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Developing a Common Understanding of the “Multiple Dimensions” of How Data Exclusivity will Impact the Turkish Pharmaceutical Industry and Health Care.

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Presentation on theme: "Developing a Common Understanding of the “Multiple Dimensions” of How Data Exclusivity will Impact the Turkish Pharmaceutical Industry and Health Care."— Presentation transcript:

1 Developing a Common Understanding of the “Multiple Dimensions” of How Data Exclusivity will Impact the Turkish Pharmaceutical Industry and Health Care Economics January 19, 2004 AmsterdamAthensBeijingChicagoEmeryvilleHong KongJohannesburg Cambridge Frankfurt LondonLos AngelesMadridManilaMilanMoscowMumbaiMunichNew YorkPalo Alto ParisSan FranciscoSão PauloSeoulShanghaiStockholmTokyoTorontoZurichSingapore

2 Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 2 TPA-XCL-TurkeyData PG Executive Summary A wide range of perspectives on a complex set of factors (such as starting date of “DE” application, time horizon of DE, location of registration, pipeline dynamic) that influence “data exclusivity” implementation need to be aligned toward a “unified view” A wide range of perspectives on a complex set of factors (such as starting date of “DE” application, time horizon of DE, location of registration, pipeline dynamic) that influence “data exclusivity” implementation need to be aligned toward a “unified view” A rigorous framework which captures all the variables and the dynamics between them along the time dimension suggest that of 1288 active substance (3,162 products) in market today only 7 (when location of registration is EU) to 12 (when location of registration is Turkey) will determine the impact between 1995 to 2002; A rigorous framework which captures all the variables and the dynamics between them along the time dimension suggest that of 1288 active substance (3,162 products) in market today only 7 (when location of registration is EU) to 12 (when location of registration is Turkey) will determine the impact between 1995 to 2002; However the future impact will be determined by how the new environment will influence competitive behavior in terms of the speed at which new molecules enter the Turkish marketplace, how pricing dynamics between generics and innovators will evolve, and how speedily generics respond to introduction of new substances However the future impact will be determined by how the new environment will influence competitive behavior in terms of the speed at which new molecules enter the Turkish marketplace, how pricing dynamics between generics and innovators will evolve, and how speedily generics respond to introduction of new substances –Impact on the Generics Manufacturers in terms of lost revenues could range between $100 million to $270 million a year, while gains to innovators could be in the range of $270 million to $600 million — implying a concerted effort for a smooth transition to a “new industry structure” is desirable –In the same spirit the impact on health care costs could vary (depending on how DE is implemented) significantly, $200 to $500 million on the sixth year after line application of DE, suggesting that data exclusivity impact is not negligible. Government along with Industry, must together evolve a consensus between different interest groups on the likely scenarios that are more realistic, and together work out a balance and rigorous implementation plan for data exclusivity adoption in Turkey, in building a robust pharmaceutical / health care platform in globalizing Turkish economy Government along with Industry, must together evolve a consensus between different interest groups on the likely scenarios that are more realistic, and together work out a balance and rigorous implementation plan for data exclusivity adoption in Turkey, in building a robust pharmaceutical / health care platform in globalizing Turkish economy

3 Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 3 TPA-XCL-TurkeyData PG Objective and Critical Questions for the Undertaking Objective Develop an objective assessment of the potential impact of “Data Exclusivity” in Turkey from multiple perspectives Critical Questions What might the impact of adopting “data exclusivity” / EU intellectual property protection be on: What might the impact of adopting “data exclusivity” / EU intellectual property protection be on: 1.Government budgets? 2.The generic industry? 3.Innovator companies and their activities in Turkey? 4.Patient welfare? 5.Overall economic / social benefits / costs? What broad scenarios exist for the adoption of “data exclusivity” / EU intellectual property protection and how does the impact vary by scenario? What broad scenarios exist for the adoption of “data exclusivity” / EU intellectual property protection and how does the impact vary by scenario? What actions might the various players consider to prepare for the likely changes? What actions might the various players consider to prepare for the likely changes?

4 Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 4 TPA-XCL-TurkeyData PG Adopting Various Views and Insights PhRMA (2 meetings) PhRMA (2 meetings) U.S. Department of Trade U.S. Department of Trade U.S.-Turkish Council U.S.-Turkish Council Pfizer Pfizer U.S. EU-Commission EU-Commission Turkish Representation in EU Turkish Representation in EU EFPIA EFPIA EGA EGA Europe Merck Sharp and Dohme Merck Sharp and Dohme GSK GSK Pfizer Pfizer Eczacibasi Eczacibasi Fako Fako YASED YASED Government Departments: Government Departments: –Patent office –Ministry of Foreign Affairs –Ministry of Economic Affairs Association of Research- Based Companies Association of Research- Based Companies Turkey We have discussed our approach with multiple organizations to ensure various perspectives / insights are captured

5 Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 5 TPA-XCL-TurkeyData PG Steering Committee Steering Committee included both representatives of the multinationals/original manufacturers and local generic manufacturers from Turkish Pharmaceutical Manufacturers Association.  Members Faik Somer - Merck Sharp & Dohme Faik Somer - Merck Sharp & Dohme Muhtar Tanrıöver - Glaxo SmithKline Muhtar Tanrıöver - Glaxo SmithKline Sedat Birol - Eczacıbaşı Sedat Birol - Eczacıbaşı Nurettin Turan - Fako Nurettin Turan - Fako

6 Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 6 TPA-XCL-TurkeyData PG Bottom-Up Approach Macroeconomic Impact Microeconomic (Firm level) Impact Healthcare / Social Security Costs Employment GDP contribution of industry Global industry competitiveness FDI flows Access to innovation Patient welfare Compliance to Multinational Standards Industry structure, entry / exit Market shares, concentration ratio Generic producers / innovators profitability — pipeline dynamics Firm level / industry growth Investments, R&D Rules of Competition in Knowledge Economy European Union Requirements Turkey (and Developing Nations) Point of View Innovators Point of View Generic Industry’s Point of View Our bottom-up approach has allowed an assessment of both macroeconomic and microeconomic impact using a subset of the following factors

7 Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 7 TPA-XCL-TurkeyData PG Aligning Multiple Perspectives and Interests Five Points of View and Interests World Trade Organization European Union Turkey Government Multinationals Local Pharma Industry Intellectual property is expensive and a critical differentiator in knowledge based competition, WTO members must respect the basic requirements Intellectual property is expensive and a critical differentiator in knowledge based competition, WTO members must respect the basic requirements Turkey must respect its obligation of the TRIPS agreement that it signed in 1995 Turkey must respect its obligation of the TRIPS agreement that it signed in 1995 Data protection should have been applied from 1 January 2000 Data protection should have been applied from 1 January 2000 Ensure member countries adopt WTO (TRIPs) rules Ensure member countries adopt WTO (TRIPs) rules Protect interests of all companies located in member countries Protect interests of all companies located in member countries Views Turkey’s progress with concern: Views Turkey’s progress with concern: –Behind schedule in adopting the TRIPS agreement –Incomplete in meeting the customs union agreement –Behind schedule in meeting EU membership provisions Become a qualified candidate for EU membership as soon as possible Become a qualified candidate for EU membership as soon as possible Adopt international intellectual property rules as soon as possible, while ensuring: Adopt international intellectual property rules as soon as possible, while ensuring: –Disruption of local industry is minimal –Social and government costs do not increase –Consumers / patients have access to medical innovation –FDI continues to increase Enhance global reach of their intellectual capital and spread costs of innovation across markets Enhance global reach of their intellectual capital and spread costs of innovation across markets Participate in markets that respect international IP rights Participate in markets that respect international IP rights Turkey must adopt data exclusivity as per TRIPS agreement of 1995 Turkey must adopt data exclusivity as per TRIPS agreement of 1995 Enable build up of robust health care sector that adheres to high quality / technology standards Enable build up of robust health care sector that adheres to high quality / technology standards “Phase In” into the new environment so as to co-exist as a low cost / generics provider “Phase In” into the new environment so as to co-exist as a low cost / generics provider Adoption of data exclusivity and EU rules must be linked to the date of accession Adoption of data exclusivity and EU rules must be linked to the date of accession Ensure they continue to play crucial roles in the Turkish health care industry Ensure they continue to play crucial roles in the Turkish health care industry However, multiple views and interest make the “Data Exclusivity” issue complex

8 Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 8 TPA-XCL-TurkeyData PG Data Exclusivity Requirements in the Context of Various Agreements Three different interpretations of likely application of Data Exclusivity Source: EU Website, WTO Website, southcentre.org, …… EC-Turkey Customs Union Agreement 2/97 Specifies EU community laws that need to be implemented into Turkish law, in order to remove all technical barriers to trade by 1 Jan 2001 Specifies EU community laws that need to be implemented into Turkish law, in order to remove all technical barriers to trade by 1 Jan 2001 –Includes detailed specs by type of goods — motor vehicles, food, medicinal products, agricultural and construction equipment, household appliances, etc. –Annex II, chapter XIII, relates to medicines and specifies that 6 or 10 years of data exclusivity needs to be implemented by 1 Jan 2001, as per EU law 65/65/EEC TRIPS Agreement with WTO 1995 Covers all aspects of IP protection including copyrights, trademarks, patents and undisclosed information (data protection) Covers all aspects of IP protection including copyrights, trademarks, patents and undisclosed information (data protection) Turkey agreed to protect all undisclosed data (Article 39.3) Turkey agreed to protect all undisclosed data (Article 39.3) No requirement on data exclusivity No requirement on data exclusivity EC-Turkey Customs Union Agreement 1/95 Harmonize Turkey’s legislation for full free movement of goods with EU by 1 Jan 2001 Harmonize Turkey’s legislation for full free movement of goods with EU by 1 Jan 2001 Two requirements relating to data protection Two requirements relating to data protection –Implement TRIPS by 1 Jan 1999 –Remove technical barriers to trade by 1 Jan 2001 Implement TRIPs by 2000 (because of 5 year transition period for developing country) Implement TRIPs by 1999 Implement Data Exclusivity by 2001 Agreements Implications of Data Exclusivity

9 Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 9 TPA-XCL-TurkeyData PG Aligning Multiple Perspectives and Interests Unified View Is Critical to Resolution of Outstanding Issues Multiple Interests Generics Generics –“Phase in” into new environment Innovators Innovators –Enhance global reach Turkish Government Turkish Government –Qualify for EU accession and manage the industry transition while implementing DE EU EU –Ensure member countries adopt WTO rules WTO WTO –Ensure global standards in protection of undisclosed information Unified View Develop a sound logic structure to classify and identify the molecules potentially affected by DE Develop a sound logic structure to classify and identify the molecules potentially affected by DE Develop different scenarios for DE application based on the most likely combination of the critical variables such as length of DE (6 vs. 10), price impact, etc. Develop different scenarios for DE application based on the most likely combination of the critical variables such as length of DE (6 vs. 10), price impact, etc. Understand the impact of the different scenarios on the industry as well as on health care costs Understand the impact of the different scenarios on the industry as well as on health care costs Understand the current impact as well as potential future impact Understand the current impact as well as potential future impact International Connectivity Requirements TRIPs TRIPs EU / Multinationals enhanced involvement EU / Multinationals enhanced involvement Economic Vibrancy of Local Industry Wealth Creation Wealth Creation Employment Employment Balanced Development Balanced Development Social Costs & Benefits Healthcare Healthcare Dislocation of industry Dislocation of industry Consumer access to innovation Consumer access to innovation In light of the multiple perspectives on Data Exclusivity, an objective and unified view is critical to resolving the outstanding issues

10 Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 10 TPA-XCL-TurkeyData PG Affected Active Substances Scenario Specification Range of Assumptions Critical Variables Logic Structure Structure of the Approach Classifies the various pharmaceutical products into various categories which might differently impact healthcare cost and pharmaceutical industry structure for different interpretations, policies, and implementation of Data Exclusivity requirements Identifies specific variables, e.g., period of Data Exclusivity, defining uncertainties surrounding interpretations and implementation of Data Exclusivity requirements Defines range of possibilities for each of the variables of Data Exclusivity for a 6- year vs. 10-year period Specifies various likely combinations of assumptions of the critical variables which will reflect likely Data Exclusivity application scenarios Impact of Data Exclusivity? –Immediate –Future Zeros in on those active pharmaceutical ingredients which will be affected by the different scenarios of DE application 5 We have developed a rigorous approach to analyzing the potential impact of implementing data exclusivity

11 Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 11 TPA-XCL-TurkeyData PG * Potentially affected only if data exclusivity is allowed to run beyond patent ** In case of multiple registrations (i.e., additional strength / form, new uses), first registration is considered as data exclusivity does not apply to subsequent registrations in EU with the exception of France. Issue is still being debated in EU (including harmonized 10+1 year) and is likely to be resolved in the near future. New uses currently get 3 years of additional data exclusivity in the U.S. *** As there is a significant overlap between the products in pipeline and sold in EU- and U.S.-only products in EU will be considered Registered Pre-Year X Not Sold in Turkey Sold in EU / U.S.*** In EU / U.S.*** Pipeline Originals Patented* Not Patented Registered Post-Year X** Generics Sold in Turkey Originals and generics both currently in the market Only originals in market today — may face generics in future Originals not yet in Turkey — may enter market and may face generics in future Future Impact (Qualitative / Quantitative Assessment via Case Studies and Model) Immediate Impact (Quantitative Assessment via Model) Logic Structure 1 Our assessment will reflect an assessment of immediate, potential future and indirect impacts Modeling Impact of Data Exclusivity Immediate vs. Future Impact

12 Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 12 TPA-XCL-TurkeyData PG Logic Structure: Classification of Pharmaceutical Products in Turkey The following decision tree describes the logic of the classification process and highlights the areas affected by Data Exclusivity * Potentially affected only if data exclusivity is allowed to run beyond patent ** In case of multiple registrations (i.e., additional strength / form, repeat use), first registration is considered as data exclusivity does not apply to subsequent registrations in EU with the exception of France. Issue is still being debated in EU (including harmonized 10+1 year) and is likely to be resolved in the near future. New uses and new forms of the active substance currently gets 3 years of additional data exclusivity in the U.S. *** As there is a significant overlap between the products in pipeline and sold in EU- and U.S.-only products in EU will be considered 3a 3b3b 4b4b 4a 1 2 Sold in Turkey Not Sold in Turkey Sold in EU / U.S.*** In EU / U.S.*** Pipeline Manufactured in Turkey Imported to Turkey Registered Pre-Year X** Originals Patented* Not Patented Registered Post-Year X** Description No impact area Sold in Turkey, registered post-Year X Marketed by generic manufacturers –e.g., Ator, Vigrande, Osteomax Generics Sold in Turkey, registered post-Year X Marketed by innovator firms –e.g., Lipitor, Pantpas, Telfast Sold in Turkey, registered post-Year X Marketed by innovator firms –e.g., Relpax Not sold in Turkey or EU / US Developed by innovator firms Not sold in Turkey, sold in EU / U.S. Marketed by innovator firms –e.g., Edronax Universe of Pharma Products Logic Structure 1

13 Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 13 TPA-XCL-TurkeyData PG A range of variables and potential assumptions Critical Variables of Immediate Impact Model Range of Assumptions 23

14 Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 14 TPA-XCL-TurkeyData PG Classification of Pharmaceutical Products for Different Registration Dates Sold in Turkey Not Sold in Turkey Sold in EU / U.S. In EU / U.S. Pipeline Manufactured in Turkey Imported to Turkey Registered Pre-Year X Registered Post-Year X Year X = 1995–1998 Year X = 1995–1998 –No legal commitment by Turkey –Applicable only if Turkey applies data exclusivity retrospectively from start year –Early entry by Turkey into EU might create some legal issues vs. specific molecules launched in this date range (e.g., generics in Turkey but not in EU) –General consensus in the industry that data exclusivity start year will not be before 1999 Year X = 1999 Year X = 1999 –Turkey–EU Association Council Decision No 1 / 95 (intellectual property rights) –TRIPS will be implemented by 1999 Year X = 2000 Year X = 2000 –TRIPS Agreement –Developing countries have 5 years to implement (by 2000) Year X = 2001 Year X = 2001 –Turkey–EU Association Council Decision No 2 / 97 (removal of technical barriers)  Turkey committed to remove technical barriers to trade by 2001 with Turkey-EU Association Decision No 1/95  EEC Directive 65 / 65 (data exclusivity) is among the rules and regulations to be implemented –Decision No 2 / 97 is a commitment by Turkey to implement data exclusivity by January 2001 Universe of Pharma Products

15 Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 15 TPA-XCL-TurkeyData PG Scenarios for Immediate Impact Location of Registration Length of Data Exclusivity Date of Registration Post-YEAR X, within Each Scenario TurkeyTurkey or EU* * Whichever is earlier Source: Monitor Analysis 6 Years 10 Years SCENARIO 1 SCENARIO 2 SCENARIO 3 SCENARIO – or later Most Likely Cases Scenario Specifications 4

16 Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 16 TPA-XCL-TurkeyData PG Potentially Affected Products Due to Data Exclusivity * Withdrawn from the market in 2002, excluded from the impact analysis ** Bulk of the sales go through the tendering process, which is not reflected in the IMS data, but taken into account in the impact analysis *** Bristol Myers Squibb Note: Excludes SSK expenditure Source: IMS Health, Ministry of Health,Monitor Analysis At most up to 10, and at least 3 active substances could potentially be affected with implementation of Data Exclusivity 1B 1A 2B 2A T E Active Substances Affected Length of Data Exclusivity Location of Registration 4

17 Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 17 TPA-XCL-TurkeyData PG Immediate Impact — Value Shift in Revenues TurkeyTurkey with EU Data Exclusivity Period Location of Registration 6 Years 10 Years Data Exclusively Start Year (+7%) (+5%) (+2%) (+1%) (0%) (+7%) (+4%) (+1%) (0%) Most Likely Cases $ (MM) Original GainsGeneric Losses * ??? Data Exclusively Start Year (+3%) (+1%) (0%) (+2%) (+1%) (0%) Most Likely Cases $ (MM) Data Exclusively Start Year (+7%) (+5%) (+2%) (+1%) (0%) (+7%) (+4%) (+1%) (0%) Most Likely Cases $ (MM) Data Exclusively Start Year (+5%) (+3%) (+1%) (0%) (+4%) (+3%)(+2%) (+1%) (0%) Most Likely Cases $ (MM)

18 Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 18 TPA-XCL-TurkeyData PG Immediate Impact — Increase in Healthcare Costs TurkeyTurkey with EU* Length of Data Exclusivity Location of Registration 6 Years 10 Years Most Likely Cases Data Exclusively Start Year $ (MM) PublicPrivate * Whichever is earlier; ** ??? Source Monitor Analysis Most Likely Cases Data Exclusively Start Year $ (MM) Most Likely Cases Data Exclusively Start Year $ (MM) Most Likely Cases Data Exclusively Start Year $ (MM)

19 Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 19 TPA-XCL-TurkeyData PG Future Impact: Multiple Uncertainties Will Drive Competitive Responses(?) Data Exclusivity Requirements? New Governance Guidelines on Healthcare Past / Current Market Behavior Future Market Behavior? Product / Market Strategy? Pipeline Management? Alliances? Pricing? Registration Speed? Understanding and Extending the Past Capturing the Range of Likely Responses in the New Environment vs.

20 Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 20 TPA-XCL-TurkeyData PG Likely Changes in Competitive Behaviour in the Pharmaceutical Industry Time Degree of Intensity of Competitor Behaviour Transition Phase (5–6 Years) Uncertainties associated with market and competitive responses Range of Possibilities Post Data Exclusivity “Market Order” Extremely intense competitive behaviour Rapid introduction of new molecules Intense price competition from generics in response to recent changes in government’s reimbursement policy Improved registration speed to EU standards (Recommended time in Turkey-EU Association Decision 2/97 is 210 Days) Marginal change in competitive behaviour Marginal increase in introduction of new molecules from historical numbers Price competition modest *In view of the discontinuous nature of change Data Exclusivity may spur in the marketplace, the assumptions for the assessment of future impact must take into account extreme outcome, while not ignoring, but not influenced by past market behaviour

21 Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 21 TPA-XCL-TurkeyData PG Potential Future Impact *Initial application of the molecule only, MRP **Azelaic Acid is registered in EU after 1995, but before 1995 Source: IMS Health, MRPFG Product Index, Monitor Analysis Original Product Registrations in EU and Turkey Post-1995, End of 2002 Likely Dynamics in the Future Generics might enter to compete against originals Originals in EU (not yet in Turkey) which might enter Turkey There are a large number of current molecules that may potentially be affected

22 Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 22 TPA-XCL-TurkeyData PG Critical Variables of Future Impact Model * Assumptions based on variables estimated by analyzing what would have happened if 6 year data exclusivity was implemented between these years ** Reflects views of some industry insiders regarding future environment in view of more vibrant environment resulting from recent policy shifts 1, 2, 3 Check appendix for rationale of assumptions Note: 10 year case will not be analyzed due to difficulties in forecasting the time-horizon. Furthermore, patent protection in later stages will minimize the impact of additional 4 year protection provided by 10 year Data Exclusivity Range of Assumptions

23 Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 23 TPA-XCL-TurkeyData PG Range of Possibilities 2.3 Historical Analysis of Number of Active Substances That Would Have Been Affected, Depending on Registration Location* Assumption 1 Velocity of Introduction similar to historical average 3 X 2 Assumption 2 Velocity of Introduction higher than historical average reflecting some industry insiders’ views about future environment 2.35 Average Price Differential29% Median Price Differential30% Average Price Differential68% Median Price Differential54% Price Differential Number of Affected Molecules

24 Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 24 TPA-XCL-TurkeyData PG Range of Possibilities — Active Substance Sales Evolution Sales Evolution of Active Substance $MM Y3–Y6 CAGR 18% 12% 30% 28% 16% 59% Critical Assumptions 3 molecule 1 year time gap Start 2004 Critical Assumptions 5 molecule 2 year time gap Start 2004 Generic Original Active Substance Original Generic

25 Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 25 TPA-XCL-TurkeyData PG Future Impact of Data Exclusivity — Industry Case 2 Case 3 Case 1 Conservative Moderate Aggressive * Number of affected molecules are 7 for the first 2 years, 6 next 2 years, 4 in the last year. Average molecule sale comparable to 3 molecule case Note:Market size is forecasted based on 4-year CAGR. Two alternative cases are considered for ranges given under percentage of sales. First case assumes market share of generics vis a vis originals will remain the same. Second case assumes all the growth during the 6 year period will come from originals Source: IMS, Monitor Analysis

26 Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 26 TPA-XCL-TurkeyData PG Future Impact of Data Exclusivity — Health Care Case 2 Case 3 Case 1 Conservative * Number of affected molecules are 7 for the first 2 years, 6 next 2 years, 4 in the last year. Average molecule sale comparable to 3 molecule case Note:Market size is forecasted based on 4-year CAGR. Forecast used to calculate percentage of sales is the total market size for pharmaceutical products in the case of increase in health care cost and total state spending on pharmaceutical products for cost to the state Source: IMS, Monitor Analysis Moderate Aggressive

27 Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 27 TPA-XCL-TurkeyData PG Indirect Effects Need Equal Amount of Attention PositiveConcerns Pharmaceutical Industry General Economy More forward looking manufacturers might be able to participate in a more dynamic marketplace Foreign direct investment might increase Generic manufacturers might lose export opportunities of active ingredients Short-term disruption in employment (may not be significant because of migration to generic manufacturers) Sound DE / IP policy will contribute to its international stature Trading relationships in sectors which are export intensive (auto, textiles, glass) Development of local entrepreneurship which is in tune with global partnerships None, except how disruption of pharma industry might impact the overall economy Impact of Application of Data Exclusivity

28 Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 28 TPA-XCL-TurkeyData PG Next Steps Specific Steps Specific Guidelines for Industry on Intellectual Property Management in Turkish Industry Outcome Policy and Industry Action Programs for DE Implementation Essential Next Steps Tailored Presentations in D.C., Brussels, and International Agencies Define Data Exclusivity Policy vis-à-vis Overall IP Policy Evolve a Communication Strategy to All Concerned for a Clear Path Forward Develop a working group for “DE” implementation

29 Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 29 TPA-XCL-TurkeyData PG Concession Industry Reconstruction Requirements Fact Based Guidelines on PP Three Proposed Exercises Must Integrate Different Points of View and Interest Toward a Comprehensive Policy Engine “ A Comprehensive Policy Engine on Intellectual Property Management ” World Trade Organization Intellectual property is expensive and a critical differentiator in knowledge based competition, WTO members must respect the basic requirements Nations must respect its obligation of the TRIPS agreement Protect interests of all companies located in member countries Turkey Become respected for WTO membership as soon as possible Adopt international intellectual property rules as soon as possible, while ensuring: –Disruption of local industry is minimal –Social and government costs do not increase –Consumers / patients have access to medical innovation –FDI continues to increase Innovators Enhance global reach of their intellectual capital and spread costs of innovation across markets Participate in markets that respect international IP rights Turkey must adopt data exclusivity as per TRIPS agreement of 1995 Enable build up of robust health care sector that adheres to high quality / technology standards Generic Manufacturers “Phase In” into the new environment so as to co-exist as a low cost / generics provider Adoption of data exclusivity and IP rules must be linked to the some benefits / conditions(?) Ensure they continue to play crucial roles in the local health care industry Industry Strategy

30 Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 30 TPA-XCL-TurkeyData PG Text box for conclusion This is the “Help!” Page: Please do not Cut! Note: Source: Title“Quote” –Source Tagline Text Text –Text c-point

31 Copyright © 2003 Monitor Company Group, L.P. — Confidential — XXXCAS-COD-Prez-Date-CTL 31 TPA-XCL-TurkeyData PG Title 28 pt Make text as large as possible for legibility Make text as large as possible for legibility Simplify projected slides, keeping the key points and data Simplify projected slides, keeping the key points and data Accompany presentation with detailed handouts Accompany presentation with detailed handouts

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