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The Social and Economic Value in Innovation Medicines

Patrizia CarlevaroHead of the International Aid Unit - LillySyria, Damascus April 25 and 26, 2005

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Leading Causes of Death – estimates for 2002 DALYs

Ranked by Importance

Cause % of deaths in the world

1 Ischaemic heart disease 12,62 Cerebrovascular disease 9,73 Lower respiratory infections 6,84 VIH/AIDS 4,95 Chronic obstructive pulmonary disease 4,86 Perinatal conditions 4,37 Diarrhoeal diseases 3,28 Tuberculosis 2,79 Trachea/bronchus/ lung cancers 2,210 Road traffic accidents 2,1

Death rates for all causes: 57 million in 2002

Source: WHR, 2004

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Ranked byImportance

Cause % of DALY *in the world

1 Prenatal conditions 6,52 Lower respiratory infections 6,1 3 HIV/AIDS 5,74 Unipolar depressive disorder 4,55 Diarrhoeal diseases 4.26 Ischaemic heart disease 3,97 Cerebrovascular disease 3,38 Malaria 3,19 Road Traffic accidents 2,610 Tuberculosis 2,3

2004 Leading Health Problems

10 Disease Burdens in DALYs

Source: WHR, 2004, Annex Table Burden of disease in DALYs* DALY : Disability Adjusted Life Years

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10 Main Causes of DALY

Ranked by importance

Cause % of DALY* in the world

1 Ischaemic heart disease 5,92 Unipolar depression disorders 5,73 Road traffic accidents 5,14 Cerebrovascular diseases 4,45 Chronic obstructive pulmonary disease 4,16 Lower respiratory infections 3,1 7 Tuberculosis 3,18 War 3,0 9 Diarrhoeal diseases 2,710 VIH/AIDS 2,6

Source : WHO Report on Health in the World 1999 * DALY : Disability Adjusted Life Years

Health Problems for the Year 2020

5

0

10

20

30

40

50

60

70

80

90

1970 2000 2030

Source: UN, The population Prospects, 2002 Update

Africa Asia Latin America & Caribbean

EuropeNorth America

Syria

Population Life Expectancy Rises

Every year more prescription drugs are being prescribed to the elderly population

70.5

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Pharmaceutical discoveries since the 1950s have helped to cut death rates for chronic as well as

acute conditions

72%

74%

83%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Disease

Rheumatic Fever and Rheumatic Heart Disease

Arteriosclerosis

Ulcer of Stomach and Duodenum

Treatment

Antibiotics

ACE inhibitors, beta-blockers, nitrates

H2 blockers, proton pump inhibitors

Source: PhRMA, 1998, Boston Consulting Group, 1993, et U.S. National Center for Health Statistics, 1998 .

Percent Drop in Age-Adjusted Death Rate

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Medicine contributes a lot to health…but other factors are important as well

1

2

1

2

1

2

2- Genes 2- Genes 1- Environnement

Genetic Disorders

Cystic FibrosisHuntington’s Chorea Hemophilia

Chronic Diseases

Alzheimer DiseaseAdult DiabetesAsthmaCancer Cardiovascular DiseasesDepression

Communicable Diseases

HIV/AIDSHepatitisTuberculosisMalaria

1-Environment 1-Environment 2-Genes

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Revolution in Research and Technology

Chemistry Biology Genetics

Manual Work Computer Robotic

New medicines transform people lives

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Medical Innovation in chronological order

penicillinssulphonamidesaspirin

psychotropics

NSAIDs

H2-antagonists beta-blockers

Lipids lowerers, ACE-inhibitors

biotech products

chronic degenerative diseases associated with aging, inflammation,cancernatural products

and derivatives

serendipity

receptors

enzymes

genetic engineering

cellular pharmacology and molecular niology

Source: Lehman Brothers Pharmaceutical Research.

1900 1950 1960 1970 1980 1990 2000 2010 2020 2030

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Research & Development is a critical factor for the progression of discovery

The average price from development to launching a new product on the market is close to 1 Billion $.

115 m 359 m 500 m 802 m 1 Billion1970 1980 1990 2000 2004 (Hansen) (DiMasi-OTA) (B.C.G). (Tuft's Center) (Tuft’s Center)

Source : PhRMA

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OneOne

As many as 10,000 compounds must be screened to eventually find

that becomes an approved drug. Research and development expenditures pay for the

work on the other 9,999 too.

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While a patent provides 20 years of protection from the application filing date, the exclusive commercial period is on average from 11-12 years or less, because of the time it takes to

develop the product and get it approved for sale.

The pharmaceutical industry has less time to recover its investments in research &

development

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Compound Success Rates by Stages

Discovery (2-10 years)

Phase I. 20-80 healthy volunteers used to determine safety and dosage

Phase II. 100-300 Patient volunteers usedto look for efficacy and side effects

Phase III. 1000-5000 Patient volunteers used tomonitor adverse reactions to long term use

Pre-clinical TestingLaboratory and animal testing

FDA Review / Approval

Additional Post-Marketing Testing

YEARSSource: PhRMA Center for Study of Drug Development, Tufts University, 1995

Compound Success Rates By Stage

5000 - 10.000 screened

250 enter pre-clinical testing

5 enter clinical testing

1 approved by the FDA

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Pharmaceutical Industry Investment in R&D 1980-2004

0

5

10

15

20

25

30

35

40

1980 1990 2000 2004 2004

R&D Investment (USDBillions)

Other Biotech R&D *

$2.0

$8.4 $26.0 $38.8

12.6% increase from 2003

Source: PhRMA 2004

R&D Abroad & Domestic (US)

*

* Estimated in 2004

*

$10.5

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Total R&D as a Percentage of Total US Sales

17.6

17.8

18

18.2

18.4

18.6

18.8

2001 2002 2003 2004

Total R&D as %of sales

Source: PhRMA 2004

18.0

18.4 18.3 18.8

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PhRMA companies estimated to spend a record $38.8 billion worldwide on research and development of new products in 2004.

More than 106 m USD per day

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Pharmaceutical manufacturers invest a much higher percentage of sales in research and development than virtually any other industry.

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R & D Investment as a Percentage of Sales, year 2000

Research-based Pharmaceutical Companies*

15.6% R&D Global

Drugs & Medicines

Electrical & Electronics

Office Equipment and Services

Telecommunications

Leisure Time Products

Aerospace & Defense

Metals and Mining

Paper & Forest Products

All Industries, excluding « Drugs and Medicines »

17.9%

12.8%

7.8%

1.2%

8.4%

5.3 %

4.7%

10.5 % Computer Software & Services

3.9%

3.9%

3.8%

0.7%

Automotive

•“Research-based Pharmaceutical Companies” based on ethical pharmaceuticals sales and ethical pharmaceutical R&D only as tabulated by PhRMA. “Drugs and Medicine” category based on total R&D and sales for companies classified within the “Drugs and Medicine” sector tabulated by Standard & Poor’s Compustat, a division of McGraw-Hill.

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Companies have shorter and shorter times during which they can market their

new drugs and companies to recoups their expenditures spent on R&D

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Shrinking Period of Market Exclusivity Between Introduction of Breakthrough Medicines and Competing

Innovators

Source: PhRMA, 2000; The Wilkerson Group, 1995

Inderal - 1965

Tagamet - 1977

Capoten - 1980

Seldane - 1985

AZT - 1987

10

6

6

4

4

0.25 Celebrex - 1999

0 2 4 6 8 10Years of Exclusivity

Inderal (beta blocker for cardiovascular diseases); Tagamet (H2 antagonist for ulcers); Capoten (ACE inhibitor for cardiovascular diseases); Seldane (antihistaminic for allergies); AZT (antiviral for HIV/AIDS)

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It takes patience, money and dedication for the long trip from the laboratory bench to medicine chest. But it’s a

journey well worth the time and expenses, because it saves and improves millions of lives

From Laboratory to Patient