Disruptive Technologies and Business Models Driving Industry Transformations

2016 Global Life Sciences Predictions

May 2016

2

Section Slide Number

Mega Trends 03

Transformation in Global Life Sciences Ecosystem 04

Ten Big Market Themes For Life Science Companies 05

Key Trends in Life Science Research Tools 06

Key Trends in Clinical Diagnostics 09

Key Trends in Pharmaceuticals 12

Concluding Thoughts 19

About Frost & Sullivan 20

Contents Contents

3

Mega Trends-Behavioural Shifts are Redefining the Market

Beyond Oncology for

Companion Diagnostics

Monetization for Chronic

Disease Care Coordination

“Beyond the pill” for

Pharma

Globalization Necessitates

Supply Chain Innovation

Regenerative Medicine

Promise Fuels Investment

Launch of Clinical mHealth

Apps

4

Transformation in Global Life Sciences Eco-system New demand spaces and shifting payment landscape are transforming fortunes of Research Tools, Clinical

Diagnostics, and Pharmaceutical companies

Life Science Research Tools

and Lab Products Diagnostics Pharmaceuticals

Ma

rke

t P

laye

rs

Dis

rup

tive

Co

mp

an

ies

P

rod

ucts

Consumables Lab Supplies Clinical

Instruments

Diagnostic

Tests

Services Companion

Diagnostics

Therapeutics CDMOs

5

Ten Big Market Themes for 2016

Rapid Growth in Single-cell

Genomics Research

Better defined regulatory

pathways will boost

Biosimilars Market

CRISPR/Cas9 Technology

Hot Amongst multiple

Industry participants

Cardiovascular, Oncology-

next wave of Cell Therapy

products

Liquid Biopsy Provides

Attractive Investment

opportunities

Biologics Contract

Manufacturing on the rise

Molecular POCT-Lucrative

M&A Opportunities Prevail

Hybrid Models drive BI

embedded in Clinical Trial

Informatics

Immunotherapies on the

fast trajectory

Social Media as an enabler

for Outreach Programs

09

07

10

04

03

02

05

01 06

08

Key Trends in Life Science Research Tools

7

0

10

20

30

40

50

0

50

100

150

200

250

2013 2014 2015

FY Total Cost 84.0 129.0 203.0

Growth Rate 53.6 57.4

Gro

wth

Rate

(%

)

FY

To

tal C

ost

($M

)

National Institutes of Health – Funding of Projects

Mentioning Single-cell Genomics, 2013-2015

Note: Grants included mentioned “single cell” and “genomics” or “single cell” and “sequencing”. All figures are rounded. Source: Frost & Sullivan; NIH RePORTER

Early 2016 will stand as a very significant transition for the single-cell genomics market as the

competitor base will nearly double this year. A number of life science research tools companies have

announced the launch of new products, or partnerships to enter the quickly growing market.

Single-cell genomics is a hot topic among life

science research tools companies, as they

race to enter the market in 2016. Fluidigm,

Thermo Fisher Scientific, and WaferGen

Bio-Systems were already positioned in the

market when Bio-Rad, Illumina, Qiagen,

and 10x Genomics announced their own

plans to enter this burgeoning market. Frost

& Sullivan expects the market entry rush to

continue through 2016.

An analysis of NIH-funded projects

mentioning single cell genomics from 2013–

2015 finds that funding totals are growing

rapidly each year. This funding soar mirrors

the rise of microRNA and epigenetics-based

research between 2005–2010 that caused a

similar urgency for companies to launch new

products to take advantage of market growth.

Rapid Growth in Single-cell Genomics Research and

Funding Drives New Market Entries in 2016

8

0

100

200

300

400

500

600

700

0

50

100

150

200

250

300

350

2013 2014 2015

FY Total Cost 12.5 87.0 288.0

Growth Rate 596.0 231.0

Gro

wth

Ra

te (

%)

FY

To

tal C

ost

($M

)

National Institutes of Health – Funding of Projects

Mentioning CRISPR/Cas9, 2013-2015

CRISPR/Cas9, a gene editing technique, can make targeted modifications to DNA accurately, cost-

effectively, and reliably. This technique catapulted onto the research scene in 2014 and companies

are flocking to provide research tools and develop therapeutics using the technology.

An analysis of NIH-funded projects mentioning

CRISPR/Cas9 from 2013–2015 finds

astronomical growth of this promising gene

editing technology. From 2013 to 2014 funding

grew 7x, and from 2014 to 2015, funding more

than tripled. Academic researchers are not the

only end users adopting CRISPR/Cas9, as the

technique is having a major impact in

therapeutics as well. The technology overcomes

may of the challenges with RNAi, TALENs, and

ZFN genome editing tools, promising to be a

market worth hundreds of millions over the next

few years.

Key companies along the spectrum of

CRISPR/Cas9 products and therapeutics include

Caribou Biosciences, Thermo Fisher Scientific,

Sigma-Aldrich, New England BioLabs, Clontech,

GeneCopoeia, OriGene, CRISPR Therapeutics,

and Editas Medicine, among others.

CRISPR/Cas9 Technology Hot Amongst Research Labs and

Therapeutics Companies

Note: Grants included mentioned CRISPR, CRISPR-Cas9, or CRISPR/Cas9. All figures are rounded. Source: Frost & Sullivan; NIH RePORTER

Key Trends in Clinical Diagnostics

10

Liquid Biopsy technologies such as NGS, qPCR and dPCR will focus increasingly on Therapy Selection

and Diagnosis

GRAIL (Illumina) - $300 million

Iniviata - $45 million Series A

Exosome $60 million; Series B

Guardant Health $100; Series D

2016 Recent

rounds of funding

IVD Market (Global)

~$60 Bn + CAGR (2016-2020) = 8%

Liquid Biopsy Technologies (Global)

~>$1 Bn + CAGR (2016-2020) =

20%

Risk

assessment

& Screening

Diagnosis Therapy Selection

$15 Bn $20 Bn

Staging and Prognosis

Monitoring

Near term

opportunities for

the application of

liquid biopsy

include oncology

and non invasive

prenatal testing

Market Size

Gro

wth

Pro

sp

ec

t fo

r L

iqu

id B

iop

sy T

ec

hn

olo

gie

s

Liquid Biopsy - An Increasingly Crowded Technology

Market Provides Attractive Investment Opportunities

ctDNA

Technologies

CTC

Technologies

High

Low

NIPT

WW~$3

.75 bn

Oncology

WW-22bn

Infectious

Testing

WW-$9.47 bn

11

High

Low High

Oncology

WW-$22bn

Infectious

Disease

WW-9.478 bn

Cardiac

WW-$1.6

Bn

Diabetes

WW ~

$16.8 Bn

Molecular POCT - Traction in Public and Private Funding

Followed by Lucrative M&A Opportunities Prevail

IVD Market (Global)

~$60 Bn + CAGR (2016-2020) = 8%

POCT Market (Global)

~$8.3 Bn + CAGR (2016-2020) = 9%

Molecular

POCT Device

Companies

(Roche)

HCIT

Capabilities

Market Attractiveness

Mark

et

Siz

e

Market Trends

• Attractive pipeline products

for molecular POCs keep

the innovation curve high,

as the market moves

toward true portability.

• This area opens

opportunities for partnership

with non-HC firms to

develop mobile solutions

and data enhancement

devices to aid coordinated

care from various sites.

• Requirement for cheap

disposable consumables

generates interest amidst

chip providers.

• Infectious disease testing

(such as Sepsis, HIV, and

Ebola) and cardiac remain

the near term most

opportunistic segments for

molecular POC applications

while oncology may be a far

- term opportunity .

Key Trends in Pharmaceuticals

13

Immunotherapies on the Fast Trajectory Checkpoint Inhibitors stress tested as Magic Bullet for cancer treatment

• Lack of solid outcomes and benefits with solid tumors have pushed pharma to invest in

immunotherapies- most valuable pharma R&D assets in 2016.

• Major segments include checkpoints, adoptive therapies, and vaccines. High value

assigned to checkpoint agents- development of robust companion diagnostics remains the

weak link.

• Growth trajectory will be moderated based on:

• Responder groups- Significant subset (>70%) do not respond to best agents

• Toxicity and Efficacy results- Severe toxicity for marketed CTLA4 products

• High costs (>100,000 per annum) and increasingly used in combination therapies

Checkpoints Adoptive Cell Therapy Vaccines

14

0.0

20.0

40.0

60.0

80.0

100.0

120.0

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2014 2015 2016 2017 2018 2019 2020

Revenue 1,673.3 2,672.8 5,659.3 9,672.6 16,050.7 24,088.2 30,381.6

Growth Rate 59.7 111.7 70.9 65.9 50.1 26.1

Year

Total Biosimilars Market: Revenue Forecast, Global, 2014-2020

Re

ve

nu

e (

$ M

illio

n)

Gro

wth

Ra

te (

%)

-

Note: All figures are rounded. The base year is 2014. Source: Frost & Sullivan

Patent Expiries, Better Defined Regulatory Pathways and

Escalating Healthcare Costs Will Boost Biosimilars Market

2016 will be most watched with the launch of Remicade and Enbrel Biosimilars

15

Note: Highest stage of development depicted.

*Other includes acute radiation syndrome and diabetes; does not include orphan drugs.

Cardiovascular, Ocular Therapies and Oncology Will Be the

Next Wave of Cell Therapy Products

Source: Frost & Sullivan

Phase 3

Phase 2

Phase 1

Marketed

AC607

(Allocure)

MESENDO

(TCA)

AMIMultiStem

(Athersys)

ALD-201

(Aldagen)

SB623

(SanBio)

MSCs

(Stemedica)

ALD-401

(Aldagen)

PDA001

(Celgene)

CD34+ cells

(Baxter)

MultiStem

(Athersys)

Revascor

(Mesoblast)

MyoCell

(Bioheart)

Ixmyelocel-T

(Aastrom)

HSSC

(Neuralstem)

MA09-hRPE

(Advanced Cell

Technology)

HSC835

(Novartis)

NiCord

(Gamida)

CLT-009

(Cellerant

Therapeutics)

HuCNS-SC

(StemCells, Inc.)

Autologous stem

cells (TCA

Cellular Therapy)

HuCNS-SC

(StemCells, Inc.)

CLT-008

(Cellerant

Therapeutics)

StemEx

(Gamida)

MPCs

(Mesoblast)

Chondrogen

(Osiris

Therapeutics)

Prochymal

(Osiris

Therapeutics)

MultiStem

(Athersys)

PDA001

(Celgene)

PDA001

(Celgene)

GBT009

(Garnet)

GBT009

(Garnet)

PLX-PAD

(Pluristem)

ALD-301

(Aldagen)

Prochymal

(Osiris/Genzyme)

Adipose-Derived

Regenerative

Cells (Cytori)

Stempeucel

(Stempeutics)

C-Cure

(Cardio3

Biosciences)

VC-01l

(ViaCyte)

ChondroCelect

(TiGenix NV)

Anterogen

(Cupistem)

Orthofix

(Remestemcel-L)

Cap – 1002 (Capricor)

Prochymal (Osiris

Therapeutics)

16

Outsourcing of Biologics Manufacturing to Emerging

Markets is Becoming Increasingly Attractive

Biologics and Final Dose Formulation (small molecules)

Contract Manufacturing Market: Revenue Forecast, Global, 2011-2020

0

5

10

15

20

25

30

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Biologics 1.86 2.06 2.30 2.63 3.03 3.41 3.81 4.27 4.72 5.19

Small Molecules 12.69 13.43 14.27 15.25 16.45 17.83 19.49 21.37 23.45 25.80

Reve

nu

e (

$ B

n)

Biologics

CAGR (2015-2020) = 11.4%

Small molecules

CAGR (2015-2020) = 9.4%

US 50.4%

Europe 27.8%

Asia 19.4%

ROW 2.3%

2015

US 47.1%

Europe 25.9%

Asia 24.5%

ROW 2.5%

2020

Biologics CMO Market: Regional Sales, Global Biologics CMO Market: Growth Rates, Global

Region Growth rate (CAGR),

2015-2020

The United States 9.9%

Europe 9.8%

Asia 16.6%

ROW 12.9%

17

Trial

Performance

Mgmt

Resource &

drug supply

optimization

Patient

Recruitment

&

Retention

BI Embedded in Clinical Trial Informatics on the Rise

with Hybrid Business Models

Site Monitoring Analytics (R&D) accelerating time to outcomes will lead to wider adoption of Adaptive Trials

and Risk Based monitoring.

Operational

Trial design

simulation

• Expected

mean trial

length and

cost

• Optimal trial

size prediction

• Devising

retention

strategies

• Optimized

CRA

resourcing

• Just-in-time

supply

• Actionable

intelligence on

trial execution

Traditional BI

vendors

Hybrid BI

vendors

• Perpetual License

based procurement

• Customized

Implementation

• Client server based

web interfaces

• Structured,

homogenous data

• Pay per use models

• Out of box &

Configurable

• Cloud, Mobile,

Social

• Structured,

unstructured,

heterogeneous data

Company to

watch out

Contains records from nearly 100 million patients from multiple healthcare providers. Draws on

a wide variety of data about each patient, including symptoms, genomic data, test results,

diagnoses, treatments and outcomes to be used for Trial Design

End goal of CT Analytics : Creating predefined operational changes based on real-world accumulated data(Adaptive)

and quantitative risk profile for monitoring trials(RBM)

18

Company to

watch out

Social Media as an Enabler for Patient Engagement

and Physician Outreach

Growth

Drivers

Drug Discovery

“ R&D Pain areas “

Pharmacovigilance

“AE monitoring”

Sales and Marketing

“ Sentiment Monitoring “

• Identification of unknown AE of

the drug

• Monitor and track the sentiments

towards a drug

• Facilitate Pharma to proactively

respond to the issues that could

impact business

• Identification of Key opinion

leaders

• Receive early warnings for market

developments

• Manage and preserve brand

equity

• Patient Recruitment and protocol

development for clinical trials

• Identify rare genetic diseases

4,401 tweets out

of 6.9 million

resembled ADR-

a report by FDA

90% of side

effects are not

reported

Healthcare

Tweets-

1,100,087,485 and

counting

11% of caregivers

and 6% of

patients share

experiences

online

FB generates

500+ TB of data

every day

57% physicians,

26% patients

generate AE

reports

Teradata® Unified Data Architecture.™ to increase the efficiency, productivity, and cost-

effectiveness of life sciences analytics, including real-world outcomes research based on Social

Media data

The Data Deluge on Social Media

19

Concluding Thoughts

Source: Frost & Sullivan

2016

Global

Lifesciences

Market

How will you

monetize Innovative

Therapeutics,

Biosimilars &

Molecular Diagnostics

to align with Value

based Care Models?

How will you

effectively create

Patient Engagement

Platforms, through

site of care evolution

outside the hospital?

Who will be your

partners in the

new era of Open

Innovation?

Where is your

organization most

vulnerable to

pending disruptions

and transformation in

Contract Research

and Manufacturing?

What are the

opportunities for new

business models and

services in Liquid

Biopsy, Single Cell

Genomics and

CRISPR/Cas9?

About Frost & Sullivan

21

More than 2,000 analysts and consultants globally curate insights from 40+ industries.

Insights that single focused information companies and strategy consultancies may miss

Market Intelligence,

Growth Consulting &

Implementation

Expertise

We are also able to support

you to grow your business or

industry & develop growth

strategies e.g. Market entry,

Customer, Branding,

Competitive strategies

40+ offices worldwide

covering mature &

emerging markets

Excellent relationships &

connections with key

stakeholders in the industry

Frost & Sullivan has successfully

completed many projects and studies

on relevant global markets

Approach & Techniques

designed to address your

specific needs

Benefits in

Partnering with

FROST & SULLIVAN

through this Service

Frost & Sullivan is uniquely positioned to help clients

understand industry transformations

22

2016 Global Life Science Program Coverage

Emerging

Technologies

Pharma &

Biotech

Research

Tools

Clinical

Diagnostics

Pharmaceuticals & Biotech

• Generics 2.0

• Cell Therapy

• Oncology

• Diabetes/Metabolic Diseases

• Neurology

Clinical Diagnostics

• Molecular Diagnostics

• Point of Care Testing

Research Tools

• Next Gen. Sequencing

Services

• Next Gen. Sequencing

Informatics

Emerging Technologies:

• CRAMS

• Biologics & Biosimilars

• Bioprocessing

2,3

4

1

3

1

2

4

23

Limited in terms of countries covered

and analyst expertise on the ground.

Global research often written from a

US base

Content only and/or limited

interactivity with analysts

Typically only a supply side

perspective

Typically only support MI and

Marketing

Focus only on a single sector of the

life sciences industry, limiting breadth

of coverage and depth of perspective

Frost & Sullivan Transformational Health Others

Our Core Value Proposition vs Others

Unparalleled breadth and depth of coverage of life sciences

value chain: Life Sciences research --> Clinical Development -->

Marketed Therapeutic Product--> Diagnostics

Highly qualified analyst teams (e.g. PhDs, Physicians and ex

Industry) on the ground in 40+ countries including 25 Emerging

Markets

Our reports are just the beginning of our market thought

leadership. We provide “any time” “any place” analyst access so

that our clients can connect with our team for market briefings, ad

hoc market/competitive insights or secondary research needs

allowing us to maintain partnerships with 7 of 10 leading Life

Science companies.

Map convergence of Pharma, Diagnostics

Medical Device, ICT, Consumer, Retail, Supply chain

Our portfolio of market, technology, competitive and economic

information supports not only MI / Marketing, but Bus Dev,

Corporate Strategy/ Innovation, R&D, etc.

Life Science Focus Areas

Global Expertise based

on Global Teams

Real Time

Interactivity

Actionable

Insights

Support of Multiple

Corporate Divisions

24

Customized Solutions for Strategic Needs

End-to-end Research Coverage Consulting Focus

NEW CHANNELS and MARKETS

PRODUCT DEVELOPMENT

M&A, ALLIANCES SUPPORT

SCENARIO PLANNING

STRATEGY DEVELOPMENT

IMPLEMENTATION

PROCESS OPTIMISATION

Market Analytics

• Industry projections (revenues, pricing)

• Competitive dynamics

• Customer segmentation/penetration

• Technology trends

One-on-One Analyst Interaction/Briefings

• On demand query support.

• Reactive opinions and insights (M&A deals,

product launches, policy changes)

Growth Consulting Services

• Customized research, business strategy, and

innovative tools that are tailor-made to address

specific projects and challenges.

Workshops: Insights to Implementation

• Ability to convert global research into actionable

and proven corporate and business strategies,

processes, and tools to help companies implement

growth processes at best practice levels.

Non Exhaustive Client List Companies Span across Pharma, Diagnostics and Research Tools in the 4 Targeted Therapeutic Areas.