The document discusses the patent cliff that the pharmaceutical industry will face between 2012-2015 as many blockbuster drugs lose patent protection. An estimated $250 billion in annual drug sales will go off-patent during this time period, threatening the business models of major pharmaceutical companies. Generic drug manufacturers are expected to capture a significant share of the market. Companies are pursuing strategies like mergers and acquisitions, expanding into emerging markets, developing new drug pipelines, and patent litigation to mitigate the financial impact of losing drug exclusivity during this period.

2. PATENT CLIFF(2012-2015)
Presentation by
Peruka Venkata Ramana Prasad
1st Semester, MBA(Pharm)
Department Of Pharmaceutical Management
NIPER

3.  What is patent cliff
Global blockbusters by revenue& patent expiration
Global drug sales at risk from patent expiration
Fall down of companys annual revenue
Key drugs in pipeline
Frequency of NME approvals may come down
Big pharma job cuts announced since 2009
FLOW OF PRESENTATION

4. Increasing merges &acquisitions
Hatch-waxman act-1984
Patent exclusivity & generic entry regulations
Generics will dominate the market
ENTERING “pharmering markets”
Patent wars
Contd..

5. It is most often described as an industry-wide
expiration of the patents of a number of
blockbuster drugs with a combined of $250 billion
in annual sales will go off-patent by 2015, creating
a life-threatening situation for many of the top
companies in pharma sector
WHAT IS PATENT CLIFF
Source : Evaluate Pharma,2012

6. Other sectors, such as software and consumer
goods, have patents. But they rely on rapid
innovation to maintain sales.
In pharmaceuticals, stringent regulations on
authorization and marketing impose tighter
controls, higher costs and longer lead times,
making drug developers more reliant on patent
monopolies to recoup their costs
Why only pharma field is more worried?

7. KEY GLOBAL PLAYERS
Source : Individual company financials online 2012

8. GLOBAL BLOCKBUSTERS BY REVENUE&
PATENT EXPIRATION
Source : Bioassociate Consulting & Management Ltd

9. Source : Evaluate Pharma,2012

10. Patent Expiration Of Drugs By Year

11. Source : IMS Global Insight, 2011

12. Source : IMS Global Insight, 2011

13. Source : IMS Global Insight, 2011

14. Source : IMS Global Insight, 2011

15. Global drug sales at risk from Patent Expiration
Source : Evaluate Pharma Vantage 2010

16. Forecasted revenues of few blockbuster Post-generification
Source : The Economist,2011

17. PFIZER – US$30 Lipitor , viagra
Eli lilly- US$13(50%rvnu) Evista , zyprexa
&Cymbalta
Takeda- 52%revenue loss Actos
Forest labs- 52%revenue loss Lexapro
Gsk,Novartis,bms,A&Z- 14-40%revenue loss
Fall Down Of Companies Annual Revenue
Source : Price watercoopers,2011

18. 2009-2013 annual patent losses by company
Source : Bio associate Consulting & Management Ltd

19. Over $280 billion spent on R&D over last decade
Source : Bioassociate Consulting & Management Ltd

20. Key drugs in Pipeline
Source : Analyst and company reports,2012

21. Frequency of NME approvals may come down
Source : US FDA , 2012
2012 : 28NME’s

22. Big Pharma job cuts announced since 2010
Source : FiercePharma.com,2012, Price watercoopers 2010

23. Increasing Merges &Acquisitions
2011 –Sanofi-Aventis- Genzyme- -US$20Bn. -Biotech
2011 – Novartis - Aires pharm – US$250Mn -Cystic fibrosis
pnemonia
2011 – Amgen - Biovex -- US$1Bn -Cancer vaccine
Oncovex
2009 –Pfizer - Wyeth - US$68 -Fill pipeline,
Biologics
2009 –Merck -Schering-plough-US$41.1 -18NME’s in
pipeline
2009, 563 deals worth US$161.2Bn took place

25. Source : Pfizer,2012
Contd..

26. Merges in 2012
Source: business-beacon.com, 2012

27. Acquisitions in 2012
Source: business-beacon.com, 2012

28. Contd..

29. 29
For Innovator companies
 Patent term extension
 Provides New drug product exclusivity
 30 months stay for ANDA approval
For Generic manufacturers
 Created “Abbreviated New drug Application” approval
process for generic versions of innovator drugs
File ANDAs with bioequivalence data using innovator
product
180 day exclusivity for first-to-file
Certification regarding each patent listed in the Orange
Book for the product: four certification options
Hatch-Waxman Act-1984

30. 30
Paragraph I
Paragraph II
Paragraph IV
Paragraph III
Patent information
has not been filed
Patent has Expired
Patent is invalid or
non-infringed by
Generic applicant
Patent has NOT expired
but will expire on a
particular date
FDA may approve ANDA
immediately
FDA may approve ANDA on
the date that the patent expires
Generic applicant provides notice
to patent holder & NDA filer;
entry of the first filer
may or may not occur
ANDA Patent certification Options

31. Source : Orange book

32. Patent exclusivity & Generic entry regulations

33. Contd..
Source : DataMonitor,2011:US FDA,2012;

34. According to IMS Health, generics drugs accounted
for 57.7% of prescriptions dispensed five years ago, and
close to 75% today
Price of the drugs will be reduced
However, while the generic drug industry will
certainly benefit in the short term from the patent cliff
Generics will dominate the market
GENERICS ; US$ 100 Bn/pa
ETHICAL MANUFACTURES ; US$ 720 Bn/pa
It is estimated that by 2014 generic market will reach
US$124Bn.
Source : IMS Health, 2012

35. LEADING GLOBAL GENERIC PLAYERS
Source : Individual company financials 2012

36. Generics offer Drugs at low cost

37. Contd..
Source : Blue cross blue shield of michigan

38. ENTERING “Pharmering Markets”
Source : IMS Health,2011

39. Contd..
Source : IMS Health,2011

40. INDIA has large domestic market.
Highest number of US FDAApproved manufacturing
Units (74) outside the US.
Clinical trial hub
Less manufacturing cost
High CAGR
Contd..

41. PATENT WARS
Law suits & legal loopholes are the last resort before
a patent cliff for innovators
30 Month marketing stay for brand name drugs as part
of patent Infringement litigation, which provides
immunity against generics.
Patent ever greening

42. In the end, the financial future of many
pharmaceutical companies will depend on how they
manage the transition of many of their brand drugs
to the generic market,
as well as on their own efforts to develop novel
therapeutics and diagnostics with significant profit
potential, and to adapt to the changing global
business climate.
However, while the generic drug industry will
certainly benefit in the short term(upto 2015) from
the patent cliff.
CONCLUSION

43. T H A N K Y
O U
Let’s get going ….
43

44. BACK UP SLIDES

45. During 180 day exclusivity

46. AG competition typically reduces a first-filer
generic’s revenues during the 180 days of marketing
exclusivity by approximately 50 percent.
To prevent this loss of revenue, a generic may be
willing to delay its entry in return for a brand’s
agreement not to launch an authorized generic –
that is, a brand’s agreement not to compete with the
generic through an AG – during the generic’s 180
days of marketing exclusivity.

47. 7. STRATERGIES TO MINIMIZE THE IMPACT OF PATENT CLIFF
Most obviously, there has been continued investment in
new drug discovery and development of a “pipeline” of
promising agents that address unmet medical needs and
are profitable.
Enhanced advertising over the past decade in an attempt
to optimize earnings prior to patent expiration

48. A number of drug companies have suggested that they will
outsource at least some of their manufacturing to places
such as Eastern Europe, India, and China, where drug
products can be made at significantly less. But Quality
issues will become severe.
Some pharmaceutical companies already are entering
into agreements with generic manufacturers, licensing
them the right to sell “authorized generics” identical to
branded drugs that have gone or will go off patent.

49. In an Economist article, it is revealed that
Pfizer worked with an American firm in order
to help break apart a 180 day generic exclusivity
period, helping the company compete with often
times cheaper generics. These practices have
helped to boost sales by over half a billion in the
first half of 2012, taking at least some of the pain
of the patent expiration out of the equation

55. Companies with the biggest
cash reserves
Novartis $15 billion
Roche $13.5 billion
Johnson & Johnson $13 billion
Merck & Co. $10 billion
GlaxoSmithKline $9.5 billion

56. HYDERABAD: Dr Reddy's Laboratories has agreed to buy
the entire equity holding of the Dutch injectable specialty
generics manufacturer OctoPlus NV for 27.39 million euro (
192 crore) in an all-cash deal.
The Hyderabad-based company said on Monday that
OctoPlus' expertise in making improved injectable
pharmaceuticals based on proprietary drug delivery
technologies and focus on medicine ingredients that are
difficult to formulate complement it capabilities.
Source: business-beacon.com, 2012