Strategic Overview of the Biotechnology Industry

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1 Strategic Overview of the Biotechnology Industry Cavan Redmond Executive Vice President General Manager Wyeth BioPharma Business Unit June 15, Wyeth.

2 Risk and Innovation Create Opportunity Biotech Share Listings Number of IPOs, by year '79 '85 '90 '95 '00 '04 * Through April Source: Wall Street Journal, May 20, 2004 by David P. Hamilton * 2

3 Funding the Future As the industry regains its strength, there is more money for frontier research in biotechnology Companies are also raising more money industry revenues are growing and profits are finally in view Billions of Dollars IPOs, Follow-Ons, Venture Capital, and other sources Total Revenues Total Net Income 0 '98 '99 '00 '01 '02 '03 0 '98 '01 '03 '05 Est. '08 Est. -6 '98 '01 '03 '05 Est. '08 Est. Data: Biotechnology Industry Organization, Ernst & Young, Bloomberg Financial Markets Source: Business Week May 24,

4 Profile of the Biotechnology Industry 1,400 ~360 Biotechnology Companies $ Generating Revenue 155 Products Approval by FDA 10 Products With Sales >$1Bn 4

5 Profile of the Biotechnology Industry 1, Total # of Biotech Companies ~ Public Private and Public Biotechnology Companies $ Generating Revenue 155 Products Approval by FDA 10 Products With Sales >$1Bn 5

6 Profile of the Biotechnology Industry 1, Revenue: $24.9 Billion 2003 Revenue: $41.3 Billion $0-0.5 million $0.5-5 million $5-50 million $ million $500+ million ~360 Biotechnology Companies $ Generating Revenue 155 Products Approval by FDA 10 Products With Sales >$1Bn 6

7 Biotech Products The Future is Now Total Market Biotech Fixed Combinations Generics *Generics Market based on 8 key markets Source: IMS Health: MIDAS, MAT Dec % Growth Constant Dollars 7

8 Genentech Only A Few Have A Portfolio of Biotech Products Number of Total Launched BioPharma Products Number of U.S. Marketed Products Amgen JNJ Wyeth Biogen Idec SP Medimmune Berlix Lilly Roche Source: IMS Health December 2003 National Sales Perspectives. Wyeth total includes European BMP. 8

9 Globalization of Biotech is Critical Sales (US$ Bn) North America accounted for 63% of sales in North America Africa, Asia & Australia Europe Latin America Source:IMS Health: MIDAS, MAT Dec

10 Time-Based Innovation Average Years to First Product Average Years to Profit Average Years From IPO to Profit Years 10

11 Biotechnology Industry Creating Accessible Innovation Global Revenue U.S. Europe Asia Source:IMS Health: MIDAS, MAT Dec 2003 PhRMA: R&D Expenditure 2001 $41.3 Bn $30.3 Global R&D Expenditures $22.0 Bn $16.3 $229.5 Bn $30.1 Bn $8.3 $5.0 $1.4 Source:Ernst & Young: Beyond Borders The Global Technology Report 2003 $0.2 11

12 Investing Today for Tomorrow's Healthcare System Pharmaceutical Market Global $467.9 Bn U.S. Pharmaceutical Market U.S. R&D Expenditures $229.5 Bn $30.1 Bn Source:IMS Health: MIDAS, MAT Dec 2003 PhRMA: R&D Expenditure

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15 Declining Drug Approvals is Biotechnology s Opportunity New SMD, rdna and mab Therapeutics Approved in the U.S. (1/1/90 10/1/03) Number of Products SMDs rdna/mab Note: SMD = small molecule drug rdna = recombinant protein mab = monoclonal antibody Source: Tufts Center for the Study of Drug Development Outlook

16 The Global Innovation Gap Number of Top 50 NCEs by Country of Origin U.S. Japan Switzerland EU - 15 Total Source: Gambardella, Alfonso, et al. Global Competitiveness in Pharmaceuticals/A European Perspective. November,

17 The Cross-Over Effect Pharma Integrated Infrastructure Global Reach Financial Resources Partnership Drive Biotechnology Discovery Innovation Technical Expertise Risk Profile Partnership Driven 17

18 R&D Budget Allocation Screening and Testing Dosage Formulation Clinical Evaluation: Phase IV Regulatory Process 11.0% 15.6% 4.9% 8.0% 32.0% 12.9% 9.1% 4.5% Synthesis and Extraction Toxicology Clinical Evaluation: Phases I, II and III Process Development Others 2.0% Source:PhRMA Annual Survey 18

19 Increasing Cost of Development Mean Clinical and Approval Phases by Therapeutic Class: CNS Endocrine Anticancer Respiratory Cardiovascular Anes/Analgesic Antiinfectives Clinical Approval Years Source: Tufts Center for the Study of Drug Development 19

20 Development Risks Standard Probabilities of Success Phase 0 Phase I Phase II Phase III Phase IV Small Molecules Replacement Proteins Therapeutic Proteins Therapeutic Vaccines Prophylactic Vaccines 12% 20% 30% 65% 95% 20% 35% 40% 65% 95% 12% 20% 30% 65% 95% 12% 20% 30% 65% 95% 22% 39% 54% 68% 96% Source: Tufts Center for the Study of Drug Development 20

21 Biotech Partnering and Alliances Biotech Alliances of Top 20 Pharmas by Stage at Signing (n=700) Alliances Alliances Alliances Alliances Discovery Lead Preclinical Phase I Phase II Phase III PLA/NDA Approved Source: Recombinant Capital Filed 21

22 Wyeth s Alzheimer s Program Utilizes All Three Platforms Alzheimer s Disease Vaccines Proteins Small Molecules Peptide-CRM Conjugate (ACC-001) Alliance with Elan Humanized Antibody (AAB-001) 5HT 1A Antagonist (SRA-333) Gamma Secretase Beta Secretase (BACE) 22

23 Manufacturing Commercialization Sustained Growth R&D Requirements 23

24 Breaking The Manufacturing Bottleneck Transformation Multiple Sites Technology Transfer Global Work Force Regulatory Interactions 24

25 Commercialization Sustained Growth Manufacturing R&D Requirements 25

26 BioPharma Strength R&D Strength Discovery Clinical Low Commercialization Strength High 26

Drugs, medical progress,

Drugs, medical progress, and the road ahead Scott Gottlieb, MD Resident Fellow The American Enterprise Institute Page 1 The Pharmaceutical Industry s Market Global Pharmaceutical Sales, by Region (in billions