OSVAH PHARMACEUTICAL CO.

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Global Pharmaceutical Market (2013-17) A Summary

DR. M. ABEDIAN
July 2013

Global Pharmaceutical Market Value & Volume Life Science & Pharma Trends for 2013

Which Disease Areas Dominate?

FDA Approvals

Global Pharmaceutical Market Value and Volume

Pharmaceutical Sales The world pharmaceutical market was worth an estimated 667,653 million ($ 857,800 million) at ex-factory prices in 2012. The North American market (USA & Canada) remained the world's largest market with a 41% share, well ahead of Europe and Japan.

BREAKDOWN OF THE WORLD PHARMACEUTICAL MARKET - 2012 SALES

Africa, Asia (excluding Japan) & Austaila; 14.70% Latin America; 5.90%

North America (USA & Canda); 41%

Japan; 11.70%

Europe; 26.70%

Chart 1 Breakdown of the world pharmaceutical market in 2012

The BRIC nations, with China in the lead followed by Brazil, Russia and India, are set to power growth in the global pharma market, along with countries such as Poland, Argentina, South Africa, Turkey and Vietnam. Growth in the pharmaceutical sector is expected to be 15% - 17% a year in those countries. By contrast, growth in developed markets will struggle to reach 5%. Growth in the US is forecast to be 3%-5% through the remainder of 2013, growth in the UK, Germany, Italy and Spain is expected to be 1%-3%. (Source: IMS Health Market Prognosis).

Life Science & Pharma Trends for 2013

Global Pharma Expansion Demand and Greater Access to Medicines Advanced research and development, in combination with emerging markets, will continue to rapidly push new and innovative therapies to reach more patients in new markets around the world. The global pharmaceutical market is steadily growing, with sales expected to reach $989 billion by the conclusion of 2013 a year-on-year increase of 3-4%, while future growth rates are estimated between 5-7% to reach $1.2 trillion in 2016. The U.S. will remain the single largest pharmaceutical market, with 3-5% growth expected next year. U.S. pharma sales are expected to reach $350 billion. Many emerging pharma markets are benefiting from increased government spending on healthcare and broad public and private healthcare funding. Higher growth is expected in pharmerging markets (Brazil, Russia, India, China, Turkey, Mexico and Korea), with an average annual growth rate of 13-16%. These seven pharmerging markets will contribute more than half of global market growth in 2013. Emerging markets will nearly double their spending on medicine over the next 3 years to $345-375 billion in 2016. China, which is predicted to grow 15% year-over-year to more than $85 billion in 2013, has become the worlds third-largest pharmaceutical market. There is rapid growth in the market and research environment in emerging economies such as Brazil, China and India, leading to a gradual migration of economic and research and activities from Europe to these fast-growing markets. In 2012, the Brazilian and Chinese markets grew by 16% and 21% respectively compared to an average market growth of minus 2% for the five major European markets and minus 1% for the US market (source: IMS Retail Drug Monitor Feb 2103) In 2012, North America accounted for 41% of world pharmaceutical sales compared with 26.7% for Europe (see chart 1). According to IMS data, 62% of sales of new medicines launched during the period 2007-2011 were on the US market, compared with 18% on the European market. The fragmentation of the EU pharmaceutical market has resulted in a lucrative parallel trade. This benefits neither social security nor patients and deprives the industry of additional resources to fund R&D. Parallel trade was estimated to amount to 5,000 million (value at exfactory prices) in 2011.

Which disease areas dominate?

The pharmaceutical industry's top 50 growth drivers over 2012-2017 span a broad spectrum of diseases, however, a number of therapy areas dominate.

Oncology Oncology accounts for 13 products or a 26% of the total list. Combined, these drugs are expected to deliver absolute revenue growth of approximately $18 billion over the next 4 years. The list of leading oncology growth drivers is comprised of a mix of established and newly launched products. Recently launched products expected to significantly shape the oncology landscape in terms of revenue growth over the next 4 years include Roche drugs Perjeta (Pertuzumab) and Kadcyla (ado-trastuzumab emtansine), in addition to Astellas/Medviation's Xtandi (Enzalutamide), Onyx's Kyprolis (carfilzomib) and Pfizer's Xalkori (Crizotinib). Novartis' Afinitor (Everolimus) straddles both of these categories, having first been approved in 2009, but with subsequently broadened indication profile that is expected to drive revenue expansion; approval in the key indication of breast cancer was secured in 2012. As mentioned previously, Roche's dominant position in the oncology antibody space looks set to be retained, not only due to recent approvals, but the long-duration assets Avastin (Bevacizumab) and Rituxan (Rituximab), both of which are expected to deliver significant revenue expansion through to 2017 despite their initial launches in 2004 and 1997, respectively. Diabetes The rapidly growing market for diabetes therapies will account for eight key growth driver products over the next 4 years, which are forecast by analysts to deliver combined absolute sales growth of around $13 billion. Merck's Januvia the dominant player in the DPP-IV drug class is forecast to be the strongest growing diabetes treatment over the next 4 years. With sales of the product set to pass the $8 billion mark by 2017. Januvia is expected to become one of the industry's best selling drugs of all time with analysts suggesting that Merck's franchise can expand at a more rapid rate than this consensus forecast indicates. Sanofi's Lantus and Novo Nordisk's Victoza are both expected to deliver absolute growth of around $2 billion over 2013-17. Sanofi will be the key beneficiary of the FDA's decision to reject Novo Nordisk's Tresiba, but is likely to see growth slow over the course of the next for years as biosimilar competition emerges. One notable feature of the diabetes market illustrative of the rapid growth expected in this area is its ability to support multiple key growth drivers in singular drug classes; an opportunity that Bristol-Myers Squibb and AstraZeneca will look to exploit via the Onglyza (DDP-IV) and Bydureon (GLP-1) franchise. Immunology and Inflammation Products indicated for the treatment of various immunology and inflammation diseases are forecast to deliver absolute annual sales growth of around $9 billion over 2013-17. Of this, AbbVie's Humira franchise is expected to account for approximately a third of this disease area's revenue expansion, with consensus forecasts indicating that the drug will come very close to matching Pfizer's statin therapy Lipitor as the biggest selling product of all time. Pfizer's own foray into the rheumatoid arthritis space via a novel oral mechanism of action (kinase

inhibitor) will see the recently approved Xeljanz deliver significant revenue growth (+$2.1 billion) over 2013-17. Multiple Sclerosis Key industry growth drivers indicated for the treatment of MS are forecast to generate combined absolute sales growth of around $7.8 billion over the next 4 years, driven by the continued uptake of oral therapies. Of the new generation of oral treatments, Biogen Idec's Tecfidera is expected to become the best-selling product (2012-17 growth of +$3.3 billion), followed by Novartis' Gilenya and Sanofi's Aubagio. Biogen Idec's efforts to dominate all areas of MS treatment appear to have the backing of current analyst sentiment both the company's pegylated version of Avonex (currently in Phase III trials) and its monoclonal antibody treatment Tysabri (for which the company is pursuing first-line use) are also forecast to add substantial revenue growth over the next 5 years. Hepatitis C Three product 'franchises' are set to dominate the hepatitis C market over the next 4 years and between them they will drive explosive growth. In reality it is Gilead's sofosbuvir-centred franchise that will generate the majority of revenues; forecast at $4.3 billion by 2017.

Disease areas dominating pharma markets 2013-17

14

12

10

No. of products

0 Oncology Diabetes I&I MS Hep C

Disease Area

Chart 2 Disease areas dominating pharma industry from 2013-17

FDA Approvals
2012 was always marked out as a year of transition for the pharmaceutical industry primarily due to the fact that the period marked the very bottom of the patent cliff. It was therefore encouraging that the FDA also approve 39 new molecular entities during this period, the highest number since 1996. From a commercial perspective, a number of products from "class of 2012" are expected to emerge as leading industry growth drivers over the next 4 years, including: Bristol-Myers Squibb/Pfizer's Eliquis, Gilead's Stribild, Roche's Perjeta, Medivation/Astellas' Xtandi, Pfizer's Xeljanz and Onyx's Kyprolis. Products approved in 2012 are expected to generate sales of around $16 billion in 2017. However, the industry remains locked in a period of transition; drugs with combined US sales in excess of $35 billion lost patent exclusivity in 2012 and expirations for the remainder of 2013 will impact products with combined US sales of $20 billion. Brand name Voraxaze Picato Inlyta Erivedge Kalydeco Zioptan Surfaxin Omontys Amyvid Stendra Elelyso Perjeta Belviq Myrbetriq Prepopik Generic name Glucarpidase Ingenol mebutate Axitinb Vismodegib Ivacaftor Tafluprost Lucinactant Company BTG Leo Pharma Pfizer Roche Vertex Merck & Co. Discovery Labs Indication Methotrexate Toxicity Actinic keratosis Renal cell carcinoma Basal cell carcinoma Cystic fibrosis Glaucoma Respiratory distress syndrome Anemia caused by CKD Alzheimer's disease imaging Erectile dysfunction Gaucher disease HER2 + breast cancer Obesity Incontinence Colon cleansing

Peginesatide acetate Affymax Florbetapir f-18 Eli Lilly Avanafil Taliglucerase Alfa Pertuzamab Iorcaserin Mirabegron Citric acid, magnesium oxide, sodium picosulfate Carfilzomib Aclidinium bromide Icosapent ethyl Aflibercept Cobicistat, elivitegravir, emtricitabine, Vivus Pfizer Roche Arena Astellas Ferring

Kyprolis Tudorza Pressair Vascepa Zaltrap Stribild

Onyx Forest Amarin Sanofi Gilead

Multiple myeloma COPD Hypercholesterolemia Colorectal cancer HIV

Linzess Xtandi Bosulif Aubagio Choline C-11 Stivarga Jetrea Fycompa Synribo Xeljanz Cometriq Raxibacumab Signifor Iclusig Gattex Juxtapid Eliquis Sirturo Fulyzaq
Source: FDA

tenofovir, disoproxil fumarate Iinaclotide Enzalutamide Bosutinib Teriflunomide Choline c-11 Regorafenib Ocriplasmin Perampanel Omacetaxine Tofacitinib Cabozantinib Raxibacumab Pasireotide Ponatinib Teduglutide Iomitapide Apixaban Bedaquiline Crofelemer

Forest Astellas/Medivation Pfizer Sanofi

Bayer ThromboGenics Eisai Teva Pfizer Exelixis Human Genome Sciences Novartis Ariad NPS Pharmaceuticals Aegerion Bristol-Myers Squibb Johnson & Johnson Salix

Irritable bowel syndrome/constipation Prostate cancer Chronic myeloid leukaemia MS Prostate cancer imaging Colorectal cancer Vitreomacular adhesion Epilepsy Chronic myeloid leukaemia Rheumatoid arthritis Thyroid cancer Anthrax Cushing's disease Chronic myeloid leukaemia Short bowel syndrome Homozygous familial hypercholesterolemia Stroke TB Diarrhoea