1.
Tchaikapharma High Quality Medicines Sofia Learn how to beat (regulatory, legal and field problems in new EU member states to ensure a smooth transition and increase your sales) the competition and benefit from the globalization Berlin February 23, 2007

2.
Competitiveness: <ul><li>CONTENTS </li></ul><ul><li>Competitiveness is crucial </li></ul><ul><li>Innovation is down and plunging with the Big Pharma </li></ul><ul><li>The new Bulgarian Modern Industry: generic and in-licensed drivers of growth </li></ul><ul><li>Synergetic partnerships both with R&D and generics: changing the face of the Bulgarian Pharmaceutical Market </li></ul><ul><li>Corporate feathers securing effectively a comparative advantage: low cost and/or superior technology widespread applicability both domestically and internationally </li></ul><ul><li>Speed and flexibility of response in a constantly changing environment </li></ul><ul><li>Decision making that avoids becoming mindlessly global or hopelessly local </li></ul><ul><li>Why is it so important in our business? </li></ul>

3.
Healthcare: crucial economic sector for the world society in the next 50 years(?) Source: UBS <ul><li>The health sector: from cost driver to growth driver </li></ul><ul><ul><li>Increasing life expectancy, higher incomes and ongoing innovations in medical science add up to a strong demand trend for the health sector </li></ul></ul><ul><li>Health has some of the attributes of a luxury good: as incomes rise, the proportion of disposable income households are prepared to spend on it increases even faster. </li></ul><ul><li>The sector is immune to saturation : one can never be too healthy </li></ul><ul><li>Healthcare: prevalent societal need of the age </li></ul><ul><li>Services directed not only at the sick but also, increasingly, at the healthy </li></ul><ul><li>How much extraction of value we get from society from the noble work we do? </li></ul><ul><li>And when? </li></ul>

4.
Synergy: transforming the way our industry work <ul><li>Growing difficulties of the innovative industry to expand gross margins of sales and deliver new molecules: life-cycle management becomes crucial </li></ul><ul><li>Regulatory and legal hurdles, constant price pressure, portfolio management in a changing environment and multiple entries are a threat to all generic players </li></ul><ul><li>Synergy: a smart sales strategy; a decision that avoids becoming mindlessly global; enjoy the fast-track positive changes of your business </li></ul><ul><li>Reduce the costs and time required, manage risk and bring sustainable value </li></ul><ul><li>Stop outsourcing profits. Strong relationships build bottom lines. </li></ul><ul><li>You can save millions and make your company millions: success will now come from the reflected glory of cooperation and that is what we call a victory in our business world, otherwise: no innovation, no sales </li></ul>

5.
Six Forces That Can Drive Your Company- Or Kill It <ul><li>Players </li></ul><ul><li>The friends and foes lurking in the healthcare system that can destroy or bolster any chance of success </li></ul><ul><li>Funding </li></ul><ul><li>The process of generating revenue, differing from the one in other industries </li></ul><ul><li>Policy </li></ul><ul><li>The regulations that pervade the industry, because incompetent advise and action can do tremendous damage </li></ul><ul><li>Technology </li></ul><ul><li>The foundation for fast and secure introduction of innovations that can make healthcare delivery more efficient and convenient </li></ul><ul><li>Customers </li></ul><ul><li>The increasingly engaged consumers of healthcare, for whom the passive term ‘patient’ seems outdated </li></ul><ul><li>Accountability </li></ul><ul><li>The demand from vigilant consumers and cost-pressured payers that innovative health care products be not only safe and effective but also cost-effective relative to competing products </li></ul>

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How do you manage these forces? <ul><li>Registration and Regulatory Affairs : lots of paperwork </li></ul><ul><li>Legal department : lawyers and lawsuits (!) </li></ul><ul><li>Human resources : administration, benefits, training programs </li></ul><ul><li>InfoTech : software development, tech support, Website design… </li></ul><ul><li>Analytics : market research, financial analysis, risk calculation… </li></ul><ul><li>Customer care : CRM, advertising… </li></ul><ul><li>Manufacturing : facilities, production and warehouse management, service… </li></ul><ul><li>Marketing : product managers, other different class of managers, field force, marketing dep’t, more field force… </li></ul><ul><li>Finance and accounting : accounts payable, billing, financial and tax statements… </li></ul><ul><li>Logistics and procurement : just-in-time shipping, purchasing, after sales follow up… </li></ul>

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How do you manage these forces when stuck in the middle? <ul><li>Registration and Regulatory Affairs : lots of paperwork MORE </li></ul><ul><li>Legal department : lawyers(!) MORE </li></ul><ul><li>Human resources : administration, benefits, training programs MORE </li></ul><ul><li>InfoTech : software development, tech support, Website design… MORE </li></ul><ul><li>Analytics : market research, financial analysis, risk calculation… MORE </li></ul><ul><li>Customer care : CRM, advertising… MORE </li></ul><ul><li>Manufacturing : facilities, production management, service… MORE </li></ul><ul><li>Marketing : product managers, other different class of managers, field force, marketing dep’t, more field force… MORE </li></ul><ul><li>Finance and accounting : accounts payable, billing, financial and tax statements… MORE </li></ul><ul><li>Logistics and procurement : just-in-time shipping, purchasing, after sales follow up… MORE </li></ul>MORE OF THE SAME

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Remember, Einstein said: <ul><li>Insanity is doing the same thing over and over again, expecting different results. </li></ul>

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The decision: <ul><li>In the fifth century BC Athens became the first (albeit limited) democracy. </li></ul><ul><li>In the seventeenth century, Quakers developed a decision-making process that remains a paragon of efficiency, openness, and respect. </li></ul><ul><li>Starting in 1945, the United Nations sought enduring peace through the actions of free people working together </li></ul><ul><li>Now it is in crisis of its own though the world peace is not genuinely in danger </li></ul>

10.
Contents <ul><li>Competitiveness is crucial </li></ul><ul><li>The new Bulgarian Modern Industry: generic and in-licensed drivers of growth </li></ul><ul><li>Synergies: changing the face of the Bulgarian Pharmaceutical Market </li></ul>

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Situation Analysis : Business environment Bulgaria <ul><li>Political and Economic environment: crystal transparency </li></ul><ul><li>Economic stability, no inflation and solid economic growth: 5.5 % growth in 2006 (avg. 5.1% since 2000) (source: Bulgarian Center for Economic Development). Foreign deficit rapidly shrinking </li></ul><ul><li>Euro-Atlantic integration completed: EU Accession January 1 st 2007 </li></ul><ul><li>High credit ratings of the country maintained (S&P, Moody’s, Fitsch) </li></ul><ul><li>Further pressure from EU and from within for more active structural reforms </li></ul><ul><li>Healthcare expenditure still is 4.3% -- among the lowest in Europe: significant upside potential as opposed to the world’s healthcare funding crisis. After the 2005 elections all leading political powers united on the healthcare reform highest priority. </li></ul>

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Situation Analysis : Business environment Bulgaria cont’d <ul><li> Healthcare System & Pharmaceutical market </li></ul><ul><li>Expanding institutional presence (app. 70% NHIF, MoH, Hospitals): generics’ priority & still complicated access of innovative products ( new pharma law still on 2nd reading in Health Commission – fully harmonized with EU (Directive 2001/83/EC, 2004/27/EC, EU Regulations) sets the frame for merging some steps, which will significantly decrease current time delays (avg.570 days) of access to market and reimbursement for new applications </li></ul><ul><li>Increased pricing pressures: implementing a cost-containment system based on pharmaco-economic evaluation of drugs with reference pricing system (fixed to the lowest bid) and the co-payment is the difference above price. Institutional & competition influences require market-adapted solutions for improved productivity and new efficiency (INN prescribing and INN substitution are not legally required) </li></ul>

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Situation Analysis : Business environment Bulgaria cont’d <ul><li> Healthcare System & Pharmaceutical market </li></ul><ul><li>Strong government support for technology transfer to high quality local producers both generics and original: Sustained Advantages in Positive List / Reimbursement Entries </li></ul><ul><li>Boom of generic registrations & consolidation in the distribution segment </li></ul><ul><li>Lagging HC reform & HC system still underfinanced – much better than Spanish hospital 3 year deferred payment practice </li></ul><ul><li>Long, 8 month payment terms in hospitals, yet to improve in 2007 </li></ul><ul><li>Changes in reimbursement regulations / model (MoH, NHIFund). Positive and Reimbursement Lists will merge in a single formulary. NHIF becomes the only funding body to administrate drugs budget. Application for price and reimbursement - processed by one “single step”. (Healthcare Commission to decide shortly) </li></ul>

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Bulgarian Pharmaceutical Market: 1990-2000 <ul><li>Local production supported by the ‘economy of deficit’ </li></ul><ul><li>Low tech, i.e. low quality (there is still a traditional doubt about quality of local production) </li></ul><ul><li>Market dominated by expensive, original, branded medicines. More than 80% of the budget dried by foreign production, leading to greater foreign deficit </li></ul><ul><li>Nontransparent privatization of local production facilities, no investment policy (no GMP) : supporting the status quo </li></ul><ul><li>No healthcare reform, no health fund </li></ul><ul><li>Local hi-tech alternative: N/A </li></ul>

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Bulgaria Today <ul><li>World competitiveness index: comparison chart of EU new members </li></ul><ul><li>39 th place for Bulgaria thanks to: </li></ul><ul><ul><li>health reform (NHIF) </li></ul></ul><ul><ul><li>medical academia level </li></ul></ul><ul><ul><li>the new Bulgarian modern pharmaceutical industry </li></ul></ul>Source: World Economic Forum Davos

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The new Bulgarian modern industry Source: Daniel Kahneman Nobel Prize winner in economic sciences 2002 How do you read this?

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The new Bulgarian modern industry Source: Daniel Kahneman Nobel Prize winner in economic sciences 2002 How do you read this letter?

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The new Bulgarian modern industry Source: Daniel Kahneman Nobel Prize winner in economic sciences 2002 How do you read it now?

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The new Bulgarian modern industry Is it a generic company?

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The new Bulgarian modern industry Is it an original one?

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OR…?

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The new Bulgarian modern industry

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The new Bulgarian modern industry Is a part of CL BioPharma Group

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Vertically Integrated Powerhouse on the Balkans Commercial League warehouse Tchaikapharma production site Tchaikapharma production site PROJECTED Cardiac hospital Cardiac hospital PROJECTED Haemodialysis center PROJECTED

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The CL/ Tchaikapharma Advantage: Winning Concept for beating regulatory, legal and market problems <ul><li>Big pharma, biomedical and generic manufacturers are able to utilize the CL BioPharma Group platform from late-stage clinical trials to take-the-drug market </li></ul>Trials Regulatory Manufacturing Marketing Distribution Tchaikapharma Inc Commercial League NPC Macedonia Pharmacia Distinguished Pharmacies Inc <ul><li>Late Stages Clinical Trials & Safety Testing </li></ul><ul><li>Product Marketing & Promotion </li></ul><ul><li>Co-Marketing & Co-Promotion </li></ul><ul><li>Reimbursement Upgrading </li></ul><ul><li>Lobbying Services </li></ul><ul><li>Wholesale & Distribution </li></ul><ul><li>Retail Pharmacies & </li></ul><ul><li>Medical Centers Management Support </li></ul><ul><li>Registration (Marketing Authorization) </li></ul><ul><li>Post- & Pre-Registration Monitoring </li></ul><ul><li>Reimbursement </li></ul><ul><li>Central Tendering </li></ul><ul><li>CL Sourcing Licensing + </li></ul><ul><li>R&D Contracting </li></ul><ul><li>CL Sourcing Pre-Market </li></ul><ul><li>Research </li></ul><ul><li>CL Sourcing Contracting </li></ul><ul><li>Manufacturing </li></ul><ul><li>Packaging </li></ul>Medical Activities <ul><li>Cath-Labs </li></ul><ul><li>Cardio Surgery </li></ul><ul><li>Haemodialysis Centers </li></ul><ul><li>Primary Care Centers Management </li></ul>Bulgarian Cardiac Institute, JSC Reaching Across The Entire Value Chain

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The CL/ Tchaikapharma Advantage: cont’d Winning Concept for beating regulatory, legal and market problems <ul><li>CL/Tchaikapharma thrives with the philosophy of being a broadly-based vertically integrated healthcare company and delivering healthcare solutions to the patient, rather than just producing & selling drugs: “ Patient always comes first ” </li></ul><ul><li>Academia Partnerships Built On Solid Foundation </li></ul><ul><ul><li>Advance market research: disease prevalence, market potential, feasibility studies </li></ul></ul><ul><ul><li>Introduction of world class standard guidelines in treatment practices </li></ul></ul><ul><ul><li>Disease management & portfolio planning </li></ul></ul><ul><li>Extended diagnostic programs: nation-wide prevention & diagnostic campaigns in Cardiovascular Diseases, Diabetes, respiratory, oncology etc. </li></ul><ul><li>Disease management: therapeutic baskets, combined therapies, end curing or/and continuous therapeutic solutions </li></ul><ul><li>Precisely targeted investment policy, aiming at improving state and quality of healthcare- Haemodialysis centers project and CathLabs Project </li></ul>

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The CL/ Tchaikapharma Advantage: cont’d Winning Concept for beating regulatory, legal and market problems <ul><li>Specialty hospital chains per therapeutic areas (or state hospital privatization) of: </li></ul><ul><ul><li>Five to ten specialized hospitals in Invasive cardiology, Metabolic, CNS and Respiratory diseases in collaboration with leading Bulgarian & European (Czech Republic, Italy & Austria) key opinion leaders. The pilot clinic in Pleven opens March 2007 </li></ul></ul><ul><ul><li>Six to twelve Haemodialysis Centers in cooperation with Majors </li></ul></ul><ul><ul><li>Four Drug Addiction Treatment Centers in cooperation with a Big Pharma. </li></ul></ul><ul><li>Health Insurance Fund establishment in Bulgaria </li></ul>Strategic Investment Projects

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Contents <ul><li>Competitiveness is crucial </li></ul><ul><li>The new Bulgarian Modern Industry: generic and in-licensed drivers of growth </li></ul><ul><li>Synergies: changing the face of the Bulgarian Pharmaceutical Market </li></ul>

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Spearheaded Entry/Re-Entry of Major Generic Players <ul><li>Only few of the foreign generic companies come closer to the local players’ performance </li></ul>Source: IMS Data

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Novartis / CL BioPharma Group Generics Cooperation <ul><li>Sandoz (Lek) & Tchaikapharma : very successful, though limited scale model of bulk supply </li></ul>

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Case Study Enalapril (Bulk Supply from Sandoz) Market Share (# of patients) Nov ‘06 Distancing leadership position in a very crowded generic market Source: NHIF, number of patients

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Case Study: ACE Inhibitors Tchaikapharma In-licensed from La Roche (results for just 3 months) and elevated Pfizer to market leader in 1.5 year time only Source: NHIF, number of patients

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Case Study on own Nordipin (Amlodipine): Leader In Three Months Only Source: NHIF/ in patients

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Case Study: In-licensed Dilatrend (carvedilol) Roche Market Share Nov ’06 Against Multiple Generic Entries Source: NHIF, number of patients

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Case Study: In-Licensed Symbicort (AstraZeneca) Time Under CL Marketing Only Source: NHIF, number of Patients

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Case Study on own Klacar (clarithromycin) : Leading Anti-infectives Brand Just Three Months After Launch Source: NHIF, Value BGN

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Marketers judgment doesn’t always look like action to their colleagues in Sales ( Stop Einstein’s insanity) Thank You Very Much