1

The Hormone Replacement Therapy Market for the

Treatment of Menopausal Symptoms in the U.S.
A Model of 1998-2021 Revenue and Patients Treated





Report by
Michael Zuckerman, MD
Ben Weintraub, PhD
Chris Martin, MBA
Julie Hoggatt
inThought Research
a division of Symphony Health Solutions


September 16, 2013, revised December 2, 2013




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Table of Contents


Executive Summary 1
Introduction.. 3
Menopause Overview.. 7
WHI. 8
Bio-Identical Hormone Therapy. 10
Harris Poll.. 11
Construction of the Model.. 11
Data Sources 12
Modeling Parameters.. 13
Modeling 1998-2006 13
2007-Present: Impact of Compounding Pharmacies. 15
The HRT Market in 2013-2015.. 16
The Future of the Compounded HRT Market.. 16
Modeling 2016-2021 17
Market Subsets. 18
Conclusion..... 19





1
Executive Summary

This report serves to: (1) analyze the current U.S. market for hormone
replacement therapy (HRT) for menopausal symptoms, focusing on the
combination HRT products, and (2) forecast the HRT market through 2021.

Both estrogen and progesterone are available as branded and generic
pharmaceuticals, in various formulations and combinations, and also as non-FDA
approved formulations from compounding pharmacies. Because of the different
sources and routes of delivery, and clinical uses, the U.S. market for hormone
replacement therapy (HRT) for the treatment of symptoms associated with
menopause is complex and difficult to quantify.

The overall U.S. HRT market for menopause is currently over $3.7 billion. Pfizers
Premarin and Prempro dominate the branded pharmaceutical market with about
$1 billion in U.S. sales this year, down from a peak of nearly $2 billion in 2001.
The overall revenue from FDA approved HRT drugs will be approximately $2.9
billion this year, with the balance of revenue from compounded HRT.

Although use of estrogen by menopausal women has occurred since the 1940s,
two factors have changed the market in the last 12 years. First, the Womens
Health Initiative (WHI) clinical trial called into question the safety of HRT for
menopausal symptoms, leading to a 50% drop in the number of women taking
HRT between 2001 and 2005. Second, the use of bio-identical hormone
replacement therapy (BHRT) for the management of menopause and anti-aging
has exploded in popularity.

Currently, HRT use is increasing. inThought estimates that the number of treated
women in the U.S. will increase from 5.5 million in 2010 to 6.2 million in 2013,
then to over 7 million by 2017. Physicians are becoming comfortable with the
safety profile of HRT, and women continue to seek the proven efficacy of the
treatments.

Non-FDA approved compounded BHRT represents a significant share of the
current HRT market. inThought estimates the current BHRT market for
combination product (17 Estradiol and Progesterone) for the treatment of
menopausal symptoms (not including sales for anti-aging) at $845 million at an
average cash price of approximately $47 for 30 days paid to compounding
pharmacies. This translates to a $2.4 billion market at an equivalent FDA-
approved branded product WAC price of $135 (the expected price of an FDA
approved combination HRT, see chart of Products & WAC below). inThought
expects the compounded BHRT market for the treatment of menopausal
symptoms to decrease starting in 2014 because of the Drug Quality and Security
Act passed by the U.S. Congress this month.

Two major sources of growth for the HRT market are use of HRT for anti-aging,
and use of vaginal estrogen therapy. These two subsets of HRT will be covered in
a future report.


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By 2016, the major catalyst for the field of HRT for menopause will be the results
of clinical trials testing new HRT formulations, most notably a low-dose
combination of bio-identical estrogen and progesterone, such as that being
developed by TherapeuticsMD. If a combination of low-dose bio-identical HRT
demonstrates non-inferiority to current treatments, with a similar safety profile, it
will be a strong competitor to both FDA approved and especially to compounded
HRT. We model FDA approved bio-identical combinations entering the U.S.
market in 2016, with revenue increasing to $800 million by 2020.






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Introduction and Overview

Each year in the United States, approximately 11 million women reach the age for
natural menopause. Several naturally occurring hormones are considered female
hormones because of the role they play in a womans wellbeing. These include
estrogen and progesterone, which are produced in the ovaries and adrenal
glands. Menopause is associated with cessation of ovarian function due to aging,
resulting in lower levels of these hormones and signifying the end of fertility. On
average, menopause begins at age 47 and is characterized by irregular menstrual
cycles, hormonal fluctuations, and related symptoms that include hot flashes,
night sweats, sleep disturbances, changes in mood, and vaginal dryness. Up to
85% of post-menopausal women report symptoms associated with menopause.

There are several options for management of menopausal symptoms, including
hormone replacement therapy (HRT), which has been used by women since the
1940s. According to experts who treat menopause, estrogen therapy is the
preferred and most efficacious option to treat these symptoms. For women who
maintain their uterus, which represents the majority of menopausal women,
progesterone therapy is also required in combination with estrogen to prevent
cancer of the uterus. HRT is available in the following two classes of hormones:

(1) Bio-identical (Natural) hormones (BHRT). Bio-identical hormones are
the same molecular-chemical as those naturally produced and
circulating in the human body. A number of U.S. Food and Drug
Administration (FDA) approved hormones, such as 17-estradiol (i.e.
Estrace) and micronized progesterone (i.e. Prometrium) are considered
bio-identical. However, currently there are no FDA-approved products
that contain the combination both of the bio-identical/natural 17-
estradiol and progesterone together.

(2) Synthetic Hormones. Synthetic hormones are non-identical in
molecular-chemical structure to hormones naturally occurring in the
body. Examples of these include conjugated equine and other synthetic
estrogen derivatives (i.e. Premarin) and progestins, such as
medroxyprogesterone acetate (MPA) [i.e. Provera] or norethindrone
acetate (NETA).
Currently, all of the FDA-approved combination products of estrogen and
progesterone (Prempro, Premphase, Activella, FemHRT, Angeliq, Prefest) use
synthetic progestins to mimic the effect of progesterone. As these synthetic
progestins have a different molecular-chemical structure than progesterone, they
bind to other steroid receptors (i.e. Mineralocorticoid, Glucocorticoid and
Androgen sites) in addition to the progesterone receptors, resulting in a number of
negative off-target effects (Cardiovascular, Lipid, Glucose and others).

The use of HRT in the U.S. peaked in 2001 with a U.S. prescription market of
approximately $6 billion annually. Starting in 2001, several factors significantly
changed the market for the treatment of menopausal symptoms. The most
dramatic impact resulted from the Womens Health Initiative (WHI) that called into


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question the safety of HRT for menopausal symptoms, leading to over a 50% drop
in the number of women taking HRT between 2001 and 2005. The estrogen and
progestins used in the WHI study were not bio-identical hormones, rather the
synthetic hormones Premarin and Prempro, the most commonly prescribed
therapies in the U.S. at the time.

Women continue to desire treatment for their menopause symptoms and are
seeking safer alternatives. As a result, women have increasingly looked to bio-
identical hormones as a more natural and safer option (Smith et al, JAMA Intern
Med; online September 30, 2013). Both the press and celebrities have
popularized the use of bio-identical hormones produced in combination by
compounding pharmacies. According to the FDA, compounded hormone
therapies safety and effectiveness have not been supported by clinical trials and
are considered experimental drugs and the cost is not typically reimbursed by
insurance companies, resulting in higher costs and risks to the patients.

Nonetheless, since there is no FDA approved drug that contains the combination
of both the bio-identical 17-estradiol and the bio-identical Progesterone (Bio-
identical Hormone Replacement Therapy BHRT), physicians often prescribe
BHRT from compounding pharmacies despite the associated costs and risks.

Market Analysis and Forecast

The different sources and reporting of FDA approved products and compounded
products makes the U.S. market for HRT for the treatment of symptoms
associated with menopause complex and challenging to quantify. inThought has
used various historical and current market data, physician and patient surveys
and qualitative analysis of market drivers to arrive at its Market Analysis and
Forecasts specifically for the use of HRT for the treatment of menopausal
symptoms.

FDA Approved HRT All Products

The total U.S. market for HRT for menopause is currently close to $3.5 billion.
Pfizers Premarin and Prempro dominate the branded pharmaceutical market with
approximately $1 billion in U.S. sales in 2012, down from a peak of nearly $2
billion in 2001. In 2002, WHI (specifically the Estrogen Plus Progestin Trial)
suggested that combination estrogen-progesterone (Prempro) of conjugated
equine estrogens (Premarin) and medroxyprogesterone acetate (Provera) could
increase womens risk for cancer, heart disease and other health issues. Before
2002, more than 90% of women who underwent a hysterectomy were treated with
some type of hormone therapy to help manage symptoms related to early
menopause caused by the operation. As a result of the WHI, the number of
women choosing to receive any type of hormone treatment post-hysterectomy
dropped dramatically.

Due to subsequent revaluation of the results of the WHI study, both physicians
and patients are becoming comfortable with the safety profile of HRT for treating


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menopausal symptoms. As a result, HRT use is again increasing. inThought
estimates that the number of treated women in the U.S. will increase from 5.5
million in 2010 to 6.2 million in 2013, then to over 7 million by 2017.


Branded FDA Approved Combination Oral HRT Products
(Source MediSpan Data Base)
Product Name Manufacturer Average WAC
ACTIVELLA Novo Nordisk $121.99
ANGELIQ Bayer $91.57
FEMHRT Warner Chilcott $73.95
PREFEST Teva $95.00
PREMPHASE Pfizer $97.63
PREMPRO Pfizer $97.65
DUAVEE Pfizer $210*
Low-dose
Combination HRT
TherapeuticsMD $135**

* Expected launch February 2014; pricing not yet verified.
** Guidance from TherapeuticsMD

FDA Approved Combination HRT Market

For the 12 months ended June 2013, U.S. sales of FDA approved combination
HRT totaled $650 million (5.6 million units) which is significantly down from its
peak of 28 million units in 2001 (per Symphony Health: PHAST Data). Use since 2006 has
been increasing steadily as physicians and patients have begun to better
understand the implications of the WHI study and the appropriate use of HRT for
menopausal symptoms.

Bio-identical Hormone Therapy (BHRT) from Compounding Pharmacies

Non-FDA approved Compounded BHRT represents a significant share of the
current HRT market. inThought estimates the current BHRT market for
combination product (17 Estradiol and Progesterone) at $845 million at an
average cash price of approximately $47 for 30 days paid to compounding
pharmacies. This translates to a $1.8 billion market at an equivalent FDA-
approved branded product WAC price of $100 or a $2.4 billion market at an
equivalent WAC price of $135 (see chart of Products & WAC below).

inThought expects the compounded BHRT market for the treatment of
menopausal symptoms to decrease starting in 2014 because of new legislation
passed this month by Congress that will likely lead to a significant increase in
price of BHRT as well as an increase in physician liability in prescribing it.
Compounding pharmacies have been the subject of negative publicity in the last
24 months, with links to cases of meningitis resulting in multiple deaths and other
concerns related to contamination, strength, quality and purity all calling public
safety into question. The FDA has released multiple studies showing that


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compounded drug potency is often lower than claimed leading consumers to
question claims from compounders, and to recognize that that many of the claims
made are not backed by clinical trial evidence.

External Factors

External factors that could impact the market for compounded HRT for
menopause are the impact of the new compounding pharmacy legislations and
regulations, and major new safety issues. The Drug Quality and Security Act (HR
3204), which prohibits the compounding of FDA-approved drugs, was approved
by the House of Representatives in October 2013 and by the Senate in November
2013. inThought believes that this new law will have a dramatic impact on the
Compounding market with respect to HRT, shifting product back to FDA-approved
products.

Another likely driver to positively impart the HRT market by 2016 would be new
HRT formulations, most notably a FDA-approved low-dose combination of body-
identical estrogen and progesterone. TherapeuticsMD is currently in phase III
clinical trials of such a product. inThought believes a low-dose, combination bio-
identical HRT product with similar safety and efficacy profiles to the current
treatment modalities will be a strong competitor to both FDA approved and
especially to compounded HRT.






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Menopause Overview

Menopause is a natural event, defined as the final menstrual period and is usually
confirmed after 12 consecutive months of cessation of a woman's menstrual cycle
in the absence of other causes. Menopause is associated with reduced
functioning of ovaries due to aging,
resulting in lower levels of estrogen and
other hormones and signifies the
permanent end of fertility. Most women
in the U.S. experience natural
menopause between the ages of 40 and
58 and 78% experience symptoms.

Peri-menopause is the transition time of
6 years or more immediately prior to the
occurrence of menopause and includes
1 year after menopause. On average, it
begins at age 47 and it is characterized
by irregular menstrual cycles, hormonal
fluctuations, and other symptoms such
as hot flashes, night sweats, change in
mood, vaginal dryness and insomnia.


Hot flashes (also called vasomotor symptoms) are the most common symptom,
occurring in up to +80% of women. When hot flashes occur at night, women
describe them as night sweats. They usually start as the feeling of heat centered
on the upper chest and face that becomes generalized. This sensation lasts
typically lasts from two to four minutes, is often associated with sweating and
occasionally palpitations, and is sometimes followed by chills and shivering and a
feeling of anxiety.
Hot flashes can
occur several
times per day.

Most women will
continue to have
hot flashes for a
year or more.
Untreated, hot
flashes usually
stop
spontaneously
five years after
their onset, and
most women do
not seek
treatment.
BASE: Women aged 45-60 years (n=1,099) harris INTERACTICE July 2013
S10. Are you currently going through or have you ever experienced
menopause?
Prevalence of Menopause Symptoms
22%
78%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Have
Experienced
Symptoms
Never
Experienced
Symptoms


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Approximately 20%-30% of women seek medical treatment for menopausal
symptoms.

In addition to the symptoms of menopause, estradiol production from the ovary
stops after menopause as a result of ovarian follicular depletion. The long-term
effects of estrogen deficiency include osteoporosis, cardiovascular disease, and
dementia.

Overview of the WHI Clinical Study

In 1991, The National Institute of Health (NIH), initiated a large (160,000 women),
long-term, multi-center study called the Womens Health Initiative (WHI) to
address major health issues concerning cardiovascular disease, cancer and
osteoporosis in postmenopausal women. A component of the WHI clinical trial
was to evaluate the benefits of combined estrogen and progestin in healthy
menopausal women. However, the WHI Estrogen Plus Progestin Trial studied the
combination of conjugated equine estrogens as its estrogen component with
medroxyprogesterone acetate as its progestin.

In July 2002, the clinical trial was halted early because interim monitoring of these
combined estrogen-progestin treatment group showed increased risk of coronary
heart disease, stroke, invasive breast cancer, and pulmonary embolism compared
to women taking placebo pills. There were noteworthy benefits of estrogen plus
progestin, including fewer cases of hip fractures and colon cancer, but the risk
outweighed the benefit.

Before the WHI findings, many physicians suggested that women use
supplemental hormone treatments to restore levels of estrogen and progesterone
after menopause. Hormone treatments provided relief of menopausal symptoms
including hot flashes. Additionally, the general medical consensus was that
hormone supplementation would lower a womans risk of cancer and heart
disease.

While the hormone treatments did provide relief of menopausal symptoms, the
WHI found that the risks of HRT did not justify long-term use for the prevention of
other chronic conditions. Specific study findings for the combination of conjugated
equine estrogen with medroxyprogesterone acetate compared to placebo include:

A 41% increase in strokes
A 29% increase in heart attacks
A doubling of rates of venous thromboembolism (blood clots)
A 22% increase in total cardiovascular disease
A 26% increase in breast cancer
A 37% reduction in cases of colorectal cancer
A one-third reduction in hip fracture rates
A 24% reduction in total fractures
Taking estrogen and progestin did not protect against dementia
No difference in total mortality (of all causes)


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Taking estrogen alone without the co-administration of medroxyprogesterone
acetate in women who have had a hysterectomy demonstrated a slightly
lower risk of breast cancer.


Figure 3: Results from the WHI Trial

Source: National Institutions of Health http://www.nhlbi.nih.gov/whi/update_ht2002.pdf

The WHI transformed the understanding of the health effects of HRT. Follow-up
studies have expanded and refined the original findings, but many questions
remain.
Are different forms of estrogen and progesterone safer and more
effective than those tested in the WHI trial?
Are different delivery methods more favorable than those studied in
the in the WHI trial?
Are different doses more favorable than those studied?
Is there an optimal age to begin therapy or an optimal duration of
therapy that maximizes benefits and minimizes risks?

After the publication of the WHI, there was a rapid decrease in the use of HRT.
According to Sprague et al (Sprague BL, Trentham-Dietz A, Cronin KA. A
sustained decline in postmenopausal hormone use: results from the National
Health and Nutrition Examination Survey, 1999-2010. Obstet Gynecol. 2012
Sep;120(3):595-603) in 1999-2000, the prevalence of oral postmenopausal
hormone use was 22.4% - 13.3% for estrogen alone, and 8.3% for estrogen plus
progestin. A sharp decline in use of all formulations occurred in 2003-2004, when
the overall prevalence decreased to 11.9%. Hormone use continued to decline
through 2009-2010 across all patient demographic groups, with the current
prevalence now at 4.7% overall, 2.7% for estrogen alone, and 1.7% for estrogen
plus progestin.

This report quantifies the past and current use of HRT in the U.S., and forecasts
the use of HRT through 2021, looking at various different forms and sources of


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HRT, the catalysts that will determine their future use, and the attitudes of patients
and physicians that are the drivers for that use.

Bio-Identical Hormone Therapy

In recent years, interest in use of bio-identical hormone therapy for menopausal
women has been increasing dramatically. Celebrities such as Suzanne Somers
and Oprah Winfrey have popularized bio-identical hormones.

Bio-identical hormone preparations are medications that contain hormones that
have the same chemical formula as those made naturally in the body (identical
molecular structure). The hormones are created in a laboratory by altering
compounds derived from naturally-occurring plant products. While the active
pharmaceutical ingredient (API) for these hormone preparations are U.S. FDA-
approved and manufactured by drug companies, the combination and preparation
of the API are made at compounding pharmacies. Compounded products do not
go through the FDA approval process and unlike FDA-approved drugs, these
products are not verified for quality, safety, purity, and effectiveness.

In 2012, The American College of Obstetricians and Gynecologists Committee on
Gynecologic Practice and the Practice Committee of the American Society for
Reproductive Medicine made the following conclusions and recommendations
with regard to compounded HRT:

Evidence is lacking to support superiority claims of compounded bio-
identical hormones over conventional menopausal hormone therapy.
Customized compounded hormones pose additional risks. These
preparations have variable purity and potency, and lack efficacy and safety
data.
Because of variable bio-availability and bio-activity of compounded
products, both under dosage and over dosage are possible.
Conventional hormone therapy is preferred over compounded hormone
therapy given the available data.
Despite claims to the contrary, evidence is inadequate to support increased
efficacy or safety for individualized compounded hormone therapy
regimens based on salivary, serum, or urinary testing.
The North American Menopause Society (NAMS) and the Endocrine Society have
issued similar statements.

A population study of 384 postmenopausal women published recently in Lancet
Internal Medicine suggests a lower risk of cardiovascular events associated with
bio-identical estrogen compared to equine estrogen (Smith et al, published online
September 30, 2013). This study is likely the first of several studies that will
validate the hypothesis that bio-identical hormones are superior to current FDA
approval estrogen products.




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Harris Interactive - Survey

A survey fielded by Harris Interactive in July of 2013, quantified HRT use in 801
women of menopausal age. The survey showed that:

Roughly one in seven women ages 45-60 that have experienced
menopause have tried either traditional HRT (14%) or bio-identical HRT
(2%).
The use of HRT greatly benefits from the recommendation of a medical
doctor
A change in lifestyle and natural therapies were predominately self-
recommended
HRT, bio-identical HRT, and non-HRT prescription medications yield a high
level of relief compared to changes in lifestyle and natural therapies.
Of women who use/have used HRT almost all (96%) received a
prescription for their HRT
Estrogen and progesterone combinations and estrogen alone are the most
commonly used
HRT is used for an average of 50 months by current and discontinued
users
3 out of 4 women said that their HRT was covered by insurance
Almost all women are not sure if they believe that bio-identical HRT
compounded at a specialty pharmacy are FDA approved.

Construction of the inThought Model

Commissioned by TherapeuticsMD, inThought has modeled the hormone
replacement therapy (HRT) market from 1998 to 2021. The market includes use
of estrogens and its derivatives, progesterone and its derivatives, and
combinations of these. We also include use of estrogen plus testosterone for the
early years of the model, although use of this combination for menopausal
symptoms has fallen to near zero in recent year.

For the purposes of this model, we group HRT into three main categories.
(1) FDA approved HRT brands
(2) Generics of these FDA approved products
(3) Compounded HRT.

The model looks at the five top brands separately:
Premarin / Prempro (the leading brand of estrogen, available in various
forms and dosages. Prempro is Premarin in combination with the branded
progestin Provera)
Estrace
Vivelle-DOT (a transdermal estrogen and has recently become available as
a generic )
Climara (a transdermal estrogen)


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Prometrium (an oral progesterone that has recently become available as a
generic)
We combine all other estrogen and progesterone formulations into an Other FDA
Approved HRT model that consists primarily of generics.

The second major category is compounded HRT. These formulations are not FDA
approved, but have the perceived advantage of using bio-identical estrogen and
progesterone is flexible dosing tailored to each patient. As opposed to FDA
approved HRT, compounded HRT is typically not covered by insurance in the
U.S.

The third category is FDA approved bio-identical combinations of estrogen and
progesterone, likely in a formulation that takes advantage of low doses of both
drugs. Currently there are no FDA approved bio-identical combination therapies
available in the market. The lead drug in this category is being developed by
TherapeuticsMD, which in September 2013, enrolled the first patient in its phase
III trial. Our model assumes that FDA approved bio-identical HRT becomes
available in the U.S. in 2016.

Data Sources

The primary source of data used to build the model is historical prescription data
from Symphony Health Solutions. We triangulate those estimates with:
Published literature on the overall size of the HRT market, looking at both
numbers of patients treated and revenue
Published data from IMS, which is similar in quality and conclusion to the
Symphony data
Company reported revenue for Premarin / Prempro from Wyeth and Merck,
and for Estrace from Warner Chilcott
Results from various surveys of health care providers and women of
menopausal age
Interviews with thought leading OB/GYN physicians and experts in the
compounded drug market
Position statements by various stakeholders such as the North American
Menopause Society.
Pricing data is from PriceRx, a service of Wolters Kluwer Health. This provides
historical pricing data on all HRT products. Our modeling uses a discount to
wholesale acquisition cost (WAC) pricing of 20%. Discounts have been increasing
over the last decade as drug companies increase nominal prices of drugs such as
HRT, while at the same time making increasingly favorable deals with insurance
companies. Pricing data for compounded HRT comes from a survey of 134 U.S.
compounding pharmacies conducted by TherapeuticsMD.




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Modeling Parameters

We have modeled the use of HRT solely for menopausal symptoms. For the
purposes of this report, we have grouped together various formulations of HRT,
including oral, transdermal, injected, and vaginal. The model does not specifically
break out any of these products, except for vaginal preparations. Use of vaginal
HRT has been growing rapidly compared to the use of the other formulations over
the last few years, and we expect that growth to continue.

Not included in this report is the hormone market attributed to anti-aging, a
significant market subset that is growing rapidly. The American Academy of Anti-
Aging Medicine (A4M) reports over 22,000 physicians as members worldwide.
A4Ms position paper issued in September 2013 supports the judicious application
of modern and advanced medical technologies to address the changes in
chemical, hormonal, physical, and nutritional needs that occurs with aging. Such
repletion includes the restoration of hormones to an optimal physiological state
when deficiency is determined by objective assessment. Bioidentical Hormone
replacement therapy (BHRT) is an essential and extensively documented protocol
for clinical intervention in the disorders of aging.

This segment of the market utilizes hormone replacement therapy in various
forms for a large percentage of its patients in conjunction with other treatments. A
significant portion of this specialty is cash pay patients, so there is no reliable data
available for this market particularly in regards to the use of BHRT. A CNN report
estimates the worldwide market for anti-aging medicine to be $291 billion by 2015.
Based on the number of physician members in A4M and other drivers (aging baby
boomer population), inThought believes this market may be significant in size.
The anti-aging HRT market will be the subject of a future report from inThought.
Modeling 1998-2006

Using Symphony data as a primary source, our model shows that the number of
women treated with HRT in the U.S. increased from 7.6 million in 1998 to 10.3
million in 2001, then fell to 5.2 million in 2005 due to the impact of the WHI
findings (Figure 4). The Symphony data are generally consistent with published
literature, although conclusions from that published literature are varied. We have
identified two key studies:

(1) Stagnitti et al, November 2011, Medical Expenditure Panel Survey by
the Agency for Healthcare Research and Quality.
(2) Sprague et al, Obstet Gynecol 120(3):595-603, Sep 2012.

Our estimate of the year 2000 of 9.2 million women treated with HRT is in
between the Sprague estimate of 8.0 million and the 2001 Stagnitti estimate of
17.9 million. For 2004, we estimate 5.2 million, between the Sprague estimate of
4.2 million and the Stagnitti estimate of 9.2 million. All data sources agree that use
declined by approximately a factor of two following the WHI study. We believe that


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the Symphony prescription data represents the most accurate historical measure
of actual use.

Figure 4: Women Treated for Menopausal Symptoms with HRT in the U.S.,
1998-2021


In order to model the impact of the WHI study, we modify the percent of women
eligible for HRT down from 90% in 2002 to 45% today. This adjustment reflects
the current consensus that HRT is contraindicated in women with history of or risk
of cancer, cardiovascular disease, thrombosis and other less common
contraindications. We use the following step-down decrease in percent eligible
from 90% in 2002, 60% in 2003, 55% in 2004, and 45% in 2005.

The gold standard for drug revenue is company reported revenue. We found
company reported revenue for the Premarin family of products (from Wyeth and
Pfizer) and Estrace (from Warner Chilcott) to be consistent with Symphony
reported revenue. Symphony reports revenue based on reimbursement received
by the pharmacy and does not necessarily take into account discounts. As such,
we generally use 95% of Symphony reported revenue. We also note that IMS
data is similar (within 5%) of our model for revenue reported from FDA approved
HRT in 2009 and 2010.

Additionally, the price of HRT has increased dramatically over the last 10 years.
For example, the list price of Premarin has increased by 9% every six months
over the last three years. Our model estimates that FDA approved HRT costs a
typical patient $285 in 1998, increasing to $420 in 2008 and $572 in 2013. Our
pricing is net of discounts negotiated by payors and assumes an average of 10
months of use per patient per year (83% compliance) for menopausal symptoms.
FDA approved HRT is generally covered by health insurance while compounded
HRT is generally not.



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Figure 5: Revenue from HRT Formulations in the U.S., 1998-2021 ($millions)


2007 - Present: Impact of Compounding Pharmacies

Our estimates of the FDA approved HRT products are likely to be within 5% of the
actual number of patients treated and revenue. By contrast, the most difficult
aspect of our HRT model is the estimation of the impact of compounding
pharmacies. No good data is available to quantify the U.S. compounding market.
Prescriptions are not tracked, compounders do not report sales or financial
results, insurance claims are not made, and surveys of patients and physicians
are incomplete with respect to compounded HRT. Nonetheless, the U.S.
compounding market is estimated at $10 billion and HRT represents
approximately 22% of the compounded drugs market.

Perhaps the most rigorous method to estimate the total use of compounded HRT
for menopausal symptoms is to subtract the number of women using FDA
approved products (estimated from company sales and Symphony prescription
data) from the total number of women using HRT (from surveys and population
estimates). Using this methodology, we estimate that approximately four million
women are using FDA approved HRT. From the Harris survey and other
estimates, we model approximately 6 million total women using HRT, leaving
approximately 2 million using compounded HRT (31%). The share of the HRT
market going to compounded drugs increases from 9% in 1998 to 10% in 2004,
and jumps from 16% in 2008 to 31% now as personalized, bio-identical HRT has
been promoted by celebrities and the popular press.

With over 30% of the market for HRT overall going to compounded product, we
estimate that compounded HRT market for menopausal symptoms will generate
nearly $850 million in the U.S. this year. Given the lower price of compounded


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HRT compared to branded FDA approved drugs, this represents a $1.7 billion
opportunity if the market for compounded HRT were to be captured by a branded
FDA approved drug price premium.

The HRT Market in 2013-2015

Our model suggests an average of 4% growth in the number of U.S. women who
will use HRT for menopausal symptoms each year from 2013 to 2017. Growth is
driven by increasing physician acceptance that HRT has an acceptable
risk:benefit profile for symptomatic women. There is no argument among
physicians about the efficacy of HRT. Further, current research along with the
related medical societies have been supportive of the renewed interest in HRT
along with its safety.

The HRT market has no major products expected through 2015. No major trials
are ongoing and little new clinical data are expected. While we may see additional
studies where cancer, heart disease or other morbidities are associated with
various HRT formulations, it is unlikely that this would negatively impact the
market.

Position papers from medical societies such as the North American Menopause
Society, the American College of Obstetrics and Gynecology, the Society for
Womens Health Research and others will continue to support at least limited use
(5 years or less) of HRT in healthy women. Several prominent gynecologists
expect use of HRT to increase significantly over the next decade, and there is
room for upside to our estimates. However, physician behavior is slow to change
and the impact of such position papers and thought leader views likely will be slow
and modest.

We expect celebrities to have relatively little impact on the HRT market in the next
few years, in spite of the profound impact some have had in the last five years.
The novelty of the compounded therapy appears to have worn off and as women
become better educated on the topic they will require clinical data to influence
their behavior.

The Future of the Compounded HRT Market

The share of the market going to compounded HRT over the next few years is
likely to decline significantly for two main reasons:

1. Public opinion is turning against compounded drugs
2. The Drug Quality and Security Act passed by Congress in the last two
months will have a profound impact on the cost and prescription of
compounded medicines.
This month, the Senate passed H.R. 3204, which had already been passed by the
House of Representatives. The bill will almost certainly be signed into law by the
President. We believe it will have the following major impacts on the use of
compounded HRT for menopausal symptoms:


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Increase price of compounded HRT by approximately 75% over the
next two years. Although registration of compounded products is voluntary
under the new law, major compounders of HRT will likely be forced to
register because of liability risk and the misbranding provisions in the law.
Compounders of HRT will be subject to lawsuits for any false and
misleading claims. Compounders will not be allowed to position their
products as lower cost to FDA branded products. For these reasons, the
cost of operating in the compounded HRT space will mean that
compounded HRT will be at least the same price as FDA approved HRT,
and often significantly more expensive.
Physician willingness to prescribe compounded HRT will decrease.
Although some doctors are likely to continue to prescribe large volumes of
HRT, many doctors will shift their practices over to FDA approved products.
Some of this trend will be a reaction to negative press and experience with
compounded products in general, but inThought believes a significant
amount will be a reaction to the provisions of the new law that will call
attention to physician liability for adversities associated with prescription of
compounded products. Many compounding pharmacies do not carry
product liability insurance, and the realization that the physician themselves
could be liable is likely to have a significant dampening effect on the
prescribing of compounded HRT.
Reimbursement of compounded HRT, already minimal, will become
more of a barrier to use. The new law highlights that compounded
products are viewed as experimental medicines by the FDA, giving payors
cover for not reimbursing their use. As the price of compounded HRT
increases, the lack of reimbursement becomes a more and more significant
issue.
Our model predicts that the number of women using compounded HRT in the U.S.
will decrease from 1.7 million this year to 400,000 by 2021 (Figure 4) and that
revenue from this use will decrease from $845 million this year to $369 million by
2021 (Figure 5).

Modeling 2016-2021

The data generated by clinical trials of one or more new HRT formulations are
likely to be the most important catalysts of HRT use in the 2016-2021 timeframe.
As doctors seek to find safe ways to use HRT for menopausal symptoms, nearly
all experts with whom we have spoken have expressed excitement for a trial of
low-dose bio-identical estrogen + bio-identical progesterone in combination such
as that being developed by TherapeuticsMD. If a phase III study were to show
that such a combination was as efficacious as currently approved HRT and safer
due to the lower doses of the hormones, such a product would significantly
expand the HRT market.

Our model assumes that phase III data from a bio-identical low-dose combination
will be released in 2015, leading to an FDA approved product in 2016. Further, we


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see the HRT overall expanding with an increase in the percent eligible from 45%
to 51% in 2016-2017 and the number of treated women increasing from 6.4
million in 2015 to 7.6 million in 2021 (Figure 4). FDA approved bio-identical
combinations will account for $866 million in 2021 revenue in our model (Figure
5).

As the outcomes of the clinical trials are difficult to predict, we examine the
scenarios where trials are not successful (bear case) and where trials show an
unequivocal benefit of the new product (bull case).

Although the compounded HRT market will be in significant decline prior to the
FDA approval of a bio-identical combination HRT product, there will still be a
market need for the compounded product. Once an FDA approved combination is
available, use of compounded HRT will be further decreased.

Market Subsets: Vaginal Estrogen Therapy and HRT use for Anti-Aging

Two sources of growth for the HRT market are use of vaginal formulations of low
dose estrogen and the use of HRT for anti-aging.

Vaginal estrogen is not indicated for the treatment of vasomotor symptoms, but
rather for treatment of vulvar and vaginal atrophy (VVA). VVA is a chronic
condition starting at menopause that often requires treatment for the duration of a
womans life.

We calculate historical vaginal use primarily from Symphony Health prescription
data, which reports scripts and revenue by formulation. Premarins vaginal
formulation accounts for approximately 26% of current revenue, increasing from
13% in 2007. Estrace is currently 97% vaginal, an increase from 88% in 2008. Of
the drugs in the Other FDA Approved HRT model, vaginal formulations currently
account for 31% of revenue.

Experts in HRT use have cited a significant unmet need that a vaginal formulation
of bio-identical estrogen could address. We expect the vaginal HRT market to
continue to grow, and will quantify this growth in a future report.

As discussed earlier, use of HRT for anti-aging is another high growth subset of
the HRT market. As with vaginal estrogen therapy, this subset will be the subject
of a future report.






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Conclusion

The HRT market for menopausal symptoms has been driven by two major factors
over the past decade (1) the WHI findings and (2) the popular trend to use
compounded bio-identical hormones. In the future, the major catalysts will be new
clinical trial data, primarily from bio-identical low-dose HRT combinations, and the
impact of strong new legislation regulating the compounded drug market in the
U.S. We expect the HRT market to grow steadily over the next eight years, with
the total number of women treated reaching 7.6 million by 2021, compared to just
over 10 million women treated in 2001 before the results of WHI. Revenue will
grow to $4.6 billion, exceeding the pre-WHI peak of just under $3.5 billion.

Several factors will influence the use of HRT over the next eight years, including
public opinion about compounded HRT, new legislation/regulation, new safety and
efficacy data, and physician attitudes and responses to position statements on
proper use of HRT. Most important will be clinical trial data showing the
effectiveness of low-dose bio-identical HRT. If the new formulations are able to
show a risk/benefit profile on par with current therapies, new FDA approved bio-
identical(s) will likely capture $860 million of the HRT market. Demonstration of
significantly superior benefits of low-dose combination HRT could lead to even
greater revenue and additional expansion of the market.