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7/31/2019 Challenges of Pharma
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Challenges facing Major Pharma industries
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R&Das%o
fsales
RISING COST OF R&D
Source: Company data, Goldman Sachs Research estimates
Over $280 billion spent on R&D over last decade
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DIMINISHING NEW PRODUCT OUTPUT
Source: FactSet
New product launches have been disappointing
VytorinJanuvia
Zyprexa
Cymbalta
Humira
Simponi
OnglyzaEffient
MultaqSavella
Bystolic
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Sales
($'000)
Quarterly sales post launch
Vytorin Januvia Zyprexa Cymbalta Humira Simponi
Onglyza Effient Multaq Savella BystolicSource: Company data
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1995 1996 1997 1998 1999 2000 2001 2002 2003 2004* 2005* 2006* 2007* 2008* 2009*
REGULATORY HURDLES GETTING HIGHER
Source: FDA * *Beginning in 2004, these figures include new BLAs for therapeutic biologic products transferred f rom CBER to CDER
FDA NME approvals
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DAUNTING PATENT CLIFF
2010-2014: $92 billion in sales coming off patent (1/3 of total)
Source: IMS Health
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Sales($billion)
2010 Ari cept, Flomax, Taxotere
2011
Lipitor, Avair Diskus,
Plavix, Zyprexa, Levaquin
2012
Seroquel, Singulair, Actos,
Lexapro, Diovan, Geodon
2013 Oxycontin, Aciphex
2014
Nexium, Cymbalta,
Celebrex, Copaxone
Key products in expiry years
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HEALTHCARE REFORM INCREASED GOVERNMENT INTERVENTION
US government now pays for 50% of the $2.5trillion in national health spending
Government share of national health spending (NHE)Total versus pharmaceutical spending, 1965-2019E
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Total spending Pharma spending
Source: CMS National Health Expenditure (NHE), historical and projected.
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HEALTHCARE REFORM INCREASED GOVERNMENT INTERVENTION
Worsening state of the European economies brings incremental pricingpressure
Remains a very fluid situation that is difficult to assess but represents a realheadwind
Cited by several management teams during 2Q earnings calls, at least in 2010 and
2011.Reimbursement cuts could be magnified by reference pricing,parallelimportation and increased generic market share
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Healthcarespendinggrowth
Primarydeficit
Primary deficit Healthcare spending growth
GermanUnification
Germany as an example of how government deficits lead to decline in healthcare spendinggrowth
Source: Datastream, Goldman Sachs Research estimates.