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Generics remains a growth segment

The global health care and pharmaceutical markets recorded further growth in 2010. Sales in the global pharmaceutical market increased by approx. 4.7%. Sales in the global generics market grew by approx. 11.5%¹⁾ to approx. EUR 91.4 billion²⁾, so that the market share of generics in the international pharmaceutical market amounted to 13.8% in 2010.

Sales in Generics, which continues to be the clearly larger core segment, recorded growth in the first three quarters of 2011 of 5% to EUR 857.4 million (1-9/2010: EUR 815.7 million). Generics thus achieved a share of 68.5% of Group sales in the first nine months of 2011
(1-9/2010: 69.3%). Adjusted generics sales in the Group also increased by 5%.

The STADA Group was able to benefit from this growth in 2010 and secure its unchanged position as number 5³⁾ in terms of sales among global classical generics suppliers. In the German generics market, STADA continued to be the clear number 3 in 2010. In the Group’s most important national markets, the respective STADA subsidiaries occupied leading positions in 2010 as in the past.

Sales of Generics, which continues to be the significantly larger core segment, were, in financial year 2010 – despite the partly difficult framework conditions in individual national markets – at EUR 1,124.2 million at the level of the previous year (previous year: EUR 1,115.6 million). Generics thus contributed 69.1% to Group sales 2010 (previous year: 71.1%). Adjusted, generics sales in the Group were also at the level of the previous year.

Generics are products for which the focus of sales and marketing is on a low pricing and/or on a cross-product and a cross-active-ingredient marketing concept.

In the view of the Executive Board, within the pharmaceutical market, generics in particular continue to demonstrate growth potential, as they guarantee cost-effective medicative therapy without any loss in quality and thus counteract the increasing cost pressure in the individual national health care markets. In addition, the potential available for generics competition is constantly being expanded due to the continuous expiration of patents or other commercial property rights.

For the future, IMS Health, a leading international market research institute, has forecast an annual growth rate for the global generics market of up to 8.4%⁴⁾ by 2015, although considerable volume increases may turn out to be weaker as a result of increased price pressure.

The Executive Board expects that the European generics market in particular will continue to show ongoing growth opportunities. This is based, among other things, on the fact that the sales volume alone for newly available active pharmaceutical ingredients for generics competition between 2011 and 2014 in the largest national markets by sales in Europe – Germany, United Kingdom, France and Italy – according to current market research figures will amount to more than EUR 13 billion.⁵⁾ Furthermore, STADA expects a further generics penetration in most European markets, which currently is still very different in the individual national markets.

Also, according to data from IMS Health, average annual generics growth in the EU will amount to 5.7%⁶⁾ from 2010 to 2012. Generics growth in Eastern Europe⁷⁾ is also expected to be particularly high. According to estimates from PMR⁸⁾ average annual growth of 14% will be possible here by 2011. According to BMI London, average generics growth in Russia between 2010 and 2014 will be 13%.

With a share in sales of approx. 25% currently generated by STADA in Eastern European markets, the Executive Board continues to expect to be able to benefit appropriately from this growth potential. With a view to the growth opportunities forecast in Eastern Europe, a focus of the internationalization strategy which continues to be pursued by the Group is thus also on the expansion of Group activities in Eastern European countries.

In 2010, STADA generated sales in the total amount of EUR 145.7 million with products containing the Group’s top five active pharmaceutical ingredients in terms of sales (previous year: EUR 184.1 million). These products thus contributed 13.0% to sales in the Generics segment in financial year 2010 (previous year: 16.5%).

The stomach medicine Omeprazole continued to be by far the best-selling active pharmaceutical ingredient both in the Generics core segment and in the Group.

STADA´s sales network outside of Germany consists the following sales companies in Europe: Austria, Belgium, Bulgaria, Bosnia-Herzegovina, the Czech Republic, Denmark, Finland, France, Ireland, Italy, Lithuania, Macedonia, Montenegro, the Netherlands, Poland, Portugal, Romania, Russia, Serbia, Slovakia, Spain, Sweden, Ukraine and United Kingdom.

Further own sales companies outside of Europe are in: China, Egypt, Kazakhstan, the Philippines, Thailand and Vietnam.

1)	IMS Market Prognosis, June 2010; IMS Thought Leadership analysis prepared for STADA, Dec. 2010. Data based on the 26 leading generics markets.
2)	Data based on the 26 leading generics markets and a projection for the other generics markets.
3)	Source: STADA estimate.
4)	IMS Generic Market Prognosis, Sep. 2010; IMS Thought Leadership analysis prepared for STADA Dec. 2010. The market data on generics fluctuates – in some cases substantially – due to differing market definitions from source to source.
5)	STADA estimate of sales volumes in 2010 at ex-factory prices for active pharmaceutical ingredients for which STADA from today’s perspective expects the patents or other commercial property rights relevant for generics competition to expire by 2014, based on data provided by various international market research institutes. STADA’s expectations as to the date of availability of active pharmaceutical ingredients for generics competition are continuously being reviewed from a legal perspective and may in future significantly differ from today’s (status: March 1, 2011) expectations as expressed in this data. The actual sales volumes becoming available for generics competition at the respective dates are subject to fluctuations as a result of changing market success, legal situations or market structures, among other factors.
6)	IMS Market Prognosis, Sep. 2010; IMS Thought Leadership analysis prepared for STADA, Dec. 2010; data based on the five leading generics markets in Western Europe.
7)	So-called CEE countries (Central and Eastern Europe) including Russia.
8)	Data from PMR Publications (2009): Generic and innovative drugs market in Central and Eastern Europe 2009.