1. Role of innovation in state of the art healthcare delivery in Russia 27 October 2015, USRBC Annual Meeting

2. Russian market dynamics Driven by innovative products last 10 years 2 USRBC Annual Meeting 2015| Company Confidential © 2005 - DLO 2008 – 7 nosologies 2010 - New pricing system 2013 – IP Court established Source: till 2004y – DSM group, 2004+ IMS Health, calculation. All Channels are included – Retail, DLO, Hospital and Regional 2012 - Russia joined WTO/TRIPS

3. Impact on healthcare outcomes Across key therapeutical areas 3 Access to innovative products has led to significant improvements in diagnostics, adherence and treatment of socially important diseases in Russia, helping to decrease mortality rates and increase in life expectancy Key disease areas (Onco, CV, infants mortality rate): 1% annual decrease in mortality rates from all diseases led to ~140 K fewer people dying in Russia in 2011 vs. 2000 +4 years increased life expectancy since 2006 (71.6 years in 2015) 164 deaths per 100 K in 2013 vs. 200 deaths from Onco diseases per 100 K population in 2000 7.5 deaths per 1000 infants mortality rate - a historical minimum <1 mln mortality rate from CV diseases in 2015 vs. 1.29 mln in 2005 Main demographic achievements: USRBC Annual Meeting 2015| Company Confidential © According to MOH, mortality of working-age population has decreased 35% from 2005 to 2015

4. 4 Critical factorsOutcome Russia joined WTO/TRIPS: data exclusivity embedded into Federal Law Court on Intellectual Property rights Single IPR body by 2016 Better IP system Improved Market Access Increased Government Funding From 2005 to 2014 a number of patented drugs in the govt funded mkt increased from 185 to 825 EDL/DLO annual review Televised Listing process with KOLs significant involvement Standards of treatments updated Diagnostic related groups (DRG) Trying to implement HTA Biologics and orphan drugs definitions Since 2006 a share of innovative drugs in state purchasing is approx. 39% Government healthcare spending stable increase…till 2015 In 2015 government has injected additional 1 bln USD for drug procurement In response to annual increase of govt spend on free care by 2% in 2005-2013, CDR decreased by 1% What is important for better access of innovation? Main developments and government’s initiatives up-to-date USRBC Annual Meeting 2015| Company Confidential ©

5. Improvements needed …to maintain innovation in future 5 Stronger IP system: Introduce patent linkage in the drug registration process Create an open database for patents and for data protection of innovative drugs during generics’ registration process Enhance the role of the Court for Intellectual Property Rights in patent infringement proceedings Develop practice of preliminary injunctions against patent infringements Harmonize stronger IP system in the Eurasian Economic Union Efficient & transparent market access for new health technologies: Improved collaboration between industry, patients & government Ensure annual review of Listing and Standards of Treatment on the regular basis Established criteria and transparent scoring system in drug listing process Assessing value of local product status and preferences for localization USRBC Annual Meeting 2015| Company Confidential ©

6. 6 Musculoskeletal diseases are among most widespread chronic diseases, accounting for substantial losses. In Russia the burden of rheumatoid arthritis is about 8 bln RUR (over 80% are indirect costs). Introduction of early diagnostics and treatment results in additional macro-economic benefits - 3-4 folds higher compared to actual disease-associated expenses 40000 of new HepC patients registered annually. 60% of patients in 20-39 years age group USRBC Annual Meeting 2015| Company Confidential © 54 144 55 6464 60 90 88 82 8585 143 145 146 +10 million -8 million “Dependent” population Working-age population Health is wealth Keeping population healthy & productive is a priority Substantial workability and productivity losses can be diverted if patients have access to timely diagnosis, treatment & care

7. 7 USRBC Annual Meeting 2015| Company Confidential © Health is wealth Conclusion Looking to the future, Russia needs to find solutions to pressing demographic challenges that will impact health and social spending Health-related disability increases sharply with age and in Russia there is an increase in reported disabilities (especially with ageing population) Health is a major cause of productivity loss and early labor market exit, with many causes being addressable Innovative medicines are not only improving outcomes, but also having impact on workability and on increasing wealth creation

8. BACK UP 8 USRBC Annual Meeting 2015| Company Confidential ©

9. And as a result… Incremental Growth of Innovative Products Quantity on State Funded Market 9 USRBC Annual Meeting 2015| Company Confidential © Source: IMS Health, calculation Hospital and DLO Channels are included Original

10. And as a result… Incremental Growth of Innovative Products Quantity on State Funded Market 10 USRBC Annual Meeting 2015| Company Confidential © Source: IMS Health, calculation Hospital, Regional and DLO Channels are included Original