A Pharma perspective on healthcare needs and innovation in drug discovery

Patrick VallanceHead of Drug DiscoveryGlaxoSmithKline

“We need to adopt a new mindset. We in big pharma should never take

for granted our right to exist; our business model is not written into any country’s constitution.

So we should be turning up to work every day with the mindset that we are earning the right to exist.

We are earning it by meeting the expectations of society. When you start to think like this,

you see the world differently.“

Andrew Witty, CEO, GlaxoSmithKline – Harvard, February 2009

A New Mindset

Science in Society – DTI MORI 2005

Public trust is low

The Challenges are Significant

In the past 20 years modern drugs have revolutionised the practice of Medicine and the outlook for patients

The unmet need remains high

The bar is also high

placebo

changing expectations

cost

the public health agenda

Fabry’s Disease

Pain throughout the body

Impaired sweating

Heat/cold intolerance

Skin rashes (angiokeratomas)

Corneal whorling

Hearing problems

Gastrointestinal problems

Heart problems

Kidney problems

Nervous system problems

Psychological issues

Pain throughout the body

Impaired sweating

Heat/cold intolerance

Skin rashes (angiokeratomas)

Corneal whorling

Hearing problems

Gastrointestinal problems

Heart problems

Kidney problems

Nervous system problems

Psychological issues

Large improvement in pain in Fabry’s Disease

Active Placebo

Large improvement in pain in Fabry’s Disease

The Challenges are Significant

In the past 20 years modern drugs have revolutionised the practice of Medicine and the outlook for patients

The unmet need remains high

The bar is also high

placebo

changing expectations

cost

the public health agenda

R&D for a New Medicine: 10+ years, $1 bn+

Sources: Drug Discovery and Development: Understanding the R&D Process, www.innovation.org; CBO, Research and Development in the Pharmaceutical Industry, 2006

IndefiniteIndefinite

Drug Drug DiscoveryDiscovery PreclinicalPreclinical Clinical TrialsClinical Trials

RegulatoryRegulatoryReviewReview

Scale-Up to Scale-Up to ManufactureManufacture

Post-Post-MarketingMarketing

SurveillanceSurveillance

1Approved

NewMedicine

0.5 – 2 0.5 – 2 YearsYears6 – 7 Years6 – 7 Years3 – 6 Years3 – 6 Years

Number Of Patients / Subjects

PhasePhaseII

PhasePhaseIIII

PhasePhaseIIIIII

55250250~ 5,000 – ~ 5,000 – 10,00010,000

CompoundsCompounds

Pre

-Dis

cove

ryP

re-D

isco

very

20 – 100

100 – 500 1,000 – 5,000

IND

Sub

mitt

ed

ND

A S

ubm

itted

… … a big challenge for addressing both developed and developing world diseasesa big challenge for addressing both developed and developing world diseases

Source: Burrill & Company; US Food and Drug Administration.Note: NMEs do not include BLAs

26 2522

28

53

39

30

35

2724

17

21

31

18 18

14

$12 $13 $13$15

$17$19

$21$23

$26

$30$32 $33

$39 $39

$43

$54

0

10

20

30

40

50

60

0

5

10

15

20

25

30

35

40

45

50

$55

New Drug Approvals (NMEs) PhRMA Member R&D Spending

New

Dru

g App

rova

ls (N

MEs)

Pha

rma

R&

D ($

billi

ons)

92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

R&D Productivity Gap

The realities of having the best pipeline

0.0x 0.1x 0.2x 0.3x 0.4x 0.5x 0.6x 0.7x

Lehman Brothers PharmaPipelines (Sept 2007)Pharma Replacement Power – NPV

Pipeline renews 60% of sales

LB Method: [NPV of recent launches (06-07) + NPV of pipeline opportunities from ‘08-’13] / NPV of products marketed before 2006.

GlaxoSmithKlineMerck

Bristol Myers Squibb

Novartis

Johnson & Johnson

Sanofi-Aventis

AstraZeneca

Pfizer

Wyeth

Eli Lilly

Roche

Abbott Labs

Schering Plough

AVERAGE

R&D for a New Medicine: 10+ years, $1 bn+

Sources: Drug Discovery and Development: Understanding the R&D Process, www.innovation.org; CBO, Research and Development in the Pharmaceutical Industry, 2006

IndefiniteIndefinite

Drug Drug DiscoveryDiscovery PreclinicalPreclinical Clinical TrialsClinical Trials

RegulatoryRegulatoryReviewReview

Scale-Up to Scale-Up to ManufactureManufacture

Post-Post-MarketingMarketing

SurveillanceSurveillance

1Approved

NewMedicine

0.5 – 2 0.5 – 2 YearsYears6 – 7 Years6 – 7 Years3 – 6 Years3 – 6 Years

Number Of Patients / Subjects

PhasePhaseII

PhasePhaseIIII

PhasePhaseIIIIII

55250250~ 5,000 – ~ 5,000 – 10,00010,000

CompoundsCompounds

Pre

-Dis

cove

ryP

re-D

isco

very

20 – 100

100 – 500 1,000 – 5,000

IND

Sub

mitt

ed

ND

A S

ubm

itted

… … a big challenge for addressing both developed and developing world diseasesa big challenge for addressing both developed and developing world diseases

Scientific publications in biomedicine

A disconnect between discovery and invention?

New Medicines

The opportunity has never been greater

Reintroduce Scientific Judgement

CEEDD

Evolution From Monolith

Virtualization of Drug

Discovery

External Resources

InternalResources

CEDDs

Pharma

CentralizedControl/Management

De-CentralizedControl/Management

ScientificOpportunity

ScientificOpportunity

Patient needPatient need

Market sizeMarket size

How should we choose where to invest discovery effort?

External Internal

Pipeline strength

Organisationalstructure

The Market

Source: Pharma Pipelines – Strategic Analysis and Conclusions 2006 – Lehman Brothers

The Lehman Brothers analysis of predicted global sales for 2006 does not include generic drugs and estimates that their database captures 80% of branded drug sales.

Diabetes, cancer and inflammation projected to be the biggest growth opportunities

2006 Estimated Global Sales

18,

808

43,

928

15,

337

11,

549

65,

275

17,

793

76,

850

26,

875

19,

481

39,

910

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

Diabet

es

Cance

r

Infla

mm

atio

n

Derm

atolo

gy

Met

abolis

m/E

ndocrin

ology

Drugs

Genito

-Urin

ary

Haem

atolo

gy

Sexual

Dys

funct

ion

Imm

une Sys

tem

Ophthal

mic

Dru

gs

CNS

Respira

tory

2005 - 2010 Market Growth p.a.

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Diabet

es

Cance

r

Infla

mm

atio

n

Derm

atolo

gy

Met

abolis

m/E

ndocrin

ology

Drugs

Genito

-Urin

ary

Haem

atolo

gy

Sexual

Dys

funct

ion

Imm

une Sys

tem

Ophthal

mic

Dru

gs

CNS

Hormone

Control

Cardio

vasc

ular

Respira

tory

Gastro

inte

stin

al

Anti-In

fect

ives

Hormone

Control

Cardio

vasc

ular

Gastro

inte

stin

al

Anti-In

fect

ives

Glo

bal

Sal

es

$m

Public Funding

ScientificOpportunity

ScientificOpportunity

Patient needPatient need

Market sizeMarket size

How should we choose where to invest discovery effort?

External Internal

Pipeline strength

Organisationalstructure

Small integrated, empowered teams

35 internal engines

35 external engines

Corporate Venture Fund

New/expanded in 2008/2009 YTD

Pharma partnerships

R&D for a New Medicine: 10+ years, $1 bn+

Sources: Drug Discovery and Development: Understanding the R&D Process, www.innovation.org; CBO, Research and Development in the Pharmaceutical Industry, 2006

IndefiniteIndefinite

Drug Drug DiscoveryDiscovery PreclinicalPreclinical Clinical TrialsClinical Trials

RegulatoryRegulatoryReviewReview

Scale-Up to Scale-Up to ManufactureManufacture

Post-Post-MarketingMarketing

SurveillanceSurveillance

1Approved

NewMedicine

0.5 – 2 0.5 – 2 YearsYears6 – 7 Years6 – 7 Years3 – 6 Years3 – 6 Years

Number Of Patients / Subjects

PhasePhaseII

PhasePhaseIIII

PhasePhaseIIIIII

55250250~ 5,000 – ~ 5,000 – 10,00010,000

CompoundsCompounds

Pre

-Dis

cove

ryP

re-D

isco

very

20 – 100

100 – 500 1,000 – 5,000

IND

Sub

mitt

ed

ND

A S

ubm

itted

… … a big challenge for addressing both developed and developing world diseasesa big challenge for addressing both developed and developing world diseases

Leading the pack – ATM Index

Source: Access to Medicines Index (Innovest)

DDW Partners – Tres Cantos