New York Bio Conference 2016

Mark J. AllesChief Executive Officer

Great Progress

2

69

69.5

70

70.5

71

71.5

72

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

World Life Expectancy2005 - 2014*

New class of

medicines to treat

high blood

pressure

First treatment

for PTCL

Two new MS

drugs

First new lupus

drug in 50 years

The first drug for

Huntington’s

disease

First therapeutic

cancer vaccine

In 2014, 1 in 5

FDA

approvals are

personalized

medicines

17 new drugs

for rare

diseases

Oral

treatments

for Hep C

with upwards

of 90% cure

rates

2015: 4 new

drugs for

multiple

myeloma

First drug to

target root cause

of cystic fibrosis

2 new

personalized

medicines to

treat skin cancer

AGE

First vaccine for

the prevention of

cervical cancer

* The World Bank Data, accessed May 4, 2016, Life Expectancy at birth, total years http://data.worldbank.org/indicator/SP.DYN.LE00.IN/countries/1W?display=graph

Great Opportunities

3

Great Challenges

4

Great Challenges & Great Opportunities

5

“The Politics of Pricing” vs. The Value of Medical Innovation

6

We Have Been Asking the Same Question for Decades

7

LIFE Magazine, May 1992 TIME Magazine, April 2013

Jimmy Carter’s Cancer Treatment Inspires New Law

8

ATLANTA (AP) - Georgia's governor has signed a bill

inspired by former President Jimmy Carter's cancer

treatment.

The measure signed Tuesday by Republican Gov. Nathan

Deal prevents insurance companies from limiting coverage

of drugs for stage four cancer patients. Supporters of the bill

say patients sometimes cannot get certain drugs unless they

first try other treatment options.

Carter, now 91, announced in August that he had been

diagnosed with skin cancer that had spread to his brain and

would begin receiving doses of Keytruda. The newly

approved drug helps the immune system seek out cancer

cells appearing in a patient's body.

Carter said in March that he had stopped treatment after

several scans found no cancer in his body.

May 3, 2016

The Cost of Pharmaceuticals is a Worldwide Focus

Latin American countries are

considering joint negotiations

France is calling for the addition of drug pricing

to the agenda for the G-7 summit in May

In Japan, the government is

considering moving to annual

price reductions

Restrictive policies for NICE and

the Cancer Drugs Fund in the UK

Proposals for drug pricing

transparency in the EU

Countries in Asia are looking to

NICE Cost Effectiveness

Assessments as a model for

reimbursement decisions

The United Nations Secretary

General has convened a high-

level panel on access to

medicines

China CFDA proposal to require

lowest prices in Asia for new drug

applications

$-

$1,000

$2,000

$3,000

$4,000

$5,000

1980 2004 2009 2014 2019 2024

Na

tio

na

l H

ea

lth

Ex

pe

nd

itu

res

(in

Bil

lio

ns

)

NATIONAL HEALTH EXPENDITURES IN BILLIONS, 1980-2024

The Growing Aging Population Drives Healthcare Spending Increase

1. Centers for Medicare & Medicaid Services. “National Health Expenditure Projections 2014-2024.” July 2015. Available at: http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-reports/NationalHealthExpendData/NationalHealthAccountsProjected.html

Baby Boomers

Entering Medicare

Unless We Find New Solutions, The Cost of Conditions Like Alzheimer’s, Diabetes and Obesity Will Be Crippling

$1.1 Trillion

$48B - $66B

$390B - $580B

Sources: Changing the Trajectory of Alzheimer’s Disease: How a Treatment by 2025 Saves Lives and Dollars, Alzheimer’s Association;

The State of Obesity: Better Policies for a Healthier America: 2014, Robert Wood Johnson Foundation

Proportion of Americans Age 65 and Older Living

with Alzheimer’s by Disease Stage, 2015-2050

43%

27%

30%

0

2015 Current

5.1 million

48%

23%

28%Severe

Mild

Moderate

2050 Trajectory

13.5 million

Far Too Much Cost In Healthcare Is Driven by Waste

HUNDREDS OF BILLIONS CAN BE SAVED ANNUALLY WITHOUT ADVERSELY IMPACTING PATIENT CARE

Sources: 1. http://healthaffairs.org/healthpolicybriefs/brief_pdfs/healthpolicybrief_72.pdf 2. http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3934668/ 3.http://www.cdc.gov/tobacco/data_statistics/fact_sheets/fast_facts/ 4.

http://www.ncsl.org/portals/1/documents/health/MedicalMalReform-2011.pdf 5. 0 Agency for Healthcare Research and Quality. Statistical Brief #172, April 2014 Available from: http://www.hcup-us.ahrq.gov/reports/statbriefs/sb172-Conditions-

Readmissions-Payer.pdf (Accessed December 9, 2014). 6. IMS Institute for Healthcare Informatics. Avoidable costs in US healthcare: the $200 billion opportunity from using medicines more responsibly. June 2013.

http://www.imshealth.com/deployedfiles/imshealth/Global/Content/Corporate/IMS%20Institute/RUOM-2013/IHII_Responsible_Use_Medicines_2013.pdf. Accessed March 2015.

12

Empowering Patients & Digital Medicine:People Will Be More “Connected” Than Ever

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“Big Data” & Personalized Medicine:More Advances Expected Over the Next 5 Years

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Value-Based Insurance

Design

Disease Management

Programs

Employer Health &

Wellness Programs

Eliminated or Reduced

Copays

Fully Covers Preventive

Care

Reduced Premiums if

Participated in Disease

Management Program

Linked Pharmacists &

Employees to Fight

Chronic Conditions

Smoking Cessation

Programs

Obesity & Wellness

Education and

Programs

Who’s Done it? Who’s Done it? Who’s Done it?

How Employers are Reducing Healthcare Costs

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Partnering with Government to Advance Solutions

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AMP (Accelerating Medicines Partnership)Developing new diagnostics and targets in Alzheimer’s, type 2 diabetes, rheumatoid arthritis, and lupus

The Partners: biopharmaceutical companies, NIH, patient and disease organizations

BIOMARKERS CONSORTIUMCombining expertise and resources to rapidly identify, develop, and qualify biomarkers, which will then advance

new therapies and guide improvements in regulatory and clinical decision making

The Partners: biopharmaceutical companies, NIH, CMS, FDA, patient and disease organizations

LUNG-MAP (Lung Cancer Master Protocol)Using comprehensive genetic screening to identify mutations in lung cancer patients in order to direct them to a specific investigational treatment, all operating under a single clinical trial protocolThe Partners: biopharmaceutical companies, NIH, FDA, patient and disease organizations

CLINICAL TRIALS TRANSFORMATION INITIATIVE (CTTI)CTTI engages all stakeholders as equal partners to analyze existing research impediments and recommend consensus-driven, actionable solutions that will lead to a more sustainable and effective clinical trial system.The Partners: biopharmaceutical and device companies, NIH, CMS, professional societies, academic institutions, patient and disease organizations

REAGAN UDALL FOUNDATION FOR THE FDA Independent 501(c)(3) not-for-profit organization created by Congress to advance the mission of the FDAThe Partners: biopharmaceutical and device companies, NIH, CMS, professional societies, academic institutions, patient and disease organizations

Part D – One of the Most Successful Partnering Examples

17

Gaining Part

D coverage

resulted in

an

8%decrease in

hospital

admissions

for seniors

overall

PHARMACEUTICAL INDUSTRY SUPPORT FOR THE AFFORDABLE CARE

ACT ESTIMATED TO TOTAL APPROXIMATELY

$90B BY 2020, WITH

APPROXIMATELY

$30B IN EXPENSES FROM 2011 -

2020 RELATING TO ELIMINATING PART D

COVERAGE GAP

Sources: PhRMA Medicines in development for Older Americans Reports, 2003 and 2013; Kaestner R, Long C, Alexander C. Effects of prescription drug insurance on hospitalization and mortality: evidence from Medicare Part D. The National Bureau of Economic Research. Published February 2014; http://www.businesswire.com/news/home/20120430005168/en/2020-Pharmaceutical-Industrys-Support-U.S.-Affordable-Care

Retail Spending on Prescription Medicines Is a Small Share of Total US Health Care Spending

• Prescription medicines today account for about 10% of health care spending in America, the same percentage as in 1960.

• PhRMA analysis of CMS data. National health expenditures by type of service and source of funds, CY 1960-2013. Baltimore, Md.: CMS; 2013. Accessed February 2015. Profile Figure 4 Accessed at http://chartpack.phrma.org/biophrma-chartpack/spending-and-costs/retail-spending-on-prescription-medicines-is-a-small-share-of-total-us-health-care-spending.

*Other includes dental, home health, and other professional services as well as durable medical equipment costs.

One Driver of Healthcare Spending Guaranteed to Go Down in Cost:Prices of Current Best-In-Class Therapies, Due To Limited Exclusivity Periods

Medicine Year

Brand

Price

Then

Generic

Price

Now

%

Change

DIOVAN HCT® 2010 $87 $15 -85%

LIPITOR® 2010 $85 $5 -95%

PLAVIX® 2011 $166 $8 -97%

SEROQUEL® 2010 $87 $7 -97%

ZYPREXA® 2010 $393 $12 -98%

Figures represent the average annual price for 30 pills of the most commonly dispensed

form and strength. “Then” price represents the average price in the year prior to generic

entry. “Now” price represents the average price in CY 2016.

Sources: IMS Analysis of PhRMA, May 2015; Kleinrock M. Daily cost of Medicare Part D. December 2013 Update. December 2013. IMS Institute for Healthcare Informatics.

Daily Cost of Top-10* Therapeutic Classes Most

Commonly Used by Part D Enrollees Has Declined

and is Estimated to Continue to Decline

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

Jan

-06

Jul-

06

Jan

-07

Jul-

07

Jan

-08

Jul-

08

Jan

-09

Jul-

09

Jan

-10

Jul-

10

Jan

-11

Jul-

11

Jan

-12

Jul-

12

Jan

-13

Jul-

13

Jan

-14

Jul-

14

Jan

-15

Jul-

15

Jan

-16

Jul-

16

Jan

-17

Jul-

17

Co

st P

er D

ay (

$)

Actual

Estimated

* From 2006

19

Solutions Will Come From Us

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Source: Sampat B, Lichtenberg F. What are the respective roles of the public and private sectors in pharmaceutical innovation? Health Affairs. 2011; 30(2):332-339.

Over 7,000 New Medicines in Development

CANCERS

1,813

CARDIOVASCULAR

DISORDERS

599

DIABETES

475HIV/AIDS

159

IMMUNOLOGICAL

DISORDERS

1,120

INFECTIOUS

DISEASES

1,256

MENTAL HEALTH

DISORDERS

511

NEUROLOGICAL

DISORDERS

1,329

21

Source: Adis R&D Insight Database. Accessed May 2015.

Investment Is Coming From Our Industry

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Celgene Has Championed a Mutually Beneficial Collaborative Model

CELGENE

PLATFORMS

FibrosisCancer

Stem Cells/Resistance

Immuno-Oncology

EpigeneticsNext

GenerationBiologics

ProteinHomeostasis

Immunology

Novel IMiDs® /CRBN & Other

Ubiquitin LigaseTargets

New Targets, EpigeneticPriming &

Convergence w/ Metabolic Targets

GDF Family PKCq,

BTKi, Novel Targets

JNK1, New Targets,

Novel phenotypic

screens

Payload Delivery,Next GenEnhanced Activities

Complementary Approaches to

I/O,Breaking Tumor

Tolerance

Unique Validation / Testing

Capabilities fromTumor Tissue

23

“

Future Medical Breakthroughs Will Come from Innovative & Entrepreneurial Solutions

“Patients Are Waiting…”

New York Bio Conference 2016

Mark J. AllesChief Executive Officer