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A Pharma perspective on healthcare needs and innovation in drug discovery Patrick Vallance Head of Drug Discovery GlaxoSmithKline Slide 2 We need to adopt a new mindset. We in big pharma should never take for granted our right to exist; our business model is not written into any countrys constitution. So we should be turning up to work every day with the mindset that we are earning the right to exist. We are earning it by meeting the expectations of society. When you start to think like this, you see the world differently. Andrew Witty, CEO, GlaxoSmithKline Harvard, February 2009 A New Mindset Slide 3 Science in Society DTI MORI 2005 Public trust is low Slide 4 The Challenges are Significant In the past 20 years modern drugs have revolutionised the practice of Medicine and the outlook for patients The unmet need remains high The bar is also high placebo changing expectations cost the public health agenda Slide 5 Fabrys Disease Pain throughout the body Impaired sweating Heat/cold intolerance Skin rashes (angiokeratomas) Corneal whorling Hearing problems Gastrointestinal problems Heart problems Kidney problems Nervous system problems Psychological issues Pain throughout the body Impaired sweating Heat/cold intolerance Skin rashes (angiokeratomas) Corneal whorling Hearing problems Gastrointestinal problems Heart problems Kidney problems Nervous system problems Psychological issues Slide 6 Large improvement in pain in Fabrys Disease Slide 7 Active Placebo Large improvement in pain in Fabrys Disease Slide 8 The Challenges are Significant In the past 20 years modern drugs have revolutionised the practice of Medicine and the outlook for patients The unmet need remains high The bar is also high placebo changing expectations cost the public health agenda Slide 9 R&D for a New Medicine: 10+ years, $1 bn+ Sources: Drug Discovery and Development: Understanding the R&D Process, www.innovation.org; CBO, Research and Development in the Pharmaceutical Industry, 2006 Indefinite Drug Discovery Preclinical Clinical Trials Regulatory Review Scale-Up to Manufacture Post- Marketing Surveillance 1 Approved New Medicine 0.5 2 Years 6 7 Years 3 6 Years Number Of Patients / Subjects Phase I PhaseII Phase III 5 250 ~ 5,000 10,000 Compounds Pre-Discovery 20 100 100 5001,000 5,000 IND Submitted NDA Submitted a big challenge for addressing both developed and developing world diseases Slide 10 Source: Burrill & Company; US Food and Drug Administration. Note: NMEs do not include BLAs R&D Productivity Gap Slide 11 The realities of having the best pipeline Lehman Brothers PharmaPipelines (Sept 2007) Pharma Replacement Power NPV Pipeline renews 60% of sales LB Method: [NPV of recent launches (06-07) + NPV of pipeline opportunities from 08-13] / NPV of products marketed before 2006. GlaxoSmithKline Merck Bristol Myers Squibb Novartis Johnson & Johnson Sanofi-Aventis AstraZeneca Pfizer Wyeth Eli Lilly Roche Abbott Labs Schering Plough AVERAGE Slide 12 R&D for a New Medicine: 10+ years, $1 bn+ Sources: Drug Discovery and Development: Understanding the R&D Process, www.innovation.org; CBO, Research and Development in the Pharmaceutical Industry, 2006 Indefinite Drug Discovery Preclinical Clinical Trials Regulatory Review Scale-Up to Manufacture Post- Marketing Surveillance 1 Approved New Medicine 0.5 2 Years 6 7 Years 3 6 Years Number Of Patients / Subjects Phase I PhaseII Phase III 5 250 ~ 5,000 10,000 Compounds Pre-Discovery 20 100 100 5001,000 5,000 IND Submitted NDA Submitted a big challenge for addressing both developed and developing world diseases Slide 13 Scientific publications in biomedicine A disconnect between discovery and invention? New Medicines The opportunity has never been greater Slide 14 Reintroduce Scientific Judgement Slide 15 CEEDD Evolution From Monolith Virtualization of Drug Discovery External Resources Internal Resources CEDDs Pharma Centralized Control/Management De-Centralized Control/Management Slide 16 Scientific Opportunity Scientific Opportunity Patient need Market size How should we choose where to invest discovery effort? ExternalInternal Pipeline strength Organisational structure Slide 17 The Market Source: Pharma Pipelines Strategic Analysis and Conclusions 2006 Lehman Brothers The Lehman Brothers analysis of predicted global sales for 2006 does not include generic drugs and estimates that their database captures 80% of branded drug sales. Diabetes, cancer and inflammation projected to be the biggest growth opportunities 2006 Estimated Global Sales 18,808 43,928 15,337 11,549 65,275 17,793 76,850 26,875 19,481 39,910 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 Diabetes Cancer Inflammation Dermatology Metabolism/Endocrinology Drugs Genito-Urinary Haematology Sexual Dysfunction Immune System Ophthalmic Drugs CNS Respiratory 2005 - 2010 Market Growth p.a. 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% Diabetes Cancer Inflammation Dermatology Metabolism/Endocrinology Drugs Genito-Urinary Haematology Sexual Dysfunction Immune System Ophthalmic Drugs CNS Hormone Control Cardiovascular Respiratory Gastrointestinal Anti-Infectives Hormone Control Cardiovascular Gastrointestinal Anti-Infectives Global Sales $m Slide 18 Public Funding Slide 19 Scientific Opportunity Scientific Opportunity Patient need Market size How should we choose where to invest discovery effort? ExternalInternal Pipeline strength Organisational structure Slide 20 Small integrated, empowered teams Slide 21 35 internal engines 35 external engines Corporate Venture Fund New/expanded in 2008/2009 YTD Pharma partnerships Slide 22 R&D for a New Medicine: 10+ years, $1 bn+ Sources: Drug Discovery and Development: Understanding the R&D Process, www.innovation.org; CBO, Research and Development in the Pharmaceutical Industry, 2006 Indefinite Drug Discovery Preclinical Clinical Trials Regulatory Review Scale-Up to Manufacture Post- Marketing Surveillance 1 Approved New Medicine 0.5 2 Years 6 7 Years 3 6 Years Number Of Patients / Subjects Phase I PhaseII Phase III 5 250 ~ 5,000 10,000 Compounds Pre-Discovery 20 100 100 5001,000 5,000 IND Submitted NDA Submitted a big challenge for addressing both developed and developing world diseases Slide 23 Leading the pack ATM Index Source: Access to Medicines Index (Innovest) Slide 24 DDW Partners Tres Cantos