Prof. Claude Farrugia Vice President Communications, EIPG

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1 Prof. Claude Farrugia Vice President Communications, EIPG

2 Is the storm over? Malta, 2008

3 Is the storm over? Malta, 2008

4 Is the storm over? Malta, 2008

5 Drug Development is Risky

6 Drug Development is a Costly Business

7 Drug Development is Time Consuming years from start to launch

8 Just to put things in perspective p

9 The pharmaceutical pp pipeline Pharma Innovation Gap

10 The pharmaceutical pp pipeline Source: Evaluate Pharma, 2014

11 The pharmaceutical pp pipeline Pharma Innovation Gap

12 Is there still a patent cliff? Source: Accenture Research, August 2012, based on Evaluate Pharma

13 Biopharmaceuticals: a renaissance

14 Biopharmaceuticals: a renaissance

15 From pipeline pp to market

16 The European Union constantly considers cost containment policies in public pharmaceutical spending. External reference pricing as a tool to control prices cesand dset a parameter a e of eped expenditures. ues. Rebates, clawback and payback policies. Internal reference pricing. ii Is Europe prepared p to pay? The inclusion of the most recent medicinal products in reimbursement lists or government formularies is sometimes inexplicably delayed.

17 Is Europe prepared p to pay? In Europe, generics make up almost one half of volume sales, but merely a fraction of value sales

18 Is Europe prepared p to pay? Europe has unfortunately slipped in terms of its 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 of where innovation should be driven. (Sir Andrew Witty, CEO GlaxoSmithKline, 2012)

19 Enter the pharmerging gmarkets

20 Enter the pharmerging gmarkets

21 Enter the pharmerging gmarkets

22 Enter the pharmerging gmarkets All Tier 1 and Tier 2 pharmerging markets were, until recently, at risk or, at best, in economic recovery.

23 Enter the pharmerging gmarkets

24 Enter the pharmerging gmarkets

25 Pharmerging gmarkets: the difference The danger of pushing the prices of prescription 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 Dekkers, CEO Bayer, 2012)

26 Pharmerging g g markets: the difference ff Source: GIPC International IP Index, January 2014

27 Pharmerging gmarkets: the difference

28 Pharmerging gmarkets or players? Global share of pharma exports Expo ort market shar re of pharmaceu utical products Other Switzerland China EU 25 Japan India USA Source: Blanc, 2014

29 Pharmerging gmarkets or players? Pharma exports from India (US $ Million) Source: CARE Ratings, from USA Department of Commerce

30 Pharmerging gmarkets or players? Jugaad Literally, an arrangement or a workaround, which has to be used because of lack of resources. Practically, a creative idea, a quick, alternate way of solving or fixing problems.

31 Pharmerging gmarkets or players? Is there a limitit to jugaad?

32 2014: The Year of the M&A Source: Evaluate Pharma, 2014

33 2014: The Year of the M&A GSK / Shire / Novartis AbbVie $m 22,600 Forest / $m 54,000 Actavis $m 25,000 Ranbaxy / Sun $m 3,200 Pfizer / AstraZeneca? $m? Valeant / Allergan $m? Merck / Bayer $m 14,200 Abbott / Mylan $m 5,300 Novartis / Eli Lilly $m 5,400 InterMune / Roche $m 8,300 Source: Evaluate Pharma, 2014

34 2014: The Year of the M&A Shire / AbbVie $m 54,000 Pfizer / AstraZeneca? $m? Valeant / Allergan $m? Merck / Bayer $m 14,200 Abbott / Mylan $m 5,300 Source: Evaluate Pharma, 2014

35 2014: The Year of the M&A Enterprise value growth Enterprise value to sales Gross Profit Sales to Return on margin Margin assets Assets Return on invested capital GSA to sales Shire 45.2% % 40.09% 66% 26.46% 29.02% 47.07% Abbvie 47.9% % 38.25% 67% 25.63% 22.45% 42.30% Actavis 116.3% % 20.90% 47% 9.28% 5.33% 25.79% Forest 216.1% % 16.59% 37% 6.14% 7.12% 71.07% Valeant 101.8% % 40.59% 29% 10.15% 4.71% 26.03% Allergan 49.2% % 34.76% 64% 22.25% 15.95% 55.06% Pfizer 6.7% % 45.17% 25% 13.10% 10.39% 40.21% AstraZeneca 18.7% % 34.39% 39% 49% 16.85% 826% 8.26% 51.03% GSK 12.9% % 32.33% 63% 20.37% 25.32% 42.08% Source: Pharm Exec Industry Audit

36 2014: The Year of the M&A Enterprise value growth Enterprise value to sales Gross Profit Sales to Return on margin Margin assets Assets Return on invested capital GSA to sales Shire 45.2% % 40.09% 66% 26.46% 29.02% 47.07% Abbvie 47.9% % 38.25% 67% 25.63% 22.45% 42.30% Actavis 116.3% % 20.90% 47% 9.28% 5.33% 25.79% Indicators of present and dfuture growth Operational metrics Forest 216.1% % 16.59% 37% 6.14% 7.12% 71.07% Valeant 101.8% % 40.59% 29% 10.15% 4.71% 26.03% Allergan 49.2% % 34.76% 64% 22.25% 15.95% 55.06% Pfizer 6.7% % 45.17% 25% 13.10% 10.39% 40.21% AstraZeneca 18.7% % 34.39% 39% 49% 16.85% 826% 8.26% 51.03% GSK 12.9% % 32.33% 63% 20.37% 25.32% 42.08% Source: Pharm Exec Industry Audit

37 2014: The year of more layoffs? Layoffs Gross Profit Sales to Return on 2013 margin Margin assets Assets Return on invested capital GSA to sales Merck 8, % 36.97% 42% 15.53% 6.31% 42.63% AstraZeneca 5, % 34.39% 49% 16.85% 8.26% 51.03% Teva 5, % 27.45% 41% 11.25% 3.77% 33.21% Valeant 2, % 40.59% 29% 10.15% 4.71% 26.03% Novartis 1, % 25.11% 48% 14.06% 11.19% 43.89% Eli Lilly 1, % 30.26% 66% 19.97% 22.25% 54.76% Sanofi % 29.09% 34% 9.89% 5.49% 40.37% Endo % 35.49% 40% 14.20% 14.78% 34.56% Source: FiercePharma, Pharm Exec Industry Audit

38 The industrial pharmacist of the future

39 Rework Renaissance Ragnarök

40 European Industrial Pharmacists Group

Fraud in the Pharmaceutical Industry

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