This document summarizes a presentation on global biopharmaceutical contract manufacturing trends and developments. It discusses market trends such as slowing growth rates in mature markets and higher growth expected in emerging markets. It also covers threats to the industry like lack of capital and increasing regulatory scrutiny. The presentation provides an overview of top biologics companies and contract manufacturing organizations (CMOs) globally. It discusses why customers may choose to work with Indian CMOs due to competitive pricing, quality capabilities, and services offered.

1. GLOBAL TRENDS & DEVELOPMENTS IN
BIOPHARMACEUTICAL CONTRACT MANUFACTURING
6TH ANNUAL BIOLOGIC INDIA CONFERENCE
18 NOVEMBER 2008
HYDERABAD, INDIA
Michael Chan, MBA
Sr. Vice President
PQC Consulting, Inc.
25 W. Rolling Oaks Dr. Suite 103
Thousand Oaks, CA 91361, USA

2. Agenda
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Global Pharmaceutical & Biotech Industry
Market Trends
Industry Threats
Trends in U.S. FDA Product Approvals
Manufacturing Activities of Top Global
Biologic Manufacturing Companies
Indian CMOs: Impact & Opportunities

3. PQC Consulting, Inc.
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Global consulting company providing solutions and education
to the pharmaceutical & biotech industries
Located in Thousand Oaks, CA (home to Amgen, Inc.)
Services include c stomi ed
Ser ices incl de customized GMP training PAI prep, audits and
training, prep a dits
due diligence, manufacturing strategy & regulatory
consultation, CMO selection and compliance turnarounds
Company senior staff have 20 to 35 years of pharmaceutical
and biopharmaceutical experience
Our clients include start-up companies, manufacturing
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organizations, and investment firms
www.pqcconsulting.com

4. Global Pharmaceutical Market Will
Experience Flat Growth Rate in 2008
Global pharmaceutical sales will surpass US$820
p p $
billion in 2009
Growth rate estimated at 4.5-5.5%, same as
previous year
U.S. market will slow down to 1-2% for 2008 & 2009
Estimated U.S. sales at US$295 billion in 2008
Ei d US l billi i
Flat growth rates expected for matured markets, i.e.
U.S.,
U S Europe & Japan

5. Sales of Global Biotech Drugs Are Slowing

6. Where Are the Higher Growth Markets?
Emerging markets (China, Brazil, India, S. Korea,
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Mexico, Turkey and Russia) are expected to grow 14
to 15% to US$115 billion
Oncology products will grow 15 to 16%
HIV therapies will grow 13 to 14%
Biologics ill
Bi l i will grow 11 to 12%
Biologics represent 25% of all pharmaceutical
products pipeline today

7. Threats to the Biopharmaceutical Industry
Lack of capital
Price pressures on drug companies
Slow U.S. approvals of new products
US
Increasing safety concerns
Excess manufacturing capacity
E f i i
Biosimilars

8. U.S. Drug Approval Rates Are Declining
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Source: U.S. FDA, CDER 2007 Update

9. Fewer Biotech Blockbusters and Product Approvals
Brand Name
Brand Name Generic Name
Generic Name Company Filing Status
Filing Status Approval Date
Approval Date
Erbitux Cetuximab ImClone Systems P 12‐Feb‐04
Avastin Bevacizumab Genentech P 26‐Feb‐04
Pegasys Copegus Peginterferon alfa‐2a w/Ribavirin Hoffmann‐La Roche S 4‐Jun‐04
NeutroSpec Technetium 99m Tc Fanolesomab Palatin Technologies S 2‐Jul‐04
Tysabri Natalizumab Biogen Idec P 23‐Nov‐04
Kepivance Palifermin Amgen P 15‐Dec‐04
Naglazyme Galsulfase Biomarin Pharmaceutical P, O 31‐May‐05
Orencia Abatacept Bristol‐Myers Squibb P 23‐Dec‐05
Myozyme Alglucosidase alfa
Alglucosidase alfa Genzyme P, O
PO 28‐Apr‐06
28 Apr 06
Lucentis Ranibizumab Genentech P 30‐Jun‐06
Elaprase Idursulfase Shire P, O 24‐Jul‐06
Vectibix Panitumumab Amgen P 27‐Sep‐06
Soliris Eculizumab Alexion P,O 16‐Mar‐07
Mircera Methoxy polyethylene glycol‐epoetin beta Hoffman‐La Roche S 14‐Nov‐07
Arcalyst Rilonacept Regeneron P,O 27‐Feb‐08
Cimzia Certolizumab pegol UCB S 22‐Apr‐08
Filing Status Note: P = Priority; S = Standard; O = Orphan

10. U.S. FDA Increasing Their Scrutiny on
Foreign Drug Manufacturers
October 16, 2008
,
FDA announced that it will have first staff posting in New Delhi by December 2008 and
•
will open up additional office in 2009 with up to 10 US staff
FDA currently hiring hundreds of new investigators; more trainees than
experienced investigators
September 2008 Ranbaxy Warning Letters and Import Alerts
• Negative perception and cause for concerns
FDA will be regulating dietary supplements and nutraceuticals
• Claims of curing medical illnesses will no longer be tolerated
Implementing FDA Risk-Based Inspection approach
• Use of overseas manufacturers/suppliers, especially India and China, will
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increase the risk scoring by a factor of 1.2 to 1.5
What Impact Will This Have on Biologics Manufacturers?

11. Global Biotech Blockbusters
Biotech Blockbusters (Over US$1 billion in sales)
Product Company Product Company
Enbrel Amgen/Wyeth Avonex Biogen Idec
Aranesp Amgen Neorecormon Roche
Remicade J&J/Centocor/Schering Gardasil Merck
Mabthera/Rituxan Genentech Rebif Serono
Neulasta Amgen Neupogen Amgen
Erypro/Procrit J&J Novorapid Novo Nordisk
Herceptin Genentech Erbitux Imclone/Merck KGa/BMS
Egogen
gg Amgen
g Lucentis Genentech
Avastin Genentech Synagis Abbot
Humira Abbot Humalog Lilly
Lantus Sanofi-Aventis Betaferon Bayer/Schering AG
Source: IMS Health

12. Top Ten Biotech Company
2007 Sales 2007
Company (US$ million) % Market Share
Amgen 15,964 21.3
Genentech 15,469 20.6
Johnson & Johnson 6,285 8.4
Novo Nordisk 5,890 7.8
Lilly 3,931 5.2
Sanofi-Aventis 3,201 4.3
Abbot 3,145 4.2
Merck KGa 2,734 3.6
Schering Plough
S h i Pl h 2,557
2 557 3.4
34
Wyeth 2,254 3.0
Top 10 Total 61,451 81.8

13. What Are Drug Companies Doing?
Buyer/Seller Relationship Partnership Collaboration
Bristol Myers Squibb
• Extends Lonza’s abatacept manufacturing agreement till 2013
• E t i t CMO agreement with C llt i
Enters into t ith Celltrion
• Construction of new $750 million biological manufacturing plant in Devens,
MA, complete by 2009/2010
Novartis
• Announced development & manufacturing collaboration with Lonza
• Building $700 million biological manufacturing facility in Singapore,
completion by 2012
Lonza building second cell culture manufacturing plant in Singapore to produce
Avastin for Genentech, expected completion by 2011
GSK building $190 million vaccine manufacturing facility in Singapore,
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operational by 2009

14. Genzyme April 21, 2008
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Genzyme Corporation announced today that the FDA has informed the company of its opinion that Myozyme® (alglucosidase
alfa) produced at the 160L bioreactor scale and Myozyme produced at the 2000L scale should be classified as two different
products because of differences in the carbohydrate structures of the molecules. Currently, Genzyme has U.S. approval to sell
Myozyme manufactured at the 160L scale, and the company has been seeking clearance from the FDA for Myozyme produced
at the 2000L scale. Production at this larger scale has already been approved in more than 40 countries.
Based on the global clinical experience of nearly 900 patients of all ages currently receiving Myozyme produced at the larger
scale, including patients who participated in the Late-Onset Treatment Study (LOTS), Genzyme believes that Myozyme
produced at both the 160L and 2000L scales is clinically effective and safe. Myozyme is the only treatment for Pompe
disease—a severe, progressively debilitating and life-threatening inherited disorder affecting a very small number of people
throughout the world.
The FDA will require Genzyme to submit a separate biologics license application (BLA) to gain approval for Myozyme
produced at the 2000L scale. The agency proposed that Genzyme initiate a rolling BLA review process by submitting results
from the LOTS study. Genzyme expects the FDA to give the BLA priority review and to act on the application by the end of this
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year. The LOTS study, which met its co-primary efficacy endpoints, was undertaken to evaluate the safety and efficacy of
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Myozyme in juvenile and adult patients with Pompe disease. Genzyme had already been preparing to submit results from this
study to the FDA to fulfill a post-marketing commitment. Genzyme anticipates that this process will culminate in the availability
of two commercial versions of Myozyme in the United States: one produced at the 160L scale and the other produced at the
2000L scale. The company expects to begin providing U.S. patients with commercial 2000L Myozyme during the first quarter of
2009.
To ensure that severely affected adults with Pompe disease in the United States have access to treatment, Genzyme, in
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collaboration with the FDA, created the Myozyme Temporary Access Program (MTAP) in May 2007. Through this program the
company is currently providing Myozyme produced at the 2000L scale free of charge to approximately 140 patients. Infants
and children with Pompe disease in the United States continue to receive commercially approved Myozyme produced at the
160L scale.
“We are extremely disappointed in the FDA’s decision because it will further delay broad patient access to Myozyme, which is
not possible under the MTAP program,” said Henri A. Termeer, Genzyme’s chairman and chief executive officer.

15. Who Are the Biologic CMO Customers?
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Start-up biotech companies
• Virtual companies
• Outsourced development, manufacturing, clinical research and
regulatory filings
Look for those who are well-funded
Look for experienced management team with long-term vision
What are key CMO selection criteria for start-up biotech
companies?
Price
•
Ability to meet schedule
•
Technical knowledge/expertise
•
Q
Qualityy
•

16. What Can Be Learned From U.S. Based
Biologic CMOs?
Laureate Pharma, New Jersey
Crossover collaboration agreement with Boehringer Ingelheim. Manufacturing agreements with Seattle
•
Genetics, Cytogen, Bradmer, Iconic Therapeutics, Enobia, Trubion, ImmunoGen, Tolerx, Tolera
Therapeutics, Alopexx, Cytheris, and ARIUS Research
Althea, San Diego
“Althea offers master and working cell banking, recombinant protein production, DNA-based
•
therapeutics and vaccines, process development, protein modification, and complex formulations.
Althea’s expertise in parenteral processes include vial and syringe filling under aseptic conditions,
lyophilization, stability testing, and final product release testing.”
Cook Pharmica, I di
C k Ph i Indiana
Bulk manufacturing, lyophilization, fill/finish, $80 million expansion in progress
•
KBI Biopharma, North Carolina
“Products that have to get to patients as quickly as possible while proving to be economically viable
possible, viable.
•
With our unique expertise in biophysical characterization, and our extensive analytical expertise, KBI
can provide clients with a depth and breadth of product understanding that simply cannot be replicated
anywhere else. Biophysical characterization leads to optimized, predictable processes and rugged,
effective formulations that allow for rapid approval, lower costs of goods and a decreased regulatory
burden.
burden ”.

17. Other Asian (non-Indian) Biologic CMOs
Fermentation/
Company Country Cell Culture Capacity (Liters)
Celltrion S. Korea C 50,000 (Online); 120,000+ (2009)
KBCC S. Korea C, M 500 (Online)
A-Bio Singapore C 500 (Online)
Lonza Singapore C 80,000 (2009); 80,000+ (2011)
Autek Bio China C 500 (2008); 2,000 (2009); 15,000 (2010)
Wison China C 4,000 (2011)
Asahi Glass Japan M 2,000 (Online)
PAC Biologics Japan C 4,000 (Online)
Inno Biologics Malaysia C 4,000 (2008)
Alpha Biologics Malaysia C 500 (2008)
Source: American Pharmaceutical Outsourcing, August, 2008

18. Why Would Customers Come to India?
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Competitive Pricing
• Lower than U.S. & European competitors but what about China?
• Offset customer travel and coordination costs
Quality & GMP Compliance
•RRecent d
t drug cases h
have cause for concerns
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• U.S. FDA stepping up scrutiny of foreign drug manufacturers
Technical Expertise
• Value added services
Value-added
• Customers want longer shelf-life
• Analytical & formulation development, lyophilization
Transitional Supply Chain Services
• Bulk manufacturing, fill/finish, packaging & distribution
• Clinical to commercial
Excellent Customer Service

19. Case Study
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U.S. biopharmaceutical start-up company uses 3 different Indian companies:
API manufacturing, fill/finish, packaging and distribution
Significant cost advantage over U.S. and other western companies
• Factoring in added client travel cost
Round-the-clock
R d th l k working h
ki hours
• They work 6 days a week
• When U.S. sleeps, India is working and vice versa
Strong desire to perform well
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• Willing to learn and accept customer input
• Met deadlines
Communication and logistics a bit challenging
• Mainly due to time differences and language barrier
• Helps to have U.S. or European expat on staff in India
Quality is hit or miss
• Initial documentation were lacking in technical substance and QC

20. Thank
Th k you