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ARV MARKET REPORT

The State of the Antiretroviral Drug Market in Low- and Middle-Income Countries ISSUE 1, OCTOBER 2010

Market Review
ARV market continues to grow rapidly, expanding by 13% in 2009
Access to antiretroviral (ARV) drugs in the developing world has grown at an impressive rate in the last decade, with the number of patients on treatment increasing 12-fold in the past seven years. In 2003, less than 400,000 patients were on antiretroviral treatment (ART) in low- and middle-income countries; today there are more than 5 million patients on ART.i In 2009 alone, the number of patients on treatment expanded by more than 20%. In dollar terms, the ARV market grew at a slightly slower pace in 2009, because the average cost of treating an individual patient declined. The average per patient per year (pp/py) cost of treatment fell by 12% for stavudine (D4T)-based regimens and by a striking 30% for tenofovir (TDF)-based regimens. As a result, the average cost of first-line therapy in low-income countries fell from $155 pp/py in 2008 to $135 pp/py in 2009. The cost of second-line therapy fell more dramatically, from $1,024 to $721 pp/py, as a result of declining prices and a move to cheaper second-line regimens. Despite the decline in the cost of treatment, the overall market for ARVs in generic-accessibleii countries grew from an estimated $700 million in 2008 to nearly $790 million in 2009, an increase of 13% (see Table 1). Second-line ARVs accounted for roughly 13%, or $98 million, of the total market size in these countries. Although less than 3% of patients in generic accessible countries are on second-line therapy, the average cost of treating these patients is 5 times higher than for patients on first-line therapy.

In contrast, the pediatric ARV market grew at a much slower pace in 2009. Although the number of children on treatment rose by nearly 30% in 2009,iii there was a significant shift in prescription patterns away from expensive syrup formulations to fixed-dose combination drugs (FDCs). In 2009, procurement of all major pediatric ARV syrups, with the exception of abacavir (ABC), declined significantly. UNITAID procurement of zidovudine (AZT) syrup, for example, dropped from over 1 million bottles in 2008 to around 200,000 bottles in 2009, a decline of 80%.iv TABLE 1: GLOBAL ARV MARKET SIZE (USD) IN GENERIC ACCESSIBLE COUNTRIES
$800M 800
$98M
600

2L

$96M

400

$601M
200

$689M

1L

0 2008 2009

Generic suppliers gaining increasing share of the market


In 2009, we estimate that Indian generic suppliers accounted for nearly 80% of ARV purchases in genericaccessible countries. Aurobindo, Cipla, Hetero, Matrix, and Ranbaxy dominated the generic market and Abbott continued to lead among originator companies. One shift in recent years has been the rapid growth of generic suppliers outside of India, such as Aspen and Adcock, which now represent an estimated 15% of the market.

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Market Outlook
Looking ahead over the next five years, the ARV market is likely to expand at an even faster pace than in recent years, as a result of changing market dynamics. The 2010 edition of the WHO ART Guidelines includes two major changes that will have significant implications for adult treatment: a new treatment eligibility threshold and the demotion of d4T as a preferred first-line drug.

funding commitments before they start aggressively moving patients off of d4T. While the pace is somewhat uncertain, the shift away from d4T is undeniable and will represent the most significant change in adult regimen trends seen in the past decade. A CHAI survey showed that 60% of patients in low- and middle-income countries were still on d4T-based regimens in 2009, and we see this dropping to just 15% of patients by 2014. South Africa, which alone accounts for 18% of the total global patients on treatment, recently promoted TDF as the preferred first-line option. Several other countries have already made similar decisions or are in the process of re-evaluating their national treatment guidelines (see Table 2).

New guidelines will increase number of patients eligible for ART, but impact on ARV demand is uncertain
Perhaps the most significant change in the 2010 WHO ART Guidelines is the recommendation to initiate all adult patients with a CD4 cell count below 350 cells/mm3 on treatment. The previous WHO guidelines only recommended treatment for patients with a CD4 cell count below 200 cells/mm3, or for patients in advanced clinical stages of the disease. Modeling estimates predict that early initiation will result in an increase in eligible patients of anywhere from 50%v to 200%.vi However, the near-term impact of this change is uncertain due to funding constraints and the ability of health systems to cope with such a significant influx of patients. In light of this uncertainty, our baseline scenario assumes that patient growth will continue to rise at a similar pace as in recent years. Please refer to the Risk Analysis section for a discussion on alternative scenarios related to patient growth.

TABLE 2: COUNTRY HIGHLIGHTS, NRTI PREFERENCES


South Africa adopted TDF as the preferred 1L choice in April 2010. SA is now initiating most new patients on TDF and has issued guidance to healthcare providers to switch existing patients on d4T who are experiencing toxicities. Kenya and Zimbabwe each adopted TDF+3TC+NVP as the preferred 1L regimen earlier this year. Patients currently on D4T who are experiencing toxicities will be switched to alternative regimens. India has decided to keep AZT+3TC+NVP as its preferred regimen. Malawi has opted for TDF+3TC+EFV for all patients, pending Global Fund approval of its Round 10 proposal. In Uganda and Nigeria, AZT remains the official preferred 1L drug but increasing use of TDF is expected in the coming years due to high prevalence of anemia and a preference for TDF among certain implementing partners.

while changes in preferred regimen choice will drive shift to more expensive 1L drugs
Another major change in the revised guidelines is the demotion of d4T as a preferred option for first-line therapy, as a result of its long-term toxicity profile. We expect that this change will drive a major shift away from d4T and towards AZT and TDF in the coming years. The rate of shift will vary by country. Most countries will phase out D4T gradually focusing first on new patients and existing patients that are experiencing toxicities but in some cases the shift will be more abrupt. In Uganda, for example, the government has already stopped buying d4T and is proactively switching all patients immediately. Some countries, such as Zimbabwe and Malawi, will likely require additional

Overall, our forecast projects a near 50% drop in d4T demand in generic-accessible countries over the next five years, from 2.3 million patients in 2010 to 1.2 million patients in 2014. Of the alternative NRTI options, TDF demand is likely to increase five-fold from nearly 700,000 patients in 2010 to 3.6 million patients by 2014 while AZT demand will double from 1.6 million patients to 3.2 million patients (see Table 3).

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TABLE 3: SHARE OF 1L NRTI MARKET IN GA COUNTRIES


100% 14% 80% 34% 60% 46% TDF

40% 40% 52% 52% 20% 14%15% D4T 0% 2010 2014 AZT

patients taking EFV. However, EFV growth is not likely to keep pace with TDF growth because a handful of countries - notably Kenya have adopted TDF+3TC+NVP as their preferred regimen, even though no FDC is available for that regimen. Furthermore, many countries will prescribe NVP to any woman of childbearing age because of concerns around EFV use during pregnancy. As a result, the ratio of EFV to NVP use is expected to rise only modestly over the coming five years. Longer-term, the NNRTI market will likely undergo more significant change, with the introduction of rilpivirine (TMC-278). This drug is expected to be more convenient than NVP, more suitable for women than EFV, and significantly cheaper than EFV. A new drug application for TMC-278 was submitted to the FDA in July, and generic versions of the product may become available in 2012.

3TC likely to gain significant share over FTC


WHO guidelines recommend the use of lamivudine (3TC) or emtricitabine (FTC) with TDF, as the preferred NRTI backbone. While 3TC and FTC are clinically interchangeable, 3TC is less expensive than FTC and as a result countries are moving increasingly away from FTC. However, FTC may see a strong near-term market in South Africa (see Table 4).

Release of h/s RTV will prompt ATV adoption


The adult second-line market will also undergo some important changes. The WHO guidelines recommend atazanavir/ritonavir (ATV/r) and lopinavir/ritonavir (LPV/r) as the preferred protease inhibitors for secondline therapy. While both are comparable in safety and efficacy, ATV/r is cheaper and more convenient for patients than LPV/r. Consequently, the recent release of heat-stable (h/s) formulations of ritonavir (RTV) will likely prompt a gradual move towards ATV/r. Several countries, including Ethiopia, Nigeria, Thailand, Tanzania, Zimbabwe, and Vietnam have already included ATV/r in their guidelines. Many countries will introduce ATV/r gradually for newly failing patients or wait until alternative formulations of ATV/r are available (co-packaged and FDC formulations are currently in development), but others will adopt ATV/r more aggressively (see Table 5).

TABLE 4: COUNTRY HIGHLIGHTS, 3TC VS. FTC


Uganda has gradually shifted from procuring both 3TC and FTC to almost exclusively using 3TC Zambia historically used exclusively FTC but has now introduced 3TC and is currently using both drugs Nigeria uses both 3TC and FTC for patients on TDF regimens but its procurement has shifted increasingly to 3TC in recent years Botswana is the only high-volume country that uses exclusively FTC South Africa currently uses 3TC but may soon be procuring TDFbased FDCs for the first time. In the long-term SA will likely move to 3TC-based FDCs due to cost, but their near-term choice may be determined by which FDCs are registered first by their local drug regulatory agency.

TABLE 5: COUNTRY HIGHLIGHTS, ATV/R


Early adopters: Uganda, India, and a handful of West African and Latin American countries have already placed orders for ATV and RTV Zimbabwe, Nigeria, and Cameroon are likely to begin introducing ATV/r in the near-term

NNRTI market likely to remain relatively unchanged in near-term


TDF is paired with efavirenz (EFV) in fixed-dose combination (FDC) pills, whereas d4T and AZT are coformulated with nevirapine (NVP). Consequently, it would seem likely that a shift to TDF-based regimens would lead to a significant increase in the share of
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Likely near-term adopters:

Pediatric market to double in size by 2014


The generic accessible pediatric market is expected to grow from $53 million in 2009 to $103 million by 2014, an annual rate of 14%. Growth in the pediatric market will be driven by significant patient scale-up, while the cost of pediatric treatment is expected to remain relatively flat. Following the trend from the past year, use of single and syrup formulations will continue to decrease as countries transition to FDCs. The market will also see major shifts in product use. Over the next five years, AZT is expected to replace d4T as the dominant pediatric backbone, with ABC volumes also increasing significantly although at a slower rate due to the higher price of ABC. The significant price differential between ABC and AZT will likely be a barrier to further ABC uptake in first-line therapy. Another drug that will see increased market share is LPV/r, as infants that were exposed to NVP for PMTCT purposes will require a LPV/r-based first-line regimen. TABLE 6: PEDIATRIC PATIENTS BY NRTI BACKBONE IN GENERIC ACCESSIBLE COUNTRIES
600,000 500,000

from $790 million in 2009 to more than $1.8 billion in 2014, representing an annual growth rate of 18%.

Risk Analysis
In this section, we consider key market uncertainties that could impact the size of the ARV market over the next five years. A major uncertainty in todays environment is the rate of scale-up of patients on treatment. While the new WHO eligibility criteria will prompt a significant increase in the number of patients in need of treatment, funding constraints are likely to limit the pace of scale-up. While our baseline scenario assumes a similar scale-up rate as seen in recent years, our risk analysis section considers two alternative scenarios.

Further growth potential with new WHO eligibility criteria


Estimates suggest that WHO guidelines revisions could lead to an increase in the number of eligible adults for ART, in the range of 50% to 200%. However, it remains unclear how many of these newly eligible patients will be initiated on ART. The ability of countries to respond to the new eligibility criteria varies widely, depending on constraints in funding, human resources, and health systems infrastructure. In our Aggressive Scenario, we consider the possibility that funding and in-country capacity will not constrain the ability of countries to gradually move towards earlier initiation criteria. Specifically, using data on CD4 count distribution from a survey in Kenyavii, we assume that nearly 20% of HIV+ patients fall within the new range defined by WHO guidelines and will be newly eligible for treatment. To account for initially limited absorptive capacity of these patients, we assume an annual increase in ART coverage of 10% among patients with a CD4 count between 200-350 cells/mm3. In the Aggressive Scenario, total adult patients on ARVs would grow to 9.7 million by 2014, or 1.5 million more patients than in the baseline scenario. In that case, the market size in generic accessible countries would grow to $2.0 billion.

Pediatric Patients

400,000 ddI 300,000 200,000 100,000 0 2010 2011 2012 2013 2014 ABC AZT d4T

Growth of ARV market in coming years will outpace historical rate


As a result of sustained patient growth and a move towards more expensive first-line regimens, the ARV market is expected to grow more rapidly in dollar terms over the next five years than in recent years. In our baseline scenario, we estimate that the overall ARV market size in generic-accessible countries will rise

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More limited growth if donors pull back on funding for ART


The global AIDS community is facing major funding challenges. Though donor investment and spending on ARVs has grown at an impressive rate in recent years, the global recession has created a major challenge to further growth in spending. There is concern that contributions from the two leading ARV funders, PEPFAR and the Global Fund, will rise at a slower pace or level out, which would significantly impair the ability of countries to scale up treatment. While our baseline scenario assumes that adequate funding will be available to allow for sustained growth in patient scale-up, our Conservative Scenario considers a more pessimistic outlook. The Global Fund estimates that roughly $2.3 billion in new funding is required each year to allow current trajectories of progress to be maintained. Based on a conservative Global Fund resource scenario, which assumes that only $1.3 billion in new funding will be made available annually, our Conservative Scenario assumes that funding for ARVs will decrease in countries that are heavily dependent on securing new GF funding, including Cameroon, Cote dIvoire, India, Kenya, Malawi, Mozambique, Namibia, Nigeria, Tanzania, Uganda, Zambia, and Zimbabwe. In the Conservative Scenario, patient numbers would grow to just 6.4 million adults by 2014, 1.8 million fewer patients than in the baseline scenario. In that case, the generic accessible market size would grow to $1.4 billion in 2014.

TABLE 7: GENERIC ACCESSIBLE GLOBAL ARV MARKET SIZE (USD) BY SCENARIO


$2.5B 2.5
Aggressive Scenario Baseline Scenario Conservative Scenario 2.0 CAGR (10-14)

21% 17%

1.5

9%

1.0

0.5

0.0 2010 2011 2012 2013 2014

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Appendices Product Demand Forecasts


in Generic-Accessible Countries

Tenofovir (TDF)
5 Patients (M) 4 API (MT) 315 500
3 50

Stavudine (d4T)
60 Patients (M) 50 43 API (MT) 36 30 25 2.3 1 2.0 1.7 1.4 1.2 20 30 40

398 400

Patients (millions)

Patients (millions)

API (MT)

231 2 149 2.9 1 73 1.4 0.7 0 2010 2011 2012 2013 2014 0 2.1 100 3.6 200

10

0 2010 2011 2012 2013 2014

Zidovudine (AZT)
4 693 Patients (M) 3 API (MT) 456 2 350 2.9 2.5 1 1.6 100 0 2010 2011 2012 2013 2014 0 2.1 200 3.2 552 629 700 600 800

Efavirenz (EFV)
3 Patients (M) API (MT) 504 439 382 328 2.6 2.3 1 1.7 1.5 2.0 200 100 0 2010 2011 2012 2013 2014 0 300 500 400 577 700 600

Patients (millions)

Patients (millions)

500

API (MT)

400 300

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API (MT)

API (MT)

300

Nevirapine (NVP)
6 705 Patients (M) 5 API (MT) 579 646 700 0.25 600 800 0.30

Atazanavir (ATV)
27 Patients (M) 25 API (MT) 30

Patients (millions)

4 424 3

Patients (millions)

504 500

0.20 15 0.15 0.2 0.10 6 0.05 2 0.0 0.00 2010 2011 2012 2013 2014 2 0.1 0.0 0.1

20

API (MT)

400 4.4 4.0 3.4 2.9 200 100 4.8 300

15

10

0 2010 2011 2012 2013 2014

Lopinavir (LPV)
0.30 Patients (M) 0.25 API (MT) 31 38 39 36 40 35 30 25 0.15 21 0.3 0.10 0.1 0.05 5 0.00 2010 2011 2012 2013 2014 0 0.2 0.3 0.2 20 15 10 45

Patients (millions)

0.20

API (MT)

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API (MT)

Product Demand Forecast, Patient Years and API


Patient Years (millions) Drug
2010 TDF AZT d4T EFV NVP LPV ATV 3TC FTC 0.7 1.6 2.3 1.5 2.9 0.1 0.02 4.2 0.3 2011 1.4 2.1 2.0 1.7 3.4 0.2 0.02 5.0 0.4 2012 2.1 2.5 1.7 2.0 4.0 0.3 0.05 6.0 0.3 2013 2.9 2.9 1.4 2.3 4.4 0.3 0.13 6.9 0.2 2014 3.6 3.2 1.2 2.6 4.8 0.2 0.25 7.7 0.2 CAGR
(20102014)

API (MT)
2010 73 350 50 328 424 21 1.8 460 24 2011 149 456 43 382 504 31 2.3 552 27 2012 231 552 36 439 579 38 5.9 653 23 2013 315 629 30 504 646 39 14.6 753 12 2014 398 693 25 577 705 36 27.4 845 11

53% 19% -16% 15% 14% 15% 96% 16% -18%

About the Clinton Health Access Initiative (CHAI)


Since 2002, the Clinton Health Access Initiative (CHAI) has assisted countries in implementing large-scale, integrated care, treatment, and prevention programs. CHAI works side-by-side with more than 20 countries in Africa, Asia, Eastern Europe, and Latin America and the Caribbean to build systems that will deliver HIV/AIDS treatment and health care by providing governments with technical assistance, leveraging human and financial resources, and facilitating the sharing of best practices across nationwide projects. CHAI also brokers agreements to lower prices of essential medicines and diagnostics, which are now accessible to more than 70 countries, representing more than 90 percent of people living with HIV/AIDS in the developing world. Today, 2.6 million people are receiving lifesaving treatments purchased under CHAI negotiated agreements. Learn more at: www.clintonhealthaccess.org.

i WHO/UNAIDS, Towards Universal Access: Progress Report 2010 ii Generic accessibility is a term used to denote a country in which global generic manufacturers are able to register and sell their generic ARV products at considerable volumes as a percentage of the total ARV volume for that country. The four major generic inaccessible countries are: Argentina, Brazil, China, and Mexico. iii WHO/UNAIDS, Towards Universal Access: Progress Report 2010 iv UNITAID Pediatric Program Actual Quantity Invoiced 2008 and 2009 v Stover et al, Estimating the Effects and Costs of Changing Guidelines for ART Eligibility, 2009. www.who.int/hiv/topics/treatment/costing_stover.pdf vi WHO Treatment Guidelines. http://www.who.int/hiv/topics/treatment/ART_eligibility_CD4_criteria.pdf vii National AIDS and STI Control Programme, Ministry of Health, Kenya. July 2008. Kenya AIDS Indicator Survey 2007. Preliminary Report. Nairobi Kenya

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