JAPAN SALES, VOLUME, PRICING 2015 - Evaluate

JAPAN SALES, VOLUME, PRICING 2015

March 2015

EvaluatePharma?'s Japan Sales, Volume, Pricing Intelligence

The size of the Japanese pharmaceutical market and the favourable payer environment makes it a key market for commercialisation of any new drug. In response to client requests for insight into Japan drug pricing and the volume dynamic behind Japan drug sales, EvaluatePharma? now includes: Japan regulatory approvals (PMDA); National Health Insurance (NHI) drug reimbursement prices; new drug price setting details, including price premiums achieved; and peak sales forecasts at launch. See the key features of this enhancement listed below. A comprehensive methodology document including in-depth documentation of the Japan datasets and use cases is available to all EvaluatePharma? subscribers. This new content integrates with our existing reported annual and quarterly Japan drug product sales as well as with our USA Sales, Volume and Pricing and with the rest of the EvaluatePharma? service.

The clients we collaborated with to develop the pricing insights told us that they particularly valued:

Insight into Japan unit drug pricing and cost per patient per year for assessments

Efficiency in conducting international drug price comparisons

Access to patient-based forecasts models for similar products launched in Japan

Transparency on new drug pricing methodology and premiums achieved for peer products

Integration of pricing information with other commercial and R&D intelligence

Translation to overcome language barriers and eliminate difficult document searches

Copyright ? 2015 Evaluate Ltd. All rights reserved.

Key features of this new intelligence include: Single, trusted source for Japan sales, pricing and product peak sales forecasts at launch Comprehensive Japan unit drug pricing including primary care and biotechnology products, branded

and generics. Source: National Health Insurance (NHI) drug price list International price comparisons for Japan, USA, France, Germany and the United Kingdom Peak sales forecast at launch; including cost per patient calculation and number of patients treated Pricing Premiums achieved and methodology used to calculate initial reimbursement price All regulatory approvals from PMDA (Pharmaceutical and Medical Devices Agency)

To find out more about our USA and Japan Sales, Volume and Pricing, future pricing developments and Evaluate's full range of services contact us:

North America: Debbie Paul Tel: +1 617 573 9453 Email: debbie.paul@

Rest of the World: Will Hau Tel: +44 (0)20 7377 0800 Email: will.hau@

Japan: Hiroshi Yamazaki Tel: + 81 (0) 80 1164 4754 Email: hiroshi.yamazaki@

For general questions: Christine Lindgren Tel: +1 617 866 3906 Email: christine.lindgren@

Disclaimer

All intellectual property rights in this report remain that of Evaluate Ltd and/or its respective third party licensors. Whilst all reasonable steps have been taken to ensure that the data presented are accurate, Evaluate Ltd cannot accept responsibility for errors or omissions. Neither does Evaluate Ltd warrant the accuracy, merchantability or fitness for a particular purpose of the data. Nothing in the reports shall constitute investment, financial or legal advice and the contents of the reports are provided for information purposes only. The data is not intended to amount to advice and should not be used as a determining factor in any investment decision. This report may not be lent, resold, hired out or otherwise disposed of by way of trade in any form of binding or cover other than that in which it is published, without the prior written consent of Evaluate Ltd. Copyright ? 2015 Evaluate Ltd. All rights reserved.

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March 2015

EvaluatePharma? Foreword:

Why Japan is a Key Strategic Market Japan is the second largest prescription drug market after the USA, with government reimbursed purchases growing 5.9%, in local currency, to around $60bn (?7,038bn) in fiscal 2013. The Japanese Yen has experienced a near 30% depreciation since the start of aggressive monetary expansion in December 2012. This has hit the dollar reporting of sales by Big Pharma. Despite this, Japan remains a core strategic country for large and medium sized pharmaceutical and biotech companies due to its favourable reimbursement environment.

Favourable Reimbursement Environment of the Japanese Market The primary payer for drugs in Japan is the government. In order for hospitals and pharmacies to get reimbursed, a drug with its associated price must be listed on the National Health Insurance (NHI) list. This is achieved by getting the Pharmaceutical and Medical Devices Agency (PMDA) to approve a drug for marketing in Japan. Upon approval, a manufacturer can request a new reimbursement drug price from the Drug Pricing Organisation (DPO) and ? once a reimbursement price has been agreed between the DPO and the manufacturer ? the drug can be added to the NHI coverage list. The median number of days between approval and NHI reimbursement is 60 days.

Getting the Right Price at Launch is Critical; Rewards for Innovation The DPO sets the reimbursed price in Japan and offers price premiums for innovation. Given that the reimbursed price of a drug is essentially fixed at launch, it is vitally important that drug companies achieve the optimal price at launch. Within this report, we explore the two pricing methods: Cost Calculation (when no comparator drug is available) and Similar Efficacy Comparison Method (page 15+). In addition, we look at the largest premiums awarded since 2006 (page 17), and show that Bristol-Myers Squibb/ Ono's melanoma treatment, Opdivo, tops the list within the Cost Calculation Method.

Price Adjustment Every Two Years: April 2014 Prices Reduced by 4.2% Every two years, effective on 1st April, the MHLW (Ministry of Health, Labour and Welfare) undertakes a price revision of drugs on the NHI coverage list. The primary purpose of this revision is to reduce the gap between the reimbursement price and the actual price paid by purchasers (hospitals/ pharmacies). On page 13 we have calculated the April 2014 revision at -4.2%. We can also see that biotechnology products had a price cut of 2.5% versus a price reduction of 5.2% for small molecule products. This is due to the reduced discounting on biotechnology products versus small molecule and also the reduced impact of patent expiries on biotechnology products versus small molecules.

Peak Sales Potential of Newly Reimbursed Drugs Surges to $34bn in 2010-15 When applying for drug reimbursement, companies are required to submit a peak sales forecast, including the number of patients treated. Analysis on page 7 reveals drugs with a collective $34bn of potential peak sales received reimbursement post 2010 versus $16.9bn for the period 2005-9. This illustrates that the Japanese market is set for a period of sustained growth.

New Endocrine (Diabetes) & Central Nervous System Drugs Largest Therapy Area for Growth On reviewing the therapeutic split of the collective $34bn in peak sales (page 8) of newly reimbursed drugs in 2010-14, we identify endocrine (diabetes) as the leading therapeutic area with $6.1bn in peak sales potential. This is driven by a raft of new treatment options available (including SGLT2, GLP-1 & DPP-IV) to Japan's large treated diabetic population (~7 million patients). Central nervous system (CNS) is second with projected peak sales of $5.3bn.

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Copyright ? 2015 Evaluate Ltd. All rights reserved.

EvaluatePharma? Foreword

The fact that oncology only ranks 6th, in peak sales forecasts, despite having the second highest number of drugs reimbursed for 2010-14, and endocrine and CNS are ranking one and two, highlights the epidemiological differences between Japan and the other G7 countries. Japan Drug Prices 40% Cheaper than USA The process for receiving a reimbursed drug price requires a company to submit comparable unit prices for the key markets of USA, Germany, UK and France. On page 15 we have analysed all the price comparison data and can reveal that between 2005-14, the median reimbursed price for drugs in Japan was 40% below reference price in the USA. In addition, we show that median drug prices in Japan are 20% lower than in Germany, 28% higher than in the UK and 11% higher than in France.

Anthony Raeside Head of Research, Evaluate Ltd

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Copyright ? 2015 Evaluate Ltd. All rights reserved.

Key Highlights Japan Sales, Volume, Pricing Report

Peak Sales Forecast of Newly Reimbursed Drugs Surges to $34bn in 2010-14 Versus $16.9bn in 2005-09 Quantity of Reimbursed Drugs Increases 8% to 64 in 2014 vs. 2013; 2014 Peak Sales Forecast Increases 19% to

$6.3bn New Endocrine Drugs Have Highest Peak Sales Forecast; Central Nervous System Second Median Annual Cost of New Drugs in Japan Jumps to $837 (?98k) in 2010-14, From $697 (?82k) in 2005-09 10 New Drugs Cost More Than $100,000 (?11.7m+) per Year in 2010-14 New Cancer Treatments Giotrif & Zytiga Priced at Premium Versus Other Newly Reimbursed Drugs in 2014 Japan Reimbursed Prices of Small Molecule Drugs (-5.2%) Falls Twice as Fast as Biologicals (-2.5%) in 2014

Revision Prices of Top 10 Selling Japanese Drugs Declined 19% Over the Last Four NHI Price Revisions (2008-14) Japan Reimbursed Drug Prices 40% Lower than USA; 20% Cheaper than Germany Cost Calculation Used in 21% of New Drug Package Reimbursements in 2014; Similar Efficacy Used in 79% Opdivo Earns 60% Adjustment for Novelty, Efficacy and Safety in 2014 Daklinza Achieves Highest Price Premium in 2014 of 40%

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