PMSIG Prep session 09/27/07


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PMSIG Prep session 09/27/07

  1. 1. PMSIG Prep session 09/27/07 ORTHO BIOTECH a Johnson & Johnson subsidiary PHARMACEUTICAL MANAGEMENT STUDENT GROUP Site visit preparation September 27, 2007
  2. 2. PMSIG Prep session 09/27/07 THE J&J CREDO It is a one-page document, written 60 years ago by General Robert Wood Johnson, one of the founders of the modern J&J corporation. The Credo has become the guiding principle of the corporation’s and of its subsidiaries activities. There is an annual global Credo survey to gauge employee satisfaction, establish priorities, make changes. The first responsibility of the company is to doctors, nurses and patients, mothers and fathers and all who use the company’s products. The company is responsible to employees by respecting their individuality, dignity and recognizing their merit. The company is responsible to communities by actively giving back to them. The final responsibility is to the stockholders by maintaining sound business principles.
  3. 3. PMSIG Prep session 09/27/07 COMPANY HISTORY 1985 Through a product licensing agreement with Amgen Inc ., Ortho Biotech acquires the rights to develop and market PROCRIT in the United States for chronic kidney disease for patients not on dialysis. 1986 FDA approval for ORTHOCLONE OKT3 1990 Ortho Biotech is established as the first biotechnology subsidiary of Johnson & Johnson. FDA approval for PROCRIT (kidney disease and HIV-related anemia, 1993 for chemotherapy-related anemia). 2002 Ortho Biotech launched innovative education and public policy initiatives to address unmet needs, and ensure that patients and their families, caregivers, advocates, and health care professionals have access to the latest treatment information, support services and quality care in the fields of cancer and anemia (next slide). 2003 Ortho Biotech creates Tibotec Therapeutics (US sales and marketing of virology products.
  4. 4. PMSIG Prep session 12/07/06 COMPANY HISTORY 2005 FDA Granted approval for DOXIL (to treat ovarian cancer) and REMICADE (ulcerative colitis)‏ 2006 Millennium and Ortho Biotech have said they intend to jointly promote cancer drug Velcade in the US as part of a co-promotion agreement. 2007 Ortho Biotech Reiterates Confidence in PROCRIT® (Epoetin alfa) Safety and Efficacy When Used According to Label
  5. 5. PMSIG Prep session 12/07/06 ABOUT ORTHO BIOTECH <ul><li>Provides innovative products and services designed to help enhance the lives of individuals with serious chronic illnesses. </li></ul><ul><li>Recognized leader in the research and treatment of anemia across multiple therapeutic areas </li></ul><ul><li>Forefront of developing innovative education and public policy initiatives that address unmet needs, and ensure that patients and their families, caregivers, advocates, and health care professionals have access to the latest treatment information, support services and quality care </li></ul>
  6. 6. PMSIG Prep session 12/07/06 PATIENT ADVOCACY Oncology Ortho Biotech launches , the first comprehensive resource directory of cancer links on the World Wide Web. Ortho Biotech partners with the Cleveland Clinic and the Scott Hamilton CARES Initiative on launching , a site with extensive info for newly diagnosed cancer patients. Strength for Caring ( ), a program designed to educate family members and friends caring for loved ones with cancer. Rebound from Anemia ( ), a national campaign to educate people with chronic illnesses about anemia.
  7. 7. PMSIG Prep session 12/07/06 PATIENT ADVOCACY HIV/AIDS HIV/AIDS NURSE TRAINING PROGRAM- Ortho Biotech supports ANAC's Nursing Development Institute, which provides faculty and practicing nurses with HIV/AIDS treatment education and best practice guidelines. National HIV Treatment Technical Assistance Initiative Ortho Biotech supports the AIDS Community Research Initiative of America in providing comprehensive, on-site training toward developing and expanding practical skills and treatment knowledge needed to educate and counsel people with HIV. Chronic Kidney Disease (CKD) CKD Awareness Campaign Ortho Biotech partners with the American Kidney Fund on their CKD consumer awareness campaign. The campaign provides educational information to consumers
  8. 8. PMSIG Prep session 09/27/07 CURRENT STATS FOR J&J <ul><li>JNJ:NYSE (as of 09/26/07)‏ </li></ul><ul><ul><li>Share Price: $65.39 </li></ul></ul><ul><ul><ul><li>52 week range: $59.72 - $69.41 </li></ul></ul></ul><ul><ul><li>P/E (Price-to-Earnings ratio) (ttm): 18.09 </li></ul></ul><ul><ul><li>EPS (Earnings Per Share) (ttm): 3.29 </li></ul></ul><ul><li>Sales in first fiscal six months of 2007 by business segment </li></ul><ul><ul><li>Pharmaceutical segment: $12.4 billion </li></ul></ul><ul><ul><li>Medical devices segment: $10.7 billion, 5.6% increase </li></ul></ul><ul><ul><li>Consumer segment: $7.1 billion, 48.5% increase (Pfizer Consumer Healthcare)‏ </li></ul></ul><ul><ul><li>Research Activities: $3.5 bilion, 4.7% increase </li></ul></ul><ul><ul><ul><li>R&D, 2 nd quarter: $1.9 billion, 2.1% </li></ul></ul></ul>
  9. 9. PMSIG Prep session 09/27/07 5-YEAR STOCK PRICE
  10. 10. PMSIG Prep session 09/27/07 FINANCIAL HIGHLIGHTS FOR J&J Price & P/E History Calendar Year 2006 2005 2004 2003 2002 High Price 69.41 69.99 64.25 59.08 65.89 Low Price 56.65 59.76 49.25 48.05 41.40 Year End Price 66.02 60.10 63.42 51.66 53.71 High P/E 18.59 20.87 23.47 24.64 30.45 Low P/E 15.17 17.82 17.99 20.04 19.13 Year End P/E 17.68 17.92 23.16 21.55 24.82 Dividend Yield 2.20 2.12 1.73 1.79 1.48 Revenue (in millions)‏ Periods 2004 2005 2006 2007 April 11,559 12,832 12,992 15,037 July 11,484 12,762 13,363 15,131 October 11,553 12,310 13,287 December 12,752 12,610 13,682 Totals 47,348 50,514 53,324 30,168 * TmodLOC=L2-LeftNav-15-Highlights
  11. 11. PMSIG Prep session 09/27/07 RESEARCH Research and Development at Ortho Biotech is supported by 4 J&J affiliates, with specific scientific expertise: Centocor Inc. biologics and monoclonal antibodies Alza Corporation drug delivery technology, formulation J&J Pharmaceutical Research & Development, L.L.C. small molecule research Tibotec-Virco Comm.VA antiviral (HIV therapeutics) and anti-infectives Ortho Biotech is a well-established company focused on the development of new and emerging therapies and treatment modalities for a variety of indications. The primary therapeutic areas of interest / research include oncology, nephrology, immunology , anemia of aging, and critical care/surgery.
  12. 12. <ul><li>PROCRIT (EPOETIN ALFA)‏ </li></ul><ul><li>Manufactured form of naturally occurring protein Epoetin  </li></ul><ul><li>Treatment of anemia (low red cell blood count) whether it is disease related (cancer, HIV, chronic kidney disease) or not. </li></ul><ul><li>In 2005, $3.3 billion in sales. </li></ul><ul><li>ORTHOCLONE OKT3 (MUROMONAB-CD3)‏ </li></ul><ul><li>World's first biotechnology-derived therapeutic monoclonal antibody. </li></ul><ul><li>Used to suppress / reduce transplanted organ rejection. </li></ul>PMSIG Prep session 09/27/07 PRODUCTS
  13. 13. PMSIG Prep session 09/27/07 PRODUCTS LEUSTATIN (CLADRIBINE)‏ Treatment of a rare cancer form called hairy cell leukemia. <ul><li>DOXIL (DOXORUBICIN HCL LIPOSOME INJECTION)‏ </li></ul><ul><li>Treatment of patients with ovarian cancer whose disease has progressed or recurred after platinum-based chemotherapy. </li></ul><ul><li>Treatment of AIDS-related Kaposi's sarcoma in patients with disease that has progressed on prior combination chemotherapy or in patients who are intolerant to such therapy. </li></ul>Advanced form of the chemotherapeutic agent doxorubicin. In this liposomal formulation, doxorubicin is encapsulated by a thin fatty layer which is in addition “pegylated”: this helps protect the drug from the immune system, resulting in a longer circulation of the product in the blood stream and allowing for dosing once every four weeks.
  14. 14. <ul><li>Systems and techniques initiated by the insurance health providers to control the use of health care services </li></ul><ul><li>Managed Care includes: </li></ul><ul><ul><li>Cash payment </li></ul></ul><ul><ul><li>Medicare </li></ul></ul><ul><ul><li>Medicaid </li></ul></ul><ul><ul><li>Private insurance companies </li></ul></ul><ul><li>In purest sense, any system of health payment in order to control or coordinate use of health services can be thought of “managed care” </li></ul>PMSIG Prep session 09/27/07 MANAGED CARE: DEFINITION
  15. 15. <ul><li>Economic incentives for physicians and patients to select less costly forms of care </li></ul><ul><li>Programs for reviewing the medical necessity </li></ul><ul><li>Increased beneficiary cost sharing </li></ul><ul><li>Controls on inpatient admissions and lengths of stay </li></ul><ul><li>Establishment of cost-sharing for outpatient surgery </li></ul><ul><li>Selective contracting with health care providers </li></ul><ul><li>Intensive management of high-cost health care cases </li></ul>PMSIG Prep session 09/27/07 MANAGED CARE: MECHANISM
  16. 16. <ul><li>Access: An individual's ability to obtain appropriate health care services </li></ul><ul><li>The first party: The individual receiving the medical service </li></ul><ul><li>The second party: The individual or institution providing the service </li></ul><ul><li>Third Party: The organization paying for the service </li></ul><ul><li>Co-payment: A cost-sharing arrangement in which the health plan enrollee pays a specified flat amount for a specific service </li></ul>PMSIG Prep session 09/27/07 MANAGED CARE: TERMINOLOGY
  17. 17. <ul><li>Formulary is a list of preferred prescription drugs approved by the third parties </li></ul><ul><li>Increasingly formularies are based on cost and expense factors and encourage generic substitution </li></ul><ul><li>Physicians are often required to prescribe from the formulary by HMOs or Prescription Drug Plans </li></ul><ul><li>Patients pay varying co-pays for drugs that are on formulary </li></ul><ul><li>For drugs that are not on formulary, patients must pay the entire cost of the drug </li></ul>PMSIG Prep session 09/27/07 MANAGED CARE: FORMULARY
  18. 18. <ul><li>Enacted in 1965 to provide health and economic security to seniors </li></ul><ul><li>Expanded in 1972 to cover younger beneficiaries with permanent disabilities </li></ul><ul><li>Cover 41 million people </li></ul><ul><ul><li>35 million elderly, 6 million under-65 disabled </li></ul></ul><ul><li>Individuals age 65+ are entitled to Medicare (Part A) if they are eligible to receive social security </li></ul><ul><li>Programs now has parts A, B, C; by 2006, a new part D </li></ul>Source: Kaiser Family Foundation MANAGED CARE: MEDICARE PMSIG Prep session 09/27/07
  19. 19. <ul><li>Medicare Program includes: </li></ul><ul><li>Part A – Hospital and skilled nursing care </li></ul><ul><li>Part B – Physician and outpatient hospital care </li></ul><ul><li>Part C – HMOs/Medicare Advantage </li></ul><ul><li>Part D – Outpatient prescription drug coverage begins January 2006 </li></ul><ul><li>Medicare is a popular program; enjoys broad public support </li></ul><ul><li>and high satisfaction levels among seniors </li></ul>Source: Kaiser Family Foundation MANAGED CARE: MEDICARE PMSIG Prep session 09/27/07
  20. 20. <ul><li>Enacted in 1965 as companion legislation to Medicare (Title XIX)‏ </li></ul><ul><li>Provides health and long-term care coverage for over 52 million low-income people </li></ul><ul><li>Guarantees entitlement to individuals and federal financing to states </li></ul><ul><li>Federal and state expenditures of $300 billion—with federal government funding 57% </li></ul><ul><li>Pays for nearly 1 in 5 health care dollars and 1 in 2 nursing home dollars </li></ul>Source: Kaiser Family Foundation MANAGED CARE: MEDICAID PMSIG Prep session 09/27/07