AgendaAgenda

• Overview: the Bio-Pharma industry

• Major challenges for developers

• Genzyme: Innovations for unmet

medical needs

Overview: the Bio-Pharma industry

TOP 10 TRENDS ON THE PHARMA INDUSTRY HORIZON

10

9

8

7

6

5

4

3

2

1• Industry consolidation

will accelerate

• Increased risk-sharing across development projects

• Continued separation of PC and specialty companies

• Increased pricing and regulatory pressures in Europe

• Slow, steady experimental re-engineering of commercial model

• Shift to more serious tone in DTC advertising

• Increasing risk-sharing to the consumer

• Increased Rx interest in Gx (generics) and other LCM(Low cost medications)

• Continued productivity

and cost transformation

• Drug safety and healthcare compliance ???

New Drug Approvals Are Not Keeping Pace with Rising R&D

Spending

New Drug Approvals Are Not Keeping Pace with Rising R&D

Spending

0

15

30

45

60

1963 1968 1973 1978 1983 1988 1993 1998 2003

NC

E A

pp

rov

als

0

20

40

R&

D E

xp

en

ditu

res

(Billio

ns

of 2

00

4$

)

Source: Tufts CSDD Approved NCE Database, PhRMA, 2005R&D expenditures are adjusted for inflation

R&D Expenditures

NCE Approvals

0

70

140

210

280

1980 1984 1988 1992 1996 2000 2004

Sa

les

(b

illio

ns

of

20

04

$)

0

10

20

30

40

R&

D (b

illion

s o

f 20

04

$)

Pharma Industry Sales are Generally Keeping Pace with R&D

Spending

Pharma Industry Sales are Generally Keeping Pace with R&D

Spending

Source: PhRMA, Tufts CSDD Analysis, 2005

R&D Expenditures

Pharma Sales

0

55

NM

E/B

LA

Ap

pro

vals

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

NME ApprovalsBLAs Approvals

Source: FDA

NME Approvals are Declining –Biologics are

Filling the Void

NME Approvals are Declining –Biologics are

Filling the Void

Growing Percentage of NME Approvals are from Small/Mid-Tier

Pharma Firms

Growing Percentage of NME Approvals are from Small/Mid-Tier

Pharma Firms

37%

63%

53%

47%

52%

48%

74%

26%

0

40

Nu

mb

er

of

NM

E A

pp

rov

als

2001 2002 2003 2004

Small/Mid-Tier Pharma Large Pharma (top 20)

Source: Ventiv Health, 2005

24

17

21

31

Major challenges for developers

Innovation Challenge: Drug Discovery is a Long, Rigorous Process

INDEFINITE

Drug Discovery Preclinical Clinical Trials FDA Review Scale-Up to Mfg.Post-MarketingSurveillance

ONE FDA-APPROVED

DRUG

0.5 – 2 YEARS6 – 7 YEARS3 – 6 YEARS

NUMBER OF VOLUNTEERS

PHASE 1 PHASE 2 PHASE 3

5250~ 5,000 – 10,000

COMPOUNDS

PR

E-D

ISC

OV

ER

Y

20–100 100–500 1,000–5,000

IND

SU

BM

ITT

ED

ND

A S

UB

MIT

TE

D

Innovation at Risk Today: US Biopharma Business Model Becoming Unstable

• Investment companies reported that through Sept 2008, biotech financing fell to $8.2 billion, 54% lower than the $17.9 billion raised in 2007.

• In late 2008, Jefferies & Co. reported that “87% of biotech companies still remain unprofitable.”

• In 2008, Pfizer pulled out of cardiovascular and other disease areas in order to stay profitable.

Innovation at Risk Today: Innovation at Risk Today: Access to New Innovation Highly Access to New Innovation Highly UncertainUncertain

Private insurers and government drive nearly all use of medicines to generics and

“preferred” brands, making it harder for new medicines to reach patients and succeed in the

marketplace

FormulariesList of covered drugs

Tiered CopaysHigher cost to patients

for brands than for generics and preferred

brands

Prior AuthorizationPhysicians required to justify

medicine’s use before it’s covered, diminishing

prescribing of such drugs

Step TherapyPatients must try and fail on alternatives before certain

medicines are covered

Financial IncentivesPayments to physicians

and/or pharmacies for high generic prescribing rate or

switching patients to preferred drugs

Government Policy Challenges

1938 1962 2009

Drug Safety Efficacy

Comparative EffectivenessCost Effectiveness

Objective Subjective

Challenges:

Legal

RegulatoryEconomic

Political

Doctors/PatientsDrugs

Governmental

Scientific

•Can value judgments be made by third parties?

“Value, like beauty,is in the eye of the beholder.”

- Twila Brase

Major Threats to Pharmaceutical Major Threats to Pharmaceutical InnovationInnovation

Major Threats to Pharmaceutical Major Threats to Pharmaceutical InnovationInnovation

• Industry productivity and output Rapidly rising R&D costs Increasing size of clinical trials Increasing regulatory pressure

• Political threat of price controls in US Rising global healthcare costs Global price disparities

• Public discontent Safety of prescription drugs Regulatory agency accountability Industry Rx marketing practices

GenzymeInnovations for unmet medical needs

• Unmet medical needs

• Novel/innovative products

• Well defined patient and physician populations

• Complex regulatory & reimbursement strategies not

• an obstacle

• Definable pathway to commercialization

• Sustainable shareholder value

Genzyme Strategic Principles for External New Product Opportunities

• Commercial Stage Product Opportunity

• Clinical Stage Product Opportunity

• Preclinical Stage Product Opportunity

• Preclinical Stage Research Opportunity

• Diagnostic Test Opportunity

What are We Looking For?

• New product within pre-existing Genzyme markets

– Additional product for existing call-point

– Expand geographic coverage

– Expand indications

– Improve product penetration

• White space expansion

– First entry into new commercial space

– Backfill pipeline

Commercial Stage Product Opportunity

– Area(s) of common scientific interest

– Complementary skills, reagents or experience

– Often identified by Science staff

Preclinical Stage Research Opportunity

Genzyme External Opportunity Evaluation: FAQ

• What kind of deals does Genzyme do?

• Broad spectrum of deals :

–Acquisition

–Joint Ventures

–Product/Opportunity in-license

–Sponsored Research Agreements

–Joint Research Programs

ProductFocused

The search process is not bound by : $ , country , partners

Competitors :

Partners :

Every General Manager act as :

Genzyme Focus Areas

• Established focus areas (products/services)– Lysosomal Storage Diseases / Genetic Diseases– Renal– Transplantation– Endocrinology– Oncology– Orthopaedics– Diagnostics

• Emerging focus areas– Cardiovascular disease– Autoimmune diseases– Neurological diseases

• White space opportunities

All is Clear ?Any Questions?