Half of all economic growth in the

last two centuries can be traced

to medical research advances.

Growth of World Population and

the History of Technology

Source: Robert Fogel/University of Chicago

-9000 -6000 -3000 -2000 0 1000 2000-40000

6000

5000

4000

3000

2000

1000

Peak of GreecePeak of Rome

Invention of Airplane

High-Speed ComputersMan Lands on Moon

Genome Project

2nd Agricultural RevolutionIndustrial Revolution

Watt Engine

Railroads

Germ Theory

PCs

Nuclear

Energy

DNA Discovered

Penicillin

Automobile

Telephone

Population (millions)

Internet

1800

1830

1860

1890

1920

1950

1980

2010

2040

30-Year Cycles of Innovation

Source: Matt Ridley, “The Rational Optimist”

Year Most Innovative Industry

Textiles

Railroads

Chemicals

Electricity

Automobiles

Aircraft

Computers

Internet

??????

Source: Estimates base on 1999 studies by Kevin Murphy and Robert Topel/University of Chicago

Economic Value of Eliminating Deaths

Heart Disease $60.5T

Cancer $58.1T

Stroke $9.5T

AIDS $9.3T

U.S. Balance Sheet 2009 $67T

Top Causes of Death

Source: AARP Bulletin / June 2007

1. Pneumonia/flu

2. Tuberculosis

3. Heart disease

4. Diarrhea

5. Stroke

1. Heart disease

2. Cancer

3. Stroke

4. Respiratory disease

5. Accidents

1907 2010

Since 1900, childhood death rates from pneumonia and

influenza have fallen 93 percent.

1820 1900 1950 2010

26

Years

31

Years

49

Years

67

Years

Source: United Nations Development Program

+5

+18

+18+36

Worldwide Life Expectancy Growth

Between 1900 and 2000,

life expectancy in the U.S.

increased 54%, from

50 to 77 years.

Source: Centers for Disease Control

Merck

1986 - 1992

250

125

0

$ billions

Market Caps of Top 10 Pharma

August 1992 April 1994

$257B

$190B

"I thought we were

doing God's work.”

- Gordon Binder

Former CEO, Amgen

Company Value ComparisonU.S. $ billions

Average: Consumer $127.0 20.5(P&G, Estée Lauder, Coca Cola, Pepsi, Kraft)

Average: Pharma $104.2 13.7(Pfizer, J&J, Roche, Norvartis, Merck, GSK, SanofiAventis,

Abbott Labs, AstraZeneca, Amgen, BMS and Eli Lilly)

Enterprise Value Est. P/E Ratio

Source: Bloomberg 4/29/2011

EXAMPLE: Cancer Prevention and Interception.

Why Now?

2. Optimal time because of advances in biomedical research

Advances in understanding cancer biology and in cancer treatments are giving us the ability to think about prevention and cancer interception.

Prevention Treatment

Pre-malignant Advanced

“Science has been a

driving force in our

health and prosperity.

And the best place to

develop the love of

science is in elementary

schools.”David BaltimoreNobel Prize, Medicine

President, CalTech (1997-2006)