The document summarizes trends in research and development of generic drugs in the global pharmaceutical industry. It provides an overview of historical developments in generic drug maker PLIVA dating back to 1928, and its combination with Barr Group in 2006 to form a global generic pharmaceutical company. It also discusses trends in the generic drug market, strategies for differentiation, and key factors for success in generic drug research and development, emphasizing the importance of speed, intellectual property positioning, and internal API development capabilities.

1. RESEARCH AND DEVELOPMENT OF GENERIC DRUG S Trends and R&D Impact i n Global Pharma Arena PharmaCon 2007 Dubrovnik, May 23 , 2007 Dr Aleksandar Danilovski Head of Global API R&D

2. Disclaimer This presentation expresses the opinion of the speaker and does not necessarily reflect the views or policies of PLIVA/Barr. All information pertaining to this presentation is from publications.

5. 1936 First organized research activities initiated in “Kaštel” in collaboration with Professor Vladimir Prelog (later Nobel Prize laureate for chemistry) New R&D Building opened in October 2002 V. Prelog opens first PLIVA R&D (1952) V. Prelog teaching in Zagreb (1936) Legacy PLIVA 70 Years of Continuous Scientific Activities

7. 200 5 Total Market Revenues Rx Drug 200 5 Revenues ($B) ~$230B ~$120B France Germany Italy Spain UK Sources: IMS Health; Marakon Associates -- Excludes some branded generics units Pharmaceutical Market Emerging Markets Growth Rates

9. Business Performance (cnt’d) Generics Outpace Big Pharma

10. Generic Pharma Trends EU Generics Market Shares

11. BRAND GENERIC Gx+ & BioGx 1.Chemistry 1.Chemistry 1.Chemistry/Biochemistry 2.Manufacturing 2.Manufacturing 2.Manufacturing 3.Controls 3.Controls 3.Controls 4.Labeling 4.Labeling 4.Labeling 5.Testing 5.Testing 5.Testing 6.Preclinical Dev. 6.N/A 6.Preclinical Dev. (abridged) 7.Clinical Dev. 7.Bioequivalance 7.Clinical Dev. (abridged) What are Generic Drugs?? First Definition Quality Safety/Efficacy GENERIC drug INNOVATOR drug bioequivalence efficacy & safety quality, efficacy, safety quality

12. Generic Pharma Trends (cnt’d) Most Analyst Expect a Decline

13. What are Generic Drugs?? Second Definition GENERIC drug Basic Patent Expired INNOVATOR drug Basic Patent Not-Expired GENERIC drug INNOVATOR drug bioequivalence efficacy & safety quality, efficacy, safety quality

15. Pharmaceutical Patents What can be Patented (Subject Matter)?? … USE(s) method-of-use dose, route of application, … PROCESS(es) synthesis, crystallization pharmaceutical technology,. PRODUCT(s) solid-state forms (“polymorphism”) drug product (“formulation”), dosage form,… drug substance (“basic patent”) TIME

16. i PrOH chlatrate Dihydrate PLIVA? ? Amorphous form Crystalline with non- crystalline water Stable mono-hydrate Monohydrate with residual solvents Unstable mono-hydrate Ethanolate Stable anhydrous form Anhydrous solvates New crystalline hydrate (di?) (pilars) RELATED PATENTS (14) September 2001 SOLID-STATE FORMS RELATED PATENTS (30) (Sept. 2001 - Oct. 2005) PURITY ANHY- DROUS MONO- HYDRATE SOLVATES DIHYDRATE PLIVA Stabilized by antioxidant Impurities High purity mono-hydrate Improved stability in impermeable Al containers Tetragonal anhydrous (cryst. ) Stable mono-hydrate Mono with lower hygr. by compaction Ethanolate Azi-hydrates 1,2-propylene-glycol clathrates 2 Novel iPr-solvates Propanolate 1pat. +1appl. Sesquihydr. & monoclinic & ortho-rhombic solv. 5 appl. Monoclinic solvates & Process for dihydrate Single step process for dihydrate Process for non-hygroscopic dihydrate Process for dihydrate (t-BuOH) Dihydrate polymorphs Amorphous via Ortho- rhombic solvates Granted Improved process for monohydrate Anhydrous (by azeotr. dest. - 2 appl. Ethanolate formulation Azi from Cryst. DHL & EtOH/water Degradation products Pfizer Ercros Apotex TEVA Hanmi Chimica Sintetica TEVA Lab. Silanes Wockhardt Pfizer Biochemie Alembic ADAMED Astur Pharma Sandoz Alembic Jubilant Hanmi Chemi Spa.

17. Atorvastatin Example (exp.2010) Status in 2005 - 557 patent families Second Example ATORVASTATIN (Lipitor ® ) 1 basic 39+36 polymorphs (salts) + processes 91 drug product (formulation); pharmaceutical technology 390 methods-of-use, dosing regimes, …

18. Proven solid-state expertise: from patents to commercial products PLIVA Generic R&D Know-How Generic Drugs are NOT COPIES!!!

19. Generic Pharma Differentiation Approaches  M&A Consolidation

22. Origin Paradigm Pharmaceutical Sciences Molecule Size “ Small” “ Big” Molecule Synthesis “ Chem” “ Biotech” “ Traditional” drugs (chemistry) “ Recombinant” drugs (molecular biology & biotechnology) pharmacy

23. PLIVA R&D (Zagreb site only) Resources Breakdown in Dec.2006 (total of 186 scientists) FBF; 41; 22% PMF; 60; 31% FKIT; 39; 21% PBF; 27; 15% Medicina; 5; 3% Veterina; 2; 1% FER; 2; 1% Ostali HR; 5; 3% Ostali svijet; 5; 3%

25. Thank You! “ As soon as you find the key to success, somebody always changes the lock” Tracey Ullman