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

2. 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 page n °2 Business environment for WHO-PQed medicines | Amman | June 2013

3. The general medicines business environment In treatment/health needs in PQP's current areas of therapeutic interest constant evolution due to:  development of new medicines/dosages/ strengths, e.g. to respond to o simplify treatment, improve adherence (e.g. fixed- dose, paediatric) o drug resistance o public-private partnerships (e.g. antimalarials) In regulation:  harmonized medicines regulation: international regulations becoming the norm (no escape!)  sharing of regulatory information  sharing of regulatory tasks page n °3 Business environment for WHO-PQed medicines | Amman | June 2013

4. What does market looks like for HIV/AIDS? page n °4 Business environment for WHO-PQed medicines | Amman | June 2013 Millions of patients on ARV treatment 2012: 8 million patients (low- /middle-income countries) treated with quality-assured ARVs 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, 1 st -line regimen of TDF + 3TC (or FTC) + EFV for adults, adolescents and older children Will put pressure on FPP and API manufacturers

5. 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 page n °5 Business environment for WHO-PQed medicines | Amman | June 2013

6. page n °6 Business environment for WHO-PQed medicines | Amman | June 2013 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) What does the market look like for TB?

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

8. 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 Mean price A+L FDC tablet page n °8 Business environment for WHO-PQed medicines | Amman | June 2013 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. Antimalarials: the opportunity The antimalarial market is large and growing The price per tablet is relatively stable for the leading 1 st -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) page n °9 Business environment for WHO-PQed medicines | Amman | June 2013

10. Medicines procured through Global Fund page n °10 Business environment for WHO-PQed medicines | Amman | June 2013

11. 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 million procured (for children & adults). Main buyers today = UNICEF, World Bank, DFID, USAID and some NGOs. (Also used for animal health.) Praziquantal: global annual needs estimated at around 660 million tablets a year and coverage expected to scale up to that level. Most international procurement funded by above donors. (Also used for animal health.) page n °11 Business environment for WHO-PQed medicines | Amman | June 2013

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

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

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

15. "Missing" or few products: examples page n °15 Business environment for WHO-PQed medicines | Amman | June 2013 Single ingredient or fixed-dose combination antiretroviral formulations for HIV/AIDS NameProduct typeStrengthPrequalified Under assessment Raltegavirtablet400 mg00 Etravirinetablet100 mg10 Abacavirtablet (scored)60 mg10 Efavirenztablet (scored)100 mg00 Tenofovir + efavirenz + lamivudine tablet 300 mg + 600 mg + 300 mg 11 Reproductive health medicines NameProduct typeSrengthPrequalified Under assessment Norethisteronetablet 350 micrograms 00 Oxytocininjection10 IU, 1-ml00 Etonogestrelimplant68 mg10

16. First to market maintains strongest market share page n °16 Business environment for WHO-PQed medicines | Amman | June 2013 PQP approval year and 2007 ‒ 2010 market share Global Fund Company Year PQP'd Share 2007- 2010 revenue 1200553% 2200335% 320055% 420071% 520092% 620082%

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

18. Business attractiveness: direct and indirect benefits page n °18 Business environment for WHO-PQed medicines | Amman | June 2013

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

20. What are the sources of cost for PQ approval (1)? page n °20 Business environment for WHO-PQed medicines | Amman | June 2013 Expenses Bioequivalence Studies Formulation development Lot Production Stability Studies Headcount On-Going Communications Local Regulatory Incidental Expenses Capital Costs Building or Upgrading Manufacturing Facilities Acquiring Land for the Manufacturing Facility Analytical Instrumentation Systems Upgrade

21. 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. page n °21 Business environment for WHO-PQed medicines | Amman | June 2013

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

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

24. page n °24 Business environment for WHO-PQed medicines | Amman | June 2013 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 Investments will vary depending on experience of company (2)

25. page n °25 Business environment for WHO-PQed medicines | Amman | June 2013 Investments 1 for a global innovator with broad experience in stringent regulatory authority (SRA) approved products

26. page n °26 Business environment for WHO-PQed medicines | Amman | June 2013 Investments 1 for a local manufacturer with no stringent regulatory authority experience

27. page n °27 Business environment for WHO-PQed medicines | Amman | June 2013 Investments 1 for inexperienced manufacturers with little infrastructure

28. The business decision process 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. page n °28 Business environment for WHO-PQed medicines | Amman | June 2013

29. 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/http://apps.who.int/ Global Fund indicative lists: www.theglobalfund.org/en/procurement/quality#listswww.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/ 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 www.theglobalfund.org/en/procurement/pqr Médecins Sans Frontières (MSF) – Untangling the Web of Antiretroviral Price Reductions. http://utw.msfaccess.org/downloads/documents http://utw.msfaccess.org/downloads/documents MSF – TB drugs under the microscope. http://www.msfaccess.org/our- work/tuberculosis/article/888http://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)https://supply.unicef.org/ GDF product catalogue http://www.stoptb.org/gdf/drugsupply/pc2.asphttp://www.stoptb.org/gdf/drugsupply/pc2.asp Expected market 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 http://www.unitaid.eu/images/marketdynamics/publications/medicines_landscape_2012.pdf page n °29 Business environment for WHO-PQed medicines | Amman | June 2013

30. 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 page n °30 Business environment for WHO-PQed medicines | Amman | June 2013