Overview of Drug Discovery and Pharmaceuticals

Yasmin Crawford, C.E.O

Global Pharma Sales growth in single digits through to 2009

Constrained by payers and providers as they grapple with ageing population

Supported by more cautious/sceptical regulators With increasing patient acceptance of generics Except in areas of specific unmet medical need

supported by evidence based medicine More scrutiny of products pre and post launch US is critical to the success but increasingly

susceptible to cost containment with Medicare

World Pharma Market

10 major markets support growth above 6%

US will continue to dominate but with lower growth

Major driver for growth still volume

0

100

200

300

400

500

600

Billions $ Growth %

WorldMarketSalesNorthAmerica

Europe

Japan

Asia/ Africa/Australia

LatinAmerica

Drug Discovery

Fewer NCEs launched to market!

2004 (30) 2007 (<20) Approx 8000 active products in preclinical to phase IV 1600 oncology products in registration in US 2006,

Phases I-IV GSK (~130) and Sanofi Aventis (~110) hold the largest

number of molecules under R&D Biotechnology accounts for over 25% of the product

pipeline Few blockbusters across therapeutic segments Markets changing towards technological improvements Acquisition of smaller specialist companies Manufacturing forced to tailor their capabilities

*adapted from IMS data 2005

Biological Industry ripe for attack!

Global Biotech Market tops $45billion

Fastest Growing sector Makes up 25% of pharma

R&D portfolio Launch of first EPO

biosimilar June 2007 Pathway to approve

biosimilars launched in the US in June 2007

*Based on 8 Generics Markets(IMS) 0

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16

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Growth %

TotalMarket

Biotech

FixedComb

Generics

Generic Injectable Market, an opportunity

Overall Hospital sector main growth driver from 2005 Generics in Europe capture 60% of branded sales in 6months

for off patent molecules Global Generic Market $45billion European Market expected to boom to $35.9billion by 2013 Western European Injectable Market, €3billion

5 Major Markets - UK 24%, FR 23%, GE 17%, IT & SP11% Largest therapeutic areas, Oncology 29%, infection 26%,

Cardiology 11% Pain 9% Generic Sales will rise at least at 10% per year 80% Rx written generically in the UK Overall generic growth rising at 15% at least twice that of the

branded market Improved regulation speeds product to market and allows

development whilst the patent is still enforced

Major pending Patent Expiry, examples

Oncologics Irinotecan (2009),Gemcitabine (2009), Docetaxol (2009

Biologics EPO (launched 2007), G-CSF (2008/9), Copegus (2009),

Humira (2013), Enbrel (2015) Anti-infectives

Meropenem (May 2009), Moxifloxacin (2014) Anaesthetics

Desflurane (2009), Ropivacaine (2010) Others

Tacrolimus (2009), Quetiapine (2012)

Investment Opportunities

Small molecules Re-Formulation/Re-Packaging Niche Products Hospital Products New proven Technologies Bioequivalence reduced patient numbers Time to market shorter Improved Regulation New line extensions Products withdrawn from the market More flexible Manufacturing available

Types of investments and Listed Successes

Most recent acquisitions in the generics industry… Matrix invested in Focus pharmaceuticals, mainly tablet

generic pharma company for £3.2m, debt & equity(~11%)

Generic Trade sales made by Indian Companies for Distribution routes into Europe and UK

Typical Generic pharma P/E ratios are 20-30x, Hikma plc (LSE) trades at 29x, Teva (NYSE) 20x

Larger pharma acquiring technology and more specialist niche R&D companies

2009 and on….

China moves into top 10 markets Blockbuster numbers growing for niche markets that do

not require mass marketing efforts Expansion of Medicare will bring cost benefit to centre

stage Parallel import trade has slowed in Europe and the USA

but whilst price variation exists there is a possibility of renewed growth, providing there is efficient supply chain management.

Major generics start to cannibalise other brands in class in Europe so all products in class at risk ?

Elegant Science, is it enough?

Payers want clear directional evidence that links cost:benefit to appropriate targets

Providers want clarity and simplicity as well as player endorsement

Patients will want proof that polypharmacy is safe Pharma needs to improve its credibility and tolerate

generics Communication amongst all players will take a

quantum leap of faith!

Overview of Drug Discovery & Pharmaceuticals

Yasmin Crawford, C.E.O