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The US Pharmaceutical Market:

What’s In?,, What’s Out? and What’s Ahead?

BY: Doug Long, VP Industry Relations


Presented to NCPDP
May 18, 2011
2011 Strategic management presentation

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
e p ess written
express itten consent
onsent of IMS HEALTH.
HEALTH
The global pharmaceutical market performance
declined in 2010

Global Pharma Historical Market Dynamics & Current Environment


Global Sales and Market Growth
Pharma market challenges

• The US/top 5 Europe/Japan no longer


the main growth drivers
• The economic crisis impact has been
different across pharmaceutical markets
• Biotechnology, a big growth area,
affected by lack of investment funds
• New product launches are not replacing
revenues lost to generic competition,
especially in primary care
• The most att
attractive
acti e areas
a eas for
fo growth
g o th
are in emerging, generics and specialty
markets

Source: IMS Health, MIDAS, Dec 2010


Top 10 markets sales and growth
Audited markets in 2010

2010

Sales, US $ % Market % Growth, CAGR


Country Billions Share Constant US $ 2006-2010

10 Key Markets 614.9 100 3.9 5.0

United States 310 7


310.7 50 5
50.5 33
3.3 46
4.6

Japan 85.8 13.9 0.4 2.4

Germany 40.0 6.5 3.0 3.6

France 38.9
38 6.3
6 3 0.9
0 2.7

China 32.8 5.3 21.9 23.9

Italy 25.2 4.1 2.2 3.7

Spain 22.0 3.6 2.6 6.6

Canada 21.6 3.5 2.6 6.4

United Kingdom 20.3 3.3 3.8 4.2

Brazil 17.5 2.9 20.1 13.5

Source: IMS Health, MIDAS, Dec 2010


In both specialist and primary care we have winners
and losers

Primary care driven Specialist driven

% %
Sales Market % Sales Market %
Global Rank US$bn Share Growth Global Rank US$bn Share Growth

Top 10 208.2 45.6% 4.2% Top 10 185.4 56.8% 7.7%

Lipid regulators 36.4 8.0% 3.7% Oncologics 55 3


55.3 16 9%
16.9% 7 4%
7.4%

Respiratory agents 28.9 6.3% 7.8% Antipsychotics 24.9 7.6% 9.2%

Anti-ulcerants 28.4 6.2% -5.6% Autoimmune agents 20.1 6.1% 15.3%

Angiotensin II antag.
antag 26 6
26.6 5 8%
5.8% 7 6%
7.6% Antidiabetics 15.8 4.8% 12.7%

Antidepressants 20.0 4.4% 2.5% HIV antivirals 15.1 4.6% 14.4%

Antidiabetics, oral 17.5 3.8% 11.9% Anti-epileptics 12.4 3.8% -11.2%

Platelet aggr. inhib. 15.2 3.3% 3.8% Narcotic analgesics 11.9 3.7% 7.8%

Vitamins & minerals 12.7 2.8% 6.8% Erythropoietins 10.7 3.3% -1.2%

Cephalosporins & combs. 11.3 2.5% 7.3% Hospital solutions 9.5 2.9% 7.9%

Non-narcotic analgesics 11.1 2.4% 2.5% MS therapies 9.5 2.9% 12.6%

Source: IMS Health, MIDAS, MAT Sep 2010


The generics market reaches $107.5bn; generics
growth is four times higher than overall growth

Source: IMS Health, MIDAS, Market Segmentation, MAT Dec 2010, Rx only. *Market Segmentation universe
After strong growth recovery in 2009; 2010 sales
growth slows to 2
2.3%
3% and 11.0%
0% TRX growth

Dollars Growth
TRx Growth

$310 10
4 5

9
4.5
$300
8
4

7
$290 3.5
.

.
5.1% 6

CHANGE

.
3
S$ BN

e BN
$280 5 2.1%

GE
2.5

% CHANG
TRx Volume
%C
Sales US

4 2
$270
3 1.5

2 1
$260
2.3% 1 1.0% 0.5

$250 0 3 0
2006 2007 2008 2009 2010 2006 2007 2008 2009 2010

Source: IMS Health, National Sales Perspectives, Dec 2010 Source: IMS Health, National Prescription Audit, Dec 2010
US market growth in 2010 was 2.3%

$350 20

$300

$250
15

GE
BN

% CHANG
ALES US$B

$200
10
$150

$100
SA

5
$50

$0 0

Source: IMS Health, National Sales Perspectives, Dec 2010


US prescription growth is 1.0% for 2010

US Growth Rate
5.0 10
9

4.0 8
E BN

7
TRX VOLUME

TRX PPG
3.0
5
4
2.0
3
T

2
1.0 1
0
0.0 -1

Source: IMS Health, National Prescription Audit Plus, Dec 2010


The largest segments of the US market had
b l
below market
k t growth
th rates
t
Sales Growth (2010)

Total market: +2.3%


Branded
Brands: -0.7%
0.7% generics: Generics:
+4.5% +21.7%

Traditional Pharma: 1.9% Specialty: 4.0%

Small molecules: 0.5% Biologics: 6.6%

Retail: 2.0% Institutional: 3.0%


Sales
$BN

$0 $50 $100 $150 $200 $250 $300

Source: IMS Health, National Sales Perspectives, Dec 2010

US Pharmaceutical Market: 2010


Brand prescription growth continues to decline in
2010
Absolute growth of prescriptions

Unbranded generics
Brands
Branded generics
250
200
150
TRxs MN

100
50
0
AC T

-50
-100
-150
-200
200
2006 2007 2008 2009 2010

Source: IMS Health, National Prescription Audit, Dec 2010


Growth remains low for both segments, but growth
rates converge in latest periods
MAT Nov 2010
16% US
Primary care driven % Market
M k t
14%
Specialist driven share US$
12% Primary care 56%
driven
10%
GROWTH US$
$

Specialist 44%
8% driven

6%
% Absolute
4%
%
%G

change
h US$
2%
Primary care 21%
driven
0%
2006 2007 2008 2009 MAT Nov
2%
-2% 2010 Specialist 79%
driven
-4%

Source: IMS Health, National Sales Perspectives, Nov 2010


Branded Generics Disaggregated

Sales and TRx share brands and generics

%Dollars %Total prescriptions dispensed


100%
14.6% 15.6% 16.2% 16.8%
90% 17.8% 19.9%

80%
ARE

70% 57.7%
61.2%
65 3%
65.3%
MARKET SHA

69.6% 72.2% 75.4%


60%
50%
85.4% 84.4% 83.8% 83.2%
40% 82.2% 80.1%
%M

30%
20% 42.3% 38.8%
34.7%
30.4% 27.8% 24.6%
10%
0%
2005 2006 2007 2008 2009 YTD 2005 2006 2007 2008 2009 2010
Nov
2010
Brands Generics
Source: IMS Health, National Sales Perspectives, Nov 2010, Branded generics disaggregated,Source: IMS Health, National
Prescription Audit, Branded generics disaggregated, Dec 2010
US is impacted by continued patent expiries, and
historically low contribution from new products

US market growth: 2009=5.2%; 2010=2.3%

• Protected brands “list" • Protected brands volume


price growth decline
• Increasing generic • Slow uptake of recently
volume and less price launched products
deflation • Patent expiries
i i
• H1N1/CCF • Greater substitution of
• Fewer safety events generics

• Demographic factors
• Approvals of innovative
therapies

Source: IMS Health, Market Prognosis, IMS Consulting, Sep 2009


The economic crises impact all stakeholders
Th danger
The d for
f pharma
h is
i losing
l i share
h off voice!
i !

Stakeholders Likely reactions


•Significant increase in price sensitivity
1 Patients •‘Down-trading’ to cheaper drugs or generics
•Deferral of treatment

•Reduced spend on promotion


2 Manufacturers •Rationalisation of product lines
• Mergers/acquisitions

•Cash-flow
•Cash flow and credit issues
Distributors •Reduced inventories to minimise financial exposure
3 •Increase in distribution costs
•Consolidation among local distributors

•Changed prescribing practices


4 Healthcare Providers •Increase generic / therapeutic substitution

•Shifting costs to patients


5 Payers •Increased
Increased focus on evidence and value
•Formulary control intensifies
Patient visit trends remain negative with -4.7%
growth in MAT Nov 2010

6%
Patient Visit Growth
4%
WTH

2%
ROLLIING MAT GROW

0%

-2%

-4%

-6%

-8%

-10%
10%
Jan-08

Mar-08

May-08

Sep-08

Nov-08

Mar-09

May-09

Sep-09

Sep-10
Jul-08

Jan-09

Nov-09
Jul-09

Jan-10

Mar-10

May-10

Nov-10
Jul-10
ROLLING MAT

Source: IMS Health, National Disease and Therapeutic Index, Nov 2010, Confidence Interval shown (+/-3.9%)
The declines in consumer sentiment in the US were
not matched by TRx declines or claims

Market Indicators Indexed to January 2007


120

110

100

90
INDEX

80

70
Index of C onsumer Sentiment
60 Index of Employment
Monthly C laims
50
TRX

40
Apr-077

Jun-077
Jul-07
7
Aug-077

Apr-088

Jun-088
Jul-08
8
Aug-088

Apr-099

Jun-099
Jul-09
9
Aug-099

Apr-100

Jun-100
Jul-10
0
Aug-100
Jan-077
Feb-077
Mar-077

May-077

Sep-077
Oct-077
Nov-077
Dec-077
Jan-088
Feb-088
Mar-088

May-088

Sep-088
Oct-088
Nov-088
Dec-088
Jan-099
Feb-099
Mar-099

May-099

Sep-099
Oct-099
Nov-099
Dec-099
Jan-100
Feb-100
Mar-100

May-100

Sep-100
Data for the last month of reported claims remains volatile until late reporting physician’s claims are added
Source: IMS Health, National Prescription Audit, Sep2010, LifeLink Sep2010; Reuters / University of Michigan Surveys of
Consumers, Sep 2010; Bureau of Labor Statistics, Sep 2010; Car sales from Bureau of Economic Analysis, National Economic
Accounts, Last Revised in Dec 2010
US market grows 2.3% in 2010

2010
% Market
Channels US$bn % Growth
Share
Retail 167.3 54.4 2.0
Chain/Mass 108.1 35.2 2.6
Independents 37.9 12.3 1.3
Food stores 21.3 6.9 0.5
Mail Service 52.6 17.1 2.1
Institutional 87.6 28.5 3.0
Clinics 36 2
36.2 11 8
11.8 4 2
4.2
Hospitals 31.9 10.4 0.6
Long-term care 14.8 4.8 6.4
Home health care 2.5 0.8 -0.6
HMO 1.1 0.4 0.4
Others 1.0 0.3 -1.2
Total 307.5 100.0 2.3

Source: IMS Health, National Sales Perspectives, Dec 2010


The US market prescriptions grew at 1.0%, driven
by chains

2010
% Market
Channels TRxs mn % Growth
Share
Retail 3,646 92.0% 1.2
Chain/Mass 2,173 54.8% 2.1
Independents 748 18.9% -0.8
Food stores 490 12.4% 0.5
Mail Service 235 5.9% -1.0
Non retail channels 319 8.0% 0.9
LTC 319 8.0% 0.9
Total 3,965 100.0 1.0

Source: IMS Health, National Prescription Audit, Dec 2010


Absolute growth of leading therapy classes

AC AC
Dollars Total Rx dispensed
US$mn TRxs mn
Antipsychotics,oth 1520.7 Anti-depressants 7.7
Analogs of human insulin 1205.9 Seizure disorders 7.3
Analeptics 971.1 Codeine & comb 6.4
Anti-platelets,oral 650.8 Vitamin D 6.2
Antiarth,biol resp mod 637.9 Lipid regulators 5.9
Alzheimer-type dementia 598.9 Analeptics 4.4
HIV antiviral combination 550.9 Calcium blockers 4.2
GI anti-inflam 518.3 Biguanides 4.1
Neurological disorders 505.1 Benzodiazepines 3.3
Codeine & comb 466.2 Mus relx,non-surg 2.7

Source: IMS Health, National Sales Perspectives, Nov 2010, National Prescription Audit, Nov 2010
Relative growth of leading therapy classes

% %
Dollars Total Rx dispensed
Growth Growth
HIV integrase inhib 58 Vitamin D 47
Biguanides 40 Antinauseant 5HT3 antag 35
Pneumococcal 38 Dpp-4 Inhib 16
Miscellaneous,oth 32 Specific
f antagonists 15
Antineoplastics,misc,oth 31 Antihyperlipidemic agt 12
Neurological disorders 30 Analeptics 10
Newer gen psycother agt 29 H2 antagonists 8
Hormones,androgens 28 Analogs of human insulin 8
Ophth preps,oth 26 Ophth corticoids 8
Ophth anti-inflam,oth 24 Alpha-beta blocker 7

Source: IMS Health, National Sales Perspectives, Nov 2010, National Prescription Audit, Nov 2010
Absolute declines of leading therapy areas

AC AC
Dollars Total Rx dispensed
US$mn TRxs mn
Ace inhibitors -242.0 Proton pump inhib -1.6
Calcium blockers -261.6 Narc cgh/anthst -1.8
Quinolones, systemic -269.2 Angiotensin II antagonists -1.8
Immunosup/transplant age -419.3 Glitazones -1.9
Platinum coordination -471.6 Quinolones, systemic -2.2
Anti-migraine -500.6 Macrolides & related -2.3
Herpes Antivirals -527.7 Synth narc,analg -2.4
UT benign prostate -806.5 O/C estrogen/progestogen -2.4
Seizure disorders -1663.0 Beta blockers -2.4
Proton pump inhib -2257.2 Osteoclast Inhibitors -4.1

Source: IMS Health, National Sales Perspectives, Nov 2010, National Prescription Audit, Nov 2010
Fastest growing products-Absolute growth

AC AC
Dollars Total Rx Dispensed
US$mn TRxsmn
venlafaxine hcl er (tev) 877 metoprolol succin (wts) 9.8
Prevnar 13® (Pfz) 732 amlodipine besy (lu.) 9.2
Crestor® (Azn) 694 simvastatin (lu.) 8.9
Copaxone® (Tvn) 559 hycd/apap (qlt) 8.2
enoxaparin sod (sdz) 540 gabapentin (am9) 7.6
Abilify® (Ots) 535 lisinopril/hctz (lu.) 6.3
Plavix® (Bsa) 534 omeprazole (rx) (myn) 62
6.2
budesonide (tev) 508 azithromycin (tev) 5.9
Humira® (Abt) 405 albuterol (myn) 5.8
Atripla® (Bmg) 368 prednisone (w-w) 5.7

Source: IMS Health, National Sales Perspectives, Jan 2011, National Prescription Audit, Jan 2011
Relative growth of leading products

% %
Dollars Total Rx Dispensed
Growth Growth
valacyclovir hcl (rby) >999 amlodipine besy (lu.) >999
venlafaxine hcl er (tev) >999 albuterol (myn) >999
Prevnar 13® (Pfz) >999 valacyclovir hcl (rby) >999
enoxaparin sod (sdz) >999 amlodipine besy (gmk) >999
amphetamin salt er (glb) 682 metoprolol succin (wts) 908
pantoprazole sod (spi) 342 gabapentin (am9) 665
budesonide (tev) 235 ti
paroxetine hcl
h l (zyd)
( d) 275
Renvela® (Gzy) 144 furosemide (rby) 253
Trilipix® (Abt) 144 alendronate sod (wts) 239
oxaliplatin (t+p) 135 ranitidine hcl (g
(gmk)
) 193

Source: IMS Health, National Sales Perspectives, Nov 2010, National Prescription Audit, Nov 2010
Fastest declining products-Absolute declines

AC AC
Dollars Total Rx Dispensed
US$mn TRxs mn

Tricor® (Abt) -271 simvastatin (drl) -4.4


Prograf® (Aes) -274 hycd/apap (mkr) -4.4
pantoprazole
p p sod (
(Pfz)
) -307 alendronate sod (
(tev)
) -4.5
Cellcept® (Roc) -325 simvastatin (aob) -4.6
Arimidex® (Azn) -434 amoxicillin (tev) -4.7
Yaz-28® (Byh) -443 cephalexin (tev) -4.8
Lovenox® (S.A) -550 Lipitor® (Pfz) -6
Effexor Xr® (Pfz) -1311 prednisone (wts) -6.9
Valtrex® (Gsk) -1524 Effexor Xr® (Pfz) -7.1
Flomax® (B.I) -1772
1772 amlodipine besy (myn) -7.1
7.1

Source: IMS Health, National Sales Perspectives, Jan 2011, National Prescription Audit, Jan 2011
Absolute Growth Vs. Yr. Ago-Companies

Dollars AC US$BN
$ TRx AC TRx mn

Novartis (incl Sandoz) 2.3 Mylan Labs, Inc. 35.7


Lilly 1.2 Lupin Pharma 33.5
Teva 1.2 Amneall Inc 30.6
AstraZeneca 0.9 Novartis (incl Sandoz) 24.7
Bristol-Myers Squibb 0.8 Qualitest Products 21.0
Gilead Sciences 08
0.8 Z d
Zydus Ph
Pharma 18 3
18.3
Global Pharma Corp 0.7 Glenmark Pharma 12.4
Novo Nordisk 0.7 Teva 12.4
Otsuka America Ph 06
0.6 W tW
West Ward
d 11 2
11.2
Mylan Labs, Inc. 0.5 Northstar Rx 10.1

Source: IMS Health, National Sales Perspectives, Sep 2010, National Prescription Audit, Sep 2010
Sales of leading corporations (Top 10)

MAT Nov 2010


% Market
US$mn % Growth
Leading corporations Share
US Industry 306,689 100.0 2.8
1 Pfizer (incl Greenstone) 26,292 8.6 -5.0
2 M
Merck
k & Co
C 18 838
18,838 61
6.1 -4.8
48
3 AstraZeneca 18,401 6.0 2.1
4 Novartis (incl Sandoz) 15,361 5.0 18.7
5 Lilly 14,222 4.6 9.0
6 Roche (incl Genentech) 13,721 4.5 -3.0
7 GlaxoSmithKline 13,655 4.5 -9.2
8 Teva 13,627 4.4 12.9
9 Johnson & Johnson 12,748 4.2 -1.7
1.7
10 Amgen Corporation 12,675 4.1 1.7
Top 10 159,542 52.0 1.0

Source: IMS Health, National Sales Perspectives, Nov 2010


Sales of leading corporations (11-20)

MAT Nov 2010


% Market
US$mn % Growth
Leading corporations Share
11 Abbott 10,824 3.5 2.6
12 Sanofi Aventis 10,464 3.4 -6.4
13 B i t l M
Bristol-Myers Squibb
S ibb 9 684
9,684 32
3.2 93
9.3
14 Boehringer Ingelheim 6,507 2.1 -12.2
15 Takeda 6,014 2.0 -25.6
16 Eisai Corp 4,706 1.5 8.2
17 Forest Lab 4,694 1.5 8.1
18 Mylan Labs, Inc. 4,601 1.5 18.1
19 Gilead Sciences 4,596 1.5 19.9
20
0 Otsuka
Otsu a America
e ca Ph 4,566 1.5
5 15.3
53
Top 20 104,332 73.8 0.8

Source: IMS Health, National Sales Perspectives, Nov 2010


$98 bn at risk to generic competition in the US by
2015

Value of products at risk 2004-2015

$98 bn

Source: IMS Health, MIDAS, Market Segmentation, Sep 2010


More innovative products will be lost than gained in the next
few years if FDA approvals remain at the current level

2014(f) 2014(f)

2013(f) 2013(f)

2012(f) 2012(f)

2011(f)
() 2011(f)
()

2010(f) 2010(f)

2009(f) 2009(f)

2008 2008

2007 2007

2006 2006

2005 2005

2004 2004

50 45 40 35 30 25 20 15 10 5 0 5 10 15 20 25 30 35 40 45 50
# NCE PROTECTION EXPIRIES # NCE APPROVALS

Source: FDA, IMS Health, Market Insights Team Analysis, Oct 2009
Global launches of innovative products declining,
d i
driven b
by fewer
f primary
i care products
d t
OF NCE LAUNCHES
NUMBER O

Source: IMS Health, New Product Focus, Jan 2011. *Preliminary estimate
31
Active pipeline continues to grow in each stage of
clinical development except Phase I

1600
NE

Phase I Phase II
S IN PIPELIN

1400 Phase III Pre-reg/reg 1,368


1231 1254
1130
1200
1062
990 1 205
1,205
OF ACTIVE PRODUCTS

933 1159
1000 864 1093
807 995
734 941
800 893
648
572
600

334 340 363


400 284 287 299 290
274 258
142
#O

200 116 120 130 131 138 139


110 102
0
June-02 June-03 June-04 June-05 June-06 June-07 June-08 June-09 June-10

Source: IMS Health, R&D Focus, Jun 2010 and previous year slides
Global R&D pipeline compared against previous
year

2,721
,

Number of active products in the pipeline to date = 6,119

1 763
1,763 (patterned segment) Specialist Driven Products

1,516
1,253
915
833 444
958
601 272 185
420 103
172 82
Pre-clinical Phase I Phase II Phase III Pre-reg/reg
44.5% 20.5% 24.8% 7.3% 3.0%
% share of active pipeline

Source: IMS Health, R&D Focus, Jun 2010


Leading franchises in the global R&D pipeline

Phase III, pre-registered, registered


1. Cancer (109)
2. CNS (51)
3. Vaccines (51)
4. Cardiovascular (49)
5. Anti-infectives & Antivirals (39)
6. Diabetes (33)
7. Genito-urinary & Hormones (32)
8. Arthritis/Pain (26)
9. Respiratory (22)
10. Dermatology (16)
11. Gastrointestinal (16)
12. Metabolic (15)
( )
13. Blood (12)
14. Ophthalmics (11)
15. Immune system (7)

Source: IMS Health, R&D Focus, Jun 2010


2008 FDA approvals of NCEs took place in a
challenging environment

Fewer new product submissions


24 in 2008* vs. 34 in 2007
Fewer “me-too” products
Delayed
or denied Restricted
market market
access access
36 complete
26 NCE approvals 21 Risk
response or Evaluation &
not-approvable Mitigation
letters Strategies

Review
i delays
d l
20% of PDUFA goals missed in 2008*
FDA staff shortage
Source: IMS, Market Insights Research. *Jan-Oct 2008.
71 “traditional” drugs have REMS programs

Program Complexity
80
75%
70

60

50

40

30
23%
20

10
0% 2% 0% 0%
0
MG MG + CP CP + ETASU + IS MG + ETASU MG + ETASU + IS MG + CP + ETASU + IS

Source: Center for Healthcare Supply Chain Research


68 “specialty” drugs have REMS programs

Program Complexity
60
57%

50

40
Aranesp
Epogen/Procrit
30
Nplate
Sabril
19% Onsolis
20
Zyprexa Relprevv
9%
10 4% 7%
3%
0
MG MG + CP CP + ETASU + IS MG + ETASU MG + ETASU + IS MG + CP + ETASU + IS

Source: Center for Healthcare Supply Chain Research


REMS programs and a more active FDA safety
program will bring new risk/benefit dynamic
Voluntary AE reporting
AE Reports
Other safety
y data From public, Point-of-Care,
Industry, Government R
Regulatory
l t d
decisions
i i
sources
Pre Market
Safety Data
FDA Analysis of
Safety Profile
Large data sets
• HMD
• Statistical (SAS, STATA)
• CMS • Clinical
• VA • Integration of all
• Other information
Registries
Electronic • Personal
Health health records
Records • Drug specific
• GPRD • Disease Data communication
• VA DOD specific
• Cigna (?)
Other
Oth
surveillance
Drug Use Data
Systems
• IMS Industry driven
• NEISS
• Verispan studies
• TESS
• US
• DAWN
• Prevnar (?)

Source: FDA PDUFA IV Information Technology Plan, DRAFT, Dec 2007


Medicare Part D and Medicaid are growing!

% TRx Dispensed

100
15 19 19 20
21
42
75 49 55
60 65
68 71 73 74 73 72 72

50 13 66 64 63 63
61
13
12
11
10
25 11 11
44 11 11 13 14 16
38 33
29 25 8 8 8 9 10
21 19 16 14 14
14 12 11 10 9 9 8
0
94

95

96

97

98

99

00

01

02

03

04

05

06

07

08

09

10
19

19

19

19

19

19

20

20

20

20

20

20

20

20

20

20

20
Cash Medicaid All Other 3rd Party Medicare Part D

Source: IMS Health: National Prescription Audit (NPA) Plus


7, Xponent PlanTrak
Debate in the US on healthcare reform was broadly
centered on core issues of access,
access affordability and
quality

• Providing • Improving
insurance to the quality of
the currently care that is
uninsured A
Access Quality delivered

• Lowering costs
of existing
Affordability
activities
• New sources of
funding
The most certain impacts are negative in the short
term but more positive or uncertain longer term
Upside
Expanded coverage of
current uninsured

Expanded Medicaid coverage


Reform of insurance
practices
p
Independent Payment Advisory Board
IMPACT

Closure of donut Patient Centered Outcomes Res. Inst.


hole Pilots, demonstration projects
Physician payment Preventive care incentives
sunshine rules
Annual fees
Biosimilar regulatory pathway
Medicaid rebate
increases
Part D donut hole subsidy
Downside
2010 2014 2019
TIMING
The reforms will move tens of millions of people to or
from coverage types by 2019
Impact on 2019
COVERAGE AFTER REFORM (Mn)
400 Vs no-reform
Vs. no reform Vs 2010
Vs.

350
LLIONS)

Exchanges +24 +24


300
Unins ed
Uninsured -32 -27
F PEOPLE (MIL

250
Nongroup/Other -5 -2
200
Employer -4 +8
NUMBER OF

150

Medicaid/CHIP +16 +11


100

Medicare 0 +14
50

0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Source: CMS, CBO Healthcare Reform Reconciliation Bill Analysis, Mar 2010
Sales and prescription performance-2011

% Growth of prescription products


Total market

10% 2007
2008
2009
2010
MAT Feb 2011
WTH U

YTD Feb 2011


% GROW

5 0%
5.0%
5% 4.6%
3.8% 4.0%
3.2%
2.6%
2.3% 2.1% 2.0%
1.8%
1.1% 1.2%

0%
Sales TRx

Source: IMS Health, National Sales Perspectives, Feb 2011 IMS Health, National Prescription Audit, Feb 2011
What’s In?
• Slower market growth
• Generics & Patent Cliff
• Specialty is growing but at a slower pace
• RX to OTC
• Private label OTC
• Chain & Mass, Mail service, Clinics, & LTC
• Medicaid
M di id & M
Medicare
di Part
P tD
• Cough, Cold and Flu
• Price Increases
• REMS
• Drug Shortages
What’s out and what’s ahead???

What’s Out? What’s Ahead?


• Brand growth • Government
− Medicaid
• Innovation
− Medicare Part D
• R&D − Health Care reform
− Generic User fees
• Office
Offi visits
i it − Generic approval backlogs
− More FDA inspections
• Elective surgery
− AMP
− Biosimilar Pathway
− REMS
− Patent Settlements
Thank you
Visit www.imshealth.com
www imshealth com for more
information on IMS’ Viewpoint

Doug Long dlong@us.imshealth.com