Introduction to Pharma and Healthcare Industries PDF

Good morning, I will not make an elaborate introduction about myself. I talked a lot during the kickoff, so most probably you know all the details of my life. But I have to repeat one thing: I\'m really very pleased to have the opportunity to teach this class, and I\'m very, very impressed with the...

Good morning, I will not make an elaborate introduction about myself. I talked a lot during the kickoff, so most probably you know all the details of my life. But I have to repeat one thing: I\'m really very pleased to have the opportunity to teach this class, and I\'m very, very impressed with the profiles and the international diversity we have in this class. During your presentations, I have already set two objectives for myself. First of all, I want to make this class the flagship class of our business school because it seems we have a lot of quality among us. Second, I hope at least three of you will teach in the next session. I think that\'s a very realistic objective. The most important thing is that when we finish this course, it has added value to your ambitions and wishes from this master\'s program. And of course, for those of you who are interested in finding an interesting, good, and rewarding job---that is, of course, the job of the Career Department. But with my knowledge and my network, I will try my best. One thing: if you want, I will be open to connecting with you on social media. I prefer to do it through LinkedIn. I don\'t use other social media much---mostly I don\'t have time. But I use LinkedIn, so if you want to connect with me, that\'s the best way. I have spent more than 35 years in the pharmaceutical industry, many years in Novo Nordisk in different regions---Middle East, Africa, Latin America. The last years were in Europe, in Spain and Italy. When I left Novo Nordisk, I started my own company called PL Value. In this company, I work as an angel investor. One of the investments I had was in the field of neglected tropical diseases with a company called BlueSense. Another venture I have is with a company called Kordilas, where we make a sort of exoskeleton for rehabilitation post-stroke. That\'s also quite an interesting project. Now for today, these are my details---my email and my phone numbers (Greek and Italian). I recommend if you want to send me something by phone, use WhatsApp or Viber and send it to the Greek one because when I\'m in Greece, I don\'t use the Italian one very much. So there is a possibility that I will not see it. This is my email---this is my private email, not the one from the school. Feel free to contact me here because it\'s the one I use regularly. So if you send something, I can always see it. If you have questions about the course, exams, or timing, and you send them to the master\'s program---maybe Master Pharma---you will get a very fast response, usually from the program coordinator, Eleonora, who was here. You met her; she\'s very active and very swift in her replies. If it\'s something that comes for me, I will also have the opportunity to respond. Now, what we will do today: my aim is mostly to get to know you and for you to get to know me. So I have designed a very introductory class, talking a little bit about health in general and with some more details on the pharmaceutical industry, reaching into the players in health, looking also briefly into R&D processes in companies---how it works. But very briefly; you will have other classes on most of the subjects, and you will hear more than once. For instance, for some topics that I consider complicated and important, I have designed it in a way that you will hear it twice from different professors---by no means overlapping. So don\'t say, \"He is getting crazy; he runs the same class twice.\" It\'s a way to understand more complex issues. Mostly, this will happen with market access economics, which is very, very important right now. Why? Because people have a lot of needs in terms of health; governments have little money, and there is a deficit between expenses and what is available from the government. So how can this be mitigated? By trying to identify the best possible projects and give them the most realistically correct price. This process is done in a department specifically in companies---you call it market access. From the government side, they call it health economics, and the process is called HTA (Health Technology Assessment). I have tried to look at these things from the side of the company and from the side of the government---not overlapping but maybe looking at things from different angles to internalize better. I hope it will not be boring for you. I see that you are very intelligent people in the class. If I say something wrong---we have a lot of medical doctors, pharmacists, biologists---all of you are very educated. So if I say something wrong, don\'t be shy to point it out: \"That\'s not correct.\" I don\'t mind; I accept corrections and discussion points. Our classes will be based on a lot of exchange of views. We have so much knowledge in the class that collectively, I would have never imagined that we could get so much. How can we make the best of that? By contributing to the class, by talking, by exchanging your points of view. Don\'t be shy. What will we get from this class today? We will try to understand some key issues, look at some of the challenges authorities and industry are facing, and try to prepare a little bit for upcoming classes for regular learning---not that it will be a sort of prerequisite, just a sort of teaser if you want. I give you some references in the classes. I usually give two or three references, but because I see that all of you are really keen on reading---judging from the number of courses attended---I added a little bit more. I have some books, and none of them is really super difficult---usually books that are quite easy to read. Depending on your interest, you can choose and pick those you want. \"Transformational Leadership in Healthcare\"---these are mostly about management of healthcare companies or pharmaceuticals. There is one book about forecasting that came out one month ago: \"Forecasting for the Pharmaceutical Industry.\" It\'s from one of the partners of a consulting company called ZS that is very good in forecasting---they specialize in that. So they made this book. It\'s on my desk; I have not read it yet, so I cannot comment about the quality, but knowing the company, I assume that it\'s useful. \"Deep Medicine: How Artificial Intelligence Can Make Healthcare Human Again\"---if you are interested in AI, and maybe some of you with a background in IT might find interest in that. All these are books that you have to purchase, so if you feel interested, you can buy them, but I don\'t specifically recommend any of these books. We never ever use any external source---only what is in the presentations here. I\'m not going to challenge you in the test. I might challenge you and expect that you challenge me in the class. It should be something simple, mostly to ensure that you have attended the class and understood the basic things. I use the test to reiterate some points that might be of interest rather than to challenge you. I wouldn\'t be surprised if all of you---you are 42, I think, in the class---score 100 percent in the test, and I wouldn\'t be surprised if you don\'t. We have five modules, and three of them will have the assignment we discussed before. I will give it to you---at least one I will give you; the other will be from my colleague Valentino, who is also exceptional. I\'m very happy that he is willing to put together the assignment to be of your interest, something that will fascinate you. These resources are available for free on the web. There is one report from the International Federation of Pharmaceutical Manufacturers. It\'s a very interesting organization, very active in producing a lot of reports. I hope that in our later classes, you will have the health economy school. This organization has promised to give us a lecture, possibly online. EFPIA is the European Federation of Pharmaceutical Industries and Associations. Then there\'s IQVIA---who is familiar with the name? I have worked for IQVIA for three years. They are in the industry and healthcare in general, making market research. It\'s the company that produces statistics for whatever is moving---it\'s a sort of monopoly in this. They also do consulting, but their main source of income is to develop and produce statistics about the market. They also have a presence in France and Normandy that works in clinical trials and CROs (Clinical Research Organizations) and monitoring. They recently made a webinar about the use of medicines in the world in 2024. I attended the webinar, and I have a big part of that to share with you. There is an old report from Deloitte, \"The Rise of Global Pharma Companies,\" which came out in 2018. If you are interested in mergers, acquisitions, and how they move in pharma, it\'s quite interesting. Then there is an important report from WHO that is quite relevant for this discussion today about the spending around the world in healthcare. A lot of the information and numbers I have are taken mostly from two sources: the WHO report and the webinar. Both of them are very credible sources for information. There is another report that came out last month in September from a company called Elazar---I\'ll tell you a little bit about that when it\'s relevant. The report from WHO about healthcare spending in the world is focused on 2021. Why is that? It\'s complicated to collect the numbers for health, and it\'s important to do with recent years. They expect a long time to collect, and the last one WHO has published, to my knowledge, was for 2021. For other matters, for more easily accessible companies, I have taken the latest numbers. Now, how much do you think is spent around the globe on health every year? In billions? Trillions? I would definitely say trillions. I can tell you how much it is---I have it here. It\'s 10 trillion. Actually, it\'s more than 10 percent of the global GDP. What does it mean that from all the money we make around the world, 10 percent is spent on health? It\'s logical, frankly, because health is the most important thing we have. So it makes a lot of sense. There is a problem here. I don\'t have a graph for that, but we have the opportunity in many classes to discuss it. This spending on health grows with a CAGR (Compound Annual Growth Rate) of 5 to 8 percent per year. The growth of GDP---Gross Domestic Product---is how much money is produced as a country, as a continent, as a globe, and it grows around 4 percent. So the amount we spend on health grows continuously as a percentage of our income, in a way. Why do you think that is? In my humble opinion, without giving references for that, it is caused by three main reasons. First of all, people live longer, and with people living longer, the presence and incidence of chronic diseases increases quite a lot. So today, more than 50 percent of people in Europe and the United States living over the age of 70 have at least two chronic conditions---hypertension, diabetes, etc.---so a lot of chronic conditions that, of course, have to be managed. Another thing besides people living longer is that they tend to come and live in big cities. People all want to live in big cities. In some countries, this phenomenon is more pronounced. Italy is not one of these countries that show this significantly. Egypt, for example, is a country that has a big problem. If you look into the size of Cairo city, it\'s beyond comprehension. And of course, what happens with urbanization when people leave the rural areas and come to live in the big city? Their life changes; they exercise less; they work physically less. So with that comes obesity, chronic diseases like diabetes, etc. So I think, in my opinion, these two elements are very, very important for this growth of expenditure---people living longer, life expectancy increasing, and urbanization. To cope with this problem becomes more and more difficult and more and more competitive, so all new products come along. Yes, yes, my voice is coming now. I will give you the floor. Let me finish now, and after the break, I will give you the floor. Thank you very much; apologies. So that\'s some of the issues that we will see more and more coming. We don\'t have enough money allocated to health around the world, and this creates a problem with the budget. But on the other hand, another thing that appears to be a problem is the shortage of healthcare professionals---in nurses and in a lot of different specializations. We said that we spend 10 percent of our GDP on health. Is that valid for every part of the world? No, let\'s see. And also, an interesting point to look into is how much of this 10 trillion is spent by the government and how much of this you have to put your hand in your pocket and pay ourselves. As a rule of thumb, we will say that two-thirds are spent and financed by the government, and one-third is financed by people like us. There is an enormous discrepancy here---a discrepancy that, for the Italians, familiar with the Pareto principle, won\'t be surprising. The discrepancy is that almost 80 percent of this spending is by 20 percent of the population. Of course, if you understand that, you understand that there is a big discrepancy in the treatment of different conditions around the world. I could spend quite a few classes on different cases to discuss this issue because it\'s a very serious problem. We can say that we live in the Northern Hemisphere; we live in Italy. Healthcare is not the best it can possibly be, but is that enough for us? It\'s not enough because I think we have to take care of people who are not so privileged, for many reasons---for our benefit---and we\'ll discuss this in general. If we look at this graph, we see a little bit of a paradox. Here you have the healthcare spending as a percentage of the GDP, and you can see how fast it grows. If you look in the rich countries---the high-income countries, with the rule of thumb being North America (United States of America, Canada), Northern Europe (what is called the European Union today), and Japan---this is the main focus. In these countries, the percentage of GDP allocated to health is around 9 percent, a little bit above 9 percent. However, in the other countries, the spending on GDP is much lower. I found this quite interesting. It\'s a comparison between the spending in 2020---that was really the year when the first vaccines came out for COVID---and on the other side, we have 2021, which was the year that the globe was getting full vaccination and treatment for COVID. If we look into the low-income countries, in 2020, they spent more on health compared to 2021. In 2021, the spending was reduced compared to the previous year; it was practically the same. Where we see the difference---the things growing---was in lower-middle-income and upper-middle-income countries. I found this quite interesting because I was expecting that because we had so much vaccination in the year 2021, the spending would be much higher. It was not---you know why? Because due to social isolation, a lot of other diseases diminished significantly. So we did not have so much flu, we did not have so much common cold, and there was a lot of saving there, so the mix was different. Another interesting discrepancy is where they spend money in low-income countries, middle-income countries, and high-income countries. You will see that in middle and high-income countries, the biggest amount is spent in hospitals, while in low-income countries, a lot of money is spent in pharmacies. One thing that surprised me when I first read this slide was the amount of money that was spent on preventive care in low-income countries. If you look into that, you see 15 percent of the budget was spent on preventive care, and in high-income, it\'s only 2 or 3 percent. So, do you think that low-income countries focus so much on prevention? No, they don\'t. The fact is that there are a lot of international organizations that go and vaccinate people, and this vaccination money is allocated there. Because the healthcare spending is very low, these amounts appear as a big expense in the healthcare budget. That was a little bit of a general overview of the spending in health in general. What I want you to remember are two things: 10 trillion US dollars are spent on health---10 percent of the annual global production goes to health. And this 10 percent has a tendency to grow; it will be 11 percent and so on. So there is a tendency to grow further. So let\'s pause here. Andrea: Yes, I wanted to ask---I think you already said it, but I might have missed it---you were saying that normally GDP grows around about 4 percent, but you were also saying that the 10 trillion should grow. Do you also have a percentage of how much should be the percentage growth and CAGR of\...? Andrea, I did not forget you. It comes with the echo; maybe I will go back to---tell me which slide you mean. Perhaps I will go back---tell me which slide you mean. Should I go back? I already wrote it in the chat if you want to read. Okay, thank you very much. I will come back to this question because there\'s a lot of echo and I cannot understand. Now, what are the key stakeholders, the key players in the healthcare environment? I think, first of all, we have the patients, and this is the basic stakeholder because these are the recipients of all the efforts, and they drive the demand side of this. The second most important stakeholders, I believe, are the health professionals. When I say health professionals, I mean medical doctors, nurses, technicians---people who really contribute to the delivery of healthcare innovations. I think this part is really the lifeblood, the platform of the healthcare system, and it\'s the part where you will see a lot of deficits going forward. What happens today---and I\'m sure you have experienced this---is that in a lot of developed countries, in a lot of rich countries if you prefer layman\'s terms, like the United States of America, Switzerland, Germany, and the UK (these are in the same group), they lack doctors and nurses mostly. What they do is they draw health professionals from other low- and middle-income countries. For the United States and the UK, it\'s very easy because English-speaking applicants find it quite easy. But also for Germany, it\'s quite attractive because they compensate considerably for some of these specialties. So they cover their needs by importing people. This creates a deficit in middle- and low-income countries, and you don\'t have to go to middle- and low-income countries actually---even in the south of Europe, in Italy, in Greece, in Spain, we\'re already starting to see this deficit. Greece is one of the countries where we see it quite a lot because, from the period 2010--2018, Greece was in financial turmoil with a big crisis, and that kept the salaries quite frozen at a certain level for medical doctors and nurses. These people, looking for better salaries, started moving to Germany, to the UK, to the United States, to Switzerland. The United States is not so easy because there is no direct correspondence of the degrees, but a lot of them were trying their chances there. Mostly for Greece, it was the UK---English is quite easy---and Germany. The other key stakeholders are the healthcare organizations. When I say healthcare organizations, I mean hospitals, clinics, long- care facilities, etc., that are quite important players and organizations that absorb most of the money. We saw that 42 percent is allocated, but in reality, according to a study made, in most cases, hospitals have 70 percent of the amount inside the concept. Why? Because some of the administrative costs, some of the pharmacy costs that are disallocated to the pharmacy, are actually cost-related to hospitals. So what we see in Europe, at least, is that 70 percent of the cost varies from big hospitals. I found this quite interesting, and I have dedicated a class on this matter, having one of the professionals who is an expert in the field just to talk to us about management in this position---what are the cases. The next player in this field, and a very important one, are the payers. They are very important because they are the ones who bring out the money, and they pay for salaries, they pay for treatments, and usually, they are governments, ministries, or insurances at the national or private level that have to pay and facilitate the whole system. And these are those that don\'t have enough money. And now, because they don\'t have enough money, they have found a lot of tricks. What happens in Italy, what happens in Greece, what happens in Spain, what happens in Germany, and many other countries is that the government has a budget, and they say to the other players, like hospital companies and private entities: \"Guys, this is the money I want to spend. This is the money I can afford to spend. Take your sales; when we exceed this level of spending, we will come back to you and try to collect the excess from you proportionally, according to your weight in the market.\" So this is the way that the government has found convenient to finance this gap. So they say to the other players: \"You will pay back either as a rebate or as a clawback.\" Maybe you have heard the term \"clawback\" that is very much in use right now. Clawback means that you take the money today, but when we exceed the budget, I come and take it back from you. Then the most fascinating one there, and the golden goose of this, if you like, is the pharmaceutical companies. These are the companies that are shouldering the burden to research, discover, manufacture, and supply new products for new diseases. And because they charge very high prices, usually they pay very good salaries as well. So they are one of the preferred employers not only in healthcare but one of the most preferred employers in the market in general. Organizations trying to understand what they can offer, what they contribute, and how you can address them also try to look into different processes in these companies like R&D (research and development), manufacturing, market access, marketing, sales. I will make a lot of classes on sales because it\'s a very important part of the whole equation and a lot of classes on market access that I think is very much needed. Then we have the companies that, on a similar front, produce medical devices for treatment of diseases that are equally important, less luxurious, less attractive as employers but still a very, very good segment. Some of them are very prestigious. On the top, we have the regulatory bodies. Regulatory bodies are organizations, always governmental or semi-governmental, authorized to regulate what happens in the pharmaceutical market. They regulate what happens in the market. If I come with a new pharmaceutical product, the regulatory bodies are responsible for giving me the license. The same for medical technology. It\'s a very powerful organization that controls practically all the pharmaceuticals that are in the market, and I can tell you, negotiating with them is a nightmare. I remember some endless meetings with people, and when you think you can reach a conclusion, things go back and start from zero. On the same front and even more complicated are the FDA in the United States and EMA on the European level. You have public health organizations like WHO, like CDC, that are somehow responsible for overseeing health around the globe and somehow ensure that global health moves in the right direction. There are a lot of researchers and academics, and I see a lot of people with PhDs in this class, so you understand the work in research, how much energy and how much time people spend to try to work in advanced science and products, etc. We have advocacy groups as stakeholders in this. Advocacy groups are groups that represent the patients in society. Maybe you have organizations like the Italian Diabetes Association or associations for oncology, particularly rare diseases, and these are very powerful, and they make a lot of impact. Even for small and rare diseases, powerful advocacy groups can really influence the government to increase spending and increase focus on their diseases. And finally, last but not least, we have humanitarian organizations that take a big burden silently to help especially low-income countries. \[19:30\] They take a big burden silently to help especially low-income countries, done with capacity building. Capacity building is a very big issue. Capacity building is to develop know-how in low-income countries on how they can manage disease, how they can train doctors, how they can train nurses, patients, pharmacists, etc. So organizations like UNICEF, the Gates Foundation, the World Diabetes Foundation---one focused on diabetes and a very active one---that have promised to come and give us a talk at a certain point either here or online. That\'s a good time to put a full stop and have a break. Let\'s take it; I see that as a biologist, I\'m carried away. You can take it as much as you want. I recommend 10 minutes in order to try to finish earlier to facilitate for the problems. I will start with Yet King to introduce himself because I had a problem, now solved it, and I don\'t want anybody to be left behind. Okay? 10 minutes. Salari, you\'re not convinced. You have a problem with\... \[19:48\] But if you take 24, 25, and the growth is expected today, with 2, not 3.2. It is for sure below 4 in\... It\'s about 5 percent, the difference here. If you see 1 percent in these numbers, how fast it\'s closing is quite a lot. I don\'t know, Andrea, if you agree with this number, but if you have a deeper perspective\... Uh, no. No. I agree. Since I was waiting for an answer, I looked online and somewhere they say that the CAGR is 8 percent, 8.2, but it depends on the time frame. Yeah. And GDP, how much they find? 5.2 for the growth of GDP. And I\'m using---look, I think if I, off the top of my head, it\'s a 3.2. It\'s a very range of five trends. Private reports are not really crazy, so don\'t take them. I usually take the most likely forecast for the GDP. Usually, the World Bank is the best company in this aspect. Your microphone is on YouTube unless you want to say something. I will mute, or if you want to introduce yourself, it\'s a good time now. You don\'t have good coordination to have this outstanding. So, just a number, and so let\'s continue. If we look into the composition of the pharmaceutical industry, it\'s not really uniform, rather different players participate. There we have, I can recall only, either finding new subjects, developing already existing molecules and characters, and so then he comes up---reasons that one of the big ones coming to my mind, something---you know, something I didn\'t get he has developing. Of course, the big---the lion\'s share in this market is with\... Different\... If you need to go to the biopharmaceutical---in the old days, we used to call that\... Excuse me, doctor, but we don\'t hear very well here. I don\'t know what happened with the mic. I\'m sorry. No, no, it\'s better. Thank you very much. I will increase a little bit the intensity, and I will bring it closer to my mouth, hoping that this will improve the situation a lot. Thank you so much---better, very, very much, thank you. In the past, pharmaceuticals were defined as the pharmaceuticals that are developed with genetically engineered processes. Today, all the large molecules---proteins, antibodies, 99 percent---are produced with genetic engineering, called biopharmaceuticals. Then you have the generic drug manufacturers that are companies that usually develop small molecules when they are out of patent. The generic manufacturers take them and they develop and market them at lower prices. In this field are companies that produce biosimilars. They take products that are out of patent, and they develop them and they sell them as a mimic in a way. The difference is that because biosimilars are proteins or antibodies, and they are produced with genetically engineered techniques, the way they are produced does not guarantee that they will have the same mark. For this reason, the FDA requires these companies to make a substantial development process, like Phase Three or something, to prove this biosimilar is the same as the original product. There are over-the-counter companies---companies that produce vitamins or food supplements, etc. There are specialty pharma companies. There are companies that produce very special, either fine chemicals that are used in the pharmaceutical industry or some very specific products. There are the vaccine manufacturers that produce vaccines, and sometimes there are companies who have other products and they have a branch on vaccines, like Pfizer, like GSK, or AstraZeneca, or in some cases maybe there are companies specialized or not. They are consumer health companies---let\'s say difficult to still relate to health. There are contract manufacturers. Contract manufacturers are companies that manufacture products sometimes for the big ones. If a company has a lot of niche products to cover---for instance, to cover the needs for vaccinations for the whole population---they go to these contract manufacturers and they have them produce for them. In the same way, there are contract sales companies. There are companies that have their own salespeople but they don\'t sell products of the company; they sell products of other companies, and it\'s also quite a big market. And finally, there are market research and service companies that service the pharmaceutical sector, like human resources, recruitment, training. And also in market sales, the most important is because it\'s an important source of information. It\'s not a source for us as a business school; it\'s a source for the industry and a source for the government. A lot of governments work with IQVIA in order to get information from them. Eh, Andrea? Yeah, you raised your hand. Yes, I wanted to ask, for the contract sales companies, do they sell drugs and pharmaceuticals for the other companies with, like, white label, or do they sell them under their own name? There are both cases. Sometimes these companies just go and promote the products of other companies. And sometimes they have what they call the co-marketing agreement---that they market the products with different names. The product is the original, but they use a different name to sell it in the market. This is usually called co-marketing or co-promotion if they have the same name. Uh, okay. Let\'s look a little bit into some graphs from IQVIA, and let\'s spend the next half an hour digging into that. It\'s quite fascinating to see differences and how the pharmaceutical market works. If you find this boring, tell me to expedite. If you find it interesting, I can take you into more details. We have presented the numbers. The pharmaceutical spending from 2019 until 2028---of course, until here is realized to a great extent; from here is forecast. You see a yellow bar going forward; this bar represents their forecast they had in 2018, how IQVIA believed that the market would grow in 2018. And you see that in 2019--2020, the market was below this. Why? Because of the COVID vaccination and social isolation, a lot of diseases showed enormous reduction in prevalence among the population, most notably seasonal diseases like the common cold, etc. Now from 2021, and in particular in 2021, there was a big jump above the forecast, and that\'s mostly because of the incremental 10 percent sales for vaccines and treatments related to COVID-19, like antivirals, etc. In 2022, the spending on COVID-19 is reduced by a lot. First of all, because the virus has weakened and becomes endemic somehow in society, people are not vaccinated anymore for COVID to a great extent. And so you see the reduction in this blue line. However, what is interesting is that the forecast---if you look in 2024 and onwards, excluding spending on COVID---is about the expected for logical. If you take a forecast in 2018 to forecast about the sales in 2024, you have a discrepancy. However, the discrepancy is quite high here; it\'s almost 100 billion, so it\'s quite high. And for the accuracy of---it\'s quite high. And as we see as we go forward to 2026, 2027, 2028, we see that the growth of the pharmaceutical sales is quite high, and it grows quite a lot beyond the original forecast. Now, in a very complex graph underneath, you have the different parameters that influence the drivers of this, and don\'t bother with others; stick with the upper one that we discussed. Now, per capita spending on health in connection with the income level---and we don\'t really look into money here. Although I said spending, it\'s actually the consumption; the correct word is the daily doses. So it\'s practically finding the cumulative daily doses of different products, and here on the x-axis you have the GDP in PPP---purchasing power parity. Somehow you try to make international dollars adjusted in order to have a more equivalent situation. I don\'t know if you are familiar with the term PPP GDP. PPP is when you try to adjust the differences to make it more relevant to the purchasing power of different countries. You see that the richest country is North America here, but the biggest consumer of pharmaceuticals is Western Europe and Japan in terms of volume. And as Southern Europe, they like very much---we consume a lot. And if I put Italy here, Italy and Spain, you will see that---you will see that we are on the top of the graph. We like medicine, the same in Japan. But the Japanese really---and the same for items---is very much also justified from the long life expectancy. In both Italy and Japan, people live longer than the average of others. Then you see Eastern Europe and North America and Latin America be more or less on the same level of consumption, although there is a big difference in the GDP---from 80,000 dollars per capita down to 20,000 in Latin America. So big difference, but the same consumption per capita. What is the difference? It\'s on the price; they consume the same volumes but at lower prices in Latin America. So we\'ll see that later. And finally, the lower consumers are in India, Africa. And that\'s---now if we look into the growth, we\'ll see these countries changing and being on the top because they try to catch up with the rest of the world, so they grow quite a lot. In this graph, we see the global market of pharmaceuticals and how it grows over the years. Is that interesting? For one reason: since all of you, or the majority of you, expressed an interest professionally in the pharmaceutical industry, I think it\'s quite relevant. Because what does it say? It\'s an industry that historically grows steadily, and it\'s expected to grow. So it\'s not an industry that one year went up and then goes down but grows quite steadily. We see one year dip, but it was because of COVID-19. So you see one year dip, and then it starts increasing, some change that was related to the impact of COVID-19. And this is the dark blue line---is the growth rate. \[20:06\] How much---what is the percentage from here to here? The bars are the actual spending---how much money we spend on pharmaceuticals, what is the size of the market. And you will see that the size is expected to be 2.3 trillion by 2028, and by 2026 it will---it should. So it grows quite steadily, and the market is one very predictable. No matter what happens, the level of spending on health really grows up; people are demanding this, the governments will\... Here, it\'s that---how much on one axis we have the percentage of spending growth---the regions that could grow fast in terms of spending---and here you have the regions that will grow on volume. So here people will consume more products; here people will spend more money. And you see that countries that are in the area of high volume and high money spending are India and Asia Pacific, because these countries, they come from very low bases. If you remember that slide before, India and Asia Pacific are on the low end. Now, these countries, they try to catch up, so they grow quite fast. Is that interesting? For me, it\'s quite interesting because what it says is that no matter in which region you are in the world, there is growth in pharmaceuticals. And you can analyze these numbers in great detail, finding which region you have higher growth, which lower. But for me, the bottom line is pharmaceuticals are expanding ground everywhere. The only country, region, that does not grow so much is Japan, as it already has very high consumption. The population does not grow; it\'s quite stable. So somehow they have completed their quite good level. So the consumption kind of stabilizes. If you look here, you will see that it\'s very close to zero, and that is contributing to two factors: stabilizing the population that does not grow, and also very high coverage already. While in countries where you have high population growth and no coverage today, like India, you see very high growth of 10 percent or higher. And for Europe---that is for our interest in most cases---the expected growth from 2019 to 2028 is 4 to 7 percent. And if we look to 2024 to 2028, we\'ll be quite stable around 4 to 5 percent, which is very, very reasonable if we take into consideration that in Europe, in the next few years, we don\'t expect so much growth in our economies---rather anemic growth, I would say. That\'s fascinating. It will be interesting to look at this presentation---I will keep---and we will look again at this presentation at the end of the course, try to see how much interest it generates for you after you get the course, the exposure to this. What do these numbers, what do these graphs say? That in some countries, the market will grow because the value---the prices---will go up; the new products will be more expensive, so it will grow. In other countries, the market will grow because people will consume more products. Okay, the green you see there is the volume growth; the blue is the contribution of increasing price. And if we look, for instance, in China---you have a---sorry, I said the opposite, apologies. You see that the volume grows, but the impact of prices is negative. Why is that? Volume grows, but in China, the impact of prices is negative. It happens because the Chinese convert a lot of products to domestically produced, either informatics, biosimilars, or newly produced products, etc. And because they produce domestically, they come with lower prices. However, the coverage of the population, although it\'s reasonable, there is a lot of room to cover rural areas in China---not well covered with pharmaceuticals. So also, the central government expands the coverage. Slowly, you see volume mix, and the growth comes from the volume; from the prices, you have reduction because a lot of products, when they are out of patents, they are produced locally with lower prices, or sometimes they are procured---the government buys from national tenders. Do you understand what a tender is? Tender is a process where the government goes out and says, \"I need to buy one vaccine for a topic. What price will you offer me? I will buy from the one who offers the lowest price.\" This procedure is called tender. And because China buys from tenders and they produce locally, they combine the effect as a negative impact on prices. So when you see big blue, you have a lot of volume growth; when you see big green, you have price increases. Okay? And usually, new products sometimes---if you look here, for instance, in North America, you see a lot of green, which means higher prices. If you look into Japan, you see a little bit of growth, but mostly coming from the volume and not from values. Therapeutic areas---we see the areas that we expect more growth going forward. I don\'t think it\'s a surprise to anybody that more growth comes from oncology. Oncology is the field that attracts a lot of---what is the second one? It\'s there, but just if you guess---is obesity the second growth area? What do you think? And the microphone---take your microphone or switch it on. Why do you think obesity has grown so much? If you look here, obesity is the fastest-growing condition, with rates increasing from 25% to 27%. Because of the priority of people affected these days, especially those coming from America---it\'s correct, there are a lot of people who are obese everywhere. In the United States, of course, it\'s at the top, and if you go to the Middle East, like Saudi Arabia, and some European countries like Italy and Spain, they are very close. What do you think? Why is obesity growing so fast? First of all, because of the change in lifestyle in recent years. That\'s very much correlated. This change in lifestyle explains why more people are obese in the world. Why will the pharmaceutical market for obesity grow faster? Because obesity is also a principal factor for many other chronic diseases. So this is 100% correct, what you say medically. Sorry, we don\'t hear you. Hey, can you try something with your phone? We cannot hear you with your microphone. It\'s a very fascinating question. Uh, we cannot hear you. Apologies. Sorry, I think the reason is that it\'s a big market---a lot of people with this disease. The problem was that until 2015, there was no treatment. There were some products, but really most of them were not working because they weren\'t necessarily effective. The first treatment for obesity came with GLP-1 from Novo Nordisk, or before that with Victoza and similar products, which were still GLP-1 daily doses. Now, Ozempic is a weekly dose. When they found a pharmaceutical product that can treat obesity, immediately the market started growing very fast. Thousands of people out there, and in the same way, the market share of Novo Nordisk grew like that, like obesity, because people understand they have a solution that affects a lot of people on Earth. That\'s why you see that we expect high growth in this market. The second market that we will see---we expect to see growth---the third one is mental health. Today, we have a lot of diseases there. There was one slide about that. We have a lot of diseases that have very little treatment, and I\'m not talking about schizophrenia, epilepsy, etc.; those are established. I\'m talking more about Alzheimer\'s and other similar disorders. Also, there are a lot of degenerative neurological conditions that have room for improvement, and there are a lot of new treatments coming up. With Alzheimer\'s, you see there was a lot of expectation with a new product from Biogen three or four years ago that proved they were not really effective. The market grew for a while but then dropped, sadly. In other conditions, like multiple sclerosis, where the market was very big, sadly, you saw the market being reduced because the products went out of patent and biosimilars came in. So the volumes remained the same, but the prices were lower, so the total market went down. It\'s not clear now for many of these degenerative neurological diseases, like gene treatments that come up with very high prices. The beauty of this, although they come with very high price tags, usually they often cure some of the diseases---not for all of them, but they often do---and that\'s really fantastic. Another disease that we saw around 2015--2016 was Hepatitis C. It was a chronic condition that had no treatment, but it was managed with a mixture of other products. In 2015, a lot of companies came out with a treatment. It was one-month, three-month treatments that people were taking, and they were getting rid of the disease. So Hepatitis C became a treatable disease, not a chronic condition anymore, and that was a very important step, especially for lower-income countries because Hepatitis C is more common in lower-income countries. I think in the Arab world we have a quite high incidence. Now, I don\'t know---with different, maybe, education---the prevalence is going down year after year. Are there diseases that are going down? I think there are some diseases that are decreasing. One of them is infectious diseases, where there is a reduction in new compounds, a reduction in the discovery of new antibiotics. So we see that this somehow shows a little bit of lower growth. Uh, what\'s next? The growth and how the growth rate---not the actual growth, but the growth rate---goes down mostly because of the impact of biosimilars. We see a lot of expensive products that lose their patent, and once they lose their patent, biosimilars come in. They sell exactly the same product at 40% or 50% of the price, so that has a total impact. Even oncology is a category that showed very sudden growth in the past, but the last two or three years, we saw a decrease in the market, and I would say also a decrease in the production of molecules. It was an area with a lot of new molecules coming up, but in the last few years, the productivity of R&D in oncology has gone down. This is obesity, and this is exactly what I\'m saying. The market was zero; the number of obese people increased around the world, but not faster. What do you think is the explanation? I can tell you: companies cannot produce enough. There are two competitors that produce GLP-1; one is Novo Nordisk, the other is Eli Lilly from the States, and they don\'t have more production, or the production is consumed. The growth you see until at least 2026 is based on the production capacity---not only the demand side because the demand is enormous. And mind you, the same product is used for the treatment of diabetes, so the companies have to prioritize a life-saving condition over obesity, which in the minds of many people---not in my mind---is considered like a lifestyle disease. It\'s not; it\'s a disease as well. But this is how people are seeing it. Look in the neurological conditions and disorders. Alzheimer\'s currently has very, very low growth in value, but we expect growth there. Actually, it\'s in negative territory today, but we expect much higher growth going forward because there are a lot of projects in the R&D. In these cases, you see 2019 to 2023 growth here, and 2024 to 2028 here. So this somehow shows the past, and Alzheimer\'s is negative, and this shows the future comes on the top. It\'s a very serious condition, but there\'s not a lot of need recognized by society. That\'s quite interesting. They have here in this slide the new products that are coming out of R&D and the potential of how much they can grow. And you see a lot of uncertainty because R&D is quite an uncertain process. A lot of products are lost in the process. This is the forecast of the United States pharmaceutical market. And I will only look into that. What are the drivers that will impact it? The drivers are: we have new brands that will contribute from today until 2028---they will contribute \$109 billion. Then you have a negative impact from products that lost exclusivity---they get out of patent, so it\'s a loss here. And then you see the existing brands, how they grow. And here you have the generics---that\'s for the United States, the picture. And here you have the total market and the year 2023, 2028, and where the growth will come from. I\'m not expecting you to remember something out of that; it\'s mostly just to understand a little bit how the market is moving and what are the drivers. If we look at the same issue in Europe, you will see a little bit different market. The growth of existing brands is quite small and more or less equal with the growth from the loss of exclusivity, and the impact of generics is higher. The reason is that in Europe, we still have low penetration of generics. So when we increase the penetration, we\'ll grow this. Do you understand this slide? Is it complicated? Maybe I will explain one more because it\'s quite interesting to understand the dynamics of the market. You have the market size today---how much money you spend in Europe on pharmaceuticals; this is the market today. Then, the growth comes from new products that will come or the growth of existing products, and this is impacted negatively by products that lose exclusivity and are replaced in the market either with generics or biosimilars. The replacement comes with a significant price reduction, so you have a dip. So this is the spending in 2023. This is the new brands, how much they contribute. This is how much the market could reduce by the products whose exclusivity is out of patent. And this is the growth of existing brands---the organic growth of the current products in a way. And this is how much you get from generics. And if you add all this together and you deduct this, you go from 226 to---excuse me---from 226 to 296. And if you analyze this growth, you can find the average growth in this period. So from 2023 to 2028, the market will grow with approximately 20%; compound altogether, accumulated growth of 20%, maybe 2% per year. If you add these numbers, you will get 296. This is complicated. We will repeat exactly the same presentation at the end of the course and see---you will find it interesting, perhaps maybe with updated numbers. This information is from the reform of European pharmaceutical legislation that is ongoing. There\'s AI---artificial intelligence---on how we will incorporate it into pharmaceutical business. And there\'s legislation for substances of human origin. When we talk about human origins, we speak about plasma, we speak about donors and donation of organs, we speak about red cells. Then we have new legislation that we\'re expecting in Europe in connection with health data. At some point in time, Europe will have to unify and use the same way to store healthcare data, and that would be quite important. Those who have to catch the train, you can go. If somebody can stay, it\'s okay. Otherwise, I will continue with the people online, but you will get the presentation. Okay, it\'s biology---it was too complicated. It\'s not going to be like that going forward, just to give you an idea of the whole market as an introduction. Don\'t be concerned; it won\'t be so complicated. So, a little bit of a small interruption because we have to finish the class a little bit earlier for the people in the school. There is a problem with the trains, and if they don\'t leave, they will have no way to go home. Now I\'m continuing. Besides the policy and the legislation, another issue in Europe that is quite old is the harmonization of how we evaluate pharmaceutical products. That\'s quite a hot issue, and we have, first of all, to make the products simultaneously available---it\'s not possible that one country in Europe has new products and the other one does not. The second thing is to find a way on the methodology to assess the products in order to find out the real value behind these products and make it available in a uniform way across Europe. Another issue that is quite interesting in Europe, and we look at, and then we see in many countries around the globe, is the supply chain---products and how we move products from the factory to the patients, but also from the raw material to the factory. We have a special class on that, and I think that will be quite interesting. So far, we have confirmed the participation of an Italian expert from Naples, who is an expert in supply chain---a big distributor in the South but also on an Italian national level---and he will give a lot of input on this. The issue we have in Europe is that a lot of products that we consume in Europe---pharmaceuticals---or raw materials for these products are produced outside Europe, raw materials in China and India. And a lot of products that the final process will use are made outside Europe, mostly in the field of infectious diseases---antibiotics. The factories that produce antibiotics in Europe are reduced continuously. During the COVID period, we saw a big problem with the supply chain everywhere; that also affected pharmaceuticals and affected both the upstream supply, meaning the supply of raw materials, and all the downstream, from the factory down to the patients. All this supply chain was really fragmented during COVID, and that was an alarm for the European Union: What are we doing here in a very essential issue like procurement of pharmaceuticals? We have a very unstable supply, and I think, in my opinion, what is the next movement of the European Union? Somehow to protect the European population by securing and boosting the supply chain, and this will be done in many different forms, but it\'s something that will come for sure. Now, we talk about market access, and we\'ll discuss a lot about that. And as a teaser---I\'m not going to take---I can tell you the different countries right now in Europe have different policies in terms of market access. They have different ways how to evaluate, how to reimburse, how to price pharmaceutical products. In my opinion, sooner or later, this thing has to become more uniform, and if you see here---I will not go through that---what you see is that in these countries, they have different priorities and different ongoing discussions about these subjects. We\'ll discuss this in a number of classes, and it will be one of the key focus areas of our course. I will not discuss so much about China---briefly, we\'ve discussed it, so I will not bother you with different policies there. We\'ll discuss it perhaps in another class with a little bit more focus, and also with Latin America and the region. We don\'t have to look so much into details, but if someone has a specific interest in that, I will have this available on Blackboard. So if you have a particular interest in one region, or if you want to go through the presentation to identify something that we went through very fast, feel free to do it. Now, I left for last this slide where I have an overview of the discovery of pharmaceutical products, and I have some red lights in between, which are some key regulatory steps where the government steps in and regulates the process. The drug discovery process for the discovery of a new product is a very expensive project. To take a product from discovery and bring it to the market costs one billion dollars. It\'s a big investment; it\'s not an investment for small companies---it\'s really for big players. Companies spend a lot of money, and it takes a very, very long time. I have one example here that I experienced myself. We are discussing Novo Nordisk from 1984. We brought it to the market. Why was that in this particular case? Because the natural GLP-1 we use has an impact on diabetes and obesity, but the problem is that the natural GLP-1 of the body lasts for a very short period of time; its half-life is minutes, so it\'s produced and very fast disappears. Now, when you give that with an injection, it doesn\'t have an effect. What was the challenge is how to prolong the half-life of this product, and to master this. Around 2010, they came out in the market with products that could last one day, and then in 2018--2019, they came into the market with products that last one week, like Ozempic. From minutes, we went to weeks, and now they are working on products that will last for one month. So you can understand how much science is behind. But on average, this process takes seven or eight years, maybe on average. The case of GLP-1 was an exception. Now, what are the key stages in drug discovery? First of all, you have to identify a target---it can be a receptor, can be a protein, can be another---and validate that if you manipulate this target, it will have an impact on the disease. Easy to say but difficult to do. In the old days, we had to do all this in vitro or in vivo experiments. Today, a lot of work is done---if any of you saw the Nobel Prize in Chemistry this year, it was based on computer models on how you can predict the structure of any chemical compound based on the composition to predict the structure of this molecule. That helps a lot because, based on this structure, we can identify how this interacts with receptors or with other molecules. So a lot of this work today is done with applications---that\'s why the process is much faster today. When you identify the target, the second step is you identify the compounds that interact with this. Then you have to optimize this compound because you identify a compound, but sometimes you have to cut a part of this compound, sometimes you have to expand it in order to ensure that you optimize the interaction with the target. And in this process, you reduce the side effects, and you increase the efficacy of the product. So if you put the whole molecule in the body of a human being, it can have some side effects. If you cut this molecule and you keep only the important part for the interaction with the target, you can eliminate side effects and increase the efficacy. I\'m explaining this in a very simple way---I\'m sure that the pharmacists and the biologists in the class might object---I try to make it in the simplest way possible. Then, once you have this optimization, you go into action testing, and you can test the product in vitro in the lab or in vivo, usually in animal models. It takes some time, and you test the product there. After that, you have the first regulatory approval, and actually, the companies get approval from authorities---FDA or relevant authorities in China and Japan---to start the investigations, start clinical trials. And this is called the Investigational New Drug (IND) application. Then you start the clinical trials. In Phase I, you test the product on healthy volunteers in order to understand the side effects and sometimes to optimize the dose. In the second phase, you have a bigger group, and these are patients, real patients, where you test the product to evaluate the efficacy, to evaluate side effect potential, to finalize the dose. And after that, you have Phase III, which is the largest part of the clinical trials, very expensive, and there you test the product sometimes in 5,000 patients. It\'s a great and heavy process, but it\'s the last one, and based on the results from this clinical trial, pharmaceutical companies get approvals in order to start selling. And this type of approval, this type of application, is called a New Drug Application (NDA), and the pharmaceutical company usually applies to the regulatory agency to take this one. So they go in the same way, and they apply for a new drug in order to get approval to start selling. In the States, you have the review of the regulatory authorities, where the regulatory authorities take all this data, and they scrutinize, and if they find that the drug has a positive effect, they give the regulatory approval. Is it the end of the story? No, it\'s not the end of the story, because in most cases, you will monitor the product, not in the usual pharmacovigilance, but in a clinical trial which is called Phase IV, and it\'s the kind of trial after the approval, when you give to the patients but you monitor the use of the product, sometimes also in double-blind studies. And that\'s the process that costs one billion. How many products make it? That\'s a very interesting question. Ten percent---ten percent of the products going through that are destined to be and get approved. Approximately 50%---big numbers, not exact---50% fail; they don\'t make it to the market because of lack of efficacy---the product is good, but it doesn\'t really work. Thirty percent fail because they have excessive toxicity that the government cannot manage, so it\'s dangerous to put the product on the people. And ten percent because of poor drug properties, either pharmacokinetics or they create some side effects or whatever. And still ten to fifteen percent fail because of lack of commercial value---sometimes you develop a product, and by the time it comes to the market, there is a better product, or a new product that cures. Another company comes with a product that cures, so suddenly the product is obsolete. Very often, the products fail because of luck. When they design the clinical trials, they don\'t design them well, and the outcome is inconclusive. I have seen that for many companies. I saw that for one of the products I had, and it was a project that I had taken the lead on. It was a product called Factor VIIa; it\'s activated Factor VII for coagulation. And this product is used for hemophilia, and we always thought in Novo Nordisk that this product can have additional uses. One of the uses we thought it could be very useful for was postpartum hemorrhage that comes after the birth of babies. The mother sometimes has hemorrhage, which is called postpartum hemorrhage. From this, especially in low-income countries---in Europe, you don\'t see so many cases; in the United States, not so much, but you go globally---and we felt that Factor VIIa could help because when they have this excessive bleeding, by giving doses of Factor VIIa, you can stop and reduce the issue to control it without a hidden operation. Another case exactly with the same product was for stroke, and especially acute indication that we believed we could help a lot, and this was hypertensive hemorrhages---it was intracranial bleeding, in other words, where we believed that the product could help. And I believe, until this moment, that the product could help. But the way we designed the clinical trial, when we got the final results, we could not really conclude, and FDA didn\'t include the product. Indeed, it was offering something, and they did not give us the---actually, to be honest, we did not submit because we saw ourselves that it was inconclusive. That\'s for today. It was a very heavy presentation. I just wanted to give you a quick overview. I could have stuck to some gross numbers and some percentages, but I wanted to give a sort of overall picture of the pharmaceutical market, and we will come back to this presentation at the end of the course, and I will try to evaluate it in the course in order. So let\'s take it as that. Thank you very much, Mohammed, thank you very much for staying in the class for this. I hope I was not really a big disturbance for your train. For the people online, thank you very much. Don\'t worry if it was a little bit complicated; we will come back to that. And Geneva said something about an interesting point about diabetes and obesity. I don\'t think the statement Geneva made is correct, and I will explain why. The product GLP-1---and I\'m sure because I followed the development from 1987 when I joined the company---I was not in the early stages, but from \'87 until 2010, when we came to the market, I followed it. The product originally was developed for diabetes because the company understood that blood glucose is regulated by two hormones. The first one is GLP-1, insulin, and of course glucagon. And now, once they developed the product in the clinical trials, it was demonstrated that it has an impact on obesity, where the problems start. And Geneva has a point that according to the company, they started giving priority to the treatment of diabetes because diabetes is a life-threatening disease. Obesity, perhaps less so. The companies tried to focus on diabetes. Many patients or many doctors were prescribing the product for obesity. And so I don\'t blame so much the companies; I blame more the doctors on one end, and authorities did not monitor the market very well. Also, Novo Nordisk and Eli Lilly made the product available under different names for diabetes and different names for obesity in order to try to separate the market. Of course, it\'s easier said than done because both doctors and patients understand that this is the same product, so you have the interaction. In any case, now, for which Angel asked the question: How many people work from development to the market phase? I don\'t have an exact number, but I can tell you that approximately 5% to 10%, closer to 10%, of the employees of companies work in the R&D area or in clinical trials. So I would say roughly 10% of the employees of companies work in this field. And a final question from Mariana. She\'s 100%---Mariana has an interesting term. Yes, the term is repurposing. Repurposing is when I have a product for a disease; later I find out that it has an impact on another disease. One product I know personally was for stopping lactation and then found out that it was useful for epilepsy and consequently changed the direction; now nobody uses it for people---it is used only for epilepsy. That\'s the case of repurposing. In the case of GLP-1, at the early stage, we had indications that this product, this GLP-1, works on the signaling in the brain. It was not really at the stage of the discovery, so I will not say repurposing. Simply, the companies did not expect to have such a big impact on obesity. That was the surprise factor. When we first launched GLP-1, we launched it as a product that controls diabetes without causing hypoglycemia, which threatens diabetic patients, and without increasing the body weight. Because when patients take insulin or other types of antidiabetic agents, one of the first impacts, once they are controlled, is that they gain all the weight. With GLP-1, we saw that this did not happen, but later when we started with higher doses, we saw that it has this profound impact on obesity. Thank you very much. With these words, I want to thank you. I repeat again: don\'t worry if you found the presentation with the graphs too complicated. We will take it again at the end of the course. I will save it, and you will tell me if it is easier to understand then. Thank you very much, and I\'m looking forward to seeing you tomorrow to discuss a similar subject more related to pricing and issues like that. Okay, that\'s it. That\'s a sort of introductory stage when we discuss a little bit more generic subjects, and the class will serve more as an introduction to market access and HTA. Thank you very much.