07/04/2014

Biological/biotechnological and biosimilars market: the global outlook with special focus on Europe Biosimilar Medicines: 12th EGA International Symposium London, April 3rd 2014

Agenda • The Global Biologic Market − The increasing importance of biosimilars in the pharma portfolios − Recombinants shaping the industry • The Macro Biosimilars Environment − NOB Players in emerging markets − The biosimilar pipeline a focus on RA • Policy Implications • The trade-off between access and innovation

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Biologics growth continues to outstrip growth rate of total pharma Such a trend is putting additional financial pressure on healthcare budgets Biologics – Share of sales

Global market trends Sales and Growth

8.4%

200

12%

7.9%

49.7%

180 10%

140

8%

120 100

6%

80 4%

60 40

12.6%

Growth, LCUS$

Sales, US$ billions

160

21.4%

Japan

Pharmerging

13.1% 59.4%

0% 2008

2009

2010

2011

Biologics Sales

2012

US

5.3%

2%

2007

EU5

Biologics – Share of growth

20 -

ROW

2013

10.0%

Biologics Growth

12.3%

Total Pharma growth Source: IMS Health, MIDAS, MAT June 2013 3 © 2013, IMS HEALTH

Key therapies in today’s world LoEs have reset the stage from small molecules to biologics Europe Top 10 products 2008-13 2008

2009

2010

2011

2012

2013

1

LIPITOR

LIPITOR

LIPITOR

SERETIDE

HUMIRA

HUMIRA

2

SERETIDE

SERETIDE

SERETIDE

LIPITOR

SERETIDE

SERETIDE

3

PLAVIX

PLAVIX

HUMIRA

HUMIRA

HERCEPTIN

ENBREL

4

HERCEPTIN

ENBREL

ENBREL

ENBREL

ENBREL

HERCEPTIN

5

ENBREL

HERCEPTIN

HERCEPTIN

HERCEPTIN

LIPITOR

MABTHERA

6

ZYPREXA

HUMIRA

LOVENOX

LOVENOX

MABTHERA

REMICADE

7

LOVENOX

LOVENOX

AVASTIN

MABTHERA

LOVENOX

LOVENOX

8

GLIVEC

GLIVEC

MABTHERA

AVASTIN

REMICADE

AVASTIN

9

PANTOZOL

ZYPREXA

GLIVEC

REMICADE

AVASTIN

LUCENTIS

10

SYMBICORT

MABTHERA

ZYPREXA

GLIVEC

SPIRIVA

LYRICA

Small molecule products

Biologic products

Source: IMS Health, MIDAS, MAT June 2013 4

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It’s the loss of exclusivity that drives interest. 12 compounds represent US$ 73 billion in sales All these products will lose patent protection by 2020, except Enbrel (US patent extended until 2028) Global Sales (MAT 09/2013), US$ billion 9.4 7.8 7.5 7.5

5.6 5.6

2016

Etanercept (Enbrel)

2015

2028 (extended)

Infliximab (Remicade)

2015

2018

2014

2015

Rituximab (Mabthera)

Expired

2018

Bevacizumab (Avastin)

2019

2019

Expired

Expired

2015

2016

2014

2019

2017

2014

2015

2015

2016

2016

Insulin Aspart (Novomix, Novorapid)

5.4

Interferon Beta-1A (Avonex, Rebif)

5.1

Total ~ US$ 73 billion

4.8 4.3 4.3

Trastuzumab (Herceptin) Glatiramer Acetate (Copaxone) Pegfilgrastim (Neulasta) Ranibizumab (Lucentis)

5

US expiry date

2018

Insulin Glargine (Lantus)

6.2

0

EU expiry date

Adalimumab (Humira)

10

Not considered existing biosimilars such as Epoetin Alfa expired in EU, but still patent protected in the US

Source: IMS MIDAS, 09/2013, IMS Patent focus 5

Agenda • The Global Biologic Market − The increasing importance of biosimilars in the pharma portfolios − Recombinants shaping the industry • The Macro Biosimilars Environment − NOB Players in emerging markets − The biosimilar pipeline a focus on RA • Policy Implications • The trade-off between access and innovation

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In Europe, biosimilar usage exhibits different rates with Italy and Spain now catching up

$US Millions

Biosimilar sales across EU5 QTR 03/2007 – 12/2013 ($US)

EU 5 countries 490M $ MAT 12/2013

40

Fast uptake at launch

35

Consistent uptake

30

Cultural resistance at first but change undergoing

25 20 15 10 5 0 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13

France

Germany

Italy

Spain

UK

Source: IMS MIDAS, MAT Dec 2013 7

Filgrastim excels in each major EU market Almost resembles small molecule generic efficiency in some countries Biosimilar uptake across TA/Countries MAT 12/2013 (Volumes, SU) Values, M$

130

104

102

86

56

SPA

UK

% Uptake, SU

80% 70% 60% 50% 40% 30% 20% 10% 0% ITA

GER ALL

Filgrastim

FRA Somatropin

Ep. Alfa

Source: IMS MIDAS, MAT 12/2013 8

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Dynamics differ not only by molecule and country but also by channel Biosimilars and originals breakdown (molecule vs. molecule only; and only reference products)

Mar-13

Mar-12

Sep-12

Mar-11

Sep-11

Mar-10

Sep-10

Mar-09

Sep-09

Mar-08

Sep-08

Mar-07

Sep-07

Mar-06

Sep-06

Mar-13

Mar-12

Sep-12

Mar-11

Sep-11

Mar-10

Sep-10

Mar-09

Sep-09

Mar-08

Sep-08

Mar-07

Sep-07

Mar-06

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Sep-06

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

BIOSIMILAR PRODUCTS (R)

ORIGINAL (H)

Mar-13

Mar-12

Sep-12

Sep-11

Mar-11

Sep-10

Mar-10

Sep-09

Mar-09

Mar-08

Sep-08

Sep-07

Mar-07

Mar-06

Mar-13

Mar-12

Sep-12

Sep-11

Mar-11

Mar-10

Sep-10

Mar-09

Sep-09

Mar-08

Sep-08

Mar-07

Sep-07

Mar-06

Sep-06

ORIGINAL (R)

Sep-06

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

BIOSIMILAR PRODUCTS (H)

Source: IMS MIDAS Q2 2013. Analysis in DDD (Defined Daily Doses). 9

The temperature is rising again, biosimilar events are warming the global agenda ROW Market trends

Regulatory

2012

Remsima (Infliximab Biosimilar) launched in Korea FDA approved Tbo-filgrastim but filed in the U.S. as BLA

2nd GSF approved in Japan

2013

Sandoz Omnitrope to be sole subsidised somatropin from Jan 2015 in NZ

Teva announce launch of GRANIX in USA

Herzuma (Trastuzumab bs) approved in Korea

Jun

Mar

Jul

Nov 2014

Europe Italy, largest Biosimilars market in EU*

Market trends

Regulatory

N° of Biosimilar applications (EMA) all-time high (8)

Biosimilar G-CSF (Zarzio) prescribed more than originator

Inflectra# (Infliximab Biosimilar) approved EU

Lilly & BI submission for insulin glargine biosimilar

Follitropin alfa biosimilar approved

Source: Secondary research. List not exhaustive. (*) at ex-manufacturer price levels, not including rebates and discounts. (#) Recommended for RA (Rheumatoid arthritis), CD (Crohn’s disease), UC (Ulcerative colitis), AS (Ankylosing spondylitis), PA (Psoriasis), PsA (Psoriatic arthritis)

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Relaxed regulatory requirements drives proliferation of Non Original Biologics in emerging markets Biologics

Non Originals

Originals True Innovator

Type

• Efficacy/safety improvements

• Disruptive

Description technologies, big advances in efficacy

• Less stringent comparability

• Affordable, high quality

• Same target but • New drug against differentiated new target (e.g. Better efficacy, safety, administration)

Target

Non Original Biologics

Biosimilars

Bio-betters

• Drug aiming at copy innovator

• Clinical equivalence and comparability to originators

• Focus on patient access, EMs

Example

11

© 2013, IMS HEALTH

Major opportunity exists in BRICs where NOBs account for 91% of the 16 markets Biologic size, $US Mn

Retail only

0 1°

CN

2°

BR

3°

RU

4°

TR

5°

MX

6°

IN

7°

TH

352

8°

ID

177

9°

VN

119

1°

AL

238

2°

AR

232

3°

SA

165

4°

EG

104

5°

PK

96

6°

VZ

62

7°

CO

14

Recombinant NOBs uptake

16 Pharmerging markets NOBs

2.000 4.000 6.000

60%

40%

20%

37%

4.162

CN

2°

BR

10°

RU

4°

1%

TR

14°

2%

MX

13°

IN

3°

TH

6°

ID

7°

VT

1°

AL

15°

AR

9°

SA

16°

EG

8°

PK

5°

2%

VZ

12°

3%

CO

11°

6%

3.923 23%

2.544 1.305

Russia

1.000 534

338 Turkey Pakistan Algeria Thai Egypt India

Mexico VN

China

44

Brazil

82

18%

41%

0%

30

Indo

130

30%

13%

927

6%

Vietnam

0% 9%

Argentina

22% Bubble size: NOBs 2012 $US Mn

Rk

0%

Retail only

Rk

BRICs countries account for 91% in value of the NOBs Pharmerging market. Three of them also come on top with regards to NOBs penetration Source: IMS MIDAS Dec 2012. Data is retail only for Algeria, Argentina, Colombia, Egypt, Pakistan, Saudi Arabia, Venezuela. (*) Size of NOBs could be underestimated in Mexico and Brazil due to panel coverage. 12 Uptake is based on recombinant and synthesised molecules. © 2013, IMS HEALTH

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NOBs have made significant impact in major biologic therapy areas Oncology

Anti-TNF

• Reditux was the world’s first non originator mAbs

• Launched in 2006, one year before Enbrel, Yi Sai Pu had the highest anti-TNF sales in China, with ~$41m in 2012

• In 2007, it was priced at $243 for a 100 mg dose in a 10 ml vial, about 50% lower than the price of originator Mabthera (Roche)*

• China has one the lowest RA prevalence in the world (undiagnosed contribute). As its population continues to grow, monitoring RA cases and biologic’s use important

• Between 2007 and 2012, Reditux achieved in India 81% CAGR, it is now the 2nd largest oncology product in India (not considering Roche)

• Yisaipu is also the least expensive among Anti-TNF

Interferons

• Launched end 2010 by Laboratorio Tutuer (AR) • Genfaxon won back market share from direct competitors (Rebif and Avonex) in tenders for Multiple sclerosis products within 7 Nosologies program (high cost part of DLO) • Genfaxon is now the 5th biologic product in Russia (PPG 90%)

Source: IMS Health, MIDAS, MAT Dec 2012. AR: Argentina (*) Bloomberg 13

© 2013, IMS HEALTH

The global playing field continues to expand with players finding niches Players differ not only in geographical spread but also a wider biologic portfolio # Pharmerging markets only

International Reach

Government backed players

Emerging markets players Serving 2+ countries

Domestic players Serving domestic market only* Source: IMS Health, MIDAS, MAT Dec 2012. (*) restricted to MIDAS sales data and recombinant and synthesised prods only. 14 © 2013, IMS HEALTH

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RA biosimilar development is a hive of activity Preclinical

rituximab for unknown indication

infliximab

Avetux (Avesthagen)

BioXpress

Amgen/Watson Richter/Stada Harvest Moon

AP052 (Aprogen) Coherus/Daiichi Sankyo –

Early phase

GS071 (Aprogen) Harvest Moon

Tocilizumab

rituximab for NHL

BOW 015 (Epirus)

Phase 3

Harvest Moon

MabionCD20 (Mabion) CT-P10 (Celltrion)

Golimumab Inflectra (Celltrion/Hospira)

GP2013(Sandoz)

rituximab for RA

CT-P10 (Celltrion)

Filed in EU/approved

Harvest Moon

TL011 (Teva) MabionCD20 (Mabion) MK-8808 (Merck) GP2013(Sandoz) PF-05280586 (Pfizer) SAIT101 (Samsung/Quintiles) BioXpress LBEC0101 (LG Life Sciences) TuNEX

etanercept

Certolizumab Harvest Moon

BI-695501 (BI)

Avent (Avesthagen)

Biocon/Mylan

Adalimumab

Harvest Moon

Coherus/Daiichi Sankyo

BioXpress

Biocon/Mylan BioXpress PRX-106 (Protalix) Source: IMS consolidation from public data Harvest Moon The list is not exhaustive Trials may have moved forward or being discontinued 15

Amgen/Watson Harvest Moon BioXpress

Abatacept

© 2013, IMS HEALTH

Could we soon see the introduction of biosimilars shortly after patent expiry in this area? Each LOE could be closely followed by a biosimilar entry Inflectra (Remicade –Celltrion*)

Rheumatoid Arthritis market

GP 2013 (Rituximab - Sandoz) GP2017 (Adalimumab - Sandoz)

New European market Entrants (estimate) 2013 Patent Expiries in EU5 (France, Germany , Italy, Spain & UK)

2014

2015

2016

2017

Remicade Rituxan

Enbrel

2018+ Humira

Cimzia

Orencia

Simponi

RoActemra * Approved Sep 2013 Source: IMS Knowledge Link, PADDS

Products in Phase 2 or 3 may not receive approval; pipeline view does not necessarily align with the projected competitive landscape in a given year

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07/04/2014

Anti-TNF and MAbs are the key RA biologics Surveyed physicians estimate only around half of RA patients are currently still receiving their first line therapy Mild

Moderate

Severe

NSAIDs

35.1%

35.0%

36.8%

Cox-2 inhibitors

17.2%

16.7%

17.5%

Traditional DMARDs

64.4%

67.7%

66.9%

Biologic TNF inhibitors

8.6%

28.5%

40.7%

Biologic non-TNFs

3.9%

12.2%

19.9%

Novel small molecules

2.1%

3.9%

5.8%

19.3%

18.8%

19.0%

Traditional Chinese medicine Traditional Herbal Medicine Corticosteroids

3.8%

1.5%

1.5%

15.8%

22.3%

37.8%

First-line Second-line Third-line Fourth-line Fifth-line Sixth-line or more

IMS primary market research, 2013(n=210), Countries included: China, Spain, Italy, France, UK, Brazil, Germany, Japan, USA Source: IMS Health Disease Insight 17

Thus a high rate of treatment switching exists in RA After 2 years, physicians estimate ~50% of RA patients switch to another therapy...an opportunity for biosimilars? Percent of RA patients switching from brand (%) 50 45

3 months

6 months

2 years

40 35 30 25 20 15 10 5 0 Methotrexate

Enbrel

Remicade

Humira

Rituxan/MabThera

IMS primary market research, 2013(n=210), Countries included: China, Spain, Italy, France, UK, Brazil, Germany, Japan, USA Source: IMS Health Disease Insight 18

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07/04/2014

One key understanding should be the role of medicines within overall cost of treatment

Cost

RA treatment cost distribution, 2008

25000 20000 15000 10000 5000 0

The per-patient cost of RA biologic treatment is high, with biologics representing ~22% of direct medical costs * Source: Access To Innovative Treatments in Rheumatoid Arthritis In Europe, 2009 19

New biologic launches continue and represent an ongoing challenge for upcoming biosimilars Superior clinical results will gain clinician and patient attention whilst associated costs will prove problematic for payers Originators

Biosimilars adalimumab cetuximab

New modern insulins Gazyva

infliximab

interferon beta etanercept

New biologics

rituximab

Perjeta (pertuzumab)

bevacizumab

Lonquex (lipegfilgrastim)

trastuzumab insulins

20

Kadcyla (trastuzumab /drug conjugate)

SC Herceptin and Rituxan

© 2013, IMS HEALTH

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07/04/2014

Agenda • The Global Biologic Market − The increasing importance of biosimilars in the pharma portfolios − Recombinants shaping the industry • The Macro Biosimilars Environment − NOB Players in emerging markets − The biosimilar pipeline, a focus on RA • Policy Implications • The trade-off between access and innovation

21

Payers and policy-makers rise as biosimilar advocates Biosimilar strategies & business model will shape future scenarios Stakeholder drivers Payer / Government

Physician

Patient

Aspiring player

Originator

Impact on biosimilars market

• Healthcare rationalization • Ensure safety and clinical efficacy • Leverage macroeconomic growth through biosimilars

Strong barrier

Neutral

• Safety and clinical efficacy concerns • Need to build learning curve on biosimilars • Reaction to differ by therapy area

• Looking for broader and affordable access • Likely to be influenced by physician advice

• Massive capital invested on biosimilars • Branded players bringing in R&D capabilities • Growing specialization along the value chain (CRAMS providers)

• Lifecycle management • Patent disputes • Active players in the biosimilar arena

EU, 2013

22

Strong driver

EU, 2018

© 2013, IMS HEALTH

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07/04/2014

The Biosimilar market of mature countries faces a paradox The largest biologic market potential and cost burden

Low overall current impact of biosimilars

Next wave of biosimilars will be challenging

There are several indications that the status quo is about to change

•

The US and European biologic markets comprise the majority of value size and growth, we expect this to continue

•

As such, the majority of biologic cost burden falls on these markets –and potentially the most attractive non originals opportunity

•

Despite 7 years of biosimilars in the EU, and recent FDA guidelines, biosimilars comprise a very small % of the mature markets

•

Significant impact in certain TAs and countries, low overall

•

MAbs for oncology and autoimmune pose incremental acceptance and uptake challenges

•

Originators seek to move standard of care on bio-betters

•

We are entering an era with great potential for change in the biosimilars market...

•

Marked by the LoE of complex compounds used in large populations and foreshadowed by a number of "firsts" in what is being brought to market, by whom, and where.

Will payers push for greater BS adoption as costs escalate?

What adoption do we expect for the next wave of BS? To what extent is BS experience an indicator of future dynamics? To what extent is competition intensifying?

23 © 2013, IMS HEALTH

The potential exists for a reverse innovation business model producing a threat to R&D in the West Biopharmaceutical industry Globalization Step 1

Step 2

Biologics R&D in mature markets and made in mature markets for EMs

Biologics R&D in mature markets but made in EMs for EMs

 Classic biologics R&D in mature markets

Reverse Innovation Step 3

Biologics R&D in EMs and made in EMs for EMs

 Emcure/Roche deal to  Molecules marketed manufacture antiin EM but not in cancer drugs in India Western markets for India (e.g. Ninotuzumab)  MedImmune JV with WuXi to develop novel biologics for China

Step 4

Biologics R&D in EMs and made in EMs for the world  Celltrion’s bioinnovative pipeline CT-P19 (rabies virus)  Celltrion developing an armed antibody?

Threat to major Western Biopharma Source: Model readapted from Vijay Govindarajan. The Economic Times. Nomura. 24

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07/04/2014

IMS Health Thank You Alan Sheppard,

[email protected]

Stefano Di Biase, [email protected]

Disclaimer The analyses, their interpretation, and related information contained herein are made and provided subject to the assumptions, methodologies, caveats, and variables described in this report and are based on third party sources and data reasonably believed to be reliable. No warranty is made as to the completeness or accuracy of such third party sources or data. As with any attempt to estimate future events, the forecasts, projections, conclusions, and other information included herein are subject to certain risks and uncertainties, and are not to be considered guarantees of any particular outcome. All reproduction rights, quotations, broadcasting, publications reserved. No part of this presentation 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. ©2014 IMS Health Incorporated and its affiliates. All rights reserved. Trademarks are registered in the United States and in various other countries.

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