Big Pharma - The Way Forward

Anders Ekblom Executive Vice PresidentGlobal Drug Development

Swedish-American Life Science Summit20th August 2009

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AstraZenecaGlobal R&D organisation

MontrealBoston

WilmingtonGaithersburg

Bangalore

Osaka

Reims

SödertäljeMölndalLund

Alderley ParkCharnwoodCambridge

Shanghai

Mountain View

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Agenda

The Pharmaceutical Industry in Perspective

Challenges

Opportunities

Scorecard for Future Success – AZ Case Study

The Pharmaceutical Industryin Perspective

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Presentation prepared for AstraZeneca: 14th May 2009

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Global USA EU5J apan Pharmerging

Source: IMS Health MIDAS MAT December 2008, Pharmerging markets = China, India, Russia, Brazil, Mexico, Turkey and South Korea.

Global Sales and Market Growth Pharmaco challenges

Global Pharma Historical Market Dynamics & Current Economic Environment

> The USA/top 5 Europe/Japan no longer ‘Mr Atlas’

> Lower GDP growth and tax revenues will impact healthcare budgets/promote more aggressive cost containment

> Biotechnology, a big growth area, affected by lack of investment funds

> Several big selling drugs will face patent expires during the next few years

> The most attractive areas for growth are in emerging markets

Pharmaceutical Industry -Global sales

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> $897+ million USD to bring one drug from concept to market

> 12 years to develop a new medicine

> One in 5000 new chemical compounds make it to market

> 80% drugs fail leaving 20% to fund the R&D engine

Pharmaceutical Industry -Key facts

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This graph is based on data from 22 companies (10 Major and 12 Mid and Other)

Major companies are defined as those spending ≥US$ 1.8 billion in 2005 on ethical pharmaceutical R&D.Mid and Other companies are defined as those spending <US$ 1.8 billion in 2005 on ethical pharmaceutical R&D.

Pharmaceutical Industry -R&D expenditure

Pharmaceutical IndustryChallenges

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Industry Overview: Global R&D expenditure, development times, global sales and NME output 1998 - 2008

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*The development time data point for 2008 includes data from 2007 and 2008 only

Source: CMR International (2009 FactBook) & IMS Health

+160% Sales

+ 80% R&D

+30% Dev.times

-43% NMEs

Challenges -Industry Trends

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Black numerals refer to number of NME entries required in each phase to obtain 1 Approval; figures in red box are success rates for each phase

Source: PBF R&D General Metrics 2008, slide 198Cohort: PBF member companies

NME Success Rates By Phase And Overall2004-2008 Industry Portrait, Pure

Challenges -R&D Productivity

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> Mergers (risk vs. reward)

> 75% of large mergers fail to create shareholder value greater than industry averages

> Pricing Pressures (ROI on R&D)

> NICE and HTA

> Patent Expiry

> 20 year patent – 12 year development time = limited time to recoup R&D costs

Challenges -Industry Trends continued

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NICE: Impact so far

Approved

Restricted

Research only

No use

Result of 232 reviews and decisions

Pharmaceutical IndustryOpportunities

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Opportunities -Future Unmet Medical Need

> Symptomatic Disease modification/prevention

> One size fits all Personalised medicine

> Ageing population

> Rational sequence of treatment and combinations

ObesityLiving longer

Stress/PainAllergy

Smoking addiction

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We apply our extensive scientific expertise in this field to

> drive greater disease understanding

> ensure the safety of medicines

> improve efficacy & success rate

Model MarkerMechanism

Patients

Opportunities -Predictive Science

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Examples of Predictive Science

> Identifying and using biomarkers to measure disease progress or the effects of a drug or combination of drugs in treatment.

> Using sophisticated computational and imaging technologies to model what happens in biological systems, which can help us predict safety, efficacy and doses before moving our studies into man.

> Looking for a better model for animal-to-man predictions through translational understanding of PK/PD relationships.

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> Emerging areas of research that promise to transform our understanding of human health and disease in the coming years

> Biologics are increasing due to genomics

> Researchers are discovering how to use human molecules—genes, proteins, and antibodies as drugs

> Fewer toxicological issues with biologics

Opportunities -Biologics & Genetics

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“ Emerging markets will play a major

part in the future of the (life

science) industries. Companies will

have to significantly expand

investment in emerging markets

across a wide range of activities,

including Research and Development.

“

- Economist Intelligence Unit

& Deloitte Touche Tohmatsu

Opportunities -Emerging Markets

Scorecard for Future SuccessAZ case study

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“MAKING

THE MOST MEANINGFUL DIFFERENCE

TO PATIENT HEALTH THROUGH GREAT MEDICINES”

Performance PeoplePatient NeedsProducts

Strengthen

the pipeline

Grow the business

Reshape

the business

Change our behaviour and our

culture

Customer-centric

mindset

Lean and agile

organisation

Responsible leaders who make every interaction count

Valued

medicines

The Fast Forward planAstraZeneca - Our Strategy

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> Cardiovascular and Gastrointestinal

> Oncology and Infection

> Neuroscience

> Respiratory and Inflammation

> New Opportunities

> Across Biologicals, Small Molecules, Vaccines

AstraZenecaAreas of Medical Focus

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AstraZenecaInnovation Center China (ICC)

>AZ’s newest global R&D centre site

>Focus on translational science by developing knowledge on potential ethnic difference and regional unmet medical needs

>Provide science support for our activities in this region

>Tap into the large talent pool and increasing innovation

ICC facility opening ceremony, Oct 15, 2008

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AstraZenecaPersonalised Healthcare (PHC)

> AZ evaluates every new drug candidate for PHC opportunity as a core component of the R&D Operating Model

> Key AZ projects in regulatory development actively testing PHC strategies

> IRESSA – PHC in action

> Dedicated team within R&D

“PHC aims to create superior patient outcomes through the use of

healthcare tools and diagnostics, achieving “right treatment, right

patient, right dose, right (first) time”

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AstraZenecaLCM Update - Iressa

M+, mutation positive; M-, mutation negativePre-planned analysis of patients in which EGFR mutation status was available

Treatment by subgroup

interaction test, p<0.0001

EU approval received across all lines of therapy for EGFR mutation positive NSCLC based on INTEREST, IPASS & full data review – July 09

Probabilityof PFS

In EGFR mutation-positive patients, IRESSA reduces the risk of

progression by 52% vs. doublet chemotherapy

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Gefitinib EGFR M+ (n=132)Gefitinib EGFR M- (n=91)Carboplatin / paclitaxel EGFR M+ (n=129)

Carboplatin / paclitaxel EGFR M- (n=85)

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AstraZenecaInnovative Partnerships

> In-licensing• DSP, Dynavax, Argenta

> Acquisitions• Arrow, Kudos, MedImmune

> Spin Outs• Albireo

> Fostering• Cancer Research UK

> Research and Screening• Alcon

> Risk-Sharing• BMS

> Combination Therapy• Pozen, Abbott, Merck

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AZD6244

MK-2206

First combination of two unapproved agents in early development, from separate pharma companies to treat patients with cancer

Combination will block signalling in the two key pathways involved in cancer cell survival and growth

Combination has much higher chance of providing benefit to patients with cancer than either agent alone

AstraZeneca & Merck Phase 1 Collaboration

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AstraZenecaBPO in Clinical Data Management (CDM)

> December 2007: AZ partnered with Cognizant for CDM operations

> Largest outsourcing agreement of it’s kind in the pharmaceutical industry

> Drivers:

> Process simplification and efficiencies

> Reduce costs

> Strategic decision to invest in core capabilities

> Benefits:

> $150Mn cost reduction over 5 years

> Standardised high quality delivery process and tools

> $10Mn joint investment to fund continuing transformation and innovation

> Transition successfully delivered in 6 months

> In ‘business as usual’ the CDM engagement is delivering to targets and meeting the broader organization goals of AstraZeneca

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AstraZenecaCase study

Scorecard for Long-Term SuccessSuccess Factor YES NOSmall molecules

Biologicals

Vaccines

Focus on speed, quality and cost

Production & distribution capability

Global reach

Leverage emerging markets

Personalised Healthcare

Innovative Partnerships