selectively leveraging strong MNC brand identity in
alternative business models (ex., OTC, BGx)
Working with local industry leaders to develop and adhere to
basic ethical compliance norms

Talent & capability
Openness to acquire talent from regional and leading local
generic firms, with commitment to training and moulding
to meet global MNC norms and expectations


About IMS Consulting Group

IMS Consulting Group is present across 70 countries with over 500 consultants across the globe. As it
focuses only on healthcare and life-sciences sector, our team of consultants bring a wide- and in-depth
skill set that is unmatched by any other firm.

IMS Consulting Group works with clients to facilitate a wide range of mission critical business decisions.
Some typical work includes strategies to enter to specific geographic/ business/ therapy/ product
markets and operational excellence initiatives to cover sales force as well as internal operations.

If you would like to know more about what we can do for your business, contact us at:

Dr. Srikanth Rajagopal: srajagopal1@imscg.com / +65 6412 7381