Top 10 Generic Pharmaceutical Companies

HEALTHCARE
The Top 10 Generic Pharmaceutical

Companies
Positioning, performance and SWOT analyses
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Table of Contents
The Top 10 Generic Pharmaceutical Companies
Executive Summary 14
Industry overview 14
Novartis (Sandoz) 15
Teva 16
Mylan 16
Ratiopharm 17
Apotex 18
Pfizer (Greenstone) 19
Sanofi-Aventis (Winthrop) 20
Watson 21
Bayer 22
Stada 22
Chapter 1 Introduction 26
What is this report about? 26
Methodology 26
Chapter 2 Industry overview 28

Summary 28
Introduction 29
Market overview 29
Global generics market: size and growth 29
Market overview for the US/5EU 30
The US 32
The UK 34
France 36
Germany 37
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Spain 39
Italy 41
Top trends in the industry 43
Changing paradigms towards emerging markets 43
The generics manufacturing base is shifting to low cost hubs 45
Growing legislative support for 'follow-on biologics' 46
Increasing participation of branded Pharma companies in generics industry 47
Consolidation 49
Top ten generic companies 50
Global ranking 50
US/5EU consolidated 50
Therapeutic focus of the top 10 51
Key marketed products of the top 10 53
Geographic focus of the top 10 54
US ranking 54
EU ranking 55
Chapter 3 Novartis (Sandoz) 58

Summary 58
Business description 59
Geographic focus 60
Marketed products 61
Major therapeutic focus 62
Growth strategies 63
Focus on difficult-to-make and biosimilar generics 63
Acquisitions and divestments 64
SWOT analysis 65
Strengths 66
Size and leading generics position 66
Dynamic launches 66
Weaknesses 67
Development setbacks 67
Opportunities 67
Strong pipeline 67
Threats 68
Legal proceedings 68
Chapter 4 Teva 70
Summary 70
Geographic focus 72
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SWOT analysis 77
Strengths 78
Leading generics market position 78
Global infrastructure 78
Weaknesses 79
Distribution model 79
Opportunities 79
Focus on hospitals and institutional channels 80
Threats 80
Failure to obtain market exclusivity in the US 80
Chapter 5 Mylan 84
Summary 84
Geographic focus 86
SWOT analysis 91
Strengths 91
Leading market position in Asia Pacific 91
Growth through strategic acquisitions 92
Weaknesses 92
Dependence on a few key products 92
Opportunities 93
Growing generics demand 93
Threats 93
Merck Generics litigations 93
Chapter 6 Ratiopharm 96
Summary 96
Geographic focus 97
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Focus on biosimilars 100
SWOT analysis 102
Strengths 102
Leading position in Germany 102
Weaknesses 103
Dependence on European market 103
Opportunities 103
Biosimilar filgrastim 103
Launch of generic Plavix 103
Threats 104
Competition in German generics market 104
Chapter 7 Apotex 106

Summary 106
Geographic focus 107
Strategic alliances 110
Investments in R&D 111
SWOT analysis 112
Strengths 112
Strong R&D capabilities 112
Weaknesses 113
Lawsuits relating to patent infringement 113
Opportunities 113
Expanding global footprint beyond Canada and the US 113
Successful tender bid for critical healthcare needs in Africa 114
Threats 114
Extending market exclusivity period in Canada 114
Growing pseudo (authorized) generics market in Canada 114
Chapter 8 Pfizer (Greenstone) 118

Summary 118
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Extending generics market share 122
SWOT analysis 123
Strengths 123
Strong market position 123
Weaknesses 124
Geographic concentration in the US 124
Opportunities 124
Growth opportunities in emerging markets 124
Threats 125
Competition in the US generics market 125
Chapter 9 Sanofi-Aventis (Winthrop) 128

Summary 128
Regionalization strategy 133
SWOT analysis 134
Strengths 134
Strong presence in emerging economies 134
Weaknesses 135
Lack of presence in the US 135
Opportunities 135
Biosimilar generics in the field of low molecular weight heparin 135
Threats 135
Low penetration of generics in France 135
Chapter 10 Watson 138

Summary 138
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Growing offshore presence 142
SWOT analysis 143
Strengths 143
Global centers of excellence 143
Weaknesses 144
Dependence on third-party manufacturers 144
Opportunities 144
Expansion in India 144
Threats 145
Loss of revenues from Ferrlecit 145
Chapter 11 Bayer 148

Summary 148
Building on government initiatives to promote generics 152
SWOT analysis 153
Strengths 153
Strong R&D capabilities 153
Weaknesses 154
Lack of presence in the US and the UK 154
Opportunities 154
Focus on emerging economies 154
Threats 154
Regulatory pressure on generic pricing in Germany 154
Chapter 12 Stada 158

Summary 158
Cost optimization 163
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Continuous portfolio expansion 163
SWOT analysis 165
Strengths 165
Low-price cost structure of ALIUD Pharma 165
Strong local sales infrastructure 166
Weaknesses 166
Dependence on third-party suppliers and manufacturers 166
Opportunities 166
Launch of biosimilar Erythropoietin-zeta 166
Expanding footprint in Eastern Europe 167
Threats 167
Regulatory pressure on generics pricing in Germany 167
Chapter 13 Conclusion 170

Introduction 170
Generics outperforming the ethical pharmaceutical industry 170
Reassessing growth strategies 170
Generics competition within the biotech sector 171
Stripping-off the pricing advantage 171
Outlook 172
Chapter 14 Appendix 176

Glossary 176
Index 178
List of Figures
Figure 3.1: Global generics market size, 2004–2007 ($m) 30
Figure 3.2: Market position of the global top 10 generics companies, 2007 32
Figure 3.3: Generics drivers and resistors - the US 33
Figure 3.4: Generics drivers and resistors - the UK 35
Figure 3.5: Generics drivers and resistors - France 37
Figure 3.6: Generics drivers and resistors - Germany 38
Figure 3.7: Generics drivers and resistors - Spain 40
Figure 3.8: Generics drivers and resistors - Italy 42
Figure 3.9: Emerging markets generic sales, 2003–2007 ($m) 44
Figure 3.10: Pharmaceutical companies and their generic divisions 48
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Figure 3.11: Top 10 generic companies global market share, 2007 50
Figure 3.12: Geographic focus of the top 10 in US/5EU, 2007 54
Figure 4.13: Novartis’ (Sandoz) geographic focus, 2006–2007 60
Figure 4.14: Novartis’ (Sandoz) therapeutic focus, 2007 63
Figure 4.15: Novartis (Sandoz) SWOT analysis 65
Figure 5.16: Teva’s geographic focus, 2006–2007 73
Figure 5.17: Teva’s therapeutic focus, 2007 75
Figure 5.18: Teva SWOT analysis 77
Figure 6.19: Mylan’s geographic focus, 2006–2007 87
Figure 6.20: Mylan’s therapeutic focus, 2007 89
Figure 6.21: Mylan SWOT analysis 91
Figure 7.22: Ratiopharm’s geographic focus, 2006–2007 98
Figure 7.23: Ratiopharm’s therapeutic focus, 2007 100
Figure 7.24: Ratiopharm SWOT analysis 102
Figure 8.25: Apotex’s geographic focus, 2006–2007 108
Figure 8.26: Apotex’s therapeutic focus, 2007 110
Figure 8.27: Apotex SWOT analysis 112
Figure 9.28: Pfizer’s (Greenstone) geographic focus, 2006–2007 120
Figure 9.29: Pfizer’s (Greenstone) therapeutic focus, 2007 122
Figure 9.30: Pfizer (Greenstone) SWOT analysis 123
Figure 10.31: Sanofi-Aventis’ (Winthrop) geographic focus, 2006–2007 130
Figure 10.32: Sanofi-Aventis’ (Winthrop) therapeutic focus, 2007 132
Figure 10.33: Sanofi-Aventis (Winthrop) SWOT analysis 134
Figure 11.34: Watson’s therapeutic focus, 2007 141
Figure 11.35: Watson SWOT analysis 143
Figure 12.36: Bayer’s geographic focus, 2006–2007 150
Figure 12.37: Bayer’s therapeutic focus, 2007 152
Figure 12.38: Bayer SWOT analysis 153
Figure 13.39: Stada’s geographic focus, 2006–2007 160
Figure 13.40: Stada’s therapeutic focus, 2007 162
Figure 13.41: Stada SWOT analysis 165
Figure 14.42: Comparative analysis of top 10 generic companies 172
List of Tables
Table 3.1: Total generic sales in the US/5EU, 2003–2007 ($m) 31
Table 3.2: Generic sales by volume in the US/5EU, 2003–2007 (Standard units m) 31
Table 3.3: Biologics going off patent in the US, 2008–2011 47
Table 3.4: Top 10 generic companies’ sales in the US/5EU, 2003–2007 ($m) 51
Table 3.5: Largest therapy areas for generics for the top 10, 2007 ($m) 52
Table 3.6: Market share by therapy area in the US/5EU generics market, 2006–2007 52
Table 3.7: Top 10 generics by sales value in the US/5EU, 2007 ($m) 53
Table 3.8: Top 10 generic companies in the US, 2003–2007 ($m) 55
Table 3.9: Top 10 generics companies in 5EU, 2003–2007 ($m) 56
Table 4.10: Novartis (Sandoz) snapshot 59
Table 4.11: Novartis’ (Sandoz) top 10 marketed products sales, 2006–2007 ($m) 61
Table 5.12: Teva snapshot 71
Table 5.13: Teva's top 10 marketed products sales, 2006–2007 ($m) 74
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Table 6.14: Mylan snapshot 85
Table 6.15: Mylan's top 10 marketed products sales, 2006–2007 ($m) 88
Table 7.16: Ratiopharm snapshot 97
Table 7.17: Ratiopharm's top 10 marketed products sales, 2006–2007 ($m) 99
Table 8.18: Apotex snapshot 107
Table 8.19: Apotex' top 10 marketed products sales, 2006–2007 ($m) 109
Table 9.20: Pfizer (Greenstone) snapshot 119
Table 9.21: Pfizer’s (Greenstone) top 10 marketed products sales, 2006–2007 ($m) 121
Table 10.22: Sanofi-Aventis (Winthrop) snapshot 129
Table 10.23: Sanofi-Aventis’ (Winthrop) top 10 marketed products sales, 2006–2007 ($m) 131
Table 11.24: Watson snapshot 139
Table 11.25: Watson's top 10 marketed products sales, 2006–2007 ($m) 140
Table 12.26: Bayer snapshot 149
Table 12.27: Bayer's top 10 marketed products sales, 2006–2007 ($m) 151
Table 13.28: Stada snapshot 159
Table 13.29: Stada’s top 10 marketed products sales, 2006–2007 ($m) 161
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Executive Summary
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Executive Summary
Industry overview
The global generics market registered sales of $96,730m in 2007, an increase of
15.3% over 2006, as against 6% growth for the overall pharmaceuticals sector.
Regular patent expiries of branded pharmaceuticals and spiraling healthcare costs
have fuelled this growth. This trend is set to continue, with pro-generic reforms
being introduced in the major markets.
The top 10 generics companies based on 2007 global sales include Novartis
(Sandoz), Teva, Mylan, Ratiopharm, Apotex, Pfizer (Greenstone), Sanofi-Aventis
(Winthrop), Watson, Bayer and Stada.
The US has the largest market share with sales worth $25,435m in 2007, or 26.3%
of global generics sales. However, generics pharma markets in the 5EU countries
(particularly France, Spain and Italy) are growing at a faster pace and accounted for
14.2% of the global generic sales in 2007.
The nervous system (NS) and cardiovascular system (CVS) were the largest
generics therapy areas among the top 10 companies covered in this report, with a
market share of 31% and, 28% respectively, based on 2007 sales.
The top 10 marketed products in 2007 in the US/5EU were mostly from the largest
therapy areas, CVS, NS, alimentary tract and metabolism, and anti-infectives for
systemic use.
The increased threat of patent expirations has forced pharma companies to shift
their business models by offering authorized generics. This allows a branded
pharma company to extend the lifecycle of a drug with an expired patent and
continue to hold on to the revenues it would have otherwise lost.
Intense competition has created pricing pressure on generic players. Participation of

specialty drug companies such as Pfizer (Greenstone), Sanofi (Winthrop) in this
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industry with the launch of authorized generics has stripped the margins off most
generics to the bare minimum in major markets. These companies take away the
economic viability of challenging patented drugs by undercutting prices and market
share during the 180-day exclusivity period.
Novartis (Sandoz)
Novartis operates its generics business through its subsidiary Sandoz. It is the
leading generic pharmaceuticals company in the world, with a market share of
7.4%, based on 2007 sales. It recorded generic sales of $7,124m in fiscal 2007, an
increase of 19.7% over 2006.
Sandoz’s major generic therapeutic areas include CVS, NS, anti-infectives for
systemic use, alimentary tract and metabolism, respiratory system, musculo skeletal
system, genito-urinary system, and sex hormones.
The top 10 marketed products of Sandoz include fentanyl, amoxi/clavul,

omeprazole, ondansetron, metoprolol, amlodip/benaz, lovastatin, cefdinir,
bupropion and azithromycin.
Sandoz plays an integral part in Novartis’ strategy by helping it maintain its leading
position and competitive edge through launch of difficult-to-make generics. As a
part of this strategy, in 2007 it received European Commission (EC) approval for a
biosimilar epoetin alfa (EPO) to bring cost-effective biological medicines to the
market.
Sandoz intends to increase its business outside the traditional core markets of
Europe and the US by covering more countries with a potential for generics where
it is not yet active. In 2007, it submitted regulatory applications for 92 different
projects around the world.
In June 2008, Johnson & Johnson's Janssen unit sued Sandoz to prevent it from
selling a generic version of the Alzheimer's drug Razadyne ER until a patent
expires in 2019.
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Teva
Teva is the second largest generics pharmaceutical company in the world based on
2007 sales. It had a market share of 6.6%, representing sales worth $6,373m in
2007, a decrease of 7.5% over 2006.
The major therapeutic areas for Teva in 2007 were CVS, NS, anti-infectives for
systemic use, respiratory system, genito-urinary system and sex hormones,
alimentary tract and metabolism, musculo-skeletal system, and antineoplastic and
immunomodulating agents.
Teva’s top 10 marketed products in 2007 include simvastatin, amlodip/benaz,

fexofenadine, azithromycin, gabapentin, venlafaxine, sertraline, amoxi/clavul,
finasteride and clozapine.
Teva aims to double the size of its business by 2012, reaching revenues of $20bn
through a series of actions, namely: increasing its market share in key markets;
doubling its R&D capabilities and production capacity; and investing in the next
wave of technology and generics to develop affordable biopharmaceuticals.
In 2007, Teva maintained its position as the US market leader in total prescriptions
and new prescriptions, with generic prescriptions increasing from 409m in 2006 to
437m in 2007, representing 18% of total generic prescriptions in the US.
Teva’s direct-to-pharmacy distribution model limits its reach to greater number of

pharmacies.
Mylan
Mylan is ranked third among the world’s largest generic pharmaceutical companies
based on 2007 sales. It garnered a global market share of 4.8% representing sales of
$4,620m. This was an increase of 22.2% over 2006.
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The key therapeutic areas for Mylan in 2007 were CVS, NS, alimentary tract and
metabolism, genito-urinary system and sex hormones, anti-infectives for systemic
use, respiratory system, musculo skeletal system, and antineoplastic and
The top 10 generic pharmaceutical products marketed by Mylan in 2007 were

fentanyl, amlodipine, omeprazole, nifedipine, oxybutynin, phenytoin, vancomycin,
salbutamol, verapamil and pravastatin.
In 2007 Mylan completed the acquisition of German-based Merck Generics and

gained a controlling interest in India-based Matrix Laboratories, which helped it
expand to numerous countries outside the US.
Mylan claims to hold the number one market position in both Australia and New
Zealand, and the number four market position in Japan. Alphapharm, its Australian
subsidiary, is the generics market leader, holding an estimated 60% market share by
volume as of August 2007. Its wholly owned subsidiary Pacific Pharmaceuticals is
the largest generics company in New Zealand.
Mylan’s revenue share, up to and following the acquisition of Merck Generics, is

spread over relatively few products. For instance, Fentanyl, which was launched in
2005 and became Mylan’s highest selling product, accounted for approximately
17%, 20%, and 18% of generics revenues in 2005, 2006 and 2007, respectively.
Ratiopharm
Ratiopharm garnered a 2.6% share by value in the global generics market, making
it the fourth largest generics pharmaceutical company. Its 2007 sales amounted to
$2,552m, an increase of 9.4% over 2006.
The important therapeutic areas for Ratiopharm in 2007 were NS, CVS, alimentary
tract and metabolism, anti-infectives for systemic use, musculo skeletal system,
respiratory system, blood and blood forming organs, dermatalogicals, and genito-
urinary system and sex hormones.
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In 2007, Ratiopharm’s top 10 generic pharmaceutical products included
omeprazole, fentanyl, simvastatin, nasengel, paracetamol, acetyl s acid,
metamizole, bisoprolol, grippeimpfst.ratio and amlodipine.
Ratiopharm is focused on the development of biosimilars. As a part of this strategy,

it cooperated with the American company Neose Technologies in 2007, for
development of innovative biosimilars. In February 2008, it received a positive
opinion from the EMEA for the first filgrastim biosimilar, granulocyte colony-
stimulating factor (G-CSF).
Ratiopharm’s generic sales are concentrated in the EU, which represented 54% of
total sales in 2007. Due to a lack of presence in the US, the company is losing out
on opportunities in that market when compared with its peers such as Novartis,
Teva and Mylan.
Apotex
Apotex generated generic sales worth $2,356m in fiscal 2007, representing a
market share of 2.4% in the global generics industry. It ranked fifth amongst the
largest generics pharmaceutical company in the world, based on sales in 2007.
The major therapeutic areas for Apotex in 2007 were alimentary tract and
metabolism, NS, blood and blood forming organs, CVS, anti-infectives for systemic
use, systemic hormonal preparations, antineoplastic and immunomodulating agents,
and sensory organs. Alimentary tract and metabolism, and NS accounted
approximately 28% and 27% of the generic sales in 2007.
Apotex’s three top marketed drugs clopidogrel, ceftriaxone and ciclosporin

recorded a decline in sales of 78.3%, 25.4% and 0.6% respectively, in 2007 over
2006.
Apotex has primarily focused on strategic alliances such as joint ventures and
licensing agreements to expand its generic and innovative pharmaceutical
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businesses. It is also undertaking acquisitions to grow its global footprint outside
the US and Canada.
Apotex’s strong R&D capabilities give the firm a competitive edge. Planned R&D
investments of over C$2bn ($1.9bn) over 10 years starting from 2008 will enable it
to create a more comprehensive product portfolio.
Extension of the market exclusivity period of patented drugs will delay the entry of
generic players such as Apotex. In addition, pseudo (authorized) generics have
gained prominence in Canada. This has inhibited the growth of real generic
manufacturers, such as Apotex, in the country.
Pfizer (Greenstone)
Greenstone is a generics pharmaceutical subsidiary of Pfizer. It ranked sixth, with a
2.0% market share in 2007.
Greenstone primarily focuses on three therapeutic areas, anti-infectives for

systemic use, CVS, and NS. Anti-infectives for systemic use form the largest share
of its therapeutic focus, accounting about 40% of its 2007 revenues.
Most of the top 10 generics marketed by Greenstone registered a decline in 2007,

except medroxyproges and sermion. Medroxyproges and sermion recorded a sales
growth of 26.9% and 32.4% respectively, in 2007.
Greenstone strategically wards off competition by launching authorized generics of

branded drugs produced by Pfizer's. As it is a subsidiary of Pfizer, the company has
the advantage of launching authorized generics without undergoing the
cumbersome process of attaining approval from the FDA. This gives it the first
mover advantage.
Greenstone has gained a strong market position due to its broad product portfolio
and creative marketing plan. For these efforts, it was honored with the DIANA
(Distribution Industry Awards for Notable Achievements) Award as the 'Best
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overall generic pharmaceutical products manufacturer’ with sales to health care
distributors over $100m' in 2007.
The pro-generics environment has intensified competition in the US market,

bringing down generic prices forcing US-focused players to look for opportunities
beyond the US.
Sanofi-Aventis (Winthrop)
Sanofi-Aventis operates in the generics business through its subsidiary, Winthrop,
which recorded generic sales of $1,709m in fiscal 2007, representing a market
share of 1.8%.
Winthrop’s generics portfolio primarily caters to the therapeutics areas, NS and

CVS, each representing 36% and 24% sales in 2007.
Winthrop’s generic drug, Lovenox, catering to the therapeutic area blood and blood
forming organs, recorded a mammoth growth of 1264.8% in sales in 2007. This
was the highest growth registered amongst its top 10 marketed drugs.
Winthrop’s regionalization strategy focuses on strengthening its presence in

developing countries such as Brazil, Russia, India, China and Mexico. In line with
this strategy, Winthrop entered the market in Philippines and China in 2007-2008.
Winthrop also strengthened its presence in European markets, particularly in

central and Eastern Europe, with the acquisition of a 24.9% stake in Zentiva in
2006.
French physicians represent a major stumbling block to generics uptake in France,

despite government initiatives to drive generics consumption. French physicians are
reluctant to prescribe generics as they consider the government’s generics
promoting policies interferes with their prescribing authority.
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Watson
Watson is the eighth largest generics pharmaceutical company in the world, with
2007 sales amounting to $1,402m and a 1.4% market share. Revenues witnessed a
decrease of 1.9% from 2006.
The key therapeutic areas for Watson include NS, CVS, alimentary tract and
metabolism, musculo skeletal system, anti-infectives for systemic use, respiratory
system, and genito-urinary system and sex hormones. NS accounted the major
chunck of Watson’s therapeutic focus, with 75% of its 2007 revenues.
Watson’s top marketed products in 2007 were hydrocod/apap, fentanyl, bupropion,

oxycodon/apap, glipizide, nicotine, pravastatin, lisinop/hctz, morphine and
salbutamol.
Watson is focusing on building an offshore presence and expanding its capacity in

countries such as India, where it acquired a solid dosage manufacturing site in Goa
in 2007. This manufacturing facility will produce about 10% of its entire
production volume and export them to the US market, giving Watson cost
advantage.
Watson is increasing its API capabilities, allowing it to work earlier on raw

materials that will support future patent challenges, and provide opportunities for
backward integration and lower production costs.
Ferrlecit is Watson’s most successful branded product, and the one that it relies
heavily on for branded drug revenues. The drug accounted for approximately 5% of
its net revenues and 12% of its gross profit in 2007. However, Ferrcelit has been
steadily losing market share to rival Venofer, and face competition from Advanced
Magnetic’s ferumoxytol, which is currently in development.
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Bayer
Bayer is the ninth largest generics pharmaceutical company in the world, based on
sales in 2007, with a 1.4% market share in the global generics market. It recorded
generic sales of $1,348m in fiscal 2007, an increase of 16.2% over 2006.
Bayer’s generics business mostly serves the NS (85%) related diseases. Blood and
blood forming organs (12%), and genitor-urinary system and sex hormones (3%)
have miniscule shares in its generics product portfolio.
Bayer’s genitor-urinary system and sex hormones generic drug, Cliane, recorded a
decline of 7.1% in 2007 sales. Rest of its top 10 drugs registered a healthy growth.
Bayer intends to capitalize on governments’ efforts to promote generics as low-cost

alternatives to branded pharmaceuticals. These government initiatves have boosted
demand for generics in Italy, Spain, France and Germany. This has helped Bayer
carve a niche for its generic portfolio in these economies.
Bayer has developed strong R&D capabilities. It spent approximately 7.8% of its
consolidated net sales per year on R&D during 2004–2007. These capabilities have
helped it focus on medical and security technology, and the use of plants to develop
and manufacture new pharmaceutical products.
Bayer’s generic drugs are mostly marketed in France, Germany, Italy, Spain,
Eastern Europe and Brazil. It does not operate in the US and UK. By contrast,
competitors such as Teva, Novartis and Mylan have a presence in these markets,
placing Bayer at a competitive disadvantage.
Stada
Stada is the tenth largest generics pharmaceutical company in the world, based on
sales in 2007, with a market share of 1.3% in the global generics market. It
recorded generic sales of $1,227m in fiscal 2007, an increase of 22.3% over 2006.
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Stada’s key therapeutic areas were alimentary tract and metabolism, CVS, NS, anti-
infectives for systemic use, musculo-skeletal system, genito-urinary system and sex
hormones, dermatologicals, respiratory system, and blood and blood forming
organs, in 2007. CVS, NS and anti-infectives for systemic use represented more
than 70% of its therapeutic focus in 2007.
Ibuprofen and pravastatin were the most successful generics sold by Stada.
Ibuprofen and pravastatin, each recorded a sales growth of 399.1% and 101.3%
respectively, in 2007.
Stada depends on a network of raw material suppliers for its production

requirements. In addition, it uses external contract manufacturers for the majority of
its pharmaceutical production, including packaging as well as production.
Generics represent a price sensitive business model for Stada. Thereby, continuous
cost optimization forms an integral part of its growth strategy. In line with this
strategy, Stada has adopted a lean business model, enhancing its ability to adapt to
changing business environments. For instance, instead of manufacturing its own
API’s, it outsources them from contract manufacturers, helping it to maintain
flexibility and cost optimizations.
ALIUD Pharma, a subsidiary of Stada, is able to offer its products at lower prices,
as it does not operate its own sales force. This has helped it to develop a cost
advantage over its competitors in the generics industry.
Germany’s Arzneimittelversorgungs Wirtschaftlichkeitsgesetz (AVWG) reform,

implemented in May 2006, has created a new reference pricing system and
introduced higher rebates on generics. These obligatory rebates and price
reductions caused a decline of 5.4% in Germany’s generic sales, by value, in the
first half of 2007.
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CHAPTER 1
Introduction
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Chapter 1 Introduction
What is this report about?
This report provides an overview of the global generics industry, including its size and
growth, followed by current trends in the industry that are expected to lead to world-
wide growth. It also provides information on the current competitive generic
pharmaceuticals industry in the major markets, the US and 5EU.
This report also includes a list of top 10 global generic companies in 2007, assessed by
the following:
The companies’ market share in the global generics market, their business
segments, and geographic focus.
The companies’ top ten marketed products and major therapeutic areas.
The growth strategies and major acquisitions and divestments in this market.
the business-related strengths and weaknesses of the top 10 companies in this

market, and insights into the opportunities and threats facing them.
Methodology
The report gives an insight into the top 10 players in the global generics industry.
These players were ranked using IMS data, based on their generic sales in 2007. The
top 10 companies have been analyzed according to market share, geographical focus,
therapeutic area of focus, and key product sales. Companies that outperformed and
underperformed in the generics drug market have been identified by this method, and
their future has been analyzed according to their strengths, weaknesses, opportunities
and threats. In the case of private players, for which no details are available in the
public domain, primary research was conducted and the details were congregated.
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CHAPTER 2
Industry overview
27
Chapter 2 Industry overview
Summary
The global generics market registered sales of $96,730m in 2007, an increase of

15.3% over 2006, as against 6% growth for the overall pharmaceuticals sector.
Regular patent expiries of branded pharmaceuticals and spiraling healthcare costs
have fuelled this growth. This trend is set to continue, with pro-generic reforms
being introduced in the major markets.
The top 10 generics companies based on 2007 global sales include Novartis
(Sandoz), Teva, Mylan, Ratiopharm, Apotex, Pfizer (Greenstone), Sanofi-Aventis
(Winthrop), Watson, Bayer and Stada.
The US has the largest market share with sales worth $25,435m in 2007, or
26.3% of global generics sales. However, generics pharma markets in the 5EU
countries (particularly France, Spain and Italy) are growing at a faster pace and
accounted for 14.2% of the global generic sales in 2007.
The nervous system (NS) and cardiovascular system (CVS) were the largest
generics therapy areas among the top 10 companies covered in this report, with a
market share of 31% and, 28% respectively, based on 2007 sales.
The top 10 marketed products in 2007 in the US/5EU were mostly from the
largest therapy areas, CVS, NS, alimentary tract and metabolism, and anti-
infectives for systemic use.
The increased threat of patent expirations has forced pharma companies to shift
their business models by offering authorized generics. This allows a branded
pharma company to extend the lifecycle of a drug with an expired patent and
continue to hold on to the revenues it would have otherwise lost.
Intense competition has created pricing pressure on generic players. Participation

of specialty drug companies such as Pfizer (Greenstone), Sanofi-Aventis
(Winthrop) in this industry with the launch of authorized generics has stripped the
margins off most generics to the bare minimum in major markets. These
companies take away the economic viability of challenging patented drugs by
undercutting prices and market share during the 180-day exclusivity period.
28
Introduction
The global generics market grew at a faster pace than the global pharmaceutical market
in 2007, driven by the rising number of patent expiries of blockbuster drugs and the
need to curb increasing healthcare expenditure. However, the generics market is
changing due to the threat from authorized generics (a product that was originally
marketed and sold by a brand company, but is relabeled and marketed under a generic
product name by the brand company itself or through a subsidiary), increased
consolidation and competition from emerging countries.
This chapter will detail the current competitive generic pharmaceutical market in the
US/5EU, using IMS data. The 5EU countries consist of France, Germany, Italy, Spain
and the UK, which are considered to be representative of Western Europe. Through this
analysis, current key trends in the generic pharmaceutical market are identified and
discussed.
Market overview
Global generics market: size and growth
The global generics market is growing at a faster pace than the global pharmaceutical
market, with a CAGR of 16.4% during 2004–2007. While the global pharmaceutical
market has grown at a CAGR of 8.3% in the same period. The constant expiration of
patents and the pressure on governments to reduce healthcare costs in numerous
markets, by using low cost alternatives to branded drugs, are the primary drivers of
growth in the industry.
29
Figure 2.1: Global generics market size, 2004–2007 ($m)
100,000 20%
90,000
18.3%
80,000 18%
70,000
Growth rate (%)

60,000 16%
Sales ($m)
15.6%
15.3%
50,000
40,000 14%
30,000
20,000 12%
10,000
0 10%
2004 2005 2006 2007
Global sales Growth rate
Source: Business Insights/IMS Business Insights Ltd
Market overview for the US/5EU
Generics demand has been high in the six major markets; the US and the 5EU countries
(the UK, France, Germany, Spain and Italy). The US generics market has the largest
market share, with sales worth $25,435m in 2007. This market alone accounted for
26.3% of global generics sales in 2007 but although it has the largest share of sales, the
5EU countries are growing at a faster pace. The 5EU countries together represented
14.2% of the global generic market's sales in 2007.
30
Table 2.1: Total generic sales in the US/5EU, 2003–2007 ($m)
2003 2004 2005 2006 2007 CAGR

03–07
US 15,619 16,911 19,938 24,862 25,435 13.0%
5EU 6,938 9,145 10,170 11,476 13,689 18.5%
5EU
France 1,207 1,777 2,157 2,539 3,495 30.4%
Germany 2,252 2,677 3,082 3,173 3,475 11.5%
Italy 372 475 580 668 945 26.2%
Spain 564 706 846 990 1,326 23.8%
UK 2,543 3,511 3,504 4,105 4,449 15.0%
Sub total 6,938 9,145 10,170 11,476 13,689 18.5%
Total US/5EU 22,557 26,057 30,107 36,338 39,124 14.8%
Source: IMS, Business Insights Business Insights Ltd
Table 2.2: Generic sales by volume in the US/5EU, 2003–2007 (Standard

units m)
2003 2004 2005 2006 2007 CAGR

03–07
US 107,109 111,294 119,990 126,873 134,321 5.8%

5EU 50,302 54,755 59,716 63,245 70,100 8.7%
France 7,531 8,853 9,872 11,502 13,459 15.6%

Germany 16,800 17,218 18,773 18,082 19,592 3.9%
Italy 1,514 1,756 2,197 2,614 3,048 19.1%
Spain 2,672 3,525 4,058 4,582 6,071 22.8%
UK 21,785 23,404 24,816 26,464 27,930 6.4%
Total US/5EU 157,411 166,050 179,705 190,118 204,421 6.8%
* Standard units- It is the number of standard dose units sold. It is determined by taking the number
of counting units sold divided by the standard unit factor which is the smallest common dose of a
product form as defined by IMS.
Among the global top 10 generic players, Novartis, Apotex, Pfizer and Stada have
outperformed the industry, while Mylan hovers around the industry average. Watson
has underperformed, with sales growing at a CAGR of 1.3% during 2004–2007. The
31
figure below depicts the market position of the top 10 companies covered in this report,
as compared to the industry average.
Figure 2.2: Market position of the global top 10 generics companies, 2007
40%
Industry average sales
35%
Pfizer
Sales CAGR 2004-2007
30%
25% Apotex
20%
Stada Industry CAGR
Novartis
15% Sanofi Mylan Teva
Bayer
10% Ratiopharm
5%
Watson
0%
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000
Sales 2007 ($m)
The US
The US is the world’s largest generics market, with a market size of $25,435m in 2007.
Generic sales in this market grew at a CAGR of 13% during 2003–2007 and
approximately 63% of all prescriptions given out in the country are for generics. In
2007, the US generics industry grew by 2.3% (y/y) in value and 5.9% (y/y) in volume.
Generic drug applications have increased from 307 in 2002 to 880 in 2007, an increase
of 187%.
The US legislature is working towards ironing out the hurdles facing the development
of generics, including patent reform, patent settlements, anti-counterfeiting/pedigree
32
measures, authorized generics and free trade agreements. In addition, the US Congress
is considering legislation that would create a safe and effective FDA approval path for
biosimilars. The key drivers and resistors to generics growth in the US are:
Figure 2.3: Generics drivers and resistors - the US
Drivers to growth
• Utilization of generics through the Medicare prescription drug benefit (Part D).
• The increasing aging population in the US will require affordable medicines.
• More than $50bn drugs to go off-patent in the US in the next few years.
• Speeding up generics approval through implementation of Generic Initiative
for Value and Efficiency (GIVE).
Resistors to growth
• Regulatory hurdles for biogenerics.
• Extension of patent exclusivity period through exclusion payment settlements.
Source: Author’s analysis Business Insights Ltd
The pro-generic environment has intensified competition in the US market, bringing

down generic prices. This has hurt the economic viability of challenging patented
drugs, forcing domestic companies to look for greener pastures beyond the US. Mylan
and Barr have long been US-focused companies but both recently made major
international acquisitions. On the other hand, Indian generic companies are keenly
eyeing the US generics market, due to their inherent ability to combine highly skilled
33
drug development with low-cost manufacturing. For instance, Wockhardt, an Indian
generic company, acquired Morton Grove, a US-based generics specialist in liquid
dermatology products, in October 2007. Furthermore, four Indian companies, Ranbaxy,
Wockhardt, Sun Pharma and Dr Reddy’s, are contending for Par Pharma, the US-based
generic drug maker, to exploit opportunities in the pro-generic US market.
The UK
The UK is the largest generics market in the 5EU, thereby ranking second overall in the
US/5EU, with a market size of $4,449m in 2007. Generic sales in the UK grew at a
CAGR of 15% during 2003–2007. The UK government’s initiatives for promoting
generics consumption have resulted in a growth of 8.4% (y/y) in value and 5.5% (y/y)
in volume in generic sales for 2007. However, the market is highly fragmented;
overseas player Sanofi-Aventis (Winthrop) is the largest presence with a 2.1% market
share. The key drivers and resistors to generics growth in the UK are:
34
Figure 2.4: Generics drivers and resistors - the UK
Drivers to growth
• Promotion of generic prescription within the NHS by the UK government.
• Huge price differential between branded and generic drugs.
• Uptake of biogenerics.
Resistors to growth
• Patient co-payment exists only for a minority of medicines.
Note: NHS - National Health Service
The UK pricing policy governs profits rather than the sale price of medicines. This
stimulates the market entry of generics, owing to the high cost of branded medicines.
International Nonproprietary Names (INN) prescribing, even for patented drugs, is
common among physicians in the UK. This has resulted in a low price and high volume
generics market. However, a lack of incentives for patients to buy generic medicines
restrains generics demand.
35
France
France is the second largest generics market in the 5EU after the UK, with a market
size of $3,495m in 2007. Generic sales in France grew at a CAGR of 30.4% during
2003–2007. The French government’s initiatives to drive generics consumption have
resulted in a growth of 37.7% (y/y) in value and 17% (y/y) in volume in generic sales
for 2007.
Generic penetration has been low in France owing to resistance from French physicians
and an erosion of the pricing advantage that generics enjoy over branded drugs, due to
the reference pricing system. However, government initiatives to hold back spiraling
healthcare costs, combined with the potential size of the generics market, have turned
the attention of international companies to the country. International companies are
vying to gain a foothold in the French generic market at an early stage, in order to
capitalize on the latent growth potential. For instance, Zydus, an Indian generics
manufacturer, reached an agreement with Evolupharm, a French virtual pharmacy
distributor, in 2006. This deal enhanced Zydus’s marketing niche in France. In 2007,
another Indian generics company, Wockhardt, acquired Negma Laboratories, an
integrated French pharmaceutical group.
The key drivers and resistors to generics growth in France are:
36
Figure 2.5: Generics drivers and resistors - France
Drivers to growth
• Pro-generic public awareness campaign jointly launched by the pharmacy
association FSPF and insurer UNCAM.
• Generics dispensing targets for pharmacists set by French government.
Resistors to growth
• Generics medicines losing pricing advantage over branded drugs.
• Resistance from French physicians.
Note: FSPS - Federation des Syndicats Pharmaceutiques de France
UNCAM - Union Nationale des Caisses d’Assurance Maladie
Germany
Germany has the third largest generics market in the 5EU, after the UK and France,
with a market size of $3,475m in 2007. Generic sales in Germany grew at a CAGR of
11.5% during 2003–2007. Measures to curb spiraling healthcare costs have promoted
generic uptake by 9.5% (y/y) in value and 8.3% (y/y) in volume in generic sales for
37
2007. Budgetary restraints and regulatory pressure have encouraged physicians to
prescribe generic drugs, and pharmacists to dispense generic alternatives. However, the
AVWG Act, introduced in 2006, bestowed Krankenkassen (healthcare fund) with
considerable autonomy to negotiate with generic drug manufacturers. Exclusive rebates
were marked on drugs received by Krankenkassen. The GKV-WSG Act further drove
the use of low cost drugs by rewarding physicians advocating rebated drugs and
making it mandatory for pharmacists to sell out rebated drugs. The key drivers and
resistors to generics growth in Germany are:
Figure 2.6: Generics drivers and resistors - Germany
Drivers to growth
• Rewards for physicians prescribing rebated drugs.
• Pharmacists must dispense rebated drugs.
Resistors to growth
• Stripping-off margins on generics.
38
All of these reforms have initiated a price war, as well as opening the German market
to foreign competition. Until recently, the market had been dominated by domestic
players, Ratiopharm, Sandoz and Stada, but now any company can gain prominence in
the German generic industry if it secures a Krankenkasse contract. Teva, which has
historically had a modest presence in Germany, won a contract for six molecules from
AOK, the largest German healthcare fund, in 2007. This was followed by a second
contract, for more molecules, by AOK, enhancing Teva's presence in the German
generic market.
Spain
Spain is the fourth largest generics market in the 5EU, after the UK, France and
Germany, with a market size of $1,326m in 2007. Generic sales in Spain grew at a
CAGR of 23.8% during 2003–2007. Like other major European markets, Spain suffers
from rising healthcare costs. This lead to the introduction of pro-generic legislation and
an awareness campaign, driving generics consumption by 33.8% (y/y) in value and
32.5% (y/y) in volume in generic sales for 2007. The key drivers and resistors to
generics growth in Spain are:
39
Figure 2.7: Generics drivers and resistors - Spain
Drivers to growth
• Introduction of pro-generic legislation.
• Government and industry sponsored generic efficacy awareness campaign.
Resistors to growth
• Equivalent margins on branded and generic drugs.
• Smaller price differences between patented and generic medicines.
• Lower drug prices dampen market entry of generic medicines.
Spain’s generic market is small and offers limited profitability. Despite this, it is
expected to grow over the next few years as large generic players are entering the
market. In 2006, Ranbaxy, an Indian generic manufacturer, acquired
GlaxoSmithKline’s generic division to further reinforce its presence in Spain. Also in
2006, Wanbury, another Indian generic company, acquired Industrial Farmaceutica
Cantabria, a Spanish dermatological branded generic company, creating a presence for
itself in the European generics market. In December 2007, Canada-based Apotex
acquired Lareq Pharma, a Spanish generic pharmaceutical company. This acquisition
extended Apotex’s foothold in Western Europe. The Canadian company will also be
able to leverage Lareq Pharma’s strong brand recognition among pharmacists in Spain,
40
and use its nation-wide sales force to launch products currently in its development
pipeline. Thus, Spain primarily serves as a niche for companies to extend their footprint
in Western Europe.
Italy
Italy is the smallest generics market in the 5EU, after the UK, France, Germany and
Spain, with a market size of $945m in 2007. Generic sales in Italy grew at a CAGR of
26.2% during 2003–2007, while generics consumption increased by 41.4% (y/y) in
value and 16.6% (y/y) in volume through 2007. The growth of the generic industry has
been boosted by the issue of compulsory licenses which allow the manufacture of
active ingredients during patent protection for export to other countries where the
patent has expired. Efforts to control rising healthcare expenditure have also
contributed to the growth of generics. The key drivers and resistors to generics growth
in Italy are:
41
Figure 2.8: Generics drivers and resistors - Italy
Drivers to growth
• Escalating healthcare expenditure.
• Allowance of generic substitution of prescriptions by pharmacists.
• Compulsory licenses allowing manufacture of active ingredients during patent
protection, for export to other countries where the patent has expired.
Resistors to growth
• CCP delays entry of generics in the Italian market.
• Existence of branded copies deter generic penetration.
• Italian reference pricing system restricts entry of multiple generics.
• Lack of incentives for generic uptake among physicians, pharmacists and
patients, as well as mistrust regarding generic bioequivalence.
Note: CCP- Complementary Certificate of Protection
The Italian legislative framework is not conducive to generics industry growth, with
CPP and the marketing of branded copies impeding generics entry. Furthermore, the
setting of reference price at the level of the price of the cheapest medicine, and a lack
of incentives for physicians and pharmacists to demand generics has resulted in a low-
price and low-volume market. This hinders the economic feasibility of generics
entering and remaining in the market.
42
Top trends in the industry
Changing paradigms towards emerging markets
There is a global shift towards the use of generics as governments worldwide are under
tremendous pressure to curtail steeply escalating healthcare budgets. Unlike branded
drugs, generics do not require costly clinical trials or an extensive development
process, and thus, they cost less in comparison to branded drugs. Until now, a major
share of the demand for generics has been coming from North America and Europe, the
two largest pharma markets in the world. However, these markets are now maturing
due to economic shifts, rapidly changing demographics and significant reforms in the
regulatory regimes. Emerging markets are set to surpass North America and Europe to
become the most lucrative drug markets in the world by 2020.
43
Figure 2.9: Emerging markets generic sales, 2003–2007 ($m)
16,000
14,000
12,000
Generic sales ($m)
10,000
8,000
6,000
4,000
2,000
-
2003 2004 2005 2006 2007
Brazil* Russia India* China** US 5EU
*Retail prices
** Hospital prices
Major factors behind the strong growth in the Brazilian generics market are the level of
government support and the patent expiration of many blockbuster drugs. The Brazilian
government supports the pharmaceutical industry through the implementation of
various regulations, such as a generics law in 1999 and first marketing authorization in
2000. Moreover, the pharmaceutical regulatory agency ANVISA has framed new
regulations, according to which all drugs present in the Brazilian market will have to
prove their bioequivalence or face withdrawal by 2014. With the government's support,
the generics market in Brazil is expected to emerge as one of the largest in the world,
accounting for 23% of the total Brazilian pharmaceutical market by 2011, as compared
to about 12% in 2007.
44
The low-cost generics market is expanding in Russia, as economic conditions improve
and disposable incomes increase. This is causing most of the top global generic
companies to expand their presence in Russia. For example, Germany's Stada increased
its share of the Russian pharmaceuticals market from 0.9% to 1.4% in 2007, through
Nizhfarm, in which it has a 99.09% stake. In 2007, it also acquired the Makiz group of
Russian companies, ZAO-Makiz Pharma.
The expected economic prosperity in the emerging countries of Asia (India and China)
will trigger many positive factors for the healthcare industry, such as higher standards
of living, increasing per capita disposable income, and an improving healthcare
infrastructure that will directly contribute to the growing consumption of generics.
Indian companies are also ready with generic version of biotech drugs. Therefore, India
and China will be able to maintain a large generics market.
The low purchasing power of a majority of the population in emerging countries and
the patent expiration of blockbuster drugs creates an increased demand for low-priced
generic pharmaceuticals.
The generics manufacturing base is shifting to low cost hubs

The emerging economies are witnessing growth in generics manufacturing facilities
owing to their cost competitiveness and pro-generics regulatory environment. For
instance, Teva is looking at opportunities to build or buy a plant in Russia by 2009.
Teva does not currently have a production activity in Russia, and is prepared to invest
$30–50m in the building of a plant.
China is emerging as a strong generic manufacturer on the back of its cost

competitiveness, strong government support (in the form of incentives),
implementation of good manufacturing practice norms, aggressive exports thrust, and
increased consolidation, which is creating Chinese Pharma giants. In 2007, the country
received the first FDA granted approval for Zhejiang Huahai Pharmaceutical to sell a
generic version of the AIDS medicine nevirapine, whose patent, held by German drug
maker Boehringer Ingelheim, expires in 2012. This was the first instance in which a
Chinese drug company has gained permission to export a finished medicine to the US.
45
The introduction of Chinese-produced pharmaceuticals is expected to further drive
down generic drug prices, offering competition to drug makers in the US and Europe,
and putting pressure on their profit margins.
Growing legislative support for 'follow-on biologics'
Follow-on biologics are used in the EU and the major countries of Asia. The EC has
already approved five biosimilar medicines, and as many as 16 new applications for
approval of biosimilar medicines had been received by the end of 2007. Omnitrope, a
synthetic form of human growth hormone developed by Novartis (Sandoz), was the
first biosimilar product to receive approval in Europe in 2006. Following the launch of
omnitrope, Novartis (Sandoz) received marketing approval for its epoetin alfa
equivalent in 2007. Later that year, Hospira received a positive recommendation from
the Committee for Medicinal Products for Human Use (CHMP) for its follow-on
version of epoetin zeta, Retacrit.
India has also been approving follow-on biologics. India-based Dr. Reddy's
Laboratories makes two generic biological drugs; versions of Roche's Rituxan and
Amgen's Neupogen. Matrix Laboratories is another Indian generic-drug maker active in
follow-on biologics.
By contrast, in the US, regulators and lawmakers continue to debate over proposals to
speed the introduction of cost-saving biosimilar drugs. However, several safety and
efficacy issues confront regulators since biologics are complex entities derived from
living host cell systems.
A number of top selling biopharmaceuticals are set to go off-patent during 2008–2001

and the table below lists a selection of these.
46
Table 2.3: Biologics going off patent in the US, 2008–2011
Product Manufacturer Active ingredient Year patent

expires
Genotropin Pfizer Somatropin 2008
Novoseven Novo Nordisk Coagulation factor VIIa 2008
Infergen Valeant Interferon alfacon-1 2009
Humira Abbott Adalimumab 2010
BeneFIX Wyeth Coagulation factor IX 2011
Source: Author’s research Business Insights Ltd
This presents a lucrative opportunity for generic manufacturers in the EU, where
follow-on-biologics have been approved. At present, a few companies within the
industry, such as Sandoz and Teva, are well-placed to exploit biologic patent expiries.
Growing legislative support for follow-on-biologics, and the rising number of
biopharmaceuticals going off-patent, will see many companies attempting to capitalize
on this potential revenue stream.
Increasing participation of branded Pharma companies in generics

industry
The generics industry is no longer the forte of pure generics players. Branded Pharma
companies are increasingly participating in this industry to win back revenues which
would have otherwise been lost due to patent expiry. Patents for branded drugs worth
more than $43bn in annual sales in 2005 are expected to expire by 2009.
The increased threat of patent expirations has forced branded Pharma companies to
reassess their competitive strategies. These companies are now altering their business
models by offering follow-on products to compete with generics, and by offering their
own authorized generics. This allows a branded Pharma company to continue to hold
on to a large portion of the revenues it would otherwise have lost.
As blockbuster drugs such as paroxetine (Paxil), bupropion HCl (Wellbutrin SR), and
sertraline HCl (Zoloft) go off patent, big Pharma companies are able to retain some
47
revenues from them by offering authorized generic versions in the 180-day exclusivity
period. To market these authorized generics, Pharma companies have partnered with
generics makers, which are, in some cases, divisions of their own companies. For
example, in July 2006, Pfizer authorized a generic version of its blockbuster Zoloft to
its Greenstone subsidiary.
Figure 2.10: Pharmaceutical companies and their generic divisions
Big pharmaceutical companies Generic divisions
Pfizer Greenstone
Novartis Sandoz
Sanofi-Aventis Winthrop
Johnson & Johnson Patriot Pharmaceuticals
Source: Company information Business Insights Ltd
Some branded drug companies prefer not to manufacture the authorized generic, so
they outsource this work to a generic company, which pays royalties to the branded
company. For example, in June 2008, Bayer has announced that it will supply Barr
Pharmaceuticals with generic versions of its big selling oral contraceptives, Yasmin
and Yaz, only three months after Yasmin's patent was declared invalid. Authorized
generics of the two products will be launched in the US in July 2008 and 2011,
respectively, and will limit the potential generic erosion of sales otherwise facing
Bayer.
The issue of authorized generics is one of the most challenging facing generic drug
manufacturers, as it means major decreases in revenues for generic drug manufacturers.
48
Consolidation
Generic manufacturers are consolidating in order to compete with integrated Pharma

companies. The generics industry is witnessing growing participation of the specialty
pharmaceutical companies through the launch of authorized generics, and the majority
of these specialty drug makers have the benefit of scale, as well as R&D capabilities.
Moreover, the regulatory measures for authorized generics give easy access to these
companies in the generics markets. These mounting challenges have set a trend of
consolidation among the pure generic players as they attempt to attain vertical
integration, scale, R&D skills and new markets.
The biggest consolidation in 2007 was Mylan's $6.7bn purchase of the generic business
of Merck, which created a vertically and horizontally integrated player. The largest
acquisition in 2006 occurred at the beginning of the year when Teva acquired Ivax for
$7.4bn, forming the world's second largest generics company.
Going forward, further consolidations are likely, particularly involving Indian and
Chinese generics players. Indian companies are looking to expand their business at the
global level by acquiring companies all over the world. Ranbaxy, for example, is
actively seeking acquisition opportunities in the US, Europe and the emerging markets
to increase its footprint. In 2005 and 2006, Ranbaxy purchased nine companies, the
largest being a $324m acquisition of Romania's Terapia.
In the next few years, consolidation will most likely rise, driven by increased
competition from companies in Eastern Europe, India and China, as well as branded
Pharma companies seeking to protect their franchises by moving into generics.
49
Top ten generic companies
Global ranking
The global generics market is highly fragmented, with the top ten companies
representing 31.7% of the total market size in 2007. Novartis (Sandoz) is the leader
with a 7.4% market share, followed by Teva (6.6%) and Mylan (4.8%). As illustrated
in the figure below, Novartis (Sandoz) overtook Teva, claiming the number one
position in the global generics market for 2007.
Figure 2.11: Top 10 generic companies global market share, 2007
100% 7.4%
100% 6.6%
4.8%
2.6% 2.4%
2.0% 1.8% 1.4%
80% 1.4% 1.3% 68.3%
Market share (%)
60%
40%
20%
0%
Mylan
Watson
Stada
Apotex
Sanofi-Aventis
Total market
Teva
Others
Ratiopharm
Bayer
Pfizer
Novartis
US/5EU consolidated
The global top 10 generic companies contributed approximately 49.9% of the total
generic sales in the US/5EU (combined) in 2007, with Teva leading in sales value,
followed by Novartis. Other companies that have moved up in the top 10 ranking in
50
2007, taking into consideration the combined US/5EU sales, include Watson and Stada,
revealing the important role that these markets play in their top-line growth.
Table 2.4: Top 10 generic companies’ sales in the US/5EU, 2003–2007 ($m)
2003 2004 2005 2006 2007 CAGR

03–07
Novartis 2,278 2,740 3,580 3,793 4,568 19.0%

Teva 2,877 3,364 4,058 5,616 4,717 13.2%
Mylan 2,022 2,188 2,686 2,966 3,772 16.9%
Ratiopharm 1,026 1,230 1,406 1,379 1,390 7.9%
Apotex 274 540 574 1,494 1,082 40.9%
Pfizer 163 259 718 1,554 1,228 65.6%
Sanofi-Aventis 85 112 123 255 387 46.2%
Watson 1,043 1,331 1,426 1,400 1,374 7.1%
Bayer 163 176 175 172 190 3.9%
Stada 438 520 583 661 812 16.7%
Top 10 companies'
generic sales in
the US/5EU 10,369 12,460 15,330 19,290 19,520 17.1%
Total generic sales

in the US/5EU 22,557 26,057 30,107 36,338 39,124 14.8%
Therapeutic focus of the top 10
Treatments for the CVS, NS, anti-infectives for systemic use, and alimentary tract and
metabolism are the largest therapy areas of the generics drug market within the top 10
generics companies, based on 2007 sales. Except for Pfizer and Stada, the rest of the
top 10 generics companies have either CVS or NS as their major therapy area,
indicating that CVS and NS are the key therapy areas in the generics market.
The CVS therapy area has registered the largest increase in market share, followed by
alimentary tract and metabolism. Conversely, blood and blood forming organs have
registered the highest decrease in market share, followed by NS. Generic sales have
been low for therapeutic areas such as dermatologicals, antineoplastic and
51
immunomodulating agents, and systemic hormonal preparations, excluding sex
hormones and insulins.
Table 2.5: Largest therapy areas for generics for the top 10, 2007 ($m)
Largest therapy area 2007 Proportion of

total sales (%)
Novartis Cardiovascular system 1,019 27.8%

Teva Cardiovascular system 1,178 34.0%
Mylan Cardiovascular system 1,115 37.2%
Ratiopharm Nervous system 284 28.6%
Apotex Nervous system 273 27.3%
Pfizer Anti-infectives for systemic use 492 40.5%
Sanofi-Aventis Nervous system 126 36.3%
Watson Nervous system 935 74.9%
Bayer Nervous system 134 85.4%
Stada Alimentary tract and metabolism 178 28.3%
Table 2.6: Market share by therapy area in the US/5EU generics market,
2006–2007
Therapeutic area Market share Market share Change (bps)

2006 2007 (2006–2007)
Alimentary tract and metabolism 8.5% 10.6% 211

Anti-infectives for systemic use 15.9% 15.7% (20)
Antineoplastic and
immunomodulating agents 1.0% 1.3% 34
Blood and blood forming organs 6.0% 1.5% (448)
Cardiovascular system 24.5% 27.5% 303
Dermatologicals 0.2% 0.2% 4
Genito-urinary system and
sex hormones 2.6% 4.0% 144
Musculo-skeletal system 3.3% 3.3% (2)
Nervous system 33.4% 31.2% (214)
Respiratory system 4.5% 4.3% (26)
Sensory organs 0.0% 0.1% 10
Systemic hormonal preparations,
excluding sex hormones and insulins 0.2% 0.2% 3
52
Key marketed products of the top 10
The top 10 marketed products in 2007 in the US/5EU are mostly from the largest
therapy areas, CVS, NS, alimentary tract and metabolism, and anti-infectives for
systemic use. Not all of the top 10 marketed products registered a growth in sales in
2006–2007. Fexofenadine and gabapentin recorded a major decline in sales of 43.9%
and 30.2%, respectively, in 2007.
Table 2.7: Top 10 generics by sales value in the US/5EU, 2007 ($m)
Generics Therapy area 2006 2007 Growth CAGR

06–07 03–07
Amlodipine Cardiovascular system 1,084 1,188 9.6% 162.6%

Amoxicillin Anti-infectives
for systemic use 796 801 0.6% 90.2%
Omeprazole Alimentary tract
and metabolism 434 729 68.1% 6.2%
Fexofenadine Respiratory system 886 497 (43.9)% 1350.5%
Gabapentin Nervous system 674 471 (30.2)% 44.3%
Fentanyl Nervous system 359 440 22.5% 12.2%
Piperacillin Anti-infectives
for systemic use 4 423 10810.7% 260.4%
Sertraline Nervous system 307 417 36.0% 720.6%
Simvastatin Cardiovascular system 247 357 44.6% 36.2%
Bupropion Nervous system 45 311 599.4% NA
Total 4,835 5,633 16.5% 48.7%
NA: not applicable
53
Geographic focus of the top 10
The geographic focus of the top 10 generic pharmaceutical companies in the US/5EU is
depicted below:
Figure 2.12: Geographic focus of the top 10 in US/5EU, 2007
Watson
Pfizer
Apotex
Teva
Novartis
Mylan
Sanofi-Aventis
Stada
Bayer
Ratiopharm
0% 20% 40% 60% 80% 100%

Geographical proportion of sales, 2007
US 5EU
US ranking
The top 10 generic companies in the US, based on 2007 generic sales in that market,
are similar to the global list, with six overlapping companies. This high level of
similarity between the two rankings is due to the US market being the major market for
the companies included in the global top 10. For instance, Novartis, Teva, and Mylan,
derived 73.8%, 85.7%, and 66.9% of their consolidated generics revenues in the
US/5EU in 2007. Ratiopharm, Sanofi-Aventis, Bayer and Stada do not make it in the
top 10 US generic companies as they do not have generic operations in the US market.
Par Pharm and Boehringer Ingel, on the other hand, are both US companies which do
54
not operate in the 5EU. Western Europe has witnessed higher generic sales growth rate
as compared with the US in 2007, opening up new avenues for companies that are
currently mostly reliant on the US market, such as Par Pharm and Boehringer Ingel.
Table 2.8: Top 10 generic companies in the US, 2003–2007 ($m)
2003 2004 2005 2006 2007 CAGR

03–07
Teva 2,704 3,102 3,727 5,248 4,202 11.6%

Novartis 1,773 1,892 2,416 2,429 3,078 14.8%
Mylan 1,598 1,569 1,967 2,073 2,521 12.1%
Watson 1,043 1,331 1,426 1,400 1,374 7.1%
Pfizer 158 254 714 1,548 1,217 66.6%
Par Pharm 741 1,100 977 1,124 1,128 11.1%
Apotex 264 527 558 1,477 1,053 41.4%
Barr Pharma 806 733 662 742 891 2.5%
Boehringer Ingel 380 430 561 788 809 20.8%
Hospira 497 525 593 635 685 8.4%
US Total 9,963 11,463 13,601 17,464 16,959 14.2%
US Generic market 15,619 16,911 19,938 24,862 25,435 13.0%
* Ratiopharm, Sanofi-Aventis, Bayer and Stada do not have presence in the US
EU ranking
The table below lists the top 10 generics players in the 5EU. The top 10 5EU generics
companies, based on 2007 generic sales, contains seven companies that are also in the
global list. Watson, Apotex and Pfizer are the three companies from the global top 10
generics companies that do not appear in this list. Watson is purely US-based, while
Pfizer and Apotex have a very small presence in the 5EU, but not enough to qualify in
the top 10. Companies focused primarily on the US market are building presence in
Western Europe, as the generics industry in the 5EU has outperformed the US generics
industry in 2007. For instance, Apotex has already made a stride in this direction with
the acquisition of Lareq Pharma in Spain in 2007.
55
Table 2.9: Top 10 generics companies in 5EU, 2003–2007 ($m)
2003 2004 2005 2006 2007 CAGR

03–07
Novartis 182 311 466 621 681 39.0%

Ratiopharm 330 444 517 545 604 16.2%
Mylan 111 192 251 357 514 46.8%
Stada 169 216 253 308 402 24.2%
Teva 61 110 159 187 292 47.8%
Sanofi-Aventis 46 62 77 175 273 56.4%
Servier 42 99 145 180 252 56.7%
Bayer 160 171 173 172 190 4.5%
Hospira 62 81 103 136 175 29.8%
Fresenius 86 83 94 113 170 18.6%
5EU Total 1,248 1,770 2,239 2,794 3,552 29.9%
5EU Generic market 6,938 9,145 10,170 11,476 13,689 18.5%
* Watson, Apotex and Pfizer do not have presence in 5EU
56
CHAPTER 3
Novartis (Sandoz)
57
Chapter 3 Novartis (Sandoz)
Summary
.Novartis (Sandoz) is the leading generic pharmaceuticals company in the world,

with a market share of 7.4%, based on 2007 sales. It recorded generic sales of
$7,124m in fiscal 2007, an increase of 19.7% over 2006.
Sandoz’s major generic therapeutic areas include CVS, NS, anti-infectives for
systemic use, alimentary tract and metabolism, respiratory system, musculo
skeletal system, genito-urinary system, and sex hormones.
The top 10 marketed products of Sandoz include fentanyl, amoxi/clavul,

omeprazole, ondansetron, metoprolol, amlodip/benaz, lovastatin, cefdinir,
bupropion and azithromycin.
Sandoz plays an integral part in Novartis’ strategy by helping it maintain its

leading position and competitive edge through launch of difficult-to-make
generics. As a part of this strategy, in 2007 it received European Commission
(EC) approval for a biosimilar epoetin alfa (EPO) to bring cost-effective
biological medicines to the market.
Sandoz intends to increase its business outside the traditional core markets of
Europe and the US by covering more countries with a potential for generics
where it is not yet active. In 2007, it submitted regulatory applications for 92
different projects around the world.
In June 2008, Johnson & Johnson's Janssen unit sued Sandoz to prevent it from
selling a generic version of the Alzheimer's drug Razadyne ER until a patent
expires in 2019.
58
Table 3.10: Novartis (Sandoz) snapshot
Headquartered: Switzerland
Incorporated: 1886
Segment revenues (2007): $7,124m
No. of employees (2007): 23,087
Market share (2007): 7.4%
Source: Company information/IMS Business Insights Ltd
Business description
Novartis is engaged in the development and manufacture of pharmaceuticals and

nutritional products. It has a broad portfolio that includes innovative medicines,
preventive vaccines and diagnostic tools, generic pharmaceuticals, and consumer
health products. It operates its generic business through the Sandoz division, which
offers about 950 compounds in more than 5,000 forms in 130 countries. It has 38
manufacturing facilities around the world and primarily operates in the US and Europe.
Sandoz has activities in retail generics, anti-infectives and biopharmaceuticals:
Retail generics – it develops and manufactures active ingredients and finished

dosage forms of pharmaceuticals no longer protected by patents, as well as
supplying active ingredients to third parties.
Anti-infectives – it develops and manufactures off-patent active pharmaceutical

ingredients and intermediates, mainly antibiotics, for use by its own retail generics
division, and for sale to third-party customers.
Biopharmaceuticals – it develops and manufactures protein or biotechnology

based products no longer protected by patents (known as biosimilars or follow-on
biologics) and provides biotech manufacturing to other companies on a cooperative
or contract basis.
59
Geographic focus
The US was the largest market for Sandoz in fiscal 2007, accounting for 43.2% of its
consolidated generic sales. It recorded generic sales of $3,078m in the US market in
fiscal 2007, an increase of 26.7% over 2006. Contributions from recently launched
products, including 'difficult-to-make' generics, such as metoprolol succinate ER
(Toprol-XL) and cefdinir (Omnicef), supported the increase in US net sales. The
company also benefited from the launch of an authorized generic version of
amlodipine/benazepril (Lotrel).
Generic revenues increased by 9.2% in the 5EU to reach $1,490m in fiscal 2007.
Sandoz recorded revenue growth in all the major EU markets except the UK, where
generic revenues declined by 29.7% to $83m in fiscal 2007.
Figure 3.13: Novartis’ (Sandoz) geographic focus, 2006–2007
40bps
100%
90%
80% 36.3% 35.9%
Generic sales (%)
70% 200bps
60%
20.9%
50% 22.9%
320bps
40%
30%
20% 40.8% 43.2%
10%
0%
2006 2007
US 5EU Others
*bps- basis points
60
Marketed products
The top 10 generic pharmaceutical products marketed by Novartis (Sandoz) based on

2007 sales are shown in the table below.
Table 3.11: Novartis’ (Sandoz) top 10 marketed products sales, 2006–2007

($m)
Drug name Therapeutic area Sales 06 Sales 07 Growth
Fentanyl Nervous system 441 464 5.1%

Amoxi/Clavul Anti-infectives for systemic use 369 319 (13.6%)
Omeprazole Alimentary tract and metabolism 176 210 19.6%
Ondansetron Alimentary tract and metabolism 12 196 1563.5%
Metoprolol Cardiovascular system 13 176 1229.8%
Amlodip/Benaz Cardiovascular system 0 132 NA
Lovastatin Cardiovascular system 64 131 103.4%
Cefdinir Anti-infectives for systemic use 0 119 NA
Bupropion Nervous system 113 100 (12.2%)
Azithromycin Anti-infectives for systemic use 129 97 (25.4%)
Total 1,319 1,943
NA: not applicable
Novartis (Sandoz) launched a number of important products in 2007, including:
Omnitrope – a follow-on version of the recombinant human growth hormone

Somatropin that was launched in the US, Italy, Spain, and France. Omnitrope liquid
was also launched in the UK and Germany.
Fenofibrate – a cholesterol reducing product, launched in Canada.
Oxycodon HCT – an opioid analgesic commonly used for the treatment of pain in
cancer patients, launched in Germany.
Cefdinir capsules and oral suspension – a generic version of the anti-infective

Omnicef, launched in the US.
61
Finasteride – an antiandrogen used as a treatment in benign prostatic hyperplasia
and prostate cancer, launched in Germany.
Amlodipine besylate/Benazepril – a generic version of the pharmaceuticals

division’s hypertension product Lotrel, launched in the US.
Ipratropium Bromide & Albuterol Sulfate Inhalation Solution – a generic

version of Duoneb, for the management of chronic obstructive pulmonary disease
and asthma, launched in the US.
Metoprolol Succinate Extended Release Tablets USP – a generic version of the

beta-blocker Toprol-XL to treat angina, heart failure, and high blood pressure,
launched in the US.
Leuprorelin Implant – for the treatment of hormone-responsive cancers such as

prostate cancer or breast cancer, launched in Germany.
Fentanyl Matrix – a generic version of the Duragesic transdermal patch pain-

killer, launched in the UK.
Epoetin alfa Hexal and Binocrit – follow-on versions of the recombinant human
protein Eprex/Erypo for the treatment of anemia, launched in Germany.
Major therapeutic focus
The major therapeutic areas for Sandoz are the CVS, NS, anti-infectives for systemic
use, alimentary tract and metabolism, respiratory system, musculo skeletal system,
genito-urinary system, and sex hormones, as shown in the figure below.
62
Figure 3.14: Novartis’ (Sandoz) therapeutic focus, 2007
Respiratory
Alimentary tract
system
and metabolism
6%
12%
Nervous system
26%
Anti-infectives for
systemic use
22%
Musculo-Skeletal
System
4%
Genito-urinary
Cardiovascular
system and sex
system
hormones
29%
1%
Growth strategies
Focus on difficult-to-make and biosimilar generics
Sandoz focuses on difficult-to-make generics, which are products based on challenging

active pharmaceutical ingredients, or requiring specialized formulations and
technologies. This range from transdermal patches and implants to extended-release
tablets. This strategy is epitomized by biosimilars, follow-on versions of existing
biologic medicines. In a precedent-setting decision, in April 2006 Sandoz became the
first company to obtain EU approval for a biosimilar medicine, the human growth
hormone Omnitrope. Approval of Omnitrope in the US followed a month later. In
63
2007, Sandoz became the first company to receive EU approval for a biosimilar EPO, a
further milestone in the company’s efforts to bring cost-effective biological medicines
in the market. As more biopharmaceuticals lose patent protection in coming years,
biosimilar products are expected to play a key role in the growth strategy of Sandoz.
Acquisitions and divestments
In 2007, Novartis became focused solely on healthcare by divesting the remainder of

its Medical Nutrition Business Unit and the Gerber Business Unit.
With the acquisition of two leading generic pharmaceuticals companies (Hexal and Eon
Labs) in 2005, Sandoz became the world’s largest generics company, with strengths in
difficult-to-make generics and innovative product applications, including device
technologies.
64
SWOT analysis
Figure 3.15: Novartis (Sandoz) SWOT analysis
STRENGTHS WEAKNESSES
Leadership position in both patented Setbacks in gaining regulatory approvals

medicines as well as generic for new products as well as difficulties in
pharmaceuticals. keeping products on the market due to
increasing scrutiny of product safety by
Dynamic launches in difficult-to-make FDA.
generics, such as cefdinir, metoprolol
succinate and ipratroprium albuterol, set
it apart from competition.
Strong capabilities in biosimilar products,

which is an emerging market with an
increasing number of major
biotechnology-based medicines coming
off patent and facing generic competition.
OPPORTUNITIES THREATS
Strong pipeline with more than 750 Legal proceedings and patent litigations
projects, including a significant proportion may have a significant impact on the
of difficult- to-make products underway. results of the company’s operations.
65
Strengths
Size and leading generics position
Sandoz has a leadership position in both patented medicines and generic

pharmaceuticals. Sandoz’s size, relative to that of its peers, provides it with economies
of scale, and serves as a useful buffer against the volatility of the generics market,
while allowing it the luxury of investing in potentially high risk ventures such as
biosimilars. Sandoz is the largest generics company globally, with revenues of
approximately $7.2bn in 2007, outpacing the market leader Teva. It achieved this
position through a series of strategic acquisitions that have increased its global
footprint and pipeline.
Dynamic launches
Sandoz is leading the way in difficult-to-make generics. In 2007, along with cefdinir,
its key launches in the US included additional dosages of metoprolol succinate, a drug
used to treat high blood pressure and heart failure. The Sandoz version of ipratroprium
albuterol, a medicine used to treat respiratory disorders, earned a coveted period of
market exclusivity following its US launch in 2007. It was an important strategic
milestone for Sandoz because treatments for respiratory diseases represent a major
growth initiative. In Europe, Sandoz launched leuprorelin, a treatment for prostate
cancer, in an implant formulation injected into the abdominal skin of patients. Sandoz’s
difficult-to-make products set it apart from the competition.
Biosimilar capabilities
Sandoz appears to be particularly well placed to exploit the emerging market for
biosimilar products, having already secured approval for biosimilar versions of
Omnitrope in 2006 and EPO in 2007. It has been building its position in biologics,
consistently growing its capabilities and expertise in the R&D of all biologic therapies,
which represented 25% of its pre-clinical research portfolio in 2007.
66
By 2010, it is estimated that more than 50% of newly approved medicines will be
biopharmaceuticals. The period beginning in 2010 will also see an increasing number
of major biotechnology-based medicines coming off patent and facing generic
competition. With decades of experience in biotechnology and global development,
along with an extensive production network, Sandoz is well placed to capture the
biosimilars opportunity.
Weaknesses
Development setbacks
The setbacks in gaining regulatory approvals for new products, as well as difficulties in
keeping products on the market due to increasing scrutiny of product safety, have
significantly impacted Novartis’s pharmaceutical segment’s performance, due to the
loss of future potential for these drugs. In March 2007, Galvus (diabetes) received an
approvable letter from the FDA requiring it to conduct major additional clinical trials
before US regulatory approval. The company also suspended the marketing and sales
of Zelnorm (irritable bowel syndrome) in the US and several other countries in
response to a request from the FDA, which requires further discussions of the product’s
risks and benefits. As a result of these suspensions, net sales of Zelnorm fell 84% in
2007, as compared to 2006, reaching $88m. Sales are expected to fall significantly
further in 2008. Furthermore, in the second half of 2007, Prexige (osteoarthritic pain)
was withdrawn from the market in Australia, as well as some countries in the EU,
based on post-marketing reports of serious liver side-effects allegedly associated with
long-term uses of higher doses, including the deaths of two patients.
Opportunities
Strong pipeline
During 2007, Sandoz submitted regulatory applications for 92 different projects around
the world. At the same time, its development team has submitted supplementary
regulatory applications in new markets for many existing products, as part of a growth
initiative prompted by the acquisition of Hexal and Eon Labs. Sandoz intends to
increase its business outside the traditional core markets of Europe and the US by
67
covering more countries with a potential for generics where the market is not yet fully
active.
The Sandoz development pipeline encompasses more than 750 projects, including a
significant proportion of difficult-to-make products. A difficult-to-make product often
starts with complex active pharmaceutical ingredients (APIs). At Sandoz, development
projects involving more than 70 APIs are currently underway. The in-house
development of APIs offers an increasingly important competitive advantage to the
company.
Threats
Legal proceedings
Legal proceedings may have a significant impact on the results of the company's
operations. Sandoz may, from time to time, seek approval to market a generic version
of a product before the expiration of patents claimed by one of its competitors for the
relevant product. As a result, it frequently faces patent litigation and in certain
circumstances, it may elect to market a generic product even though patent
infringement actions are still pending. For example, in June 2008, Johnson & Johnson's
Janssen unit sued Sandoz to prevent it from selling a generic version of the Alzheimer's
drug Razadyne ER until a patent expires in 2019. Should it elect to proceed in this
manner and conduct a 'launch at risk', it could face substantial damages if the final
court decision is against it.
68
CHAPTER 4
Teva
69
Chapter 4 Teva
Summary
Teva is the second largest generics pharmaceutical company in the world based
on 2007 sales. It had a market share of 6.6%, representing sales worth $6,373m in
The major therapeutic areas for Teva in 2007 were CVS, NS, anti-infectives for
systemic use, respiratory system, genito-urinary system and sex hormones,
alimentary tract and metabolism, musculo-skeletal system, and antineoplastic and
Teva’s top 10 marketed products in 2007 include simvastatin, amlodip/benaz,

fexofenadine, azithromycin, gabapentin, venlafaxine, sertraline, amoxi/clavul,
finasteride and clozapine.
Teva aims to double the size of its business by 2012, reaching revenues of $20bn
through a series of actions, namely: increasing its market share in key markets;
doubling its R&D capabilities and production capacity; and investing in the next
wave of technology and generics to develop affordable biopharmaceuticals.
In 2007, Teva maintained its position as the US market leader in total

prescriptions and new prescriptions, with generic prescriptions increasing from
409m in 2006 to 437m in 2007, representing 18% of total generic prescriptions in
the US.
Teva’s direct-to-pharmacy distribution model limits its reach to greater number of
pharmacies.
70
Table 4.12: Teva snapshot
Headquartered: Israel
Incorporated: 1944
Teva is a global pharmaceutical company that specializes in the development,

production and marketing of both generic and proprietary branded pharmaceuticals, as
well as APIs. Its global operations are conducted in North America, Europe, Latin
America, Asia and Israel. It has operations in more than 50 countries, 36
pharmaceutical manufacturing sites in 16 countries, 17 generic R&D centers and 18
API manufacturing sites around the world.
Teva operates its generic business through its subsidiaries in North America and
Europe, and further markets through its International Group.
Teva’s principal US subsidiary (Teva USA) is the leading generic drug company in the
US. Teva USA markets over 300 generic products in more than 1,000 dosage strengths
and packaging sizes. In 2007, its total prescriptions increased from approximately
409m in 2006 to approximately 437m in 2007, representing 18% of total generic
prescriptions. As of February 7, 2008, Teva had 160 product registrations awaiting
FDA approval, including 44 tentative approvals.
Teva manufactures and markets generic prescription pharmaceuticals in Canada

through its subsidiary Novopharm. At the end of 2007, its product portfolio included
181 generic products which were sold in approximately 700 dosage forms and
71
packaging sizes. As of the end of 2007, Novopharm had applications for 62 products
awaiting approval of the Therapeutic Products Directorate of Health Canada.
In Europe, Teva has generic operations in 17 Western European countries. During

2007, Teva received 1,160 generic approvals, corresponding to 89 new compounds in
206 formulations. In addition, as of December 31, 2007, Teva had approximately 3,166
marketing authorization applications pending approval in 30 European countries,
including countries in central and Eastern Europe, corresponding to 154 compounds in
310 formulations.
Teva’s International Group is responsible for countries outside the US, Canada and
Western Europe. The markets in the International Group include eight of the world’s
top ten largest generic pharmaceutical markets (based on IMS data): China, India,
Brazil, Mexico, Russia, Japan, Turkey and Korea. In most of these markets, Teva’s
products are marketed and sold as branded generics.
Geographic focus
The US was the largest market for Teva in fiscal 2007, accounted for 65.9% of the
consolidated generic sales. It recorded sales of $4,202m in the US in fiscal 2007, a
decrease of 19.9% from 2006.
Teva’s operations in the 5EU contributed 8.1% of the consolidated generic revenues in
fiscal 2007. Spain registered the largest increase in sales in 2006–2007 in the 5EU. It
recorded sales of $38m in the fiscal 2007, as compared to $9m in 2006.
72
Figure 4.16: Teva’s geographic focus, 2006–2007
745 bps
100%
90% 18.5%
274 bps 26.0%
80% 5.3%
70% 8.1%
Generic sales (%)
1,019 bps
60%
50%
40% 76.1%
30% 65.9%
20%
10%
0%
2006 2007
US 5EU Others
*bps- basis points
Marketed products
The top 10 generic pharmaceutical products marketed by Teva based on 2007 sales are
shown in the table below.
73
Table 4.13: Teva's top 10 marketed products sales, 2006–2007 ($m)
Simvastatin Cardiovascular system 886 497 (43.9%)

Amlodip/Benaz Cardiovascular system 0 418 NA
Fexofenadine Respiratory system 351 216 (38.6%)
Azithromycin Anti-infectives for systemic use 238 193 (19.0%)
Gabapentin Nervous system 306 182 (40.4%)
Venlafaxine Nervous system 59 158 167.5%
Sertraline Nervous system 259 134 (48.3%)
Amoxi/Clavul Anti-infectives for systemic use 161 122 (24.4%)
Finasteride Genito-urinary system
and sex hormones 84 91 7.7%
Clozapine Nervous system 67 72 7.0%
Total 2,412 2,082
NA- Not applicable
Key generic drugs launched by Teva in 2007 are:
The generic versions of Protonix (pantoprazole) and Lotrel (amlodipine

besylate/benazepril) in the US.
The generic equivalents of Norvasc, Lamisil and Vantin in France.
The generic versions of Zocor, Ciproxacin and Diflucan in Italy.
The major therapeutic areas for Teva, based on 2007 sales, are CVS, NS, anti-
infectives for systemic use, respiratory system, genito-urinary system and sex
hormones, alimentary tract and metabolism, musculo-skeletal system, and
antineoplastic and immunomodulating agents, as shown in the figure below.
74
Figure 4.17: Teva’s therapeutic focus, 2007
Alimentary tract and

metabolism
Respiratory system 4%
7%
Anti-infectives for
Nervous system systemic use
27% 19%
Antineoplastic and
immunomodulating
agents
2%
Musculo-skeletal
Cardiovascular
system
system
3%
34%
Genito-urinary
system and sex
hormones
4%
75
Growth strategies
In 2007, Teva undertook a strategic review and identified key opportunities for growth.
It aims to double the size of its business by 2012, reaching revenues of $20bn. It
intends to achieve this target through the following growth strategies:
Increasing its market share in key markets such as the US, EU, Latin America.
Doubling its R&D capabilities and production capacity, with a focus on capturing
an increasing number of first-to-market opportunities in key markets, including
Paragraph IV filings in the US.
Investing in biosimilars to develop affordable biopharmaceuticals.
Teva is taking significant steps towards advancing the strategic goals that it identified
in 2007. Following the strategic review, it announced/completed two major
acquisitions in 2008, in line with its growth strategy, to increase its market share in key
markets and to become a leading player in biosimilars.
In March 2008, Teva signed a definitive agreement to acquire Bentley Pharmaceuticals,

a specialty pharmaceutical company focused on advanced drug delivery technologies
and generic pharmaceutical products. The acquisition will take place following the
spin-off of Bentley's drug delivery business to its shareholders and will consist solely
of the generic pharmaceutical operations at closing. Bentley markets its products
primarily in Spain, but also sells generic pharmaceuticals in other parts of the EU. This
acquisition is expected to provide Teva with a platform to capture a leading position in
the growing Spanish generic pharmaceutical market.
In January 2008, Teva acquired CoGenesys, a privately-held biopharmaceutical

company, focused on the development of peptide- and protein-based medicines across
76
broad therapeutic categories. The acquisition reflects Teva’s strategy to enhance its
position in the biosimilars market. The CoGenesys acquisition will add advanced
technological platforms, including albumin fusion, a novel approach to long acting
biopharmaceuticals, to Teva’s portfolio. Such platforms are important for establishing
Teva’s leadership position in biosimilars.
SWOT analysis
Figure 4.18: Teva SWOT analysis
Leading generics market position, with Direct-to-pharmacy distribution model

unbranded generic sales of $6,373m in limits its access to a greater number of
2007. pharmacies.
Extensive global infrastructure, with

operations in more than 50 countries
worldwide.
Strong pipeline, with 160 product Failure to obtain market exclusivity in the
registrations awaiting FDA approval. US.
Opportunities in emerging markets such Competition from low-cost manufacturing

as Latin America, Central and Eastern facilities in emerging Indian and Eastern
Europe, and Asia. European companies.
Focus on hospitals and institutional

channels to expand its leadership position
in injectable products.
77
Strengths
Leading generics market position
Based upon 2007 revenues, Teva is the second largest generics company worldwide,
with unbranded generic sales of $6,373m. Teva Pharmaceuticals USA, the company's
principal subsidiary, is the leading generic drug manufacturer in the US. In 2007, Teva
maintained its position as the US generic market leader in total prescriptions and new
prescriptions, with generic prescriptions increasing from approximately 409m in 2006
to approximately 437m in 2007, representing 18% of total generic prescriptions in the
US.
In 2007, Teva expanded its generic market share in the UK, which has become its
second largest market after the US. Its UK subsidiary has a wide retail generic portfolio
and is also a major supplier to the National Health Service. It has a strong position with
all major wholesalers and retail chains, and also maintains the largest sales force in the
industry, focusing on independent retail pharmacies. Bolstering its European strength,
Teva is also the fourth largest company in the French generic market.
Generics are likely to remain Teva’s main business and are forecast to be responsible
for about 87% of its 2012 sales. Teva’s size and leadership position in the generics
market provides it with economies of scale and is a useful buffer against the potential
volatility of the industry.
Global infrastructure
With operations in more than 50 countries worldwide, Teva has an extensive global
infrastructure, which provides it with a platform to distribute its products to all the
major world markets. With 36 pharmaceutical manufacturing sites in 16 countries, and
18 API manufacturing sites around the world, it enjoys significant vertical integration,
providing better control over its own pharmaceutical production. Teva’s rapid growth
has been largely driven by a succession of acquisitions, most recently that of IVAX in
2006 and SICOR in 2004, which has served to extend its footprint dramatically.
78
Weaknesses
Distribution model
Teva has an inherent weakness in its distribution model. It distributes its products
through a direct-to-pharmacy business model. This model nullifies the participation of
wholesalers or any other intermediaries, limiting its access to a greater number of
pharmacies. Given the intensifying competition in the markets it operates, Teva needs
to strategically adopt a distribution model that will enable it garner a wider distribution
network.
Opportunities
New drug launches and approvals
Teva’s new product launches and approvals provide it with an opportunity to achieve
significant revenue growth and enhance its market share. In 2007, it launched 25
generic versions of its branded products in the US. During the year, Teva USA
received, in addition to 26 final generic drug approvals, 18 tentative approvals. As of
February 2008, it had 160 product registrations awaiting FDA approval, including 44
tentative approvals. Collectively, the sales of brand-name versions of these 160
products in the US exceeded $100bn in 2007. It is believed that Teva is the first to file
with respect to 49 of these products, the branded versions of which had US sales of
more than $40bn in 2007.
In addition, Teva has a solid generic pipeline, with several launches set for 2008. It will
launch lamotrigine chewable tablets in July 2008, during Lamictal’s composition patent
(4,602,017) pediatric exclusivity period, which is due to expire in January 2009. An
exclusive Fosamax 35mg and 70mg launch is also underway, and Teva has entered into
an agreement with Biovail and GlaxoSmithKline concerning generic Wellbutrin XL
150mg to be launched in 2008.
Opportunities in emerging markets
79
Teva could gain substantially from emerging markets such as Latin America, Central
and Eastern Europe, and Asia, taking advantage of the expected increases in spending
on healthcare and growing populations. Teva has presence in some of the fastest
growing pharmaceutical markets in the world, including eight of the world’s top ten
largest generic pharmaceutical markets: China, India, Brazil, Mexico, Russia, Japan,
Turkey and Korea.
Teva’s pharmaceutical sales in these regions reached $1.4bn in 2007. Approximately

41% of these sales were generated in Latin America (including Mexico), 26% in Israel,
26% in central and Eastern Europe, and 7% in other countries. These strong sales are
expected to increase going forward and, as a result, the International Group is expected
to be of increasing importance in the coming years.
Focus on hospitals and institutional channels
In 2007, Teva continued its focus on sales of generic injectable products to hospitals
and institutional channels, mostly in the US and certain countries in Europe, and Latin
America. Teva, supported by its sterile manufacturing capabilities, offers a variety of
product technologies and a wide range of oncology products, with different therapeutic
mechanisms in both injectables and oral formulations.
Future patent expirations and growth in the oncology market present promising
opportunities in the generic oncology market. Teva believes that leveraging its strong
generic R&D capabilities and a promising pipeline, together with a strong global reach
in the hospital and institutional markets provide it with the opportunity to expand its
leadership position in injectable products, particularly in the generic oncology market.
Threats
Failure to obtain market exclusivity in the US
Failure to obtain market exclusivities in the US could have a material adverse effect on
Teva’s sales and profitability. The US generics market has a great influence on Teva’s
performance. It derived approximately 60% of its total revenues in 2007 from North
80
American sales. Its ability to achieve sales growth and profitability is dependent on its
success in challenging patents and/or developing non-infringing products, and its
ability to launch products with US market exclusivity. Since Teva is first to file for so
many of its abbreviated New Drug Application (ANDA) submissions, the loss of
exclusivity after six months and entry of further generic competitors impacts on
product sales significantly.
Competition from emerging Indian and Eastern European companies
The emergence of generic companies with low-cost manufacturing facilities poses an

increasing threat to Teva, which has the majority of its manufacturing plants based in
the high cost environments of the US and Western Europe. Low-cost manufacturing
facilities will give pricing advantage to its competitors. Whilst Teva is currently able to
remain competitive and bear the higher associated costs, this state of affairs is unlikely
to continue. Currently, generics companies are undergoing intense consolidation;
leading to a highly competitive environment where all measures to increase margins
must be implemented.
81
82
CHAPTER 5
Mylan
83
Chapter 5 Mylan
Summary
Mylan is ranked third among the world’s largest generic pharmaceutical

companies based on 2007 sales. It garnered a global market share of 4.8%
representing sales of $4,620m. This was an increase of 22.2% over 2006.
The key therapeutic areas for Mylan in 2007 were CVS, NS, alimentary tract and
metabolism, genito-urinary system and sex hormones, anti-infectives for systemic
use, respiratory system, musculo skeletal system, and antineoplastic and
The top 10 generic pharmaceutical products marketed by Mylan in 2007 were

fentanyl, amlodipine, omeprazole, nifedipine, oxybutynin, phenytoin,
vancomycin, salbutamol, verapamil and pravastatin.
In 2007 Mylan completed the acquisition of German-based Merck Generics and

gained a controlling interest in India-based Matrix Laboratories, which helped it
expand to numerous countries outside the US.
Zealand, and the number four market position in Japan. Alphapharm, its
Australian subsidiary, is the generics market leader, holding an estimated 60%
market share by volume as of August 2007. Its wholly owned subsidiary Pacific
Pharmaceuticals is the largest generics company in New Zealand.

spread over relatively few products. For instance, Fentanyl, which was launched
in 2005 and became Mylan’s highest selling product, accounted for
approximately 17%, 20%, and 18% of generics revenues in 2005, 2006 and 2007,
respectively.
84
Table 5.14: Mylan snapshot
Headquartered: Pennsylvania, United States

Incorporated: 1970
Mylan develops, licenses, manufactures, markets, and distributes generics and APIs.
With the acquisition of the generic pharmaceutical business of Merck KGaA (Merck
Generics) in October 2007, it became the third largest generics company worldwide
with a global presence in more than 90 countries. Its broad product offering includes
more than 570 products in a wide range of therapeutic areas.
Mylan operates through three segments: generics, Matrix and specialty. Its revenues
are primarily derived from the sale of generics and branded generic pharmaceuticals,
specialty pharmaceuticals and APIs. Its generic pharmaceutical business is conducted
primarily in North America, EMEA, and Asia Pacific.
In the US, it has one of the largest generic product portfolios, consisting of 180
products, of which approximately 171 are in capsule or tablet form in an aggregate of
approximately 457 dosage strengths. In addition to those products that it manufactures
in the US, it also markets 74 generic products in a total of 129 dosage strengths,
principally through UDL, under supply and distribution agreements with other
pharmaceutical companies.
Mylan derives its generic pharmaceutical sales in EMEA and Asia Pacific from its
wholly-owned subsidiaries acquired through the acquisition of Merck Generics. It has
operations in 17 countries in EMEA.
85
Geographic focus
The US was the largest market for Mylan in fiscal 2007, accounted for 54.6% of its
consolidated generic sales. It recorded generic sales of $2,521m in the US, an increase
of 21.6% over 2006. Mylan’s net sales in the US were derived primarily from the sale
of solid oral dosage products. Additionally, new products launched, such as
amlodipine, contributed significantly to the sales in the US.
Mylan generated 27.1% of its consolidated generic revenues from the 5EU in fiscal
2007. The UK accounted for 0.2% of the consolidated generic sales in the fiscal 2007,
the smallest proportion of Mylan's sales. Generic sales from the UK declined by 11.1%
to $8m in fiscal 2007 over 2006. In the UK, wholesalers decreased their orders in 2007
in anticipation of more favorable rebate contracts that were scheduled to take effect in
2008.
Mylan’s largest increase in sales from 2006–2007 was in Germany in the 5EU, where it
recorded sales of $56m in fiscal 2007, an increase of 180% over 2006. In Germany,
sales were bolstered by successful participation in health insurer contracts which were
implemented by the German government in April 2007. Mylan’s German subsidiary,
Mylan dura, has secured contracts covering approximately 40% of all insured
individuals.
86
Figure 5.19: Mylan’s geographic focus, 2006–2007
100%
320 bps
90% 21.6% 18.4%
80%
344 bps
70%
Generic sales (%)
23.6% 27.1%
60%
50% 25 bps
40%
30% 54.6%
54.8%
20%
10%
0%
2006 2007
US 5EU Others
*bps- basis points
Marketed products
The top 10 generic pharmaceutical products marketed by Mylan, based on 2007 sales,
are shown in the table below.
87
Table 5.15: Mylan's top 10 marketed products sales, 2006–2007 ($m)

Amlodipine Cardiovascular system 0 326 NA
Nifedipine Cardiovascular system 182 185 1.5%
Oxybutynin Genito-urinary system and
sex hormones 38 165 334.3%
Phenytoin Nervous system 106 88 (17.0%)
Vancomycin Alimentary tract and metabolism;
antiinfectives for systemic use 76 85 12.2%
Salbutamol Respiratory system 103 85 (17.0%)
Verapamil Cardiovascular system 70 77 11.0%
Pravastatin Cardiovascular system 13 44 234.7%
Total 1,232 1,755
NA: Not applicable
The major therapeutic areas for Mylan, based on 2007 sales are CVS, NS, alimentary
tract and metabolism, genito-urinary system and sex hormones, anti-infectives for
systemic use, respiratory system, musculo skeletal system, and antineoplastic and
immunomodulating agents, as shown in the figure below.
88
Figure 5.20: Mylan’s therapeutic focus, 2007
Alimentary tract
Respiratory
and metabolism
system
10%
3%
Anti-infectives
for systemic use
6%
Antineoplastic and
Nervous system
Immunomodulating
29%
agents
2%
Musculo-skeletal
system Cardiovascular
2% system
38%
Genito-urinary
system and sex
hormones
10%
Growth strategies
Mylan has grown rapidly over the past few years, mainly through inorganic expansion.
In 2007, it completed the acquisition of Merck Generics and gained a controlling
interest in Matrix. With these acquisitions, Mylan expanded in numerous countries
outside the US and became the third largest generics company, based on 2007 sales, in
the world.
Through its controlling interest in Matrix, Mylan has direct access to the second largest
API manufacturer in the world, providing it with a vertically integrated supply chain.
With the acquisition of Merck Generics, Mylan added Genpharm, a top five generics
company in Canada, to its stable. This acquisition also provided presence in an
89
additional area with significant growth opportunities, giving direct access to markets in
Poland, Hungary, Slovakia, Slovenia and the Czech Republic.
In October 2007, Mylan acquired the generics business of Merck KGaA, a Germany-
based company operating in the pharmaceutical and chemical business. The acquisition
transformed Mylan from the third largest generics company in the US to the third
largest in the world.
In January 2007, Mylan completed its acquisition of approximately 51.5% of the

outstanding shares of Matrix, an Indian public limited company engaged in the
manufacture of APIs and solid oral dosage forms, taking its controlling interest to
71.5%. This acquisition deepened its vertical integration through APIs, additional
leverage for its R&D activities, enhanced supply chain capabilities, a base for
international distribution, expertise in new chemical entities (NCEs) and expansion of
therapeutic categories.
90
SWOT analysis
Figure 5.21: Mylan SWOT analysis
Leading position in Asia Pacific with Mylan’s revenue share, up to and

number one market position in both following the acquisition of Merck
Australia and New Zealand and the Generics, is spread over relatively few
number four market position in Japan. products.
Strategic acquisitions have provided

Mylan with a greatly enlarged global
footprint and pipeline.
Robust generic product pipeline, with 88 Pricing litigations related to Merck

product applications pending at the FDA. Generics (UK).
Strengths
Leading market position in Asia Pacific
Zealand and the number four market position in Japan. Alphapharm, its Australian
subsidiary, is the generics market leader, holding an estimated 60% market share by
volume as of August 2007, and offering the largest portfolio of generic pharmaceutical
products in the Australian market. In New Zealand, Mylan's wholly owned subsidiary
91
Pacific Pharmaceuticals is the largest generics company on the market. Its Japanese
subsidiary Mylan Seiyaku offers a broad portfolio of over 400 products with a focus on
antibiotics, anti-diabetics, oncology, and skin and allergy medications.
The generics market in Australia is underdeveloped, and as a result, the government is

increasingly focused on promoting generics in an effort to reduce costs. In addition,
recent pro-generics government actions in Japan, such as higher patient co-pays, fixed
hospital reimbursement for certain procedures and pharmacy substitution, are expected
to be key drivers of the future growth and profitability of Mylan.
Growth through strategic acquisitions
The acquisitions of Matrix and Merck Generics in 2007 provided Mylan with a greatly
enlarged global footprint and pipeline, with the majority of this having been
contributed by Merck Generics. Prior to the acquisitions of Matrix and Merck
Generics, Mylan sourced all of its raw materials externally. With Matrix’s large and
well established API division, the second largest in the world, vertical integration will
result in considerable cost savings for Mylan, while also providing it with a steady
income through external supply. Furthermore, with the acquisition of Merck Generics,
Mylan gained a global presence, having been entirely US-focused prior to the deal.
Mylan now has a leading position in Australia, France, Spain, Italy and Japan.
Weaknesses
Dependence on a few key products

spread over relatively few products. Fentanyl was launched in 2005 and became
Mylan’s highest selling product, accounting for approximately 17%, 20%, and 18% of
the generics segment net revenues in 2005, 2006 and 2007, respectively. Although its
recent acquisitions mean that this dependence should lessen. Merck Generic’s portfolio
shows a similar concentration, with sales of Duoneb and Epipen responsible for at least
18% of annual revenue during 2002–2006. Mylan is therefore shifting from
92
dependence on one key product to three, two of which have already been on the market
for some time, heralding dramatic sales declines due to increasing competition.
Opportunities
Growing generics demand
Demand for generic drugs, which account for one-fifth of global drugs sales, is
growing at 15% per annum, compared with 6% in the overall drugs market. The faster
growing generics demand is due to the efforts of governments, from Japan to Germany
to the US, to prune health care costs as the overall age of their population’s increases.
Mylan’s strong presence in faster growing regions, as well as its robust generic
products pipeline, provides it with significant opportunity to leverage the growing
generics demand. As of December 2007, including Matrix it had 88 product
applications pending at the FDA, representing approximately $154.4bn in US sales for
the 12 months ended June 2007 for the brand name versions of these products. Of these
applications, 15 were first-to-file Paragraph IV ANDA patent challenges, which offer
the opportunity for 180 days of generics marketing exclusivity if approved by the FDA.
In addition, a large number of high-value branded pharmaceutical patent expirations
are expected in the US between 2007 and 2009. The total approximate value of the
drugs due to lose their patents in this period is $45bn. These patent expirations provide
additional generic products opportunities.
Threats
Merck Generics litigations
It has been alleged that Generics UK, a subsidiary of Merck, was involved in pricing
agreements pertaining to certain drugs during 1996 and 2000. Additional claims were
filed against Generics UK as of December 31, 2007 by health authorities in Scotland
and Northern Ireland, totaling £20m ($40m) plus interest. In addition to these civil
claims, criminal proceedings were also filed in Southwark Crown Court in 2006 against
the company. Generics UK has $132m recorded in other liabilities related to the pricing
93
litigation involving Dey and Generics (UK). Such litigations relating to pricing
manipulation have an adverse impact on the confidence of investors and will affect the
brand image of Mylan.
94
CHAPTER 6
Ratiopharm
95
Chapter 6 Ratiopharm
Summary
Ratiopharm garnered a 2.6% share by value in the global generics market,

making it the fourth largest generics pharmaceutical company in the world. 2007
sales amounted to $2,552m, an increase of 9.4% over 2006.
The important therapeutic areas for Ratiopharm in 2007 were NS, CVS,
alimentary tract and metabolism, anti-infectives for systemic use, musculo
skeletal system, respiratory system, blood and blood forming organs,
dermatalogicals, and genito-urinary system and sex hormones.
In 2007, Ratiopharm’s top 10 generic pharmaceutical products included

omeprazole, fentanyl, simvastatin, nasengel, paracetamol, acetyl s acid,
metamizole, bisoprolol, grippeimpfst.ratio and amlodipine.
Ratiopharm is focused on the development of biosimilars. As a part of this

strategy, it cooperated with the American company Neose Technologies in 2007,
for development of innovative biosimilars. In February 2008, it received a
positive opinion from the EMEA for the first filgrastim biosimilar, granulocyte
colony-stimulating factor (G-CSF).
Ratiopharm’s generic sales are concentrated in the EU, which represented 54% of
total sales in 2007. Due to a lack of presence in the US, the company is losing out
on opportunities in that market when compared with its peers such as Novartis,
Teva and Mylan.
96
Table 6.16: Ratiopharm snapshot
Headquartered: Germany
Incorporated: 1973
Ratiopharm is engaged in developing and selling generics, and prescribed branded

pharmaceuticals in Europe. With about 750 prescription and non-prescription drugs,
Ratiopharm has a broad portfolio in the generics business, covering almost all
therapeutic areas. It has presence in 25 countries and markets its products in 35
countries.
Geographic focus
Ratiopharm’s operations are concentrated in the 5EU and other markets. Revenues
from the 5EU increased by 0.9% to reach $1,390m in 2007. Germany, the largest
market for Ratiopharm, accounted for 40.6% of its consolidated generic sales in 2007.
It recorded generic sales of $1,035m in 2007 in Germany, a decrease of 10.5% from
2006.
France accounted for 2.7% of the consolidated generic sales in 2007, the smallest
proportion of Ratiopharm's sales. Its generic sales increased by 55.6% in France,
reaching $70m in 2007. Ratiopharm’s largest increase in sales from 2006–2007 was in
Spain, where it recorded sales of $178m in 2007, an increase of 76.2% over 2006.
97
Figure 6.22: Ratiopharm’s geographic focus, 2006–2007
100%
462 bps
90%
80% 40.9% 45.5%
Generic sales (%)
70%
60%
462 bps
50%
40%
30% 59.1% 54.5%
20%
10%
0%
2006 2007
5EU Others
*bps- basis points
98
Marketed products
The top 10 generic pharmaceutical products marketed by Ratiopharm based on 2007

sales are shown in the table below.
Table 6.17: Ratiopharm's top 10 marketed products sales, 2006–2007 ($m)
Omeprazole Alimentary tract and metabolism 133 130 (2.2%)

Simvastatin Cardiovascular system 80 63 (21.8%)
Nasengel Respiratory system; Sensory organs 32 37 16.9%
Paracetamol Nervous system 22 26 15.8%
Acetyl S Acid Nervous system 24 25 3.5%
Metamizole Nervous system 21 25 17.3%
Bisoprolol Cardiovascular system 27 24 (9.1%)
Grippeimpfst Anti-infectives for systemic use 14 24 68.7%
Amlodipine Cardiovascular system 19 23 21.9%
Total 437 458
The major therapeutic areas for Ratiopharm, based on 2007 sales, are NS, CVS,
alimentary tract and metabolism, anti-infectives for systemic use, musculo skeletal
system, respiratory system, blood and blood forming organs, dermatalogicals, and
genito-urinary system and sex hormones as shown in the figure below.
99
Figure 6.23: Ratiopharm’s therapeutic focus, 2007
Respiratory system
6%

metabolism
17%
Nervous system Anti-infectives for

29% systemic use
13%
Blood and blood

forming organs
2%
Musculo-skeletal
system
7%
Cardiovascular system
Genito-urinary system 24%
Dermatologicals
and sex hormones
1%
1%
Growth strategies
Focus on biosimilars
Ratiopharm is working on the development and manufacture of biosimilars through its

wholly owned subsidiary BioGeneriX in Germany. In order to fully tap long-term
potentials in biotechnologically manufactured drugs, BioGeneriX began early
development of innovative follow-on biologics with improved patient benefits, parallel
to its development of biosimilars. In this regard, it cooperated with the American
company Neose Technologies in 2007. Ratiopharm’s biosimilar products are managed
by three subsidiaries: BioGeneriX (biopharmaceutical and clinical development),
100
Merckle Biotech GmbH (biopharmaceutical production) and Ratiopharm Direct (sales
and marketing).
Ratiopharm has made several acquisitions in the past to improve its strategic position
in the market. However, the company is not pursuing an aggressive acquisition strategy
when compared to its competitors such as Sandoz, Teva and Stada.
In 2004, Ratiopharm acquired Magnafarma, a Dutch generics company, which was

renamed Ratiopharm BV. The acquisition enabled Ratiopharm to build sales in the
Dutch generics market, and boosted its position in the overall generics market.
In 2002, in order to expand its oncology activities, Ratiopharm acquired oncology

specialist Ribosepharm, a Germany based company. This acquisition enabled
Ratiopharm to increase its oncology therapeutic area, providing a broad range of key
oncology products.
101
SWOT analysis
Figure 6.24: Ratiopharm SWOT analysis
Leading market position in Germany, with Dependence on European market, with

$390m of generic sales generating from EU accounting for 54% of total generic
Germany in 2007. sales in 2007.
Approval from EMEA for the filgrastim Competition in the German generic
biosimilar. pharmaceutical market from Stada and
Novartis (Sandoz).
Launch of a generic version of Sanofi-
Aventis's blockbuster blood thinning drug
Plavix (clopidogrel).
Strengths
Leading position in Germany
Ratiopharm’s leading market position in Germany, Europe's biggest drugs market,

provides it with competitive advantages. It is the market leader in German generic
drugs, with $390m sales generated in Germany in 2007. However, this is not to say that
the company is over-reliant on one market, as it covers an extensive geographical
102
range, with subsidiaries located in 25 countries, and its products available in 35
countries.
Weaknesses
Dependence on European market
Ratiopharm’s high dependence on the European generics pharmaceutical market

exposes it to various risks associated with European market dynamics and economy.
Although Ratiopharm has a wide geographical spread, the EU is responsible for more
than half of its total generic sales, representing 54% of total sales in 2007. It does not
have presence in the US, which means that it loses out on potential opportunities in the
US market, which its peers, such as Novartis, Teva and Mylan, are able to capitalize
on.
Opportunities
Biosimilar filgrastim
In February 2008, Ratiopharm received a positive opinion from the EU regulatory

EMEA for the first filgrastim biosimilar, granulocyte colony-stimulating factor (G-
CSF). This product will be sold in the European pharmaceutical market by Ratiopharm
Direct for use in the treatment of different types of neutropenia and to mobilize stem
cells.
The high price of the original branded filgrastim is one of the major obstacles to higher
use of the drug in many European countries; therefore the availability of cheaper
alternatives may allow more patients to be treated. This approval will strengthen
Ratiopharm's position and will add to its long-term prospects on the biosimilar market
Launch of generic Plavix
Ratiopharm will gain significantly from the launch of a generic version of Sanofi-
Aventis's blockbuster blood thinning drug Plavix (clopidogrel), if successful. The
company plans to launch the cheaper generic version of Plavix in 2008. The EU market
103
for Plavix was worth approximately CHF3.2bn ($3.1bn) in 2007, of which Germany
accounted for 18%.
Threats
Competition in German generics market
Generics competition in the German pharmaceuticals market is a threat to Ratiopharm,

as its sales are predominantly concentrated in Germany. Its key competitors are Stada
and Novartis (Sandoz), both of which have high generic drug sales in Germany, and
were ranked second and third in the German generics market after Ratiopharm in 2007.
104
CHAPTER 7
Apotex
105
Chapter 7 Apotex
Summary
Apotex generated generic sales worth $2,356m in fiscal 2007, representing a

market share of 2.4% in the global generics industry. It ranked fifth amongst the
largest generics pharmaceutical company in the world, based on sales in 2007.
The major therapeutic areas for Apotex in 2007 were alimentary tract and
metabolism, NS, blood and blood forming organs, CVS, anti-infectives for
systemic use, systemic hormonal preparations, antineoplastic and
immunomodulating agents, and sensory organs. Alimentary tract and metabolism
and NS accounted approximately 28% and 27% of the generic sales in 2007.
Apotex’s three top marketed drugs clopidogrel, ceftriaxone and ciclosporin

recorded a decline in sales of 78.3%, 25.4% and 0.6% respectively, in 2007 over
2006.
Apotex has primarily focused on strategic alliances such as joint ventures and
licensing agreements to expand its generic and innovative pharmaceutical
businesses. It is also undertaking acquisitions to grow its global footprint outside
the US and Canada.
Apotex’s strong R&D capabilities give the firm a competitive edge. Planned
R&D investments of over C$2bn ($1.9bn) over 10 years starting from 2008 will
enable it to create a more comprehensive product portfolio.
Extension of the market exclusivity period of patented drugs will delay the entry
of generic players such as Apotex. In addition, pseudo (authorized) generics have
gained prominence in Canada. This has inhibited the growth of real generic
manufacturers, such as Apotex, in the country.
106
Table 7.18: Apotex snapshot
Headquartered: Ontario, Canada

Incorporated: 1974
Apotex is a Canada-based generic drugs manufacturer engaged in the production of

more than 260 generic pharmaceuticals in approximately 4,000 dosages. Its products
are exported to over 115 countries worldwide. Apotex has attained global presence
through subsidiaries, joint ventures and licensing agreements in Australia, Belgium, the
Czech Republic, Italy, Mexico, the Netherlands, New Zealand, Poland, Turkey, the UK
and others.
Apotex focuses on the development and manufacture of sterile products such as

ophthalmics, injectables, inhalation solutions; and non-sterile products such as nasal
and oral solutions. During 2006–2007, Apotex expanded its R&D focus to include
areas such as hematology, neurodegenerative diseases and psoriasis. Companies in its
group also research, develop, manufacture and distribute fine chemicals, non-
prescription and private label medicines, and disposable plastics for medical use.
Apotex also operates in the biosimilar area through Cangene, a Canadian
biopharmaceutical company.
Geographic focus
The US is the largest market for Apotex, accounting for approximately 44.7% of its
consolidated generic sales in 2007. It recorded generic sales of $1,053m in the US in
2007, a decrease of 28.7% from 2006.
107
Apotex registered a healthy sales growth in the 5EU. Italy accounted for 1.2% of the
consolidated generic sales in 2007. Revenues from this region recorded an impressive
growth rate of 70.6% over 2006 to reach $29m.
Figure 7.25: Apotex’s geographic focus, 2006–2007
1,354 bps
100%
90%
80% 40.5%
54.1%
Generic sales (%)
70%
55 bps
60% 0.7%
50%
1.2%
40% 1,410 bps
30% 58.8%
20% 44.7%
10%
0%
2006 2007
US 5EU Others
*bps– basis points
Marketed products
The top 10 generic pharmaceutical products marketed by Apotex based on 2007 sales
are shown in table below.
108
Table 7.19: Apotex' top 10 marketed products sales, 2006–2007 ($m)

Clopidogrel Blood and blood forming organs 888 193 (78.3)%
Paroxetine Nervous system 168 170 1.6%
Gabapentin Nervous system 25 46 86.2%
Metformin Alimentary tract and metabolism 34 45 32.0%
Cefepime Anti-infectives for systemic use 0 28 NA
Desmopressin Systemic hormonal preparations* 20 25 23.4%
Ciclosporin Antineoplastic and
immunomodulating agents 20 20 (0.6)%
Ceftriaxone Anti-infectives for systemic use 25 19 (25.4)%
Total 1,317 779
NA: not applicable

* excluding sex hormones and insulins
In 2007, Apotex launched amlodipine besylate tablets, the generic equivalent of

Pfizer’s Norvasc, in the US market.
The major therapeutic areas for Apotex, based on 2007 sales, are alimentary tract and
metabolism, NS, blood and blood forming organs, CVS, anti-infectives for systemic
use, systemic hormonal preparations, antineoplastic and immunomodulating agents,
and sensory organs, as shown in the figure below.
109
Figure 7.26: Apotex’s therapeutic focus, 2007
Systemic hormonal
preparations
Sensory organs
2%
1%

metabolism
28%
Nervous system
27%
Anti-infectives for
systemic use
9%
Cardiovascular Antineoplastic and

system immunomodulating
12% agents
Blood and blood 2%
forming organs
19%
Growth strategies
Strategic alliances
Apotex has primarily focused on strategic alliances, such as joint ventures and
licensing agreements, to grow its generics and new pharmaceutical businesses. It has
agreements with Beijing Med-Pharm, Boehringer Ingelheim, Blood Diagnostics and
others. These agreements have either enabled Apotex to gain access to new markets,
license to manufacture patented drugs, or both. Beijing Med-Pharm entered into a five
year agreement with Apotex to market Ferriprox (Deferiprone) in China. Apotex’s
110
licensing agreement with Boehringer Ingelheim allowed it to manufacture a patented
drug containing nevirapine for export to the developing countries suffering from the
escalating HIV/AIDS problem.
Investments in R&D
Apotex intends to create a complete product line by investing further in its core
strength, generic pharmaceuticals R&D. It has proposed to invest over C$2bn ($1.9bn)
for R&D over the next 10 years, from 2008. This will provide it with an innovative
product line, thus conferring a competitive advantage.
In 2007, Apotex made two major acquisitions, reflecting its strategic move to gain a
foothold outside the US and Canada. These deals will provide the ideal infrastructure
and brand recognition to aid the launch of Apotex’s developmental products in the EU.
In December 2007, Apotex acquired Lareq Pharma, a Spain-based generic

pharmaceuticals company. This deal will extend its foothold in Western Europe.
Additionally, Apotex can leverage Lareq Pharma’s strong brand recognition among
pharmacists in Spain, and its nation-wide sales force, to launch products that are
currently in its development pipeline.
In November 2007, Apotex acquired Topgen, a Belgium-based generic

pharmaceuticals company. This deal will provide access to the rapidly growing Belgian
generics market, as well as extending its market share in Europe.
111
SWOT analysis
Figure 7.27: Apotex SWOT analysis
Strong R&D capabilities, with planned Patent infringement lawsuits will force
investment of over C$2bn ($1.9bn) over Apotex to cease the sale of the generic
the next ten years from 2008. versions of the products.
THREATS
OPPORTUNITIES
Change in Canada’s intellectual property

Apotex expanded its global footprint
legislation leading to extension of the
beyond Canada and the US with the
market exclusivity period of patented drugs
acquisitions made in Western Europe
will delay the entry of generic players such
and the establishment of a new affiliate in
as Apotex.
Turkey.
Pseudo (authorized) generics inhibit the

Successful tender bid for AIDS drug ‘Apo
growth of real generic companies such as
Triavir’ in Africa provides access to a
Apotex.
potential market.
Strengths
Strong R&D capabilities
Apotex’s strong R&D capabilities have endowed it with an innovative product line,
giving it a competitive edge. Apotex spent approximately 20% of its revenues on R&D
in the fiscal year 2006, placing it among the top 12 R&D companies in Canada. Its
focused approach has enabled it to develop considerable expertise in formulation,
development, synthetic and analytical chemistry. Apotex is currently expanding its
R&D expertise in the areas of hematology, neurodegenerative diseases and psoriasis.
Apotex’s R&D capabilities stand to be further invigorated by its investment plans of
112
more than C$2bn ($1.9bn) over the next ten years, from 2008. Thus, Apotex is set to
create a complete product line based on its robust R&D capabilities.
Weaknesses
Lawsuits relating to patent infringement
Apotex has been subject to several lawsuits relating to patent infringement. In 2007,
Acorda Therapeutics (Acorda), a US-based bio-pharmaceutical company, filed a
lawsuit against Apotex asserting infringement of a patent relating to Zanaflex capsules.
Acorda filed the lawsuit in response to Apotex’s submission of an ANDA to the FDA
seeking approval for marketing generic versions of Acorda’s Zanaflex capsules, the
patent for which expires in 2021.
Earlier in 2006, the District Court of the Southern District of New York had issued a
preliminary injunction for preventing the sales of Apotex’s generic version of Sanofi’s
Plavix. Adverse outcomes of these patent infringement lawsuits will force Apotex to
cease the sale of the generic versions of the products, which in turn will have a
negative impact on its top-line.
Opportunities
Expanding global footprint beyond Canada and the US
Apotex’s acquisitions in Belgiuma and Spain, as well as its new affiliate in Turkey,
represent its aim to grow outside North America. These initiatives will establish the
infrastructure required to introduce products in the EU which are currently in Apotex’s
development pipeline. The Spanish generics market is fast growing and was valued at
approximately €1.2bn ($1.1bn) in 2006, with an estimated 16.6% (y/y) growth rate, as
compared with 7.6% (y/y) for the overall pharmaceutical market. Moreover, the
Belgian generics market is less developed than many other markets in Europe, with
approximately 10% market share, but strong growth. Apotex can leverage the acquired
companies' strong brand recognition amongst pharmacists, and nation-wide sales
forces, to capitalize on the emerging opportunities in the growing generics market in
these countries.
113
Successful tender bid for critical healthcare needs in Africa
Successful tender bids in less developed economies, such as Africa, will enable Apotex
to access new markets, thereby expanding its global footprint. Apotex was awarded a
tender from the Rwandan government for the triple combination AIDS drug ‘Apo
Triavir’ in May 2008. Rwanda is one of the countries worst hit by HIV in Africa, with
11% of the adult population testing HIV positive in 2000. This level has been reduced
to approximately 3% of the adult population in 2007, owing to the initiatives
undertaken by the Rwandan government to curb the disease. This has created potential
demand for generic versions of crucial drugs. Apotex is the first company to provide
AIDS medicine to Africa under the provisions of the Canadian Access to Medicines
Regime (CAMR). Normally the triple combination of the branded AIDS product costs
about $6 per dose if bought individually. By contrast, Apotex produces the drug ‘Apo
Triavir’ at a cost of 19.5 cents per tablet. Given the fragile economic condition of
African countries, Apotex has a potential market for its low cost generic products in
this country.
Threats
Extending market exclusivity period in Canada
An extension of the market exclusivity period of patented drugs will delay the entry of
generics manufactured by companies such as Apotex onto the Canadian market. The
Canadian government extended the market exclusivity period of patented drugs in
2006, from five years to eight years, with an additional six months for drugs with
pediatric indications. This change in Canada’s intellectual property legislation will also
drive up prescription drug cost.
Growing pseudo (authorized) generics market in Canada
The availability of pseudo generics will inhibit the growth of pure generic companies,
such as Apotex. Pseudo generics are identical to the branded equivalent, but are
marketed under different names at lower costs. These products have gained prominence
in the Canadian generics market as they have lower associated development,
114
manufacturing and regulatory costs. Drug manufacturers must obtain a notice of
compliance (NOC) for any drug sold in Canada, as well as a notice of allegation
(NOA) to the branded manufacturer in order to alert them of the imminent launch of
the generic version. These processes are expensive and, moreover, time consuming. By
contrast, a pseudo generic NOC takes only days to acquire, requiring only a letter
stating bioequivalence from the branded manufacturer. Additionally, the time required
to list a drug on provincial formularies in Canada is significantly less for pseudo
generics as compared with generics. This gives the branded company the first movers’
advantage with regards to the release of the pseudo generics in the market, thereby
adversely impacting the real generic companies, such as Apotex.
115
116
CHAPTER 8
Pfizer (Greenstone)
117
Chapter 8 Pfizer (Greenstone)
Summary
Greenstone is a generics pharmaceutical subsidiary of Pfizer. It ranked sixth, with

a 2.0% market share in 2007.
Greenstone primarily focuses on three therapeutic areas, anti-infectives for

systemic use, CVS, and NS. Anti-infectives for systemic use form the largest
share of its therapeutic focus, accounting about 40% of its 2007 revenues.
Most of the top 10 generics marketed by Greenstone registered a decline in 2007,

except medroxyproges and sermion. Medroxyproges and sermion recorded a
sales growth of 26.9% and 32.4% respectively, in 2007.
Greenstone strategically wards off competition by launching authorized generics

of branded drugs produced by Pfizer's. As it is a subsidiary of Pfizer, the
company has the advantage of launching authorized generics without undergoing
the cumbersome process of attaining approval from the FDA. This gives it the
first mover advantage.
Greenstone has gained a strong market position due to its broad product portfolio
and creative marketing plan. For these efforts, it was honored with the DIANA
(Distribution Industry Awards for Notable Achievements) Award as the 'Best
overall generic pharmaceutical products manufacturer’ with sales to health care
distributors over $100m' in 2007.
The pro-generics environment has intensified competition in the US market,

bringing down generic prices forcing US-focused players to look for
opportunities beyond the US.
118
Table 8.20: Pfizer (Greenstone) snapshot
Headquartered: New Jersey, US

Incorporated: 1993
No. of employees (2007): NA
NA: not available
Pfizer is engaged in the discovery, development, manufacturing and marketing of

prescription drugs for humans and animals. It operates in the generics business through
its subsidiary Greenstone.
Pfizer bought Greenstone as a part of its acquisition of Pharmacia in 2002, at which

time Greenstone was already manufacturing authorized generics of the Pharmacia's
blockbusters. Greenstone serves as the platform to introduce generic versions of Pfizer
products that lose patent exclusivity and become subject to generics competition. Its
portfolio consists of approximately 28 authorized generic drugs, including many
onetime blockbusters such as azithromycin (Zithromax), sertraline HCl (Zoloft),
gabapentin (Neurontin), and amlodipine besylate (Norvasc).
Geographic focus
In 2007, the majority of Greenstone’s generic sales were in the US, which accounted
for 63.8% of its consolidated generic sales. It reported generic sales of $1,217m in
The 5EU contributed only 0.6% of the consolidated generic sales in 2007. However, it
recorded a robust growth in this region as compared with the US. Greenstone’s generic
sales from Spain increased by 58% to reach $11m in fiscal 2007.
119
Figure 8.28: Pfizer’s (Greenstone) geographic focus, 2006–2007
704 bps
100%
90%
28.6% 35.7%
80%
25 bps
Generic sales (%)
70% 0.3%
0.6%
60%
729 bps
50%
40%
71.0%
30% 63.8%
20%
10%
0%
2006 2007
US 5EU Others
*bps- basis points
Marketed products
The top 10 generic pharmaceutical products marketed by Greenstone, based on 2007

sales, are shown in table below.
120
Table 8.21: Pfizer’s (Greenstone) top 10 marketed products sales, 2006–2007
($m)
Azithromycin Anti-infectives for systemic use 602 477 (20.7)%

Amlodipine Cardiovascular system 0 234 NA
Sertraline Nervous system 462 201 (56.6)%
Medroxyproges Genito-urinary system and sex
hormones; Antineoplastic
and immunomodulating
agents 37 47 26.9%
Glipizide Alimentary tract and metabolism 51 47 (8.1)%
Quinapril Cardiovascular system 113 45 (60.1)%
Gabapentin Nervous system 130 41 (68.5)%
Alprazolam Nervous system 43 40 (6.6)%
Sermion Cardiovascular system 14 19 32.4%
Spironolacton Cardiovascular system 21 17 (18.8)%
Total 1,473 1,167
NA: not applicable
In 2007, Greenstone launched Amlodipine Besylate, the authorized generic of Norvasc,

in the US.
The major therapeutic areas for Greenstone, based on 2007 sales, are anti-infectives for
systemic use, CVS, NS, alimentary tract and metabolism, genitor-urinary system and
sex hormones, and dermatologicals, as shown in the figure below.
121
Figure 8.29: Pfizer’s (Greenstone) therapeutic focus, 2007
Alimentary tract
and metabolism
5%
Nervous system
24%
Genito-urinary
system and sex Anti-infectives for
hormones systemic use
5% 40%
Dermatologicals
1%
Cardiovascular
system
25%
Growth strategies
Extending generics market share
Greenstone strategically wards off competition by launching authorized generics of

Pfizer's branded drugs. Authorized generic cause prices to drop by about 50% during
the exclusivity period and the competing generics company ends up with about half the
market share it would otherwise have gained. As a subsidiary of Pfizer, Greenstone has
the advantage of launching authorized generics without undergoing the cumbersome
process of attaining approval from the FDA. This gives it the first movers’ advantage.
Thus, Greenstone strategically hurts the competitor’s economic motivation of legally
challenging brand-name drug patents by undercutting price and market share through
launch of authorized generics.
122
In 2006 and 2007, Greenstone did not make any acquisitions or divestments with
regards to its generics business.
SWOT analysis
Figure 8.30: Pfizer (Greenstone) SWOT analysis
Greenstone has gained prominence in the Greenstone has missed out on

markets in which it operates owing to opportunities in the major European
comprehensive product line and market as its generic business is mostly
marketing style. concentrated in the US.
Greenstone proposes to leverage Pfizer’s Generics competition in the US

global scale and extensive product pharmaceuticals market from Novartis
portfolio to tap the growing markets of (Sandoz), Teva, Mylan and Watson.
middle-income patients living in Latin
America, Eastern Europe and Asia.
Strengths
Strong market position
Greenstone has gained prominence in the markets in which it operates owing to its
comprehensive product line and marketing style. Greenstone supports distributor
123
promotional programs and provides a high level of product and customer service. This
has created a great deal of flexibility in meeting the healthcare needs of distributors and
their customers. Healthcare Distribution Management Association (HDMA), a US-
based association representing primary, full-service healthcare distributors, recognized
Greenstone for these efforts. Greenstone was conferred the DIANA (Distribution
Industry Awards for Notable Achievements) Award as the Best Overall Generic
Pharmaceutical Products Manufacturer with over $100m sales to health care
distributors.
Weaknesses
Geographic concentration in the US
Greenstone has missed out on opportunities in the major European market as its
generics business is mostly concentrated in the US, which contributed approximately
63.8% of consolidated generic revenues in 2007. Greenstone generated only 0.6% of its
consolidated generic revenues in 2007 from the 5EU. By contrast most of its
competitors in the generics industry have a considerable presence in the 5EU,
particularly Teva, Novartis, and Mylan, which generated approximately 8.1%, 20.9%,
and 27.1% of their generics sales, respectively, from the 5EU in 2007. Greenstone’s
negligible presence in the 5EU markets puts it at a competitive disadvantage.
Opportunities
Growth opportunities in emerging markets
Greenstone proposes to garner more revenues from emerging markets, including Latin
America, Eastern Europe and Asia. It plans to leverage Pfizer’s global scale and
extensive product portfolio to tap the growing markets of middle-income patients living
in these markets. For instance, it intends to expand operations in China from 110 cities
to more than 650 cities by launching generics for medicines that have lost, or will soon
lose, patent protection in this market. Greenstone’s initiatives in emerging markets will
add to Pfizer’s efforts in increasing its market share to approximately 6% by 2012, up
from 4% in 2007.
124
Threats
Competition in the US generics market
Generics competition in the US pharmaceuticals market is a threat to Greenstone, as its

sales are primarily concentrated in the US. Players such as Novartis (Sandoz), Teva,
Mylan and Watson dominate the US generics landscape. The pro-generics environment
has intensified competition in the US market, bringing down generic prices. Lower
generic prices have hurt the economic feasibility of challenging patented drugs, forcing
US-focused players to look for opportunities beyond the US. Competition in the US
generics market has further intensified with the rising interest of Indian companies in
the US market. Indian generic companies can combine highly skilled drug development
with low-cost manufacturing, giving them a competitive advantage. For instance,
Wockhardt, an Indian generic company, acquired Morton Grove, a US-based generics
specialist in liquid dermatology products, in October 2007. Besides, four Indian
companies, Ranbaxy, Wockhardt, Sun Pharma and Dr Reddy’s, are competing for Par
Pharma, the US-based generic drug maker, to capitalize on opportunities in the pro-
generic US market.
125
126
CHAPTER 9
Sanofi-Aventis (Winthrop)
127
Chapter 9 Sanofi-Aventis (Winthrop)
Summary
Sanofi-Aventis operates in the generics business through its subsidiary,

Winthrop, which recorded generic sales of $1,709m in fiscal 2007, representing a
market share of 1.8%.
Winthrop’s generics portfolio primarily caters to the therapeutics areas, NS and

CVS, each representing 36% and 24% sales in 2007.
Winthrop’s generic drug, Lovenox, catering to the therapeutic area blood and
blood forming organs, recorded a mammoth growth of 1264.8% in sales in 2007.
This was the highest growth registered amongst its top 10 marketed drugs.
Winthrop’s regionalization strategy focuses on strengthening its presence in

developing countries such as Brazil, Russia, India, China and Mexico. In line
with this strategy, Winthrop entered the market in Philippines and China in 2007-
2008.
Winthrop also strengthened its presence in European markets, particularly in

central and Eastern Europe, with the acquisition of a 24.9% stake in Zentiva in
2006.
French physicians represent a major stumbling block to generics uptake in
France, despite government initiatives to drive generics consumption. French
physicians are reluctant to prescribe generics as they consider the government’s
generics promoting policies interferes with their prescribing authority.
128
Table 9.22: Sanofi-Aventis (Winthrop) snapshot
Headquartered: Paris, France

Incorporated: 1994
Segment revenues (2007): $1,709
No. of employees (2007): NA
NA: not available
Sanofi-Aventis is a pharmaceutical group engaged in the research, development,

manufacture and marketing of healthcare products. Its business activities primarily
focus on pharmaceuticals and human vaccines. Sanofi-Aventis’ pharmaceutical
business specializes in six therapeutic areas: thrombosis, cardiovascular, metabolic
disorders, oncology, central nervous system (CNS) and internal medicine.
Sanofi-Aventis has grouped all its generic products into a single dedicated business,
Winthrop, which has its operations spread across 14 countries, including France,
Germany, the UK, Portugal, the Czech Republic, Finland, Hungary, Italy, Spain,
Sweden, Switzerland, Turkey, South Africa, and Colombia. The Winthrop generics
portfolio comprises about 300 products, 40% of which are authorized generics. It
develops generic drugs for metabolic disorders, cardiology, thrombosis and pain. Major
compounds offered by Sanofi-Aventis’ generic subsidiary, Winthrop, include ramipril,
co-codamol, and pravastatin.
Geographic focus
Winthrop registered a growth of 51.9% in generic sales from the 5EU in the fiscal year
2007. France was the largest geographic market amongst the 5EU for Winthrop,
accounting for 13.3% of the consolidated generic sales in 2007. It recorded generic
sales of $228m, an increase of 85.4% over 2006, primarily due to healthcare cost
129
containment measures undertaken by the French government, resulting in more patients
being prescribed generic products.
Spain was the smallest market for Winthrop, accounting for 0.6% of its consolidated
generic sales in 2007. Winthrop recorded a growth in generic sales of 94% in Spain to
$10m in 2007. Winthrop recorded a growth in generic sales of 94% in Spain.
Figure 9.31: Sanofi-Aventis’ (Winthrop) geographic focus, 2006–2007
100%
418 bps
90%
80%
Generic sales (%)
70%
60% 81.6% 77.4%
50%
40%
30%
20%
418 bps 22.6%
10% 18.4%
0%
2006 2007
5EU Others
*bps– basis points
Marketed products
The top 10 generic pharmaceutical products marketed by Winthrop, based on 2007

sales, are shown in table below.
130
Table 9.23: Sanofi-Aventis’ (Winthrop) top 10 marketed products sales,
2006–2007 ($m)
Essentiale Alimentary tract and

metabolism 44 56 28.5%
Nospa Alimentary tract and
Depakine Nervous system 40 50 23.3%
Vaxigrip Anti-infectives for
systemic use 22 29 30.3%
Apap/Codeine Respiratory system 26 29 8.7%
Ramipril Cardiovascular system 23 27 19.3%
Paclitaxel Antineoplastic Dakota and
immunomodulating agents 2 23 1264.8%
Lovenox Blood and blood forming
organs 16 22 31.6%
Plavix Blood and blood forming
organs 13 20 52.5%
Total 239 334
The major therapeutic areas for Winthrop, based on 2007 sales, are NS, CVS,
antineoplastic and immunomodulating agents, alimentary tract and metabolism,
genitor-urinary system and sex hormones, anti-infectives for systemic use, musculo-
skeletal system, systemic hormonal preparations, and dermatological, as shown in the
figure below.
131
Figure 9.32: Sanofi-Aventis’ (Winthrop) therapeutic focus, 2007
Systemic hormonal preparations

2%
Alimentary tract and metabolism
10%
Anti-infectives
for systemic use
6%
Nervous system
36%
Antineoplastic and
immunomodulating
agents
12%
Cardiovascular system
Musculo-skeletal system 24%
2%
Genito-urinary system
and sex hormones
Dermatologicals
7%
1%
132
Growth strategies
Regionalization strategy
Winthrop’s growth strategy proposes to make optimal use of its product portfolio
through its regionalization strategy. This strategy focuses on strengthening its generics
business in developing countries such as Brazil, Russia, India, China and Mexico. A
burgeoning demand for health services, owing to growing wealth in emerging
economies, has opened up opportunities for pharmaceutical companies such as Sanofi-
Aventis. As a part of its strategy to penetrate high growth markets, Sanofi-Aventis
launched in Cebu its generics arm, Winthrop Pharmaceuticals Philippines in 2007. It
also entered the generics market in China in 2007–2008, where it plans to develop and
manufacture products locally for use in the Chinese market. For this purpose, it has
signed deals to collaborate with universities and state-funded research institutions in
the country. It plans to enter the Brazilian generics market, which was valued at
approximately $3.5bn in 2007, in 2010, through franchise agreements.
In June 2008, as a part of its strategy to increase its presence in emerging economies,
Winthrop announced its intentions to take over all issued and outstanding ordinary
shares of Zentiva, a Czech Republic-based company that develops, manufactures, and
markets branded generic pharmaceutical products. This deal will expand Winthrop's
presence in Eastern Europe and give it a foothold in this emerging generics market.
133
SWOT analysis
Figure 9.33: Sanofi-Aventis (Winthrop) SWOT analysis
Winthrop’s regionalization strategy has Winthrop is missing out on opportunities

helped it to establish a strong niche and in the rapidly growing US generic market
adapt to the local therapeutic needs of the owing to the lack of presence in this
emerging economies such as Brazil, region.
Russia, India, China and Mexico.
Biosimilar generics in the field of low The low penetration of generics in France,
molecular weight heparin will enable owing to generic price cuts and resistance
Sanofi-Aventis to continue marketing of from French physicians, will adversely
the biosimilar version of the product affect Winthrop’s market share and
following patent expiry through its position.
Winthrop subsidiary.
Strengths
Strong presence in emerging economies
Winthrop’s strong presence in emerging economies will boost its top-line owing to the
escalating demand for healthcare facilities in these economies. Its regionalization
strategy has helped it to build a niche and adapt to local therapeutic needs in emerging
economies, such as Brazil, Russia, India, China and Mexico. Sanofi-Aventis
strengthened its presence in the European markets, particularly in central and Eastern
Europe, with the acquisition of a 24.9% stake in Zentiva in 2006. Rising income and
growing demand for healthcare facilities in these economies, coupled with Winthrop’s
134
diverse generic products portfolio of approximately 300 products, have positioned it
well to enhance its market share and prominence.
Weaknesses
Lack of presence in the US
Winthrop is foregoing opportunities in the rapidly growing generics market in the US

owing to its lack of presence in this region. The US is the largest market for generic
drugs, with unbranded generics accounting for more than 50% of prescriptions in 2006.
A rapidly aging population, a conducive political environment, patent expiry of key
biotech and branded drugs, and the Hatchman-Waxman Act, have boosted the generics
business in the US. Winthrop’s operations are spread across 14 countries in Europe,
South Africa and South America. Because most of its competitors, such as Teva,
Mylan, Sandoz, Watson, Pfizer and Apotex, have a strong presence in the US market,
Winthrop’s lack of presence puts it at a distinct competitive disadvantage.
Opportunities
Biosimilar generics in the field of low molecular weight heparin
Biosimilar generics in the field of low molecular weight heparin will enable Sanofi-
Aventis to extend its market exclusivity period for its leading branded product,
Lovenox. The FDA has approved biosimilar generics in the field of low molecular
weight heparin and Sanofi-Aventis can capitalize on this opportunity by developing
biosimilar generics for Lovenox, which is expected to go off-patent in 2012. This
approval will enable Sanofi-Aventis to continue marketing of the biosimilar version of
the product following patent expiry through its Winthrop subsidiary.
Threats
Low penetration of generics in France
The low penetration of generics in France, owing to resistance from French physicians,
will adversely affect Winthrop’s global market share and position as France is
Winthrop’s key market. French physicians represent a major stumbling block to
135
generics uptake in France, despite government initiatives to drive generics
consumption. French physicians prefer to shift patients onto a different branded drug
once a brand goes off-patent, rather than turning to a generic equivalent. In addition,
the price cut in generics announced by the French government in its 2006 budget has
had an adverse impact on the growth of many generic players, such as Biogaran.
Generic price cuts and resistance from French physicians will inhibit the growth of
Winthrop’s business in France.
136
CHAPTER 10
Watson
137
Chapter 10 Watson
Summary
Watson is the eighth largest generics pharmaceutical company in the world, with
2007 sales amounting to $1,402m and a 1.4% market share. Revenues witnessed
a decrease of 1.9% from 2006.
The key therapeutic areas for Watson include NS, CVS, alimentary tract and
metabolism, musculo skeletal system, anti-infectives for systemic use, respiratory
system, and genito-urinary system and sex hormones. NS accounted the major
chunck of Watson’s therapeutic focus, with 75% of its 2007 revenues.
Watson’s top marketed products in 2007 were hydrocod/apap, fentanyl,

bupropion, oxycodon/apap, glipizide, nicotine, pravastatin, lisinop/hctz, morphine
and salbutamol.
Watson is focusing on building an offshore presence and expanding its capacity

in countries such as India, where it acquired a solid dosage manufacturing site in
Goa in 2007. This manufacturing facility will produce about 10% of its entire
production volume and export them to the US market, giving Watson cost
advantage.
Watson is increasing its API capabilities, allowing it to work earlier on raw

materials that will support future patent challenges, and provide opportunities for
backward integration and lower production costs.
Ferrlecit is Watson’s most successful branded product, and the one that it relies
heavily on for branded drug revenues. The drug accounted for approximately 5%
of its net revenues and 12% of its gross profit in 2007. However, Ferrcelit has
been steadily losing market share to rival Venofer, and face competition from
Advanced Magnetic’s ferumoxytol, which is currently in development.
138
Table 10.24: Watson snapshot
Headquartered: California, US
Incorporated: 1984
Watson is engaged in the development, manufacture and sale of branded and generic
pharmaceutical products. Its operations are based predominantly in the US and India,
with its key commercial market being the US. It markets more than 150 generic
pharmaceutical product families and 27 branded pharmaceutical product families.
Watson operates in three divisions: generic, brand and distribution. Its portfolio of
generics includes products that it develops internally, those licensed from third parties,
and those that it distributes on behalf of third parties. During 2007, Watson expanded
its generic product line with the launch of 16 generic products.
Geographic focus
The US is the major market for Watson’s generic business. It reported $1,374m of
consolidated generic sales in 2007, as compared with $1,400m in 2006, a decrease of
1.9%. This was mainly due to lower pricing of the company’s existing products.
139
Marketed products
The top 10 generic pharmaceutical products marketed by Watson, based on 2007 sales,
are shown in the table below.
Table 10.25: Watson's top 10 marketed products sales, 2006–2007 ($m)
Hydrocod/Apap Respiratory system 163 220 34.5%

Bupropion Nervous system 205 190 (7.1%)
Oxycodon/Apap Nervous system 72 133 85.5%
Glipizide Alimentary tract and
metabolism 65 49 (25.1%)
Nicotine Nervous system 39 36 (7.3%)
Pravastatin Cardiovascular system 194 35 (81.7%)
Lisinop/Hctz Cardiovascular system 12 35 190.7%
Morphine Nervous system 11 34 211.7%
Salbutamol Respiratory system 12 28 129.2%
Total 817 952
Key generic drugs launched by Watson in 2007 included:
Bupropion hydrochloride XL 300mg tablets – an anti-depressant launched in June

2007.
Transdermal fentanyl – an analgesic, launched in August 2007.
Albuterol sulfate inhalation solution – a bronchodilator, launched in September

2007.
TiliaTM Fe – an oral contraceptive, launched in October 2007.
The major therapeutic areas for Watson, based on 2007 sales, are NS, CVS, alimentary
tract and metabolism, musculo skeletal system, anti-infectives for systemic use,
140
respiratory system, and genito-urinary system and sex hormones, as shown in the figure
below.
Figure 10.34: Watson’s therapeutic focus, 2007

metabolism Anti-infectives for
Respiratory system
6% systemic use
2%
2%
Cardiovascular
system
9%
Genito-urinary
system and sex
hormones
2%
Musculo-skeletal
system
4%
Nervous system
75%
141
Growth strategies
Growing offshore presence
To keep pace with shifting industry dynamics, Watson is building an offshore presence
and expanding its capacity. As a part of this strategy, it continued to enhance and
expand its operations in India. During 2007, its Indian manufacturing facility based in
Goa, received approval to export products to the US market. The facility will be able to
produce approximately 10% of its entire production volume. During 2008, the facility’s
capacity will be expanded further so that it is capable of handling about a third of
Watson’s production volume.
As part of this strategic initiative, Watson also aims to increase its API capabilities,
allowing the company to work earlier on raw materials that will support future patent
challenges, and provide opportunities for backward integration and lower production
costs. In addition, its recently purchased bioanalytical facility in Mumbai, India became
operational in 2007 and will provide it with the flexibility to manage its own bio-
studies at a significantly reduced cost.
As a part of strategic initiatives aimed at reducing its cost structure and enhancing
operating efficiencies, Watson sold its sterile injectable manufacturing facility located
in Phoenix and closed its Puerto Rico site during 2007, helping it to achieve
approximately $30m in cost savings.
In 2006, Watson acquired Andrx Corporation, a specialty pharmaceutical company

based in the US. Andrx is one of the leading companies in formulating difficult-to-
replicate products, which is consistent with Watson’s plan to expand its differentiated
product offerings. Furthermore, the acquisition of Andrx also provided it with more
than 60 ANDAs on file with the FDA.
142
SWOT analysis
Figure 10.35: Watson SWOT analysis
Global centers of excellence enable it to Dependence on third-party manufactured

develop a number of generic products products, which accounted for 57%, 58%,
through a combination of internal and and 51% of its net product revenues in
collaborative program. 2007, 2006 and 2005, respectively.
Expansion in low cost, growing Approval of generic version of Ferrlecit or

economies, such as India, with the other competitive product by the FDA.
acquisition of Sekhsaria Chemicals (2006)
and a solid dosage manufacturing site
(2007).
Strengths
Global centers of excellence
Watson’s global infrastructure includes R&D centers and manufacturing facilities in

the US, Northern Ireland, India and China. Adding vertical integration to the mix, it
also operates API manufacturing plants in India, China and Northern Ireland.
Watson devotes significant resources to the R&D of generic products and proprietary
drug delivery technologies. It incurred generic segment R&D expenses of $102m in
2007, $84m in 2006 and $81m in 2005. It is developing a number of generic products
143
through a combination of internal and collaborative programs. Its internal development
program, supplemented by products gained through the acquisition of Andrx, provides
Watson with more than 60 ANDAs on file with the FDA. A number of these
opportunities are expected to contribute to higher margins and longer lifecycles than its
traditional commodity products.
Weaknesses
Dependence on third-party manufacturers
Dependence on third party manufacturers prevents Watson from maximizing profits

and also exposes it to supplier side risks. Watson has agreements with third parties for
the manufacture of certain products. Some of Watson's third party manufactured
products accounted for 57% of its revenues in 2007, including products such as
Ferrlecit and bupropion hydrochloride sustained release tablets, and a number of oral
contraceptive products.
Opportunities
Expansion in India
Watson's expansion in low cost, growing economies like India will enable it to
manufacture its products at reduced costs enabling the company to market them at
competitive prices. As a part of its cost reduction initiative, Watson acquired an Indian
company, Sekhsaria Chemicals in 2006. Sekhsaria is a Mumbai-based premier process
research, development and manufacturer service provider for the global pharmaceutical
industry in 40 countries, including the US, Europe and Japan. Watson also acquired a
solid dosage manufacturing site in Goa, India, which received FDA approval in
September 2007. In addition, it is expanding Goa’s capacity to be capable of handling
about a third of its production volume.
144
Threats
Loss of revenues from Ferrlecit
Loss of revenues from Ferrlecit, the primary product in Watson's portfolio, could have
a significant impact on the company's financial position and cash flow. Ferrlecit is
Watson’s most successful branded product, and it relies heavily on it for branded drug
revenues. The drug accounted for approximately 5% of its net revenues and 12% of its
gross profit in 2007. However, revenues from Ferrlecit are likely to decline, as
Ferrlecit's loss of exclusivity in 2004 will allow generic applicants to submit ANDAs
for the drug. It has been steadily losing market share to its rival Venofer, and both will
face competition from Advanced Magnetic’s ferumoxytol, which is currently in
development. Moreover, it expects generic competition as soon as 2008, with Teva the
probable contender. If a generic version of Ferrlecit or another competitive product
receives FDA approval and is marketed, Watson’s net revenues and profits could
significantly decline.
145
146
CHAPTER 11
Bayer
147
Chapter 11 Bayer
Summary
Bayer is the ninth largest generics pharmaceutical company in the world, based
on sales in 2007, with a 1.4% market share in the global generics market. It
Bayer’s generics business mostly serves the NS (85%) related diseases. Blood
and blood forming organs (12%), and genitor-urinary system and sex hormones
(3%) have miniscule shares in its generics product portfolio.
Bayer’s genitor-urinary system and sex hormones generic drug, Cliane, recorded
a decline of 7.1% in 2007 sales. Rest of its top 10 drugs registered a healthy
growth.
Bayer intends to capitalize on governments’ efforts to promote generics as low-

cost alternatives to branded pharmaceuticals. These government initiatves have
boosted demand for generics in Italy, Spain, France and Germany. This has
helped Bayer carve a niche for its generic portfolio in these economies.
Bayer has developed strong R&D capabilities. It spent approximately 7.8% of its
consolidated net sales per year on R&D during 2004–2007. These capabilities
have helped it focus on medical and security technology, and the use of plants to
develop and manufacture new pharmaceutical products.
Bayer’s generic drugs are mostly marketed in France, Germany, Italy, Spain,
Eastern Europe and Brazil. It does not operate in the US and UK. By contrast,
competitors such as Teva, Novartis and Mylan have a presence in these markets,
placing Bayer at a competitive disadvantage.
148
Table 11.26: Bayer snapshot
Headquartered: Leverkusen, Germany

Incorporated: 1881
Segment revenues (2007): $1348m
Market share: 1.4%
Source: Company information Business Insights Ltd
Bayer is the holding company for the Bayer Group, which includes approximately 350
companies. Through its various companies, Bayer focuses on three areas: health care,
crop science and material science. Bayer's healthcare segment is engaged in the
research, development, manufacturing and marketing of pharmaceutical and medical
products. Besides proprietary drugs, it also has a portfolio of off-patented drugs
(branded generics). These drugs are mostly marketed in France, Germany, Italy, Spain,
Eastern Europe and Brazil.
Geographic focus
The 5EU contributed 14.1% of Bayer’s consolidated generic revenues in 2007.

Germany was the largest market for Bayer, accounting for 8.6% of the consolidated
generic sales in 2007. It recorded generic sales of $116m in 2007, an increase of 9.4%
over 2006.
France, Bayer's least significant active market in terms of revenues, contributed 1% of

its consolidated generic revenues in 2007. Revenues from this market registered a
significant growth of 29.7% in 2007, as compared with 2006.
In Spain, Bayer recorded its highest growth rate of 31.0% in generic sales in 2007, as
compared with 2006.
149
Figure 11.36: Bayer’s geographic focus, 2006–2007
100%
70 bps
90%
80%
Generic sales (%)
70%
60% 85.9%
85.2%
50%
40%
30%
20%
10% 14.8% 70 bps 14.1%
0%
2006 2007
5EU Others
*bps- basis points
Source: Business Insights; IMS Business Insights Ltd
Marketed products
The top 10 generic pharmaceutical products marketed by Bayer based on 2007 sales are
150
Table 11.27: Bayer's top 10 marketed products sales, 2006–2007 ($m)
Aspirin Vit C Nervous system 89 98 10.1%

Aspirin Nervous system 68 75 10.4%
Microgynon 30 Genito-urinary system and sex
hormones 25 28 10.6%
Triquilar Genito-urinary system and sex
hormones 11 12 6.3%
Neogynon Genito-urinary system and sex
hormones 10 10 8.5%
Mesigyna Genito-urinary system and sex
hormones 8 10 20.2%
Vitamin B1/B6 Alimentary tract and metabolism 7 9 42.4%
Benerva Alimentary tract and metabolism 8 9 11.5%
Mirena Genito-urinary system and sex
hormones 4 6 43.8%
Cliane Genito-urinary system and sex
hormones 5 5 (7.1)%
Total 235 262
The major therapeutic areas for Bayer, based on 2007 sales, are NS, blood and blood
forming organs, and genitor-urinary system and sex hormones.
151
Figure 11.37: Bayer’s therapeutic focus, 2007
Blood and blood

forming organs
12%
Genito-urinary
system and sex
hormones
3%
Nervous system
85%
Growth strategies
Building on government initiatives to promote generics
Bayer has carved a niche for its branded generic drugs in the emerging economies of
Eastern Europe and Brazil, as well as in major markets such as Italy, Spain, France and
Germany. Government efforts to promote generics as a low-cost alternative to branded
pharmaceuticals have boosted demand for generics in these economies, and Bayer
intends to build on these surges in demand.
Bayer made several acquisitions in the fiscal year 2007 related to its crop science,
material science and over-the-counter (OTC) business; however, it did not pursue
inorganic growth for its generics business.
152
SWOT analysis
Figure 11.38: Bayer SWOT analysis
Bayer’s strong R&D capabilities, Bayer markets its generic

complemented with collaborations with pharmaceuticals primarily in France,
leading universities, public sector Germany, Italy, Spain, Eastern Europe
research institutes and partner and Brazil. However, it lacks presence in
companies, have aligned its product the US and the UK, the leading generics
portfolio to the requirements of the markets.
markets in which it operates.
Bayer is contemplating enhancements to Bayer faces threats from compulsory

its top-line by capitalizing on the rising rebates and price reduction such as
healthcare needs in emerging markets of AVWG reform introduced in in 2006,
Brazil and Eastern Europe. which caused a decline of 5.4% in the
total German generic sales by value in the
first half of 2007.
Strengths
Strong R&D capabilities
Bayer’s strong R&D capabilities have aligned its product portfolio to the requirements
of the markets in which it operates. It spent approximately 7.8% of its consolidated net
sales per year on R&D during 2004–2007. Bayer also collaborates with leading
universities, public-sector research institutes and partner companies, further
complementing its R&D activities. Bayer’s R&D activities are currently focused on
medical and security technology, and the use of plants to develop and manufacture new
pharmaceutical products.
153
Weaknesses
Lack of presence in the US and the UK
Bayer is missing out on opportunities in two of the leading generics markets, the US
and the UK. The US is the world’s largest market for generic drugs, with generics
accounting for more than 50% of prescriptions. A rapidly increasing aging population,
government support for generics to bring down healthcare expenses, and approximately
103 drugs due to go off-patent during 2008–2012, has created huge opportunities for
generic companies in the US. The UK is the second largest generic market in Europe,
after Germany, with an estimated market size of $4.4bn in 2007, as compared with
$4.1bn in 2006. In addition, generics penetration has been the highest in the UK among
the 5EU, estimated at 26% by value and 64% by volume in 2006, primarily due to
government led initiatives aimed at curbing rising healthcare costs. Moreover, most of
Bayer's competitors in the generics industry have presence in the US and the UK,
particularly Teva, Novartis, and Mylan. Bayer’s lack of presence in the US and UK
puts it at a competitive disadvantage.
Opportunities
Focus on emerging economies
Bayer intends to boost its top-line by tapping into proliferating healthcare needs in the
emerging markets of Brazil and Eastern Europe. Brazilian generics sales totalled $1bn
in 2006, approximately 11% of the pharmacy sector, and are expected to value $3.5bn
in 2010. Many blockbuster drugs, including oral contraceptives and hormones, are set
to go off-patent in Brazil and government initiatives to promote low-cost generics, both
in Eastern Europe and Brazil, have created huge opportunities for generic
manufacturers such as Bayer. It can capitalize on its R&D capabilities to launch
generics in these economies.
Threats
Regulatory pressure on generic pricing in Germany
The German government introduced the Arzneimittelversorgungs

Wirtschaftlichkeitsgesetz (AVWG) reform in May 2006 to bring down Germany’s
154
escalating healthcare provision costs. The German sickness fund, Krankenkassen,
gained substantial negotiating power as an outcome of the legislation. Generic
producers that supplied Krankenkassen were forced to provide rebates of 10%, except
for those drugs priced 30% below the reference price. Obligatory rebates and price
reductions caused a decline of 5.4% in generic sales, by value, in the first half of 2007.
Therefore, it is expected that such compulsory rebates and price reductions, owing to
the reforms, will have an adverse impact on the sales value of generic producers such
as Bayer going forward.
155
156
CHAPTER 12
Stada
157
Chapter 12 Stada
Summary
Stada is the tenth largest generics pharmaceutical company in the world, based on
sales in 2007, with a market share of 1.3% in the global generics market. It
Stada’s key therapeutic areas were alimentary tract and metabolism, CVS, NS,
anti-infectives for systemic use, musculo-skeletal system, genito-urinary system
and sex hormones, dermatologicals, respiratory system, and blood and blood
forming organs, in 2007. CVS, NS and anti-infectives for systemic use
represented more than 70% of its therapeutic focus in 2007.
Ibuprofen and pravastatin were the most successful generics sold by Stada.
Ibuprofen and pravastatin, each recorded a sales growth of 399.1% and 101.3%
respectively, in 2007.
Stada depends on a network of raw material suppliers for its production

requirements. In addition, it uses external contract manufacturers for the majority
of its pharmaceutical production, including packaging as well as production.
Generics represent a price sensitive business model for Stada. Thereby,

continuous cost optimization forms an integral part of its growth strategy. In line
with this strategy, Stada has adopted a lean business model, enhancing its ability
to adapt to changing business environments. For instance, instead of
manufacturing its own API’s, it outsources them from contract manufacturers,
helping it to maintain flexibility and cost optimizations.
ALIUD Pharma, a subsidiary of Stada, is able to offer its products at lower prices,
as it does not operate its own sales force. This has helped it to develop a cost
advantage over its competitors in the generics industry.
Germany’s Arzneimittelversorgungs Wirtschaftlichkeitsgesetz (AVWG) reform,

implemented in May 2006, has created a new reference pricing system and
introduced higher rebates on generics. These obligatory rebates and price
reductions caused a decline of 5.4% in Germany’s generic sales, by value, in the
first half of 2007.
158
Table 12.28: Stada snapshot
Headquartered: Bad Vilbel, Germany

Incorporated: 1970
Stada is engaged in the development and marketing of generics and branded products
with off-patent APIs. It operates 46 sales companies in 30 countries including China,
Kazakhstan, Vietnam, the Philippines, and Thailand.
The generics division is its largest core segment. It markets generic products through
its subsidiaries STADApharm, ALIUD Pharma, cell pharm and Hemofar. Stada
abstains from manufacturing any active ingredients and auxiliary materials necessary
for pharmaceutical production in its own facilities. Instead it depends on a network of
raw material suppliers for its production requirements. In addition, Stada uses external
contract manufacturers for the majority of its pharmaceutical production, including
packaging as well as drug production. However, Stada does operate some production
units in Germany, Serbia, Russia, Ireland, and Vietnam.
Geographic focus
The 5EU has the largest share (66.2% in the fiscal year 2007) in Stada’s consolidated
generic sales. Germany was the largest market for Stada, accounting for 38.7% of the
consolidated generic sales in 2007. It recorded generic sales of $475m in 2007, an
increase of 15.3% over 2006. It ranked third in the German market after RatioPharm
and Novartis (Sandoz) in fiscal 2007. Stada and its subsidiaries, ALIUD Pharma, cell
pharm and Hemofar, all market its products in Germany, enabling it to capitalize on
sales from four companies, thereby gaining a larger market share.
159
The UK accounted for 0.7% of the consolidated generic sales in 2007, the smallest
proportion of Stada's sales. This region represents huge potential for growth as a
significant proportion of branded off-patent products that are yet to have generic
competition characterizes the UK market and Stada could get in there with its generics.
Stada has reinforced its presence in the UK market through the acquisition of Forum
Bioscience Holdiings, a British pharmaceutical company in September 2007. This deal
has strengthened Stada’s niche product portfolio in the UK.
Stada's largest increase in sales from 2006–2007 was in Italy. It recorded sales of
$112m in fiscal 2007, an increase of 60% over 2006.
Figure 12.39: Stada’s geographic focus, 2006–2007
100%
10 bps
90%
33.9% 33.8%
80%
Generic sales (%)
70%
60% 10 bps
50%
40%
66.1% 66.2%
30%
20%
10%
0%
2006 2007
5EU Others
*bps- basis points
160
Marketed products
The top 10 generic pharmaceutical products marketed by Stada based on 2007 sales are
Table 12.29: Stada’s top 10 marketed products sales, 2006–2007 ($m)
Omeprazole Alimentary tract and

Simvastatin Cardiovascular system 39 41 5.3%
Fentan.Stada Bet.M Nervous system 14 24 69.5%
Alendronic AC Musculo-skeletal system 16 22 40.9%
Lansoprazole Alimentary tract and
Ibuprofen Musculo-skeletal system 13 13 (3.5)%
Tramadol Nervous system 10 12 22.0%
Metformin Alimentary tract and
Metoprolol Cardiovascular system 15 11 (22.9)%
Total 218 291
161
The major therapeutic areas for Stada, based on 2007 sales, are alimentary tract and
metabolism, CVS, NS, anti-infectives for systemic use, musculo-skeletal system,
genito-urinary system and sex hormones, dermatologicals, respiratory system, and
blood and blood forming organs, as shown in the figure below.
Figure 12.40: Stada’s therapeutic focus, 2007
Respiratory system
1%
Nervous system
21%
metabolism
27%
Musculo-skeletal system
9%
Genito-urinary system Anti-infectives for

and sex hormones systemic use
3% 10%
Dermatologicals Antineoplastic and

2% immunomodulating
agents
Cardiovascular system Blood and blood forming
1%
25% organs
1%
162
Growth strategies
Cost optimization
Generics represent a price sensitive business model for Stada. Thereby, continuous cost
optimization forms an integral part of its growth strategies. In line with this strategy,
Stada has adopted a lean business model, enhancing its ability to adapt to changing
business environments.
Stada does not manufacture any of the active ingredients and auxiliary materials
necessary for pharmaceutical production in its own facilities, in order to maintain
flexibility and cost optimization. Instead, it depends on a network of raw material
suppliers for its production requirements. These suppliers are primarily located in low-
cost countries, mainly in Asia. In addition, Stada uses external contract manufacturers
for the majority of its pharmaceutical production, including packaging as well as
production, in accordance to Stada’s drug approvals. This brings volume and cost
flexibility into the production process. However, Stada is also in the process of shifting
from contract manufacturing to low-cost production units operated by its Hemofarm
subsidiary in Russia and Vietnam. Both of these production arrangements enable it to
reduce production costs, giving it a reduced cost base in comparison to some of its
competitors, this allows it to price its products more competitively.
Stada has also developed cost optimization in the sales area. It is aiming to reduce its
sales force for established companies in Germany. It has restructured the sales force of
the major generics marketing subsidiary STADApharm. Such cost restructuring will
have a direct and favorable impact on the operating margins of Stada.
Continuous portfolio expansion
Stada is also focused on the continuous expansion of its product portfolio. It launched
approximately 424 products, including branded pharmaceuticals, in fiscal 2007. As of
December 2007, Stada has conducted approval procedures for more than 120 APIs in
over 50 countries. In addition it has launched the biosimilar product Erythropoietin-
163
zeta in Germany in the first quarter of 2008. Such launches in the field of biosimilars
will further consolidate and reinforce its market presence as there is a sizable
opportunity for sales growth in this field.
Stada has been actively pursuing European expansion recently, and in addition to
organic growth has been expanding its presence outside Germany through mergers and
acquisitions. Attaining additional access to economies of scale and vertical integration,
in areas such as production of APIs, are the primary objectives behind its extensive
acquisition activities.
In September 2007, Stada acquired Forum Bioscience Holdings, a British

pharmaceutical group. This acquisition strengthened and expanded Stada’s presence in
the UK.
Earlier, in August 2007, Stada acquired Makiz, a Russian pharmaceutical group. This
acquisition provided Stada with access to low-cost production sites and development
centers in Russia. In addition, Makiz’s product portfolio significantly strengthened
Stada’s activities in Russia.
164
SWOT analysis
Figure 12.41: Stada SWOT analysis
ALIUD Pharma’s low-price cost structure Stada is dependent on third parties for the
enables it to pursue price aggressive sales manufacture of active ingredient and
strategies. auxiliary materials necessary for
pharmaceutical production in its own
Stada has a strong local sales infrastructure facilities.
with 46 sales companies in 30 countries.
Stada launched biosimilar Erythropoietin- Regulatory pressure on generics pricing in

zeta in Germany in the first quarter of 2008. Germany will decelerate the growth of
Such biosimilar launches will reinforce generic players such as Stada.
Stada’s market position and boost its top-
line.
Stada expanded its footprint in Eastern

Europe with the acquisition of Makiz, a
Russian pharmaceutical group in August
2007 and Hemofarm, a Serbian generic
company in 2006.
Strengths
Low-price cost structure of ALIUD Pharma
ALIUD Pharma, a subsidiary of Stada, has a marketing strategy that has allowed it to
develop cost advantage over its competitors in the generics industry. ALIUD Pharma is
able to offer its products at lower prices, as it does not operate its own sales force. This
165
permits it to save on sales-force costs by sending its product information through the
mail. This low-price cost structure enables it to pursue price aggressive sales strategies,
as well as allowing it to enter hefty discount agreements with health insurance
organizations in Germany, considerably enhancing its top-line and market share.
Strong local sales infrastructure
Its strong local sales infrastructure in various markets permits Stada to promptly and
adequately meet challenges triggered either by regulatory changes or competitive
pressure in international markets. It operates 46 sales companies in 30 countries. Of
these, 25 countries are European, including the five major generics markets on that
continent. It also has presence in countries outside Europe, including China,
Kazakhstan, Vietnam, the Philippines, and Thailand. Stada’s strategic development of
its local sales infrastructure has also helped it to build up a balanced presence in both
mature and developing markets.
Weaknesses
Dependence on third-party suppliers and manufacturers
Its dependence on third parties exposes Stada to supplier side risks. Stada has
agreements with third parties for the manufacture of the active ingredients and
auxiliary materials necessary for pharmaceutical production in its own facilities. In
addition, Stada uses external contract manufacturers for the majority of its
pharmaceutical production, including both packaging as well as production. Contract
manufacturing accounted for approximately 55% of its total pharmaceutical production
in the fiscal year 2007. Any default on the part of the supplier or failure to meet
regulatory standards will jeopardize Stada’s operations.
Opportunities
Launch of biosimilar Erythropoietin-zeta
The field of biosimilars offers a great opportunity for sales growth, as the high cost of
developing these products is a barrier to market entry for many companies, limiting
166
competition in this market. Stada launched the biosimilar Erythropoietin-zeta in
Germany in the first quarter of 2008. This product is used for the treatment of anaemia
associated with chronic renal failure and chemotherapy. Such biosimilar launches will
reinforce Stada’s market position and boost its top-line.
Expanding footprint in Eastern Europe
The growing purchasing power of private households and the rising demand for
generics in Eastern Europe, due to changes in national healthcare policies in favor of
generic drugs, underline Stada’s growing interest in this region. Stada acquired Russian
pharmaceutical group Makiz in August 2007. This deal gave access to low-cost
production sites and development centers in Russia. In addition, Makiz’s product
portfolio significantly strengthened Stada’s position in Eastern Europe. Earlier in 2006,
Stada acquired Serbian generics company Hemofarm. This deal gave access to new
production technology and low-cost production facilities, as well as generating
economies of scale and adding to its market presence in the region. Its low cost
production facilities helped the company to gain a cost advantage over some of its
competitors. Furthermore, these acquisitions helped Stada to avert start up cost in this
region.
Threats
Regulatory pressure on generics pricing in Germany
The escalating costs of providing healthcare in Germany prompted the introduction of

the AVWG reform in May 2006. This act froze drug prices for two years, except for
those generics that were priced at a third of the cost of branded drugs. Subsequently,
the German reference price system was re-structured and rebates were introduced on
generic drugs. Krankenkassen, the fund through which healthcare in Germany is
regulated, gained considerable negotiating power as a consequence of the legislation.
Compulsory rebates and price reductions resulted in a 5.4% decline in generic sales, by
value, in the first half of 2007. The regulatory pressure on generics pricing in Germany
has adversely impacted the top-line of the generic players, despite a growth in volume
167
sales. Such regulatory pressure will decelerate the growth of generic players such as
Stada.
168
CHAPTER 13
Conclusion
169
Chapter 13 Conclusion
Introduction
The conclusion of this report focuses on the dynamics of the generics industry and
assesses the strategies adopted by leading players. The chapter also gives a
comparative analysis of the companies on various parameters, such as sales growth,
geographical coverage and therapeutic area focus.
Generics outperforming the ethical pharmaceutical

industry
The generic industry is vibrant and booming, with continuous patent expiration and
government support to curb spiraling healthcare costs. The pro-generic legislative
measures underway in the major and emerging markets have further enhanced the
future prospects of this industry. The increasing acceptance of generics is made clear
by the way that this industry has outperformed the ethical pharmaceutical industry.
Reassessing growth strategies
The growing prominence of generic players has caused ethical pharmaceutical

companies to reconsider their growth strategies. Generics are no longer the preserve of
pure generics manufacturers. Instead, specialty drug manufacturers such as Pfizer and
Sanofi-Aventis are taking a keen interest in the industry to win back revenues they
would have otherwise lost to generics through authorized (pseudo) generics
manufactured by their subsidiaries. The growth strategy of these specialty
pharmaceuticals is in sharp contrast to pure generics players, as they strategically
impair the economic viability of legally challenging brand-name drug patents by
undercutting price and market share through the launch of authorized generics. On the
other hand, most of the pure players such as Teva, Apotex and Stada are concentrating
on new product launches, cost optimization and global expansion through organic and
inorganic growth.
170
Generics competition within the biotech sector
‘Follow-on-biologics’ (biosimilar/biogeneric) has evolved as a new growth arena for

generics. Follow-on-biologics have been approved in the EU and the major countries of
Asia, such as India. However, the US, the largest generics market in the world, is still
deliberating the issue. The undercurrent of the debate, initiated in 2007, is skewed
towards a favorable outcome and approval for follow-on-biologics in the US market
would provide a huge impetus to the generics industry.
Stripping-off the pricing advantage
The major concern in the industry is that governments, in their efforts to promote low-
cost generics, have stripped the margins of these products, endangering the long term
sustainability of generics companies. The low price of generics has started hurting the
sales value of the industry. In Germany, for example, compulsory rebates and price
reductions caused a decline of 5.4% in generics sales, by value, in the first half of 2007.
The reference pricing system in most of the major markets such as France and Spain
has reduced the pricing advantage that generics had over patented drugs, hindering
growth.
171
Figure 13.42: Comparative analysis of top 10 generic companies
Sales growth, Geographic Therapeutic

Companies coverage, 2007
CAGR 2004-07 focus, 2007
Novartis (Sandoz)
Teva
Mylan
Ratiopharm
Apotex
Pfizer (Greenstone)
Sanofi-Aventis
(Winthrop)
Watson
Bayer
Stada
Source: Company information/Business Insights Business Insights Ltd
Outlook
The continued expiry of blockbuster drugs and pro-generic legislative measures will
continue to drive the generics industry. According to IMS Health, sales of generic
pharmaceuticals are expected to increase by 14–15% in 2008, as compared with global
sales growth of 6–7% for branded pharmaceuticals. The participation of ethical
pharmaceutical manufacturers in the generics market will further fuel the growth of the
industry, as they try to win back revenues lost from patent expiry by launching
authorized generics.
Generic manufacturers are consolidating in order to maintain their competitive stance

against branded pharmaceutical companies. This trend is set to continue, with Indian
172
and Chinese manufacturers investigating options in the US market in particular. Indian
and Chinese companies have the inherent benefit of combining highly skilled drug
development with low-cost manufacturing. Thus, the US is expected to witness
enhanced acquisition and merger activities, with the Chinese and Indian companies
taking the lead. Western European countries will also observe M&A activities owing to
higher growth opportunities in these markets, along with pro-biogeneric legislations.
Follow-on-biologics will provide an impetus for generics industry growth. Currently,

the EU is the leading market for biosimilars. The US lags behind in this arena owing to
legislative hurdles. However, considerable progress has been made in the US regarding
the legislation to create an FDA approval pathway for biosimilars. Increasing
acceptance of biosimilars in the EU, as well as the favorable developments in the US,
has led the Indian Pharmaceutical Export Promotion Council to structure a biotech-
specific export promotion plan.
Generic players will continue to make inroads in emerging markets such as China,
Brazil, Mexico, and Turkey, due to the surging demand for drugs in these countries,
combined with an inability to afford cutting-edge innovative pharmaceuticals.
Maturing major markets will further drive generics towards emerging economies.
173
174
Chapter 14
Appendix
175
Chapter 14 Appendix
Glossary
Active ingredient A component that provides pharmacological activity or an other

direct effect in the diagnosis, cure, mitigation, treatment, or
prevention of disease, or affects the structure or any function of
the body of man or animals.
ANDA ANDA (Abbreviated New Drug Application) contains data that,

when submitted to FDA's Center for Drug Evaluation and
Research, Office of Generic Drugs, provide for the review and
ultimate approval of a generic drug product.
Authorized generics An authorized generic is a pharmaceutical product that was

originally marketed and sold by a brand company, but is
relabeled and marketed under a generic product name. It may be
marketed by the brand company itself or through a subsidiary, or
the brand company may license the product to another company
for marketing, in return for royalties.
Exclusivity period The FDA offers a 180 day exclusivity period to generic drug
manufacturers, during which only one (or sometimes a few)
generic manufacturers can produce the generic version of a drug.
Generic drug A generic drug is a non-brand pharmaceutical equivalent to

another drug and has identical strength, dosage form, and
concentration. Typically, generic drugs are sold at a lower cost
than brand name drugs.
NDA When the sponsor of a new drug believes that enough evidence
on the drug's safety and effectiveness has been obtained to meet
176
the FDA's requirements for marketing approval, the sponsor
submits a New Drug Application (NDA).
OTC OTC (over-the-counter) drugs indicate pharmaceutical products

or drugs that do not require a prescription.
Standard units The number of standard dose units sold. It is determined by

taking the number of counting units sold divided by the standard
unit factor which is the smallest common dose of a product form
as defined by IMS.
177
Index
Anti-infectives, 52, 53, 59, 61, 74, 99, 109, Ratiopharm, 14, 18, 39, 52, 54, 55, 95, 96, 97,
121, 131 98, 99, 100, 101, 102, 103, 104, 130
Apotex, 14, 18, 19, 40, 52, 55, 56, 105, 106, Respiratory system, 74, 88, 99
107, 108, 109, 110, 111, 112, 113, 114, 135
Sanofi, 14, 20, 34, 52, 54, 55, 103, 113, 127,
Bayer, 14, 22, 48, 52, 54, 55, 147, 148, 149, 128, 129, 131, 132, 133, 134, 135
150, 151, 152, 153, 155, 160
Spain, 14, 29, 30, 39, 40, 41, 55, 61, 72, 76, 92,
Blood and blood forming organs, 51 97, 111, 129, 130, 149, 152
Cardiovascular system, 52, 74 Stada, 14, 23, 39, 45, 51, 52, 54, 55, 101, 104,
157, 158, 159, 160, 161, 162, 163, 164, 165,
France, 14, 29, 30, 36, 37, 39, 41, 61, 74, 92, 166, 167, 168
97, 129, 135, 149, 152
SWOT, 1, 65, 77, 91, 102, 112, 123, 134, 143,
Germany, 29, 30, 37, 38, 39, 41, 45, 61, 62, 86, 153, 165
90, 93, 97, 100, 101, 102, 103, 104, 129,
149, 152, 154, 159, 164, 166, 167 Teva, 14, 16, 18, 39, 45, 47, 49, 50, 52, 54, 65,
66, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79,
Italy, 14, 29, 30, 41, 61, 74, 92, 107, 108, 129, 80, 81, 101, 103, 135, 154
149, 152, 160
UK, 29, 30, 34, 35, 36, 37, 39, 41, 61, 62, 78,
Mylan, 14, 17, 18, 33, 49, 50, 52, 54, 83, 84, 86, 93, 107, 129, 154, 160, 164
85, 86, 87, 88, 89, 90, 91, 92, 93, 94, 96,
103, 120, 135, 154 US, 14, 15, 16, 17, 18, 19, 26, 30, 31, 32, 33,
45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 59,
Nervous system, 52, 53, 61, 74, 88, 99, 109, 60, 61, 62, 63, 66, 67, 68, 71, 72, 74, 76, 78,
121, 131, 140, 151, 161 79, 80, 85, 86, 89, 90, 92, 93, 103, 107, 109,
111, 113, 119, 121, 124, 125, 130, 135, 139,
Novartis, 14, 15, 18, 46, 50, 52, 54, 57, 58, 59, 142, 143, 154
60, 61, 63, 64, 67, 103, 104, 154, 159
Watson, 14, 21, 51, 52, 55, 56, 135, 138, 139,
Pfizer, 14, 19, 47, 48, 51, 52, 55, 56, 109, 117, 140, 141, 142, 143
119, 121, 122, 123, 124, 135
178

Top 10 Generic Pharmaceutical Companies

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Top 10 Generic Pharmaceutical Companies

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HEALTHCARE

The Top 10 Generic Pharmaceutical

While information, advice or comment is believed to be correct at the time of

Chapter 2 Industry overview 28

Chapter 3 Novartis (Sandoz) 58

Chapter 7 Apotex 106

Chapter 8 Pfizer (Greenstone) 118

Chapter 9 Sanofi-Aventis (Winthrop) 128

Chapter 10 Watson 138

Chapter 11 Bayer 148

Chapter 12 Stada 158

Chapter 13 Conclusion 170

Chapter 14 Appendix 176

 Intense competition has created pricing pressure on generic players. Participation of

 The top 10 marketed products of Sandoz include fentanyl, amoxi/clavul,

 Teva’s top 10 marketed products in 2007 include simvastatin, amlodip/benaz,

 Teva’s direct-to-pharmacy distribution model limits its reach to greater number of

 The top 10 generic pharmaceutical products marketed by Mylan in 2007 were

 In 2007 Mylan completed the acquisition of German-based Merck Generics and

 Mylan’s revenue share, up to and following the acquisition of Merck Generics, is

 Ratiopharm is focused on the development of biosimilars. As a part of this strategy,

 Apotex’s three top marketed drugs clopidogrel, ceftriaxone and ciclosporin

 Greenstone primarily focuses on three therapeutic areas, anti-infectives for

 Most of the top 10 generics marketed by Greenstone registered a decline in 2007,

 Greenstone strategically wards off competition by launching authorized generics of

 The pro-generics environment has intensified competition in the US market,

 Winthrop’s generics portfolio primarily caters to the therapeutics areas, NS and

 Winthrop’s regionalization strategy focuses on strengthening its presence in

 Winthrop also strengthened its presence in European markets, particularly in

 French physicians represent a major stumbling block to generics uptake in France,

 Watson’s top marketed products in 2007 were hydrocod/apap, fentanyl, bupropion,

 Watson is focusing on building an offshore presence and expanding its capacity in

 Watson is increasing its API capabilities, allowing it to work earlier on raw

 Bayer intends to capitalize on governments’ efforts to promote generics as low-cost

 Stada depends on a network of raw material suppliers for its production

 Germany’s Arzneimittelversorgungs Wirtschaftlichkeitsgesetz (AVWG) reform,

What is this report about?

 the business-related strengths and weaknesses of the top 10 companies in this

 The global generics market registered sales of $96,730m in 2007, an increase of

 Intense competition has created pricing pressure on generic players. Participation

Global generics market: size and growth

Growth rate (%)

Source: Business Insights/IMS Business Insights Ltd

Market overview for the US/5EU

2003 2004 2005 2006 2007 CAGR

Total US/5EU 22,557 26,057 30,107 36,338 39,124 14.8%

Source: IMS, Business Insights Business Insights Ltd

Table 2.2: Generic sales by volume in the US/5EU, 2003–2007 (Standard

2003 2004 2005 2006 2007 CAGR

US 107,109 111,294 119,990 126,873 134,321 5.8%

France 7,531 8,853 9,872 11,502 13,459 15.6%

Total US/5EU 157,411 166,050 179,705 190,118 204,421 6.8%

Source: IMS, Business Insights Business Insights Ltd

Sales 2007 ($m)

Source: Business Insights/IMS Business Insights Ltd

Figure 2.3: Generics drivers and resistors - the US

Source: Author’s analysis Business Insights Ltd

The pro-generic environment has intensified competition in the US market, bringing

Note: NHS - National Health Service

Source: Author’s analysis Business Insights Ltd

The key drivers and resistors to generics growth in France are:

Note: FSPS - Federation des Syndicats Pharmaceutiques de France

UNCAM - Union Nationale des Caisses d’Assurance Maladie

Source: Author’s analysis Business Insights Ltd

Intense competition has created pricing pressure on generic players. Participation of

The top 10 marketed products of Sandoz include fentanyl, amoxi/clavul,

Teva’s top 10 marketed products in 2007 include simvastatin, amlodip/benaz,

Teva’s direct-to-pharmacy distribution model limits its reach to greater number of

The top 10 generic pharmaceutical products marketed by Mylan in 2007 were

In 2007 Mylan completed the acquisition of German-based Merck Generics and

Mylan’s revenue share, up to and following the acquisition of Merck Generics, is

Ratiopharm is focused on the development of biosimilars. As a part of this strategy,

Apotex’s three top marketed drugs clopidogrel, ceftriaxone and ciclosporin

Greenstone primarily focuses on three therapeutic areas, anti-infectives for

Most of the top 10 generics marketed by Greenstone registered a decline in 2007,

Greenstone strategically wards off competition by launching authorized generics of

The pro-generics environment has intensified competition in the US market,

Winthrop’s generics portfolio primarily caters to the therapeutics areas, NS and

Winthrop’s regionalization strategy focuses on strengthening its presence in

Winthrop also strengthened its presence in European markets, particularly in

French physicians represent a major stumbling block to generics uptake in France,

Watson’s top marketed products in 2007 were hydrocod/apap, fentanyl, bupropion,

Watson is focusing on building an offshore presence and expanding its capacity in

Watson is increasing its API capabilities, allowing it to work earlier on raw

Bayer intends to capitalize on governments’ efforts to promote generics as low-cost

Stada depends on a network of raw material suppliers for its production

Germany’s Arzneimittelversorgungs Wirtschaftlichkeitsgesetz (AVWG) reform,

the business-related strengths and weaknesses of the top 10 companies in this

The global generics market registered sales of $96,730m in 2007, an increase of

Intense competition has created pricing pressure on generic players. Participation

.Novartis (Sandoz) is the leading generic pharmaceuticals company in the world,

The top 10 marketed products of Sandoz include fentanyl, amoxi/clavul,

Sandoz plays an integral part in Novartis’ strategy by helping it maintain its

Retail generics – it develops and manufactures active ingredients and finished

Anti-infectives – it develops and manufactures off-patent active pharmaceutical

Biopharmaceuticals – it develops and manufactures protein or biotechnology