Japan's New Growth Strategy: MSD s Contribution as a Global Company

Transcription

1 Japan's New Growth Strategy: MSD s Contribution as a Global Company Presentation at Pharma Delegates Tony Alvarez Representative Director and President MSD K.K. January 20, 2011

2 Forward-Looking Statement Merck & Co., Inc., Whitehouse Station, N.J., U.S.A. This presentation contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of These statements are based on management's current expectations and involve risks and uncertainties, which may cause results to differ materially from those set forth in the statements. The forwardlooking statements may include statements regarding product development, product potential or financial performance. No forward-looking statement can be guaranteed and actual results may differ materially from those projected. Merck undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. Forward-looking statements in this presentation should be evaluated together with the many uncertainties that affect Merck's business, particularly those mentioned in the risk factors and cautionary statements in Item 1A of Merck's Form 10-K for the year ended Dec. 31, 2009, and in any risk factors or cautionary statements contained in the Company's periodic reports on Form 10-Q or current reports on Form 8-K, which the Company incorporates by reference. 2 Tony Pharma Delegates

3 No Duty to Update The information contained in the presentation set forth below was current as of December 29, While this presentation remains on the company s website the company assumes no duty to update the information to reflect subsequent developments. Consequently, the company will not update the information contained in the presentation and investors should not rely upon the information as current or accurate after December 29, Tony Pharma Delegates

4 Agenda 1 New Introduction MSD: A compelling of New MSD combination 2 Japan s New Growth Strategy 2010 New MSD 3 MSD s Global Contributions to Japan s Growth through Innovation 4 Tony Pharma Delegates

5 Agenda 1 New Introduction MSD: A compelling of New MSD combination 2 Japan s New Growth Strategy 2010 New MSD 3 MSD s Global Contributions to Japan s Growth through Innovation 5 Tony Pharma Delegates

6 Today s MSD: Expanded Global Presence Approximately 93,000 employees around the world Operations in more than 140 nations Scientists committed to finding the best science globally, and accessing a great diversity of scientific thought 2010 Revenues (Jan.-Sep.) : $33.9 billion 2009 R&D Expense: $5.8 billion 6 Tony Pharma Delegates

7 A Diverse Portfolio and Global Presence Other 4% Neuro & Ophth 3% Women's Health 4% Oncology 5% 1Q - 3Q2010 Total Revenue Animal Health 6% Consumer Health 3% Bone, Resp, Immun & Derm 25% 1Q - 3Q 2010 Pharma & Vaccines Revenue¹ Eastern Europe/Middl e East Africa Asia Pacific 4% 6% Latin America 7% Japan 9% Canada 4% Other 0% United States 42% Diabetes 8% Vaccines 9% Infectious Disease 10% Cardiovascular 10% Diversilied Brands 11% Europe 27% ¹ Excludes $38 million of other sales in 1Q Tony Pharma Delegates

8 Positioned to Capitalize on Growth Opportunities & Combined Strengths Focused Integrated Effort on Greatest Growth Opportunities Emerging Markets Biologics Vaccines Expanded and Strengthened Franchises Cardiovascular Diabetes/ Obesity Bone/Immunology Respiratory/ Dermatology Oncology Neurosciences/ Ophthalmology Infectious Diseases Mature Brands Women s Health/ Endocrine Complementary Businesses Animal Health Consumer Health Care 8 Tony Pharma Delegates

9 Best Positioned to Offer Customers a Portfolio of Options in Key Therapeutic Areas CV and Diabetes Infectious Diseases Respiratory/ Bone/ Imm/Derm Women s Health Neuro/ Ophthalmology Oncology Vaccines Mature Brands 9 Tony Pharma Delegates

10 Merck* and Schering-Plough: A Compelling Combination *Merck & Co., Inc., Whitehouse Station, N.J., U.S.A. Strong & diverse portfolio with leading brands in key businesses Powerful late-stage pipeline with more than 20 late-stage compounds in global Expanded global focus with a greater proportion of sales outside the U.S. and a dedicated strategy for emerging markets Financial strength to invest in the best opportunities in healthcare 10 Tony Pharma Delegates

11 MSD Started in Japan on October 1, 2010 Increased market presence Banyu Pharmaceutical Co., Ltd. x Schering-Plough K.K. Expanded product portfolio Diverse and robust pipeline 11 Tony Pharma Delegates

12 Our Company s Origin in Japan Merck & Co., Inc., Whitehouse Station, N.J., U.S.A. Established in 1891 Founder: George Merck 23 years old at that time 1891 Founded Merck in New York 1915 First Merck Research Laboratory in Rahway, NJ -Sulfas - Antibiotics - Hormones, etc. 1930s Established framework for scientific research cooperation with universities 12 Tony Pharma Delegates Banyu Pharmaceutical Co., Inc. Established in 1915 Founder: Toru Iwadare 26 years old at that time 1915 Synthesizing and mass-producing Salvarsan Founded Banyu during postgraduate at University of Tokyo 1946 Developed penicillin (first in Japan) Schering-Plough K.K Established in Japan under the name of Essex Nippon (renamed to Schering-Plough K.K. in 1989) 1960 Nippon Organon K.K. was founded (was merged by S-P K.K. in 2008)

13 MSD: Increased Scale Approximately 4,400 employees Approximately 2,400 MRs 15 nationalities Capital:Y26,349 million (As of October 1, 2010) Shiga Plant Osaka Office Menuma Plant Tokyo Head Office 13 Tony Pharma Delegates

14 MSD: Increasing Japan Market Presence 2009 FY Ranking 2009 FY 2010 FY Company Sales 2010 FY Sales Company Billion Ranking Billion Yen Yen ETHICAL TOTAL 8,852 ETHICAL TOTAL 8,874 1 TAKEDA YAKUHIN KOG TAKEDA YAKUHIN KOG DAIICHI SANKYO PFIZER<JAPAN> PFIZER<JAPAN> DAIICHI SANKYO CHUGAI SEIYAKU MITSUBISHI TANABE MITSUBISHI TANABE CHUGAI SEIYAKU NOVARTIS PHARMA<JA NOVARTIS PHARMA<JA ASTELLAS SEIYAKU EISAI EISAI MSD GLAXOSMITHKLINE<JA ASTELLAS SEIYAKU SANOFI-AVENTIS<JAP SANOFI-AVENTIS<JAP OTSUKA SEIYAKU ASTRAZENECA<JAPAN> ASTRAZENECA<JAPAN GLAXOSMITHKLINE<JA BANYU SEIYAKU OTSUKA SEIYAKU DAINIPPON SUMITOMO DAINIPPON SUMITOMO KYOWA HAKKO KIRIN KYOWA HAKKO KIRIN 200 TOP 15 companies 5,029 TOP 15 companies 5, SCHERING-PLOUGH<JA Tony Pharma Delegates Source: IMS 2009 and 2010 FY Actual

15 (Billion yen, NHI Basis from IMS) Continuous Growth Through Delivering Innovative Medicines & Vaccines to Japan Banyu and Merck & Co., Inc., Whitehouse Station, N.J., U.S.A. Integration Nulotan Trusopt Claritin, Qvar 1998 PegIntron Claritin Reditab Rebetol Eyevinal 1999 Singulair, Fosamac Temodal PegIntron, Others Zetia Zetia Propecia Preminent Banyu & SPKK Integration Claritin DS, Nasonex, Aroglycem Follistim Pen Remeron Asmanex Ganirest Isentress 2009 Januvia Sales in SPKK Sales in Banyu 15 Tony Pharma Delegates

16 MSD: Expanded Japan Product Portfolio Therapeutic Area Cardio / Metabolic Legacy Banyu Products Legacy SPKK Products Respiratory Infectious Disease/ Vaccine Bone Dermatology Anesthesiology Neuro/ Ophthalmology Oncology Women s Health 16 Tony Pharma Delegates

17 MSD s pipeline has been expanding (As of December 27, 2010) 2010 Phase Ⅱ 2010 Phase III Infectious Dis., V710 Osteoporosis, MK-0822 Infectious Dis., MK-7009 Infectious Dis., MK-0991 Atherosclerosis, MK-0859 Insomnia, MK-4305 Cancer, MK-8669 HPV Vaccine, V-503 Insomnia, MK-6096 Cancer, MK-0683 NHL Moved forward in 2010 Cardiovascular, SCH Schizophrenia, SCH Cancer, MK-0683 Mesothelioma 17 Tony Pharma Delegates

18 Positioned for Growth: Successful Integration Launch Accelerate Breakthrough Focus on Customer - Maximize product value Deliver on Pipeline - Keep programs on time Upgrade Capability - Develop and retain talents Build Long-term Strategy - Set course for growth in Research and Commercialization 18 Tony Pharma Delegates

19 Delivering on Our Pipeline: All Planned NDAs Achieved during Integration Planned Planned NDAs NDAs NDAs Under Review NDAs Under Review Product Product Approvals Approvals Rotavirus vaccine *Januvia AGI Cervical cancer Vaccine Daptomycin Bridion (Jan) Vorinostat *Follistim 900IU *Nasonex unscented *Januvia AGI *Temodal (Jan) Daptomycin *Januvia Insulin Rotavirus vaccine *Follistim 900IU Cosopt (Apr) Vorinostat *Januvia Insulin All submissions completed 19 Tony Pharma Delegates NDAs submitted in 2010 *Add-on indication or new formulation

20 Build Long-term Strategy: MSD s R&D Strategy is Basis for Growth Focus on priority disease areas to meet unmet medical needs and maximize opportunities Bone, Respiratory, Immunology and Endocrine, Cardiovascular, Diabetes & Obesity, Infectious Diseases, Neuroscience, Women Health, Oncology, Vaccines Redefining R&D success by looking to customers and scientific leaders early and often in product lifecycle Probability of Success Productivity Leveraging technologies to facilitate drug discovery & development Ensure a more sustainable pipeline by translating basic research productivity into late-stage clinical success Cycle Time Collaboration Focus on cycle time reductions Supplementing internal R&D capability with external collaborations 20 Tony Pharma Delegates

21 Agenda 1 New Introduction MSD: A compelling of New MSD combination 2 Japan s New Growth Strategy MSD Global Contributions to Japan s Growth through Innovation 21 Tony Pharma Delegates

22 Japan s Future in Innovation: The Cabinet s New Growth Strategy ( ) 4 growth areas and 3 infrastructure areas by 2020 In the 4 areas, 5 million new employments and 123 trillion yen in demand will be created. Science and Technology includes: 1. Construct globally competitive science-tech innovation systems 2. Construct national strategy to promote science-tech innovation 3. Strengthen basic research and accelerate innovation 4. Academia, government, and industry collaboration is key 22 Tony Pharma Delegates Green Innovation [Environment/Energy] 4 Growth Areas Life Innovation [Health care/nursing] Asian Economy 3 Infrastructure Areas Sightseeing/Region 5 Science/ 6 7 Technology/ Employment/ Finance Telecommunication Talent

23 Is the Growth Strategy Feasible? Aging Society Challenge Economic Stagnation 1) GDP per one person 2) Global share of GDP 3) IMD* global competitiveness #3 (2000) 14.3% (1990) #1 (1990) #23 (2008) 8.9% (2008) #27 (2010) * International Institute for Management Development Source: National Institute of Population and Social Security Research Note: 1), 2) IMF World Economic Outlook Database 3) World Competitiveness Yearbook 23 Tony Pharma Delegates

24 Does Economic Growth Strategy support Bio- Pharmaceutical Industries Comprehensively? Worldwide, the Bio-Pharmaceutical Industries thrive in a policy environment that comprehensively supports innovation. Our Issues: Pricing to support innovation, globally-integrated regulatory review processes, strong clinical trials environment, government support for basic research Our Issues: Pricing Regulatory Reviews Clinical Trials Basic Research Focus of Economic Growth Strategy Unapproved Drugs & Indications the primary issue New Product Premium remains only a trial & not mentioned in Strategy Pricing rules inconsistently incentivize innovative research A pre-requisite to reform: Drug approval decisions must be expedited PMDA operational funds increased in 2010 Supplemental Budget A pre-requisite for reform: Improve clinical testing environment Industry-Academia-Government partnerships crucial to success Increase Government investments & provide tax incentives Foster science careers, attract global talent, align science education & industry needs Cross-Ministerial decision -making on budgets & strategies 24 Tony Pharma Delegates

25 Significant Growth in Singapore for Pharmaceutical Industries : Japan s Competitors in Basic Research Importing global brains Top global scientists / Novel prize level (more than 2,000) ¼ of population come from other countries Major company s core facilities newly built Roche: Translational Research Center (2010) Abbott: R&D Center (2010) MSD: Translational Research Laboratory (2009) Takeda: Clinical Research Center (2008) Medtronic: Global Business Center and manufacturing site for Pacemaker (2010) Fujitsu: Healthcare Center (2010) Waseda Univ.: Bio-Science Research Center (2009) Expected GDP growth in 2010: 13~15% Pharma. Industry becomes a core to contribute its growth. 25 Tony Pharma Delegates

26 Japan s Current trends: Impact to Pharma Industries - Challenges Increasing pressure on drug pricing and reimbursement Patent expiries and growing generic threats have increased Diversification of customer needs Possibility of insurance system crisis Persistence of slow-growth economy 26 Tony Pharma Delegates

27 Japan s Current trends: Impact to Pharma Industries - Opportunities Aging population with growing healthcare needs Rising incidence of chronic disease High unmet medical needs, e.g. Alzheimer s, Oncology, etc. Increasing importance of preventive care - Increasing importance of promoting health of the working population Advancing science and technology enabling new drug discovery 27 Tony Pharma Delegates

28 Agenda 1 New Introduction MSD: A compelling of the New combination MSD 2 Japan New Growth Strategy 2010 New MSD 3 MSD s Global Contributions to Japan s Growth through Innovation 28 Tony Pharma Delegates

29 Merck*/ Schering-Plough Integration: Commitment to Discovery and Development for Patients *Merck & Co., Inc., Whitehouse Station, N.J., U.S.A. Schering-Plough and Merck R&D organizations share a common culture of scientific excellence Schering-Plough has an established presence in oncology and neuroscience, two areas Merck is building Schering-Plough s expertise in novel biologics complements Merck s BioVentures technology Schering-Plough s therapeutic areas of focus complement those of Merck Mechanistic diversity adds strength to our joint pipeline 29 Tony Pharma Delegates

30 New, Differentiated Commercial Models to Grow Our Business Launching new commercial models around the world including the U.S., EU, Japan and Canada with common tenets: Focus on customer value and trust Portfolio approach Solutions to improve health outcomes Multi-channel approaches and new technologies Efficient management of resources through common infrastructures, systems and processes Flexible models created by local market leaders who determine execution and channel selection based on local market dynamics and customer input 30 Tony Pharma Delegates

31 Investing in Future Growth Merck BioVentures Regional Business Development Franchise Strategy Invest in Future Growth Emerging Markets Brazil, China, India, Korea, Turkey, Russia and Poland Japan: Key Growth Market Become Lean & Flexible 31 Tony Pharma Delegates

32 Best Positioned R&D Pipeline Filed 2009 File File File BRINAVESS (EU) Boceprevir AIT Grass 3 (US) Acadesine DULERA 2 NOMAC/E2 (EU) SYCREST (EU) JANUMET XR (US) NOMAC/E2 (US) Ridaforolimus Sitagliptin + Simvastatin BRIDION (US) Ezetimibe + Atorvastatin SAFLUTAN (US) Sitagliptin + Pioglitazone AIT Ragweed (US) ELONVA (US) MK-0524A (US) MK-0524B MK-4305 Telcagepant Odanacatib Vorapaxar V503 1 Anticipated filing date 2 Trade name DULERA is under regulatory review in the US 3 Anticipated filing 2010/ Tony Pharma Delegates

33 Today s MSD R&D Strategy: Continued Investment in Innovation Extract greatest pipeline value from Innovative internal and external R&D Ensure a strong internal research capability Leverage the capability through collaborations Openly collaborate with the best partners Continually evaluate potential transactions From platform technologies to late-stage product opportunities In a coordinated approach across the company Celebrate the global and distributed nature of innovation! 33 Tony Pharma Delegates

34 Collaboration Creates Value Combining our Strengths Sharing our Successes Partners Discovery Innovation Formulation Subject Matter expertise 34 Tony Pharma Delegates MSD Novel technology application Clinical Development Commercialization expertise Subject Matter expertise 34

35 We have defined our Areas of Interest MSD publishes our Areas of Interest twice each year. For each therapeutic area, we list the Mechanism of Actions that we are interested in and those that we are not. Late-stage clinical compounds (phase 2b or beyond) are of interest in any therapeutic area. Visit us at: to learn more! 35 Tony Pharma Delegates Merck & Co., Inc., Whitehouse Station, N.J., U.S.A. 35

36 Build Long-term Strategy: Partnerships as the Foundation Academia, Pharma and Biotech more closely collaborate, expanding Academia s role Academia will be more involved in drug development stage (e.g. development and understanding of appropriate animal models ) VC/Biotech Academia Pharmaceutical Industry Academia Academia Basic Research Drug Discovery Drug Development Clinical Trial Approval Source: Alzheimer s & Dementia, 2008 (modified) 36 Tony Pharma Delegates

37 Academia: Powerhouse of Innovation Powerhouse of Innovation Breakthrough knowledge New concepts of disease Epoch-making technology What pharmaceutical industries need from academia Novel drug target for unmet medical needs New methodologies for target validation in human biological function Elucidate pathogenetical and pathophysiological mechanism of intractable diseases Innovative technology platform for drug development Biomarkers for disease and pharmacology 37 Tony Pharma Delegates

38 Collaborative and Innovative R&D Partnering with Academia Increases Traditional Approach Narrow alliance on specific technology/knowledge Restricted contracts Separate labs Limited information exchange Collaborative Approach Broad alliance on certain disease area or research field Comprehensive contracts Fusion labs/frequently visit each other Share all information Collaborative Approach Harvard Medical School Merck & Co., Inc., Whitehouse Station, N.J., U.S.A., 2007 A broader R&D alliance to conduct research into oncology and central nervous system disorder Columbia University - AstraZeneca, 2008 A broader pact to develop new drugs for diabetes and obesity, and to pursue basic research for neurology Universities in UK Shionogi, 2009 International academia-industry collaboration initiatives with the United Kingdom to research and develop new seeds for innovative medicine 38 Tony Pharma Delegates

39 We have a long history of successful collaborations with Japanese partners Kyorin: NOROXIN First quinolone antibiotic Yamanouchi: PEPCID H 2 antagonist for ulcers Kitasato Institute: ivermectin Antiparasitic for animals/humans Osaka University/Biken: VARIVAX /ZOSTAVAX Varicella virus vaccines Japan Tobacco: JTT-305 Osteoporosis Santen: SAFLUTAN Prostaglandin analogue for Glaucoma 39 Tony Pharma Delegates

40 Seeking Potential Partners in Japan During Much More Coming in 2011 MSD Satellite Luncheon Seminar at Bio International 2010 in Chicago New MSD Worldwide Licensing Strategy - How to Work Together with Asia Pacific Partners - 40 Tony Pharma Delegates MSD Technology Days and Partnering Meetings at Bio-Expo Japan 2010 in Tokyo Wants and Needs of MSD in Basic Research and Platform Technology - A Showcase for Partnerships in Biomarkers, Drug Delivery-Formulation and Data Management-Mining Technologies Luncheon Seminar and Partnering Meetings at Bio Japan 2010 in Yokohama

41 Toward the Best Healthcare Company in Japan Meet unmet medical needs Most trusted partner in science and innovation Deliver high customer value Achieve long-term growth 41 Tony Pharma Delegates

42 Thank you! 42 Tony Pharma Delegates