EU Hospital Generic Tenders James Burt Vice President, Hospitals Accord Healthcare PDIG 10 th Nov

1. EU Hospital Generic Tenders James Burt Vice President, Hospitals Accord Healthcare PDIG 10th Nov

2. Hospital Medicines Hospital acquired drugs account for approximately 20-25% of global drug spend* Typically dominated by injectable and high potency forms Products are typically small volume, high unit value items Often purchased via tender processes orchestrated by professional buyers Often additional safety or usage considerations exist Retail Channel Hospital Channel Injectable Oral Other *IMS, all available countries, 2009 sales value

3. Hospital Therapeutic Classes Generics represent approximately only 8-12% of the cost of hospital medicines* However, IMS tends to over estimate generic prices The hospital generics value pool is dominated by oncology and systemic anti-infectives** UK hospital market 2009 IMS = €5.27B Generic ~ 15% UK tends to have lower brand prices and IMS tends to over estimate generic prices Generic Branded Unclassified *IMS Value, Q4 08 Euro/MNF - 17 EU Hospital Markets, **UK data IMS 2009

4. Types of Hospital Markets few annual/bi-annual tenders, compliant/inflexible, transparent, efficient distribution Nordics, UK, Netherlands, • many tenders (>150), reasonable compliance, transparency poor, influencers unclear, • pricing/ reimbursement complex, changing rules • France, Italy, Poland • hybrid regional tenders, hospital contracts and ‘spot’ business • Spain, Austria, Ireland, Portugal • No tenders, physician influence high (DE private sector/BE total), range important as bundling common • Germany, Belgium, Switzerland

5. Tender Longevity: • Supply periods vary by country from 2 weeks  4 years • most common 12 months, • calendar year cycle typical: i.e. • summer submission autumn adjudication winter start • Long tenders: • Spain: typically 3 years, • UK/Netherlands: often 2 years, • France: military 4 years • Implications: • helpful to supply chain, • higher price pressure, • difficult to estimate future COG movement • Short tenders: • emergency tenders in UK/Netherlands/ Denmark, cover patent expiry until regular cycle • Retail tenders in Nordics, 3mths 2 weeks • Implications: • Supply chain difficulty (OOS common), • user/patient confusion, • increased work load for adjudicators (suit commodity products), • lower price pressure

6. Notice period: • Notice period varies from 1 day  6 months (i.e. adjudication to 1st supply) • most common 1-2 months, • Manufacturing lead times can be up to 6 months (API order  delivery of final released product) • Long: • Denmark: Oncology tender, notification in October 2011, first supply April 2012 • Netherlands: IZDN notice October, first supply February • Implications: • For major tenders essential to give sufficient time for supply chains to respond • Losing company gets enough time to utilise stock on hand • Short: • France/Portugal: just assume stock available • Sweden: Halland tender 2 weeks notice given in 2011 • Implications: • If tender is large, can be very difficult to pre-empt without large risk of write offs • Working capital considerations • Stocking from previous session

7. Number and Frequency Low number of tenders: Denmark: single national tender (Kiwi like). 2+ supplier also ‘awarded’ No alternative product available if outage High number of tenders Poland: up to 200 per month High workload Other systems: Portugal: listing, not award Multiple awards, lack of clarity on demand 13 8 1/21 1 13+ 1000+ 5/8 0+ 150+ 150+ 450+

8. Non price criteria: • Many tenders now require additional information as part of the assessment • In some markets these are weighted to build a final value (not cost) based assessment • Formulation • UK/Portugal/Netherlands: dual/triple awards • Sweden: reduced score for powder vs solution • Environmental • Sweden: exclusion assessments made on environmental impact statements/reduction programs • Romania: recently required demonstration of ISO140001/18001 program • Artwork • Denmark: Safe artwork design now makes up 15% of the assessment • UK: can be an exclusion criteria • Contamination • Denmark: 25% of assessment weight • Presentation Range • UK: common to exclude if not all available • Sweden: reduced range = reduced score • Stability data • UK/Italy/Austria/Germany/Ireland: require some additional post reconstitution/ dilution data • Denmark: Amgros initiated a consultation in Oct. Sweden: in scoring • Supply performance • UK/Sweden can be an exclusion criteria

9. Stockholm tender NB: Prices in SKR

10. Skåne Tender NB: Prices in SKR

11. French example NB: French Army Tender: not all French tenders the same

12. Other tender features: • There are a broad range of other tender features that procurement systems set differently • Often the unintended consequences are not understood • Bar codes • Sweden: required soon but scored now on vial. Denmark: required from 2012 • France/Serbia/Turkey/Italy/Belgium : Mass serialisation required on carton • Supply times • West EU: mostly individual hospital orders on a monthly cycle • Bulgaria/Cyprus/Lithuania/Malta: often supply is in quarterly or half year drops • CSR • UK: green supply chain initiatives • Minimum Shelf life: • Ukraine: require 80% of shelf life remaining • Malta: 5/6ths shelf life remaining • France: >3months remaining is OK • Samples: • Spain/Malta: require local finished stock • UK: flexible, will take other country stock, or nude vials + artwork • Payment terms • Italy: average >6months, • Spain: regional but worst region >600days! • Germany: <30 days

13. Ideal system Medium length Regional, not national or individual hospital Multiple suppliers, not monopoly award Consistent volumes i.e. not price listing Samples from other countries or electronic versions acceptable Notice period in keeping with lead times Consistent and transparent weighting on non-price attributes Reasonable payment terms Set shelf life remaining not % remaining UK Report card

14. Cautionary tale • Procurement predominantly through group purchase organisations (GPOs) • Bundling often evident with loss leading on some common products • Product often unique to market • Stock dumping common shortly after multi-market supply starts • Limited number of ‘deep pocket’ players remain • High volume + limited number of remaining players = high likelihood of shortages

15. Thankyou!