Professional Documents
Culture Documents
Contents
11
Stakeholder considerations
13
Market updates
14
Americas 14
Europe, Middle East, Africa (EMEA)
16
Asia 20
Contacts 25
2
3
2003
2006
2009
2012
Source: DTTL Global Life Sciences and Health Care Industry Group
analysis of IMS Health
500
400
295
300
219
241
299
316
340
349
357
374
394
414
434
455
267
Global medical technology sales: +4.5% CAGR 2012-18
200
100
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Source: DTTL
Global Life Sciences and
Care Industry Group
analysis
of EvaluateMedTech World Preview 2013 Outlook to 2018
Source:
EvaluateMedTech
andHealth
EvaluatePharma
(23SEP
2013)
4
5
6
7
8
9
10
12
12
13
14
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2015, not 2014 looking more likely for EU medtech regs adoption, Clinica Medtech Intelligence, October, 2013
IMS Health Market Prognosis, June 2013
EIU Healthcare World Outlook
IBISWorld Industry Report L6724-GL,Global Biotechnology, April 2013
Amgen buys Onyx Pharmaceuticals: Good news for biotech?, Barrons.com, August 26, 2013. http://blogs.barrons.com/stockstowatchtoday/2013/08/26/amgen-buys-onyx-pharmaceuitcals-good-news-for-biotech/. Accessed October 9, 2013
Ibid
EvaluateMedTech World Preview 2013, Evaluate Ltd., 2013
Ibid
Ibid
EIU Healthcare World Outlook
EIU-Global Forecasting Service, Economic Forecast, June 2013
Global life sciences outlook Resilience and reinvention in a changing marketplace 3
The outlook for the life sciences sector in the Asia region is
favorable, as economic and demographic trends continue
to boost demand. The regions health care spending is
expected to keep growing at a steady average rate of
7.6 percent through 2013-2017. For example, India has
expanded its primary care policy priority and spending and
is expected to increase spending at an average rate of 16.1
percent for the five years ending in 2017. About threefourths of the countrys health budget goes into addressing
primary health care (PHC) through the National Rural Health
Mission (NRHM). India spent close to $3.9 billion (Rs.21,000
crores) in 2012-13 alone.26 Indonesia and the Philippines
are set to grow in double digits with expansion in their
insurance systems.
The goal of Chinas health care reform is to provide safe,
effective, convenient, and affordable health care, including
universal access to basic medical and health services by
2020. Health care expenditures in China are expected to
expand at an average rate of 15.6 percent for the period
2012 to 2017, reaching 5.9 percent of its GDP by the end
of 2017. The growth in health care spending in China
is driven by an increase in pharmaceutical spending of
almost 19 percent per year, reaching $166 billion by the
end of 2017; as well as changing lifestyles leading to new
ailments (e.g., hypertension) that require more health care
spending.27
Despite encouraging economic and demographic trends,
life sciences companies growth prospects are being
tempered by a number of challenging marketplace and
enterprise issues: navigating health care reform; delivering
innovation and value; complying with regulatory changes;
and operating in a smaller and connected world. Read
on to learn more about these macro issues, suggested
considerations for stakeholders, and activity in specific
geographic markets.
29
30
31
Health care reform and life sciences: Threat, opportunity or both?, A EIU/Deloitte Touche Tohmatsu Limited survey of 295 senior executives
from the life sciences sector released in June 2013. Respondents represent pharmaceutical companies (36%), medical devices companies (20%),
service providers such as contract research organizations (20%), biotechnology firms (13%) and others. Some 43% of respondents are C-level
or above. Respondents are distributed globally, with a third each in Western Europe and North America, 26% in the Asia-Pacific region, and the
balance from the rest of the world. Respondents also come from companies with a broad range of sizes: 54% represent businesses with less than
US$1bn in annual revenue, while a quarter work for companies with more than US$10bn in annual revenue.
Ibid
Ibid
Ibid
Global life sciences outlook Resilience and reinvention in a changing marketplace 5
32
33
34
35
36
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39
40
41
42
Congressional Budget Office Projections. Health Insurance Exchanges: CBOs May 2013 Baseline. http://www.cbo.gov/sites/default/files/cbofiles/
attachments/44190_EffectsAffordableCareActHealthInsuranceCoverage_2.pdf. As cited in Will they come? Consumers and health insurance
exchanges: Awareness, preferences, and concerns, Deloitte Center for Health Solutions, 2013.
Reuters. http://www.reuters.com/article/2012/07/04/us-india-drugs-idUSBRE8630PW20120704
Health care reform and life sciences: Threat, opportunity or both?, EIU in collaboration with Deloitte Touche Tohmatsu, 2013
Ibid
Ibid
Ibid
World Preview 2013, Outlook to 2018: Returning to Growth, EvaluatePharma, www.evaluategroup.com/wp2013
Ibid
EIU Healthcare World Outlook
Impact of austerity on European pharmaceutical policy and pricing; Staying competitive in a challenging environment. Centre for Health
Solutions Deloitte LLP, June 2013
EIU Healthcare World Outlook; Global Information Inc.
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39
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30
20
30
23
26
25
28
22
30
39
36
35
27
24
17
21
20
22
24
18
30
26
21
10
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: DTTL Global Life Sciences and Health Care Industry Group analysis of FDAs Center for Drug Evaluation and Research and Reuters
http://www.prnewswire.com/news-releases/hospiras-inflectra-infliximab-the-first-biosimilar-monoclonal-antibody-to-be-approved-in-europe-223098561.html
44
EIU Healthcare World Outlook
45
Measuring the return from pharmaceutical innovation 2013, Deloitte Centre for Health Solutions, Deloitte LLP, December 2013
46
Ibid
47
Ibid
48
Ibid
Global life sciences outlook Resilience and reinvention in a changing marketplace 7
43
49
New Investment Fund will Advance Late-stage Vaccines and Other Global Health Technologies, Yahoo Finance, September 23, 2013.
http://finance.yahoo.com/news/investment-fund-advance-stage-vaccines-040100472.html
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53
54
55
http://www.ema.europa.eu/ema/index.jsp?curl=pages/regulation/document_listing/document_listing_000345.jsp
EIU Healthcare World Outlook
Economic Times. Http://articles.economictimes.indiatimes.com/2013-09-24/news/42361200_1_medical-products-india-inspections
http://www.who.int/medicines/services/counterfeit/impact/ImpactF_S/en/
Trade in illegal medicine hits pharmaceutical sector, World Finance, April 20, 2012. http://www.worldfinance.com/home/special-reports-home/
trade-in-illegal-medicine-hits-pharmaceutical-sector. Accessed October 16, 2013
http://www.efpia.eu/articles/coding-identification-products-towards-safer-medicines-supply-0
Global life sciences outlook Resilience and reinvention in a changing marketplace 9
56
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60
61
10
Issue Brief: Update: Privacy and security of protected health information: Omnibus Final Rule and stakeholder considerations, Deloitte Center
for Health Solutions, Deloitte Development LLC, 2013
Issue Brief: Networked medical device security and patient safety: Perspectives of health care information security executives, Deloitte Center for
Health Solutions, Deloitte Development LLC, 2013
Health Data Management. What HHS/OCR will look for in HIPAA compliance audits, Mar 21 2013, via Factiva
Issue Brief: Update: Privacy and security of protected health information: Omnibus Final Rule and stakeholder considerations, Deloitte Center for
Health Solutions, Deloitte Development LLC, 2013
2013 Global life sciences outlook: Optimism tempered by reality in a new normal, Deloitte Touche Tohmatsu Limited, 2012
Ouch! The Chinese Bribery Scandal is Hurting Big Pharma, Forbes, October 15, 2013. http://www.forbes.com/sites/edsilverman/2013/10/15/
ouch-the-chinese-bribery-scandal-is-hurting-big-pharma/. Accessed November 4, 2013.
Corruption risk in the Chinese pharmaceutical market, Deloitte Touche Tohmatsu Certified Public Accountants LLP, 2013
Ibid
64
IMS Market Prognosis, May 2012
65
Ibid
Global life sciences outlook Resilience and reinvention in a changing marketplace 11
62
63
12
Stakeholder considerations
The following are among important considerations for
life sciences sector stakeholders as they look to address
marketplace and organizational issues in 2014:
Health care reform: Health reform is going to accelerate
the transformation of global health care from a volumeto value-based marketplace. And that means companies
in pharma, biotech and medtech will be having different
conversations with different people than they traditionally
have. Going forward it is no longer a physician-preference
world; governmental organizations, patient advocacy
groups, hospital administrators, and other stakeholders
will play a key role in product selection and purchase.
Companies will need to be responsive to how the market
wants to buy rather than fixating on how the company
wants to sell. Also, what the market wants is important:
Pharma companies need to develop what they can sell,
not simply sell what they can develop. Real-world evidence
and an ability to articulate their value proposition by
addressing a products clinical, safety, and economic impact
will become determining factors in a companys future
competitive position. Organizations that only have price as
their strategic lever will be at a disadvantage.
Life sciences companies should take a strategic, global
approach to health care reform by focusing on challenges
that are common across major markets, such as valuebased pricing and other cost-reduction strategies. Some
organizations already have responded by making substantial
changes in their innovation processes and sales models.
Life sciences firms also should look at the challenges and
opportunities that specific national reforms can bring
because local tactics of a global strategy will inevitably vary.
Given that many of the industrys challenges are impacting
governments around the world, it is expected that changes
in one market may influence other markets.
Innovation and value: Opinion differs on whether
life sciences R&D productivity is improving, declining
or remaining static. Some reports indicate that better
quality new drug approvals in 2012 coupled with a sector
that is returning to growth, signal that life sciences R&D
productivity may be improving.69 However, analysis of the
late-stage pipelines of a cohort of 12 leading life science
R&D spenders, conducted by the Deloitte Centre for
Health Solutions, indicates that overall R&D returns have
been declining since 2010. While the number of new
compounds entering the late stage pipeline has remained
static, the forecast value of those compounds has reduced.
Although new compounds have delivered enough value
69
70
Market updates
Americas
Brazil
Market Fact: Brazil is the largest pharmaceutical
market in Latin America. Pricing pressure, cost
control, and product portfolio management are
among the issues facing its life sciences sector in
2014.
Brazil is the largest pharmaceutical market in Latin America
and the 10th-largest in the world, accounting for about
two percent of overall demand. 2012 sales were an
estimated $36.9 billion (including taxes). Pharma sales are
forecast to grow to $48.7 billion by 2017, supported by
rising household incomes but somewhat constrained by
government efforts to hold down the prices of patented
drugs.71
Pricing pressure, cost control, and product portfolio
management are among the issues facing Brazils life
sciences sector in 2014. Pricing pressure occurs on two
fronts: Manufacturers must submit all proposed drug prices
to an independent organization, the Regulation Drug
Market Committee (CMED), whose final market price may
be lower than what the manufacturers submitted. Also,
Brazil has a strong local generics industry (the largest in
Latin America), which is supported by government policies
aimed at extending the availability of medicines to lowincome consumers.72 These pressures are prompting life
sciences companies to employ various strategies to identify
the optimal price for their key products.
Brazils product registration and launch process through
ANVISA, the national health agency, is complex and
expensive; to control costs, life sciences companies need
to carefully consider country-specific conditions (e.g.,
competitive offerings, proposed distribution system,
regulatory issues) before moving forward with new market
offerings.
Some life sciences companies in Brazil operate discount
programs, which can present portfolio management
challenges. Discount programs allow patients to buy drugs
at a reduced cost, encouraging adherence. Companies
usually have several discount programs for each product,
which can complicate pricing and distribution.
14
Taiwan
Turkey
Brazil
India
Singapore
United States
Mexico
Thailand
0
Source: DTTL Global Life Sciences Industry Group analysis of Patient
Beyond Borders data
United States
Market Fact: Changes related to ACA, competing
on value versus volume, new commercial
models, and real-world evidence and how it
informs much of the health care industry life cycle
are major drivers in the U.S. life sciences market.
2014 is anticipated to be a positive year for U.S. life sciences
companies, as they continue to obtain greater clarity on
ACA implementation and its impacts, become increasingly
better at capitalizing on emerging market opportunities,
and incorporate real-world evidence into their strategic
thinking and decision-making.
The EIU projects the U.S. pharmaceutical market, the
worlds largest at $396 billion in 2011, will grow 6.4 percent
annually through 2011-16.77 Demographics and disease
trends will boost drug consumption, while the expansion of
insurance coverage to millions of uninsured Americans under
the ACA (via health insurance exchanges and Medicaid
expansion) is forecast to increase revenue for drug makers.
However, ACA-related pharmaceutical sector fees, a new
medical device tax, and lower government drug prices could
negatively impact growth. The FDAs continued work to
finalize a biosimilars pathway is also a concern.
The current Administrations policies are playing a key role in
transforming the U.S. health care marketplace and shaping
the life sciences sectors short- and long-term planning.
Competing visions are the watchwords: Following reelection, the Administration has an opportunity to accelerate
the implementation of key reform elements through the
actions of HHS, and to drive funding appropriations through
Congress. Heading into 2014, the country will see a fair
number of initiatives, such as health insurance exchanges,
beginning to go from proposed to enacted to implemented.
The competing vision to this approach is: What will be the
priorities? What will be the impact? and What will be
the marketplace and sector reactions?
The U.S. health care provider landscape is also changing
physician-hospital consolidations are growing in frequency
and combined purchasing departments are growing in
influence. This is driving life sciences companies to employ
new business models that recognize the power of new
decision-makers in product pricing and selection.
16
Figure 6: GBA (The Federal Joint Committee) decision on the level of added Therapeutic benefit granted to
newly approved drugs
25
20
Added benefit is prerequisite and basis for price negotiations - If no added benefit is proven,
a reference price will be calculated based on exisiting comparative therapies (often generics)
GBA decisions (as of October 2013)
15
10
5
0
Major added
benefit
Significant
added benefit
Slight added
benefit
Unquantifiable
added benefit
No added
benefit
Source: DTTL Global Life Sciences and Health Care Industry Group analysis of GBA
Germanys Angela Merkel faces tough coalition talks, BBC News Europe, September 23, 2013. http://www.bbc.co.uk/news/world-europe-24203909. Accessed September 26, 2013
82
United States Census Bureau, 2009; Deloitte Development LLC research and analysis, Nov 2009
Global life sciences outlook Resilience and reinvention in a changing marketplace 17
81
83
85
86
87
84
18
Turkey
Market Fact: Critical success factors for the life
sciences sector in Turkey include promotion of
investments and innovation (i.e., R&D activities
and protection of intellectual property rights),
quality, and sustainability.
Turkeys total pharmaceutical sales (including OTC sales)
are projected to grow by 8.8 percent a year between
2013 and 2017, reaching $19 billion.88 Estimating the
size and growth of the market is complicated due to the
governments moves to cut pharmaceutical prices and
their encouragement in the use of generics as part of its
efforts to reduce public health spending. According to the
Pharmaceutical Manufacturers Association of Turkey (IEIS),
the market share of generics rose to 38.1 percent in 2011
but fell back in 2012 to 37.7 percent.89
The need for continuous innovation in life sciences R&D
is driving companies in Turkey to seek new and different
funding sources, as government and university support is
not extensive. Tax and incentive legislation may provide
much-needed financial resources for sector R&D; however,
companies likely will have to lobby for the necessary
changes. In addition, some companies may look to shift
their R&D and manufacturing locations to those jurisdictions
offering more favorable operating conditions.
Cost controls linked to increasing government pricing
pressures on pharmaceuticals is another challenge facing
life sciences companies in Turkey. In response, executives
are working to ensure that their operations are efficiently
managed and their business models reflect changing market
conditions. Companies are closely monitoring their cost
structures. However, it is critical that they follow a strategy
and control mechanism which does not sacrifice long-term
benefits just to maximize short-term profits.
Regulators and customers in Turkey are likely to increase
calls for more privacy and security of personal information.
There are already certain regulations in effect regarding
the security requirements for software development in
the health care sector. However, more strict requirements
specifically to protect information security and privacy are
expected to be introduced. In the meantime, life sciences
Asia
China
Market Fact: Recent allegations of malpractice by
certain companies in their go-to-market conduct
have sparked organizations to tighten their
compliance programs, particularly those associated
with Anti- Bribery Anti- Corruption (ABAC) Act and
Foreign Corrupt Practices Act (FCPA) regulations.
2014 is anticipated to be a positive year for life sciences in
China. Pharmaceutical sales are forecast to grow an average
of 17.7 percent per year in 2013-17, reaching $166 billion
in 2017. By 2016, the value of pharma sales in China is
expected to be greater than that in Japan, currently the
worlds second-largest market.96
From an economic perspective, the central government
spent an additional $125 billion in health care expenses
above and beyond its planned expenditures over the past
three years, and is further increasing its 2013 health care
budget by 27 percent to $41 billion. In addition, Chinas
well-documented, rapidly rising income level has crossed
a critical threshold $5,000/year in GDP per capita at
which point overall consumption tends to spike. Also,
Chinas rapid rise in both internet and mobile phone usage
is changing patient access and awareness of different types
of care. The number of Internet users in China reached
more than 540 million at the end of 2012, taking Internet
penetration to above 40 percent of the population.
Looking at demographic trends, Chinas population is
aging (Figure 7), bringing attendant health conditions and
creating demand for life sciences products. In addition,
China is becoming increasingly urbanized the proportion
of urban population has grown from 36 percent in 2010
to 52.6 percent in 2012. Urbanization and continued
westernization of the population have driven lifestyle
changes centered on an increasingly western diet, high
prevalence of smoking, and increased pollution, which have
materially changed the profile of disease in China.
Ibid
Impact of austerity on European pharmaceutical policy and pricing; Staying competitive in a challenging environment. Centre for Health Solutions
Deloitte LLP, June 2013
95
Espicom Business Intelligence United Kingdom Medical Devices report Q2 2013
96
EIU China: Healthcare and Pharmaceuticals Report, June 2013
93
94
20
8.28
107
8.50
111
8.60
113
8.90
118
9.10
121
9.40
9.60
126
129
10.10
171
120.9
136
42.4
30.1
10.7
2008 2009
2010 2011
2012
2013
2014
2015
2020
China
US
Japan
UK
16.9
1.5
6.0
India
Market Fact: India has a fragmented life sciences
industry, with stiff price competition, government
price controls, and limited availability of
infrastructure. Nonetheless, MNCs are increasing
their operations in India and creating opportunities
to drive industry growth in the country.
Indias pharmaceutical sales were $22.6 billion in 2012.
They are expected to rise to $23.6 billion in 2013 and
reach $27.0 billion in 2016. As a percent of health care
expenditures, pharmaceutical sales were 22.6 percent in
2012; they are expected to reach 23.6 percent in 2013 and
27 percent by 2016.97
India is among the top five pharmaceutical emerging
markets.98 The double digit growth registered by Indias
life sciences and health care industry can be attributed
to several socio-economic factors, including increasing
sales of generic medicines, continued growth in chronic
therapies, and a greater penetration in rural markets.
Other growth drivers are heightened health awareness,
increasing affluence, changing lifestyles resulting in higher
incidence of lifestyle diseases, increasing government
expenditure on health care, and a nascent, yet fastgrowing health insurance industry. In addition, the nations
low cost of production and R&D boosts the efficiency of
Indian pharmaceutical companies and its comparative cost
advantage enhances Indian pharmaceutical exports.
The worldwide demand for cost-effective generic
drugs is leading India to rise as a hub of generic drug
manufacturing. India accounts for over 10 percent of global
pharmaceutical production, with over 60,000 generic
brands across 60 therapeutic categories; it manufactures
more than 400 different active pharmaceutical ingredients
(APIs). The country is the front-runner in a wide range of
specialties involving the manufacture of complex drugs.
A number of pharmaceutical companies are increasing
their operations in India, which has 119 manufacturing
sites approved by the U.S. FDA, the highest in any foreign
22
102
103
104
105
24
Contacts
John Rhodes
Global Life Sciences Sector Leader
Deloitte Touche Tohmatsu Limited
+1 973 602 6908
jorhodes@deloitte.com
Enrico de Vettori
LSHC Industry Leader
Deloitte Brazil
+55 11 5186 6239
enricovettori@deloitte.com
Herve Ballantyne
LSHC Industry Leader
Deloitte Middle East
+ 966 2 657 2725
hballantyne@deloitte.com
Yvonne Wu
LSHC Industry Leader
Deloitte China
+86 21 61411570
yvwu@deloitte.com.cn
Oleg Berezin
LSHC Industry Leader
Deloitte CIS (Russia)
+74 957 870 600 x2188
oberezin@deloitte.ru
Yves Jarlaud
LSHC Industry Leader
Deloitte France
+33 1 58 37 96 06
yjarlaud@deloitte.fr
Janson Yap
LSHC Industry Leader
Deloitte Southeast Asia
+65 6216 3119
jansonyap@deloitte.com
Gregor Elbel
LSHC Industry Leader
Deloitte Germany
+49 211 8772 3104
gelbel@deloitte.de
Hulya Yilmaz
LSHC Industry Leader
Deloitte Turkey
+90 212 366 60 72
hyilmaz@deloitte.com
Atul Dhawan
LSHC Industry Leader
Deloitte India
+91 124 679 2030
adhawan@deloitte.com
Simon Hammett
U.K./Switzerland LSHC Leader
Deloitte United Kingdom
+44 20 7303 6402
shammett@deloitte.co.uk
Jun Matsuo
Life Sciences Sector Leader
Deloitte Japan
+81 80 2003 8644
jmatsuo@tohmatsu.co.jp
Terry Hisey
Life Sciences Sector Leader
Deloitte United States
+1 215 246 2332
rhisey@deloitte.com
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