Claude Farrugia, EIPG Vice-President Presentation at EIPG – VAPI-UPIP Symposium “Biotech and Advanced Therapies: Challenges and Opportunities” at the Faculty of Medicine and Pharmacy, Campus Jette, Vrije Universiteit van Brussel, Brussels 2013

2. These are troubled times.....
llUSlNESS _ _ .- _ _ -,................... -
Why today's Cyprus bailout could be
the start of the next financial crisis
_.. ... __ 16 Ml.rch 2013
It _-,. ,: ' "wIit"= _ _01
<:,-._11_,.. .,.. _01..
~-...r."---" .......". ''''''~1oolp.
httol......... _' i • (.~) .....
_ .....".__-....Ew----.........--_ _","6.-:;--, n. ......-....... _ •• o.,.noo-....
...... 6 _5 . . . , . ~ ~ _ ~ . w _
Ff'oIlor_~l'f"Ob_ _ ..... _........,. _ _ ATloI
_ ; . ; ...... IO ..... _ _ .... ~ ....oI iIo
~---_.!:--...:.=:L'Arena"-"'---
-_._.
---r--- :."::.--:-=
;;;;;;;;;. ----_._-
--... ...........,.,
El£ZDI.I~8l'rls:Di.recamimNew.rchiliruTv'ipl5"pe:nn
ltali~ e adesso?GriI:l~p!II1in«o''ilneD;irilo.SiI'br'Elor]Jl.l'l:lsakKhoc.~b1ciJr.o
Smloosov.!l,'ildkri,Caml.nalWiillosi ioULMlI.AlvllKIll*Sll.idali
---
Warning that UK 'may never
recover' ifGreece exits euro
•
~. theguardian
€90bn Irish bailout ends in turmoil.
Now Europe fears crisis will spread. _....... _ • _ _ • d_
....- -----_ ----

3. These are troubled times.....

4. .....and pharma is not 'immune~.
TOP 10 COMPANIES
Many big drug companies are
seeing their sales decline
12-MONTH
SALES· CHANGE IN
(S BilliONS) SALES
Pfizer $51.9 -8.6%
Novartis SO.8 2.0
Merck & Co. 40.9 6.8
Sanofi 38.9 -0.9
Roche 35.0 2.7
AstraZeneca 34.5 -5.4
Glaxo$mithKline 33.6 -1.8
Johnson & Johnson 26.8 -4.5
Abbott laboratories 25.8 4.1
Teva 24.0 -3.4
TOTAL $362.2 ·L2%
GLOBAL MARKET $857.3 3.5%
.. For the 12 months ending on June 30. 2012.
SOURCE: IMS Institute 101" Healthcare Inlormahcs

5. .....and pharma is not 'immune'.
PHARMACEUTICAlR&D
EXPENDITURES
$70 billion
NEW DRUGS
APPROVEO·
60
'10'05'00
o
'95
40
30
50
20
PhrMa ..
............i1'le'frlt;4~ffs·'········
10
'95 '00 '05 '09
o
."""",11,.
10-- .... .....
50
40
30
20
60" .

6. .....and pharma is not 'immune'.
6.
5.
-:. 4.Z
-
PhRMA Member
~ Ra.O Sp~djnll
3S
$16.9 $19.0
$15.2
Sl"2.7 $13.4
24
New Drug
AHrov.ts (NME.)
17
"
16
...
...
-•
•• ~
~
•-:l~
E•
•~
••••
• 1992 nu I.M 1995 J996 1997 199. 1999 2000 2001 2002 2003 2004 2005 2006
6.

7. Drug Development: Costly and Lengthy
Number of Compounds to Produce a New Drug
'_IV..- ---_ '_7'1'... --~. _ O.$·~Y.... _

8. Drug Development: Costly and Lengthy
Number of Compounds to Produce a New Drug
,
n m
--
P",
lid •
I
1·7',... ---+.
Pha~lI.
so-~
parienls
$750,000
9moDlbs - ~
)'N1n
-
_---'_l-- _
Phoilse Ib
}o-so hWlhy
subjoKu
5300,000
6monrhs - I
}"~f
._----
Ph.ut'la
40-60 heahb)'
subje<15
S3OO,000
61110111115
r"'-""'''''''"''-''--r .

9. Drug Development: Costly and Lengthy
Number of Compounds to Produce a New Drug
'_IV..- ---_ '_7'1'... ---+. _ O.$·~Y.... _
10-15 yearsfrom start to launch

10. Just to put things in perspective...
-----
------
_. -- --- ----- -
---- ---- ------
_.---:";...-
--
10-15 yearsfrom start to launch

11. The Patent Cliff: A Race Against Time
Blockbuster US Patent Expiries
mu
.'
...Z"lril
"'"Prlnlvll Blnln
Inlron 1lthromax .... Imlll""
Augmlntln NoYolJn
NltUpogln
GluC:OpNIlO
l-
Roeophin
Zoloft O.,l:onlln
L~~lln
M.!~otln
Colou
"'"CI.rilln Oi1luc:.ln
Pr.y~ld
Adv.lr Pray.ehol
Flo..,n!
LOYlno.
P••II
Efl'uPlnix e.....
lone: Zoco.
Fo..N.urontln
P,ocrit NOIVUC:
CIPfo
."
2D
18
"-• "0
.Q
a; 12
~
-• 10
••'" 8
-0
0 ,N
,
2
0
2003 2005 2001

12. The Patent Cliff: A Race Against Time
1,n4
o
2,000
1,000
Annual Sales Volume in the EU
becoming available for competition
2,268
€ million 2,On 2,059
2004 2005 2006 2007 2008 2009 2010

13. The Patent Cliff: A Race Against Time
,.~2
11'
-'-'"
UoMONTH CKAHCL
."""-2.~
-().
-&3
..>7.
-102
.,
"."
••••••
"",,'
($ R.LIOIlS)
.".,B<
.,
",.,.
--H)P!'d~
......-_.Un....d '11.......
-- .Aad ..... dosNwsynptoms
Cn:JM", dlwaw. rtlftmalood a-ttwM
..........
"""'"'"""""""""'..........z-.
AlltlotI Uibcnloroes
"""-'
..........""
TOP 10 PRODUCTS
Sa~ are declining for many of the workfs top pharmaceuUcals
CC, FOIMO
Ch "'-,Nl
-~..........
"""""-........
""'"......."'""X
=...
• ,...I 2 _ - .... _lO.:zoLt SOI*t:US_1OI ~..... •

14. The Patent Cliff: A Race Against Time
Developed Markets Generic Share
24.2% •
'""-4)
'-
41
-•-
15.3%
16.2%
11.9% ,
8-9%
;:=~21-22%
_ .... 21-22%
13-14%
• 2010Generic Shar~
.2015 Shar@lncrease
.-31.7% • 34·35%
12_8% •
-21.3%
13.4%
15-16%
=~~~_...27-28%
_ _.... 21-22%
Sou~: UtS Molkft. PwIt....... A9t 2011
------

15. •
The Patent Cliff: A Race Against Time
SOLUTION
Companies offer a mixed portfolio ofnew medicines and..
generic medicines.
• -
HOWEVER
Many originator companies do not possess the experience
and/or know-how to play in the generic space, and must
• acquireorform joint ven,tures with existing players.
PROBLEM
Increased scrutiny from competition watchdogs.
Federal Trade Commission v. Watson Pharmaceuticals Inc et al.,
.... .." U5'Supreme Court

16. Are we prepared to pay?
In Europe, generics make up almost one halfofvolume
sales. but merely a fraction ofvalue sales
,....
",,,
""'
,.,.
"'"
'''''
11 Volume· aeneric market share
70K 10K

17. Are we prepared to pay?
"Europe must ensure that it doesn't slip into
a position where it simply focuses on
acquiring medicines at the lowest possible
cost. This will destroy the incentivisation for
innovation, and will ultimately lead to a loss
ofthe breakthrough opportunities ofnew
medicine research. The importance ofthis
industry to health, healthy ageing, and
economic growth is just too great to run that
. I "rise
(Richard Bergstriim, Director General EFPIA)

18. Are we prepared to pay?
"Europe has unfortunately slipped in terms
ofits willingness to pay for innovation. ...
We're now at a point where we have to take
the view and I think face the reality that
really it's about the U.S. and, excitingly
anew, it's about Japan in terms ofwhere
innovation should be driven."
(Sir AndreIV Witty, CEO ClaxoSmithKline)

19. Where have we heard this before?
NME LAUNCHES
New Mol.cular Entities (NMEs)
by Region of First Launch
203 170
----
• •
/
Europe
1/u.s.
o+-,~~~~~~
9293949596979899000102
20
o
, 993-1997 1998-2002

20. Enter the Global Markets.
Spending by Geography
SI,I]5-I,20S6n
>0"
• United States
·'"'• lllP¥l
• Ph¥merlllng
• Cilllllda
• Rest of Europe
• S(IO,lth Korea
• Rest of Wor1d

21. Enter the Global Markets.
'''' "" INOex
"'"' 2011 INDEX
"'"' 2016 INOEX
, United Slales
""
, United St.l",
'"
, United Stde,
""2 Japan 35 2
~"" " 2 A China
", A fr.nce
"
, A ChilD
"
, V
""" ", V Germany
"
, Germany
"
, A Br.zil
", A Ch;""
• , V france
"
, V Ge'lI'llny
", V It.ly
• , A BIiI.;[
• , V Fr.n<:t
", A Spain , , V Italy
• ,
'""
,
, V
"'
, • V Spain , , A lndia ,
• V ~.~
, • C.nada , • A Russia ,
" Brazil 5
" V
"'
,
" V C.n.d. ,
" AlI$t"li.l , " A Russia ,
" V
"'
,
" Mexico , " V Au,tuli. ,
" V Sp.lin 5
" South Ko... , " A India ,
" V Australi. ,
" Russia , " V Sootll Kore. , " A Argenti". ,
" V lodi. 2
" V Mexico , " V South Ko,e. ,
" A Turkey 2
" Turkey , " V Mel<ko ,
" V Nethe,wnds 2
" A ~.~ 2
" A VeneZllela ,
18 V 8l'lgium 2 18 A Venezuela 2 18 V Turkey ,
" A Gr_e 2
" V Netherl,""l$ 2
" A lndo~ia 2
" V
"'.~
2
" V Bolgium 2
" V "'.cd 2
........ Change in r.nking OVI!f prior 5 ye."
ApP'tndi. noles
R,nk;'"') in an y"" b.<ed on ....od;"'I in ,,,,,,tonl US!.I Q< l{)ll u,h."9I' ..tu.
Sourct: [MS ""'.1<<1 Progno'i'. ""'I' 2012 I"m in "ch 'I'" too," on "tio of country .....din9 to U.S. ,pendiog (in con,unt US,) in the y..'.

22. Enter the Global Markets.
w, 50'"z
• "''''•, 50'"
•~ so",
~ .,'"~ .,'"9 ,.'"0
~
"'"w
«
'"'•z
•
•
Global New Molecular Entities
Country Availability
Pharmerging
I
I I
• Additional 2006-2010 NME avallat>~ In 2016
.2006-2010 NME available In 2011
Sou"",: DlS In<titIIu for Htalthr.o.. lnb....tic.. May lOll

23. Global markets are not European
• Diverse healthcare systems
• Fragmented markets
• Complex regulatory systems
• Cultural and language barriers
• Increased competition (local and global)
• Varied infrastructure
• Highly dynamic situation

24. Global markets are not European
Figure 2: Tne Wealth Pyramid across the emerging markets (adapted from Praflalad and
Ueberthal, 19981),
PlJrdlaslng power parity Population in millons
In U.S. doILn Chi" ..... ...",
B Greatel'" than S20,OOO 2 7
•
How
S10,000 to S20.000 60 63 15
H..... "'"
SS.COO to S10,000 m 125 27
/ _not le,st•.,,,,OOO 800 700 105

25. Global markets are not European
2016 PharmaceuticaL Spend Per Capita
2005S and Population
(hlno ,'U Plop. '.)<19.....
""""""'!ling lie, J '96 I'bp. 1.012""
I...... Ul Pop. 1,192.....
~--U5. '892 Pop.3Z6Mn
JI.-n $6«4 I'q). U ......
c...lo '420 !'<>p. J6Mn
EU5 $375 ,..,.., 320Mn
_ _ un !'<>p. SOHn " ~=,
!
!leS' 01 Eun>pe pn "",,1_ I
BrOlW "eo Pop. 20''''
R..... '179 ""p. 140Hn
•
~
.~
o
~700
~~
o~
~
3'00
~~
l~
• '00
-,~
Vletnam
• .~.~..N
N
-•
~ - 1lr1I,;1
.~ ,-~
,~.
- ,-,w ,,-
~
,~
~~"". .-~el_si.
> ,~
• • ~.~
~
"~, • ThllII"Cl MoleO••
-,~
b
~ ,~ .~
- - ,-.. ~ POPIJI..,I,T10N wrrn 2016 INCOI'lE >15,000
I Volume Growth and Populations
I With >S5,OOOjYear Income by Country in 2016

26. Global markets are not European
Intellectual Property
• Indian patent law allows for compulsory licensing if
"reasonable requirements of the public with respect to
the patented invention have not been satisfied; the
patented invention is not available to the public at a
reasonably affordable price; or the patented invention
has not been worked in the territory ofIndia".
• 2012: Indian patent office authorised Natco Pharma to
make and sell generic sorafenib (Nexavar, Bayer AG)
whilst still under patent, paying 'fA> of its net (reduced)
sale in royalties to Bayer.
• Trastuzumab (Herceptin, Roche), ixabepilone and
dasatinib (Ixempra and Sprycel , Bristol-Myers Squibb)
under consideration.

27. Global markets are not European
Price control:
• China: In 2013 cut prices of more than 400
medicines by up to 20%.
• India: In 2012 widened scope of price controls to
348 medicines from 74. In 2013, proposes that
prices of patented medicines be based on the
country's per capita income.
• "Most countries follow some form ofprice control.
We need to ensure that expensive drugs are
available at affordable rates to the poor.n
(D.S. Kalba, Secretary, Pharmaceutical Department)

28. Global markets are not European
"The danger ofpushing the prices
ofprescription drugs down, down,
down is that at some point the
business model of developing
these drugs will lose its
attractiveness. India is
becoming very reluctant to
respect IP for Western companies
and that is becoming a challenge
for us."
(Marijn De""ers, CEO Bayer)

29. Global markets are not European
Global Spending, 2011 aocl 2016
r
Pharmerging Spending and Growth
••
•
.--
•••
.--
""
_.""_...,
_.......-.. . ~
000';'
_","_"__ W_.-.-,,",'" _ ... _ ... _ _ IJli _ _ .......

30. '[J@
Changes in the industry: a renaissance
"1 really believe that in the jilture,
companies like Novartis are going
to be paid on patient outcomes as
opposed to selling the pill. ... Many
health-care systems around the
world are under intense financial
pressure and would prefer to pay
for a patient who is actually
getting a result and feeling better.
... The industry needs to spend
more money on R&D and less on
sales and marketing."
(joseph jimenez, CEO Novartis)

31. Changes in the industry: a renaissance
r
Spending and (j,owth in leading Therapy Areas Spending in 2016
----~
w_
w·_
.n-~
w·_
,,~
"...-.,J.._
.~­
"...-....,-.....-.,,-"......,,)0,_
.u-,_.Uo,_
.
--
_:IlI_.....__
.-:l
<
--• •
--_ 10 _
-----_s ---
--
-"._.._-.......
-lu
f-"-.-::::...--...
_ .......... f;,IGR
_ ~U·lOl6 ~
.,. - "' -SI'OCIING ~ lOll·lOlI
-.,M_..__.......

32. Changes in the industry: a renaissance
Biosimilar penetration in Europe embryonic;
potential in USA post 2014
For R&D based companies is going to be an established market play
,..-
-.- •
Zl....
>~
~:..-~
<~
...-
.-.-
-.-
•

33. '[J@
Changes in the industry: a renaissance
''It's not like engineering where the
iPhone 5 follows on ji-om the iPhone 4.
Coming up with a new drug requires skill,
insight and luck. .... But we are on the
verge, potentially, ofa new wave of
pharmaceutical innovation."
(Kenneth Frazier, CEO Mere" & Co)

34. European industrial pharmacists
Q12013: Annus horribilis
• GSK to close financial services operations in Cork (Ireland), 94 jobs to
go
• MSD to close facility in Rathdrum (Ireland); 280 jobs to go
• Actavis Malta to close R&D unit by end 2013; 64 jobs to go
• AstraZeneca to close Aiderly Park (UK), overhaul R&D, cut about 1,600
jobs; 2.300 job cuts in sales and adnlinistration; total of 5,050 jobs by
2016
• Eli Lilly to layoff 1,000 US sales jobs
• TEVA to reduce manufacturing footprint, job losses in Israel likely over
next five years
• AbbVie to fire mid-hundreds of sales force for heart drugs

35. European industrial pharmacists
• A changing workplace:
• drug discovery in Europe, drug development and
commercialisation in far East, registration and
marketing in Europe or North America
• drug discovery, development and commercialisation in
far East, and then registered and marketed in Europe
• Logistical challenges to avoid shortages of supply
• Challenges to safeguard quality, safety and efficacy
• Temperature control of biologicals in transportation
• Falsified medicinal products

36. Falsified Medicinal Products
I 2008 2009 I 2010 I 2011
Numberofcases 3.2 °7 3>368 1,812 2,494
Numberofarticles 8,891,°56 11,462,533 3,200,492 27,460,538
India UAE India China
(51.6%) (73-7%) (93.2%) (68.2%)
ProvenanceTop 3
Syria India China India
(36.4%) (22.6%) (4-7%) (28.2%)
UAE China Hong Kong Hong Kong
(8:7"10) (1.4%) (0·9%) (1.5%)
European Commission Taxation and Customs Union

37. European industrial pharmacists
Seven Skill Sets Necessary to Operate in the Pharmaceutical
Industry of the Future
1) Ability to Manage Decentralized Intellectual Capital Resources
2} Ability to Work In Joint Ventures and Across Divisions. Cultures and Countries
3) Abflity to Integrate an Understanding of Intellectual Property laws.
Scientific Expertise and Business Strategy
4) Ability to Spur Creativity While Managing Commercially
5) Knowledge and Insight on the Decision-Making Dynamics of Payers
6) Expertise In the Functioning and Decision-Making of Regulatory Agencies
7) Human Resource Skills to Help Transform Pharmaceutical Companies

38. C:European Industrial Pharmacists Group
• The main objective of EIPG is to promote and uphold
the importance and role of the industrial pharmacist
within the pharmaceutical industry.
• Promote the modern pharmaceutical industry to
observers and more importantly to young pharmacists
• Ensure that educational standards meet the needs of the
industrial pharmacist in the industry of 2020
• Provide mentoring and coaching to young pharmacists
who need career advice

39. «:European Industrial Pharmacists Group
'f EIPe, is to I G
~le of the i ~
:::.~,~.-c,..i""V,,....
Q~t
~~~
~....

40. {{Former/~ when religion was strong
and science weak, men mistook magic
for medicine; noL1f, when science is
strong and religion weak, men mistake
medicinefor magic."
Thomas Szasz