Generics & OTC: The pharmacist strikes back!
Inevitably patents do fall and knowing what to do next is critical in a market as large as France. In the time leading up
to their blockbuster Omix's expiry, Astella France's director, Patrick Errard, examined the local environment and created
a plan to utilize the framework to the group's advantage. By creating a new gallenic formulation of their blockbuster, he
was able to get a new product to market quickly and compete with the generic equivalents to come. The key according to Errard:
"Accepting that a backup product is not an innovation and marketing your drug at the generic price." As a result, they have
now recaptured half of their original revenue stream before expiry and the turn around has become a benchmark for the French
Maurice Chagnaud, President of Teva France
France was very late to introduce a generic law, but as explains Catherine Bourienne-Bautista, managing director of the GEMMME
(association representing generics) "When generic drugs were originally introduced in France, doctors were not quick to prescribe
them automatically ... generic drugs only took off when the reins were in the pharmacists' hands. In 1999, a law was passed
giving the pharmacists the authorization for substituting branded products with generic ones. After that, generic labs focused
their commercial and advising efforts on the pharmacists and generics started picking up."
Emmanuel de Rivoire, Country Manager of Nycomed Franc
Yet she notices that doctors still resist the generification process. "In France, when a drug becomes generic its sales figures drop immediately and there is a transfer of prescriptions
to products which are still patented," and that 10 years down the line "Generic drugs only represent 11% of the market in
France." Bourienne Bautista points out the success of generics in scaling down the cost for the Social Security and the "€1.2
billion ($1.34 billion) worth of savings per year in a potential market representing €2 billion ($2.4 billion)."
However, if you look at the overall market penetration of generics, France has still a lot to catch up. Maurice Chagnaud,
president of Teva France, explains why: "If you consider the full substitution list, you will find that France has a very
good performance reaching 75% penetration rate...but one of the problems in France is that a big proportion of therapeutic
areas are not considered 'eligible' for generic products by law."
Patrice Zagamé, CEO of Novartis
As a result, despite France's good product-by-product penetration rate compared to Germany, UK and USA, the substitution list
covers only 22% of the market volume. Teva works with the French generic association GEMME to enlarge this list. "We need
to grow the substitution list up to 30% and from there to 40% of the global volume in France," states Chagnaud. Not every
day you have such a win-win challenge, since health authorities have interest to increase generics for the sake of sustaining
France's universal healthcare system.
Chagnaud acknowledges that the key to increase the penetration rate in an area is to offer a complete product-portfolio per
therapeutic area. In his words, "Teva built a very interesting portfolio in the respiratory area, creating a global respiratory
franchise called Teva Respiratory and managing to reach our goal of having more than 40% of the market share in beclometason
market (ICS). This was a very important achievement since we started from a 22% market share." With more than 100 products
launched last year, Teva's complete-portfolio strategy is due to strengthen.
In a market where, each year from 2010 to 2015, branded products worth €647 to € 970 billion (or $800 million to $1.2 billion
based on exfactory price) will lose their patents, growth for French generics will be tremendous. It's up for the fittest
to take advantage of that.
Emmanuel de Rivoire, country manager for Nycomed France, felt the heat of patent expiry last year: "Losing exclusivity with
Pantoprazole is huge as it was 70% of our revenue in France. On the other hand, in the coming years, we know we will have
new products entering the marketplace, such as Roflumilast (Daxas®) for chronic obstructive pulmonary disease (COPD)... While
we anticipate EU approval in the middle of 2010, we will likely not be able to launch until mid-2011. Therefore the big issue
has been: how do we maintain our presence in France during this two-year gap between 2009 and 2011? This disparity is too
short to make a definitive change to the model, but too big to do business as usual."
"Our last move of 2009 coincided with our Nycomed's headquarter decision to launch an OTC version of Pantoprazole on the French
market... We received EU-centralized approval for the 20mg dose of the drug. Despite having no knowledge of OTC in the French
market, we went ahead with the launch which required the establishment of a new local division. Currently, 6 500 pharmacists
have already bought the OTC version out of the 22 000 or so pharmacists in France, which demonstrates a significant launch."
"Another big factor behind our move into OTC is my belief that pharmacists are becoming an increasingly important customer
in the overall pharmaceutical business. An internal OTC business is the best way to ensure we have constant interaction with
pharmacists and can control our image in the market."
"While it's true that the overall OTC market is much smaller than Rx, the growth rate is in the double digits while Rx is
only in the 1.5-2% band. Clearly there is opportunity here which is why we felt it is an important business to enter. We also
recognize that – while it will not be easy – we will be able to feed our OTC portfolio with Nycomed brands from other markets."
According to Daphné Lecomte-Somaggio of France's self-medication association – AFIPA – "The French healthcare system has to
evolve and take into account pathologies which have a high cost while acknowledging for benign illnesses self-medication should
She also notices a change in practices to explain the success of OTC drugs. "The shift is also driven by a change in demography
of healthcare professionals. In the past you would have your doctor visit at home, but nowadays it sometimes takes 4 or 5
days to see a doctor. Therefore, self-medication becomes a practical solution in benign cases."
The 2008 implementation of a Libre-Accès or Free-Access law allows for some OTC products to now be displayed on the customer-side of the counter at pharmacies. Directly
accessible to patients, it is the government's latest move to promote out of the pocket expenses. It has been rapidly adopted
in nearly 50% of the nation's pharmacies. Getting on the free-access list can mean up to 10% immediate sales increase.
Once among the most respected people in villages of rural France, the pharmacists are regaining their central role in France's
healthcare environment. It's only fair if you consider that most of French industrial pharmaceutical success stories were
born at the back of family pharmacies, unlike in Germany or the US where they were created on the backbone of chemical companies.
Biogaran, the hometown hero created in 1996 by Servier at the dawn of the French generics market, attributes its success partly
to its considerable efforts "to train pharmacists to be accustomed to substitution," as company president Pascal Brière explains.
As Patrice Zagamé, CEO of Novartis France, remarks, "The potential alliance between the prescription industry and pharmacies
is still poorly developed here and the reason behind it is that the local industry has only been focused on the physicians
for decades. The new healthcare reform tries to change that. It gives a pivotal role to pharmacists and expands their potential
scope of interface, although the law also prevents the industry from getting too close to the point of purchase (pharmacies)."
He concludes: "The self-medication market is not very developed in France. The local culture is not around self-medication,
as opposed to other countries, but it will slowly change. We can foresee that this market will expand due to the increased
transfer of healthcare towards patients that, with further education, will demand more of these products."
France for many years has lagged behind in over-the-counter (OTC) offerings. In regard to OTC medication, French doctors have
long considered that patients did not have the ability to properly identify and analyze their symptoms for treatment. The
rise of increased and improved information through the internet has provided more of the general population with the ability
to discern their complications, thereby countering the main argument against OTCs.