14
EFPIA-Japan and IMS drug market forecast for Japan based on current drug pricing policy proposals 31 May, 2017 Ole Mølskov Bech Chair, EFPIA Japan
EFPIA-Japan and IMS drug market forecast for Japan based on current drug pricing policy proposals
31 May, 2017
Ole Mølskov Bech
Chair, EFPIA Japan
2 www.efpia.eu
The drug market in Japan will be flat or slightly declining over the next decade
Japan likely to be the lowest growing market among major markets
The analysis clearly suggests: Japan can continue to reward innovation AND make
budget savings
Lessons from the drug market forecasts
3 www.efpia.eu
The drug market in Japan has grown only modestly in recent years
0
2
4
6
8
10
12
2013 2014 2015 2016
9.8 9.7 10.6 10.3
5.5%
-0.9%
9.1%
-2.7%
CAGR 1.7% (2013-2016)
2017Q1: -7.2%
All Rights Reserved. Confidential and Proprietary.
Source: IMSBase JPM *1 EFPIA-QuintilesIMS Forecast *2 Forecast since project started before end of FY 2016. Actual figure was -3.6%
*2
Mar
ket
size
(U
nit
: Tn
Yen
)
Reprinted with permission
Reprinted with permission
Drug budget is only 20-25% of healthcare spending, and is growing more slowly than the other 75%+
Market growth (comparison b/w medical expenditure and drug expenditure)*1,2
60
70
50
0
10
40
FY2025 FY2012
-0.14%
3.28%
Mar
ket
size
(U
nit
: Tn
Yen
) Drug expenditure (Result of this project) Medical expenditure (Forecast by MHLW)
All Rights Reserved. Confidential and Proprietary.
Source: IMSBase JPM, MHLW Social Security Council Medical Insurance Committee, *1 “References II on National Assembly for Social Security System Reform ‘Arrangement of discussion’ (Medical / nursing care field)”, 2013/5/16 *2 Recalculation of Quintiles IMS estimation of drug expenditure 2016-2026, “Base” scenario forecast on this project, adjusting time period and including real data for 2012-2015
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New drug prices in Japan are now low by international comparison
2011 2012 2013 2014 2015 2016
+13% +25% +3% -20% -20% -11%
-6% -5% -36% -23% -27% -31%
vs.
vs.
Comparison of Median Prices between Japan, EU3, and US
Source: PhRMA
Note: Analysis of new products listed in Japan from 2011 to August 2016 that are also listed in France, Germany, or the UK (n
= 146). EU3 price is the average price across France, Germany, and the UK. US price reflects the average manufacturer
rebate on branded products in Medicare Part D (35%) as estimated by the IMS Institute. Foreign currency rate is based on
moving average in the year before listing in Japan, consistent with MHLW methods.
Source: IMS Institute, 2016, Estimate of Medicare Part D costs after accounting for manufacturer rebates;
Reprinted with permission
Japan will be the market with the lowest growth
All Rights Reserved. Confidential and Proprietary.
8%
2%
5% 5% 5%
5%
-1%
2% 2% 2%
-2%
0%
2%
4%
6%
8%
10%
US Japan Germany UK France
CAGR 2016－21
US 5~8%
Japan -1~2%
Germany 2~5%
UK 2~5%
France 2~5%
Italy 2~5%
Spain 1~4%
Canada 2~5%
Developed 2~5%
China 6~9%
Brazil 6~9%
India 10~13%
Russia 6~9%
Turkey 10~13%
Mexico 3~6%
Emerging 6~9%
Source: QuintilesIMS Market Prognosis 1Q 2017 ＊1 Forecast by unified model for all countries. Forecasting methods and market definitions are different from EFPIA-QuintilesIMS forecast
7 www.efpia.eu
The Price Maintenance Premium has worked! (1) The Drug Lag has been reduced considerably
18%
48%
71%
82%
52%
29%
41.5 mths 5.0 mths 15.0 mths Median
Yr. of Japanese application
Application lag – current status and future trend *1,2
2015-2019 (prospective)
2010-2014 2006-2009
Lag of under 1 year
*1 Covers the 27 respondents with products applied for or to be applied for in Japan (excluding products subject to a development request etc.) *2 Covers those of the above products with an identifiable application lag [Source] ‘Follow-up survey on impact on new drug development of the price maintenance scheme’ (PhRMA) conducted at the end of 2014 on 29 major Japanese, US and European firms [Definition of terms] Application lag: The delay (in months) in the filing of an applications in Japan following the earliest application filed amongst the countries of the
US and EU5 (UK, France, Germany, Italy and Spain)
Source: PhRMA
Lag more than 1 year
8 www.efpia.eu
The Price Maintenance Premium has worked! (2) Investment in development in Japan has risen considerably
0
200
400
600
800
1,000
1,200
1,400
2004 2006 2008 2010 2012 2014 2016
Dru
gs in
develo
pm
en
t
Japan Development Pipeline
Preclinical Phase I Phase II Phase III
Annual Growth 2.3%
Annual Growth 11.1%
Price Maintenance Premium 825 CLINICAL TRIALS*
18,095 SITES**
# of clinical trial conducted
201～ 101～200 31～100
(+21% since 2013)
(+55% since 2013)
Number of EFPIA & PhRMA sponsored clinical trials 2015
Source: PhRMA
9 www.efpia.eu
• By sales, only half of products eligible for PMP receive the premium
• PMP is awarded to both domestic and foreign companies
9
Price Maintenance Premium rewards innovation, not foreign companies! And not all innovations receive the premium
51%
49%
適応対象売上 適応対象外売上
373
52
51.5
450
38
54.5
0% 20% 40% 60% 80% 100%
製品数
会社数
総加算額
内資系 外資系
Bio yen Bio yen
companies
Products Products
All Rights Reserved. Confidential and Proprietary.
EFPIA/QuintilesIMS
RISFAX (MHLW reports to LDP Healthcare committee)
Sales with PMP Sales without PMP
though eligible
companies
Premium
Total
Number of
companies
Number of
products
Domestic Foreign
Data: 2016 Data: FY 2016
Reprinted with permission
10 www.efpia.eu
EFPIA acknowledges that sustainability of universal healthcare coverage means that healthcare services need to be managed more efficiently across the entire value chain to control costs
EFPIA is willing to support the proposal for an immediate price revision following market expansion by additional indications (provided that it is restricted to cases where the product has huge sales and where the additional indication(s) increases sales significantly)
EFPIA is willing to support annual re-pricing (provided that adjustment is limited to LLP and Gx discounting from the NHI price beyond a certain percentage)
EFPIA is open to discussing alternatives to the cost-plus price-setting method
EFPIA is open to alternative measures of the US reference price
EFPIA is willing to make a contribution to sustainability of healthcare system… IF the price
maintenance premium is continued
All Rights Reserved. Confidential and Proprietary.
Market growth in high case (The entire market, unit: ¥Tn) *1
10.3
0.5
1.9
0.9
0.8
6.1
’25
10.4
0.5
1.9
1.0
0.9
6.1
’24
10.0
0.5
1.9
1.1
0.8
5.7
’23
10.0
0.6
1.9
1.2
0.7
5.6
’22
9.7
0.6
1.9
1.3
0.6
5.3
’21
9.7
0.6
1.9
1.4
0.6
5.2
’20
9.7
0.6
1.9
1.5
0.7
5.0
’19
10.2
0.6
1.8
1.8
0.7
5.2
’18
10.3
0.6
1.7
2.0
0.4
5.5
’17
10.6
0.6
1.7
2.4
0.2
5.6
’16
10.3
0.6
1.5
2.7
0.0
5.4
’26
10.6
0.7
1.4
3.1
5.4
’14
9.7
0.6
1.2
3.2
4.7
’15
9.8
0.7
1.1
3.6
4.5
’12
9.3
0.7
0.9
3.6
4.2
’13 (FY)
Ox
LLP(b)
LLP(a)
Gx
Other
Source: IMSBase JPM
*1 Ox: Original products, LLP (a): generic drugs launched before 2016, LLP (b): generic drugs launched after 2017, or planned to be launched, Gx: Generic products
Reprinted with permission
Even the “high” case is for a broadly flat pharmaceutical market
High case assumes: (i) expansion of price maintenance premium to all eligible products; (ii) 5 more new drugs developed than in base or low cases; (iii) later achievement of 80% Gx rate;
(iv) annual price revision for LLP and Gx with large deviation; and (v) launch of highly innovative drugs ¥500 Bn / year at peak time
Reprinted with permission
12
11
10
9
8
7
1
0
10.6
’16
10.3
’15
10.6
’14
9.7
’13
9.8
’12
9.3
10.3
9.2
9.7
’19
9.0
9.7
10.2
’18
9.3
9.9
’17
-1.5% per year
’26
8.0
9.0
10.3
’25
8.1
9.1
10.5
’24
8.0
9.0
10.0
’23
8.1
9.0
10.0
’22
10.4
8.9
9.7
’21
8.3
9.0
9.7
’20
8.4
10.5
8.0
縮小シナリオ
基本シナリオ
拡大シナリオ
市場の成長 (シナリオ別)
(兆円)
(年度)
All Rights Reserved. Confidential and Proprietary.
Source: IMSBase JPM
All three scenarios in the IMS analysis conclude that the drug market will be flat or declining over the next decade
-2.5% per year
-0.3% per year
Differences include: - the low case assumes scrapping of
PMP - the high case assumes that all new
products receive the PMP Other assumptions explained in the following presentation
13 www.efpia.eu
• The analysis show that even in the optimistic high case, the drug market in Japan will be declining -0.3% p.a. during the coming 10 years
• Average annual growth is forecast to be -1.5% in the base case, and for the low case -2.5%
The drug market in Japan will be flat or slightly
declining over the next decade
• The EFPIA-J and QuintilesIMS forecast only focused on Japan and no direct comparison between this analysis and other markets can be made.
• However other analysis of other developed markets suggest they are likely to grow (+2% to +5% p.a. during the period 2016-21)
• With a declining market in Japan and growth in the rest of the world there is a risk Japan will be deprioritized for global investment and the drug lag might worsen again
Japan likely to be the lowest growing market among major markets
• The drug budget is already set to be well controlled, primarily as a result of existing measures and the higher Gx target
• Based on the EFPIA-QuintilesIMS simulation it is clear the PMP can be maintained while achieving the government’s desired control of the drug budget
The analysis clearly suggests: Japan can continue to reward
innovation AND make budget savings
Lessons from the drug market forecasts
THANK YOU
