10 YEARS OF GENERIC MEDICINES IN BRASIL. Growth Earnings Challenges

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2 10 YEARS OF GENERIC MEDICINES IN BRASIL. Growth Earnings Challenges PróGenéricos - Generic Medicines Industries Association Odnir Finotti - CEO

3 Brasil Population profile x Income x medicines access restriction Access Restriction Private Health Plan A More than US$5800 5% No 78% B US$2325 to US$ % 30 40% 53% C US$930 to US$ % 50 65% 29% D Bellow US$930 50% Above 65% 8% Fonte: IBGE (POF), SM = Salário Mínimo

4 Objective and challenge: Increase access to reliable medicines by improving offer and fostering competitiveness to reduce price. Generic medicines was created by Law Decree 9.787, in It introduced the concept of interchangeble medicines with bioequivalence proof regarding reference products. First product launched in market: Feb/2000 Laws help to create new markets should entrepereneurs see opportunities.

5 Investments and Destination From 1999 to 2004 = US$ 170 million 24% 9% 4% Pharmaceutical and Bioequivalence Tests GMP Adjustments 63% Developing of New Generic Drug Increase Productive Capacity More US$ 354 million forecasted until source: Companies Pró Genéricos

6 Employment Growth rate = 100% 44,5% 21,2% 22,9% 26,8% 11,0% 13,9% source: Companies Pró Genéricos

7 GENERIC MEDICINES IN BRAZIL ACTUAL DATA

8 Generic Medicines = Market Authorization 90% of the most known diseases can be treated with generic medicines. 89 pharmaceutical companies hold registers for Generic Medicines. source: Anvisa Jun/2009

9 # of Market Authorization Manufacture Site Origin. Others Argentina Austria Israel Canada Germany ,6% are developed and manufactured locally in Brasil. India 193 Brazil Source: IMS Health

10 Market Survey Evolution Index Generic Medicines growth rate is much higher than those for the total market. Source: IMS Health

11 Generic Market Medicines Survey Market Evolution Share Index Generic Medicines has constantly gaining market share

12 Generic Medicines have contributed to the development of the local companies. PHARMACEUTICAL MARKET BRASIL - 10 TOP COMPANY RANKING COMPANY Moving Annual Total - March % Part. EMS ,59 SANOFI-AVENTIS ,24 ACHÉ ,68 MEDLEY (SA) ,67 NOVARTIS ,1 EUROFARMA ,90 PFIZER ,06 BAYER SCHERING ,86 ASTRA ZENECA ,37 BOEHRINGER ,24 4 companies out of 10 largest pharmaceutical companies are generic medicines producers. Source IMS Health

13 RESULTS AND EARNINGS

14 Generic Medicines - Increase access to reliable products while saving money for the patients. Generic medicines must be 35% cheaper than reference products (inovators). Actually they have been 50% cheaper.

15 ,5% Quite effective in providing more access to reliable and cheaper medicines while expanding the market. ATENOLOL = million units 2,003 2,004 2,005 2,006 2,007 2,008 2,009 generics brand reference GENERICOS SIMILARES MARCAS REFERENCIA TOTAL Generic 65% cheaper than reference product(atenol )

16 267, , , , , , , , , , , , , , , , ,240 1,016,613 1,053,228 1,549,864 Patent expired in Feb 07. Legal actions delayed Generic launch CLOPIDOGREL Market evolution aftegeneric launching. 56,5% 36,1% 2,004 2,005 2,006 2,007 2, reference Generic brand Referência Genérico Marca Similar Total Generic is 57% cheaper than reference product Quickly took leadership while doubling market size.

17 Most prescribed medicines in Brazil. Rivotril Amoxycillin Lexotan Enalapril Atenolol Sibutramine Metformin Cephalexin Bromazepam Nimesulide Physicians are more and more prescribing Generics. 8 out of the 10 top prescribed medicines in Brasil are Generics. Public awareness campaign among physicians informing about Generic availability would contribute to increase prescriptions. Advertising activities among public hospitals and health centres would contribute for the correct instruction about therapeutic and economic benefits of Generic medicines. Pharmacists play important role regarding substitution for Generic medicines, therefore they are target for educational programs in order to dispense Generic Medicines accordingly Only Generic medicine can substitute the reference product. Source: Close Up- Abr09

18 Savings for the population has reached around US$ 6,0 bn. Generic medicine definitely increase access to medicine and resulted in R$12,1 billion savings for the Brazilian population.

19 Generic Medicines are also good tax payers. VAT collected = US$ 2, 0 bn Fonte: Empresas Associadas Pró Genéricos

20 CHALLENGES

21 Increasing Generic Medicines market Share 83% 60% 26% 18% 14% 45% 22% 55% 60% 60% 51% 44% 35% 30% 29% 26% 20% 13% 13% 14% 7% 70% 63% 53% 60% 31% 34% 4% Units US$ Generic medicines have bigger market share where governments play a key role in providing medicines. Source: IMS Health

22 Challenges Law enforcement: medicines prescribed by physicians can only be changed by generic medicines. Market research made as secret customer the researcher shows the prescription or ask for the medicine by name and observe the pharmacist. Results: In 67% client receive the correct medicine. In 33% client receive another type of product and, in this case, 78% the suggested product was not generic. Source: Research Ipsos/Opinion Dez/03

23 Challenges Increase the access to reliable and efficient drugs Public tenders Law 9787 force the prescription by generic name in public hospitals and health centers. Law force that the public tenders must acquire medicines by the lowest price. That is the reason why generic medicines have poor participation in public tenders. To qualify the public acquisitions in health sector is the objective of PL 3536/04.

24 Challenges Increase the access to reliable and cost effective medicines. To include new products and therapeutic classes in the Health Ministry program Farmacia Popular would expand the access to medicines to the population who need it most. At the present the program offers 8 therapeutic classes. The products included in the program are subsided and the users co-participate with around 10% of the public price. To make sure that the pharmacists will follow the law therefore dispensing generic medicines accordingly.

25 To reduce the high taxes on medicine is mandatory to enhance access. Products Final price % tax. Public Price for medicines is controlled by the government. Among many others, only VAT accounts for 17% of the public price. High taxes lead to misappropriation and informal practices, while keeping high prices which means a barrier to access to medicines. Human Medicines 35,7% Salt 29,4% Egg 21,8% Meat 18,7% Rice and bean 16,5% Wheat flour 15,5% Milk 13,8% Reduction of tax increase the access and reduce the informal practice.

26 Intelectual Property Law instead of being an incentive to innovation has become an excuse to extend period of protection for product already on the public domain. To guarantee the enforcement of the law. To avoid patent extension or any other attempt aiming at extending the period of protection and exclusivity determined by law. More and more companies are seeking for extra protection time by using legal actions. All those actions already in course have caused delays for the introduction of generic version. Obedience to the Intelectual Property Law would avoid legal disputes and uncertainties on the right time to start commercialization of Generic version.

27 PRÓ GENÉRICOS Associação Brasileira das Indústrias de Medicamentos Genéricos Rua Alvorada, 1280 V. Olímpia - São Paulo Tel.: Website: progenericos@progenericos.org.br