Business environment for WHO prequalified medicines Arab Union of the Manufacturers of Pharmaceuticals and Medical A

1. Business environment for WHO prequalifiedmedicines Arab Union of the Manufacturers of Pharmaceuticals and Medical Appliances Amman, Jordan, 13 June 2013 Jacqueline Sawyer

2. page n °2 Business environment for WHO-PQedmedicines | Amman | June 2013 • Outline • General medicines environment • Medicines markets (medicines procured through international donor funds via e.g. Global Fund to Fight HIV/AIDS, TB and Malaria, UNITAID, UK Department for International Development, USAID) • Indirect benefits of prequalification • Investment needed for prequalification • Investment needed for prequalification, depending on type of manufacture • Business decision process

3. page n °3 Business environment for WHO-PQedmedicines | Amman | June 2013 • The general medicines business environment • In treatment/healthneeds in PQP'scurrent areas of therapeuticinterestconstant evolution due to: • development of new medicines/dosages/ strengths, e.g. to respond to • simplifytreatment, improveadherence (e.g. fixed-dose, paediatric) • drugresistance • public-privatepartnerships (e.g. antimalarials) • In regulation: • harmonized medicinesregulation: international regulationsbecoming the norm (no escape!) • sharing of regulatory information • sharing of regulatorytasks

4. page n °4 Business environment for WHO-PQedmedicines | Amman | June 2013 • What does market looks like for HIV/AIDS? • 2012: 8 million patients (low-/middle-income countries) treated with quality-assuredARVs • Market expansion: new WHO guidelines recommend earlier initiation of therapy generic accessible (GA) ARV market: today's 8 million would be 15 million tomorrow • New guidelines recommend single, preferred, 1st-line regimen of TDF + 3TC (or FTC) + EFV for adults, adolescents and older children • Will put pressure on FPP and API manufacturers Millions of patients on ARV treatment

5. page n °5 Business environment for WHO-PQedmedicines | Amman | June 2013 • HIV/AIDS: the opportunity • ARV market is large and growing • Newer ARVs (tenofovir-based combinations) still have reasonable price levels (from manufacturers' point of view) • Also: many opportunities in new formulations of leading medicines and several niche market opportunities, both for HIV treatment and treatment of related diseases and conditions

6. page n °6 Business environment for WHO-PQedmedicines | Amman | June 2013 What does the market look like for TB? Global Fund to Fight AIDS, TB and Malaria leading products in 2010: • Market is dominated by four (prequalified) products (67% market share), two 1st-line and two 2nd-line products • Prequalified products share of Global Fund anti TB market: 80% Global Fund leading products in 2012???: • Large number of products prequalified in 2012; analysis expected to show some shifts • Interest of TB manufacturers in seeking prequalification reflected market value? TB market leading products (Global Fund 2010)

7. page n °7 Business environment for WHO-PQedmedicines | Amman | June 2013 • Anti-TB medicines: the opportunity • Currently, 1st-line TB market is a stable market with stable prices • 2nd-line TB market is a growing with stable prices for leading 2nd-line products • Few companies supplying the leading 2nd-line products

8. page n °8 Business environment for WHO-PQedmedicines | Amman | June 2013 • What does the market look like for malaria? • Leading antimalarial artemether + lumefantrine fixed-dose combination (A+L FDC), Global Fund & UNICEF • Number tablets & patient share A+L FDC • M • Meanprice A+L FDC tablet Artemisin-based combinations: sales of WHO-prequalified artemisinin-based combination (ACT) medicines nearly 300 million individual treatment courses procured in 2012 (largely with international funds.

9. page n °9 Business environment for WHO-PQedmedicines | Amman | June 2013 • Antimalarials: the opportunity • The antimalarial market is large and growing • The price per tablet is relatively stable for the leading 1st-line medicine • A new entrant into this market has the opportunity to capture a significant market share • There are only a few leading products to focus on: • artemisinin-based fixed dose oral combination formulations • artemisinin-based fixed dose combination or co-blistered oral formulations • artemisinin-based fixed dose combination or co-blistered oral paediatric formulations, preferably dispersible • artemisinin-based single-ingredient formulations • few other antimalarial medicines (mefloquine, sulfadoxine + pyrimethamine)

10. page n °10 Business environmentfor WHO-PQedmedicines | Amman | June 2013 • Medicines procured through Global Fund

11. page n °11 Business environment for WHO-PQedmedicines | Amman | June 2013 What does the market look like for neglected tropical diseases? Albendazole (for low-income countries): 1 to 1.4 billion tablets a year for preventive chemotherapy in children (2 to 15 years). In 2011, reported used was 302 million tablets out of which 112 million were procured (rest = company donations). Anticipated scale up: to 600 million tables donated, and 400‒800 millionprocured (for children & adults). Main buyerstoday = UNICEF, World Bank, DFID, USAID and someNGOs. (Alsoused for animal health.) Praziquantal: global annualneedsestimated at around 660 million tablets a year and coverageexpected to scale up to thatlevel. Most international procurementfunded by abovedonors. (Alsoused for animal health.)

12. page n °12 Business environment for WHO-PQedmedicines | Amman | June 2013 • What does the market look like for reproductive health? • Donor medical contraceptives: market growth

13. page n °13 Business environment for WHO-PQedmedicines | Amman | June 2013 • What does the market look like for reproductive health? • Donor medical contraceptives: market growth

14. page n °14 Business environment for WHO-PQedmedicines | Amman | June 2013 • Profitability stronger than in other donor-funded therapeutic areas

15. page n °15 Business environment for WHO-PQedmedicines | Amman | June 2013 • "Missing" or few products: examples

16. page n °16 Business environment for WHO-PQedmedicines | Amman | June 2013 • First to market maintains strongest market share PQP approval year and 2007‒2010 market share Global Fund

17. page n °17 Business environment for WHO-PQedmedicines | Amman | June 2013 Prequalification opens the door to large markets Manufacturer Large institutional markets Other markets (e.g. USA) and benefits PQP approval

18. page n °18 Business environmentfor WHO-PQedmedicines | Amman | June 2013 • Business attractiveness: direct and indirect benefits

19. page n °19 Business environment for WHO-PQedmedicines | Amman | June 2013 • Evolution of a manufacturer

20. page n °20 Business environment for WHO-PQedmedicines | Amman | June 2013 What are the sources of cost for PQ approval (1)?

21. page n °21 Business environment for WHO-PQedmedicines | Amman | June 2013 • What are the sources of cost for PQ approval (2)? • Bioequivalence studies: • largest portion of the expenses; about half of companies used outside organizations, such as clinical research organizations or bioanalytical services companies, to carry out the work for them • Estimated: US$ 100,000 ‒ 1,000,000; average = c.US$ 500,000. • Formulation Development • If the formulation not already being manufactured, the specific formulation has to be developed. The cost of developing a new formulation varies. • Estimated US$ 150,000 ‒ 250,000, although could be much higher if formulation development is highly complex. • Lot Production • Critical step in PQ process is determining whether a company can consistently produce product that meets specifications and product claims. Requirement for 2 batches. Cost of a production lot varies depending on complexity of API and drug formulation. • Estimated US$ 50,000 per lot. • "Idle time"  • New facility idle during approval process (the time between producing the lots for the PQP application to the production of commercial products). Up to 2 years.

22. page n °22 Business environment for WHO-PQedmedicines | Amman | June 2013 What are the sources of cost for PQ approval (3)?

23. page n °23 Business environment for WHO-PQedmedicines | Amman | June 2013 Investments will vary depending on experience of company (1)

24. page n °24 Business environment for WHO-PQedmedicines | Amman | June 2013 Investments will vary depending on experience of company (2) • Manufacturers experienced in dealing with global regulatory agencies will have fewer investments in both capital and formulation development • Manufacturers with existing dossiers will have fewer investments to make • Formulation development may be necessary and depends upon the complexity of the medicine • Companies without a WHO GMP-standard facility, will require renovations to meet GMP standards • Companies new to the pharmaceutical industry will have to make major investments in capital infrastructure

25. page n °25 Business environment for WHO-PQedmedicines | Amman | June 2013 Investments1 for a global innovator with broad experience in stringent regulatory authority (SRA) approved products

26. page n °26 Business environment for WHO-PQedmedicines | Amman | June 2013 Investments1 for a local manufacturer with no stringent regulatory authority experience

27. page n °27 Business environment for WHO-PQedmedicines | Amman | June 2013 Investments1 for inexperienced manufacturers with little infrastructure

28. page n °28 Business environment for WHO-PQedmedicines | Amman | June 2013 • The business decisionprocess • A “PQ strategy” should not be seen in isolation but as a part of the company’s broader strategy that takes into account: • your geographic portfolio • your product portfolio • your target markets • the type of investments required (human and financial) • your company skills • market size and future demand • revenue potential • cost of applying for PQP • schedule • profit potential • degree of risk: no guarantee of securing tenders; forecasting can be challenging; expected time to approval (especially for small companies with limited SRA experience); the higher cost of producing quality products (e.g. 5 - 10% greater than for non-quality-assured products). • and is supported at highest level of company.

29. page n °29 Business environment for WHO-PQedmedicines | Amman | June 2013 • Useful information • Current treatment recommendations: Standard treatment guidelines for eligible medicines referenced in WHO invitations for EOI. Indications, dosage & recommended alternatives. • Competitors in the market and in the pipeline: WHO PQP list of prequalified products & products under assessment for WHO-prequalification: http://apps.who.int/ • Global Fund indicative lists: www.theglobalfund.org/en/procurement/quality#lists • Volumes procured, and at what prices: Historical pricing information can give an indication on where the markets are going. • WHO AMDS Global Price Reporting Mechanism (HIV drugs): http://apps.who.int/hiv/amds/price/hdd/ • Global Fund Price and Quality Reporting mechanism (PQR)(HIV, TB, malaria drugs): www.theglobalfund.org/en/procurement/pqr • MédecinsSans Frontières (MSF) – Untangling the Web of Antiretroviral Price Reductions. http://utw.msfaccess.org/downloads/documents • MSF –TB drugs under the microscope. http://www.msfaccess.org/our-work/tuberculosis/article/888 • Current pricing information for some products is available on line: UNICEF product catalogue with indicative prices : https://supply.unicef.org/ (excludes anti-TB drugs) • GDF product catalogue http://www.stoptb.org/gdf/drugsupply/pc2.asp • Expectedmarket outlook: E.g. UNITAID adopts a market-based approach to improve global access to key health products, and regularly publishes market landscapes for key health products. UNITAID HIV, Tuberculosis and Malaria Medicines Landscape. 2012. http://www.unitaid.eu/images/marketdynamics/publications/medicines_landscape_2012.pdf

30. page n °30 Business environment for WHO-PQedmedicines | Amman | June 2013 • In summary • PQP works with companies to improve the global availability of quality-assured medicines for populations in need • PQP is a key component of the value chain for medicines for developing countries • Application for prequalification is well-defined and consistent with applying for approval from other stringent regulatory authorities • PQP has both direct and indirect benefits to manufacturers • Direct: access to large institutional markets • Indirect: capacity building, access to global markets, social responsibility and improved image • But depending on a company’s experience with stringent regulatory authorities and quality manufacturing facilities, the investment to be made in seeking product prequalification ranges from minor to significant