1. Innovation and the Pharmaceutical Research and Development Industry January 2002 MSD South Africa

5. Rx Enzymes, receptors, genetics, proteomics Safety, quality and efficacy tests Medical and marketing approval Physician and patient satisfaction Longer than 10 years More than $800 m Quality assurance DISCOVERY DEVELOPMENT PRODUCTION REGISTRATION MONITORING

8. Patent application 1 medicinal product 05 years10 years15 years 20 years Patent expiry Acute toxicity Pharmacology Chronic toxicity Phase I clinical trials Phase II Phase III Registration and transparency Price Reimbursement Pharmacovigilance Supplementary Protection 10 years of research 2 to 3 years of administrative procedures Source : « Recherche & Vie », LIM (AGIM) FROM DISCOVERY TO PATIENT

9. R&D: SCIENTIFIC RISK Source: Based on PhRMA analysis, updated for data per Tufts Center for the Study of Drug Development (CSDD) database. DISCOVERY AND DEVELOPMENT OF A SUCCESSFUL MEDICINE 3,000 - 10,000 10 - 20 5 - 10 2 1 POST-MARKETING SURVEILLANCE PRECLINICAL TEST (ANIMALS) DEVELOPMENT 2 - 5 CLINICAL TEST (HUMANS) QUANTITY OF SUBSTANCES YEARS IV III III II I PHASES PHASESSYNTHESIS, EXAMINATION & SCREENING BASICRESEARCH 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 INTRODUCTION/REGISTRATION

10. LENGTH OF DRUG DEVELOPMENT Source: Tufts CSDD, NCE Database, 1995.

11. U of Rochester TuftsOTAMyers & Howe Tufts COST OF DRUG DEVELOPMENT Source: R. Hansen, PhD. University of Rochester; J.A. DiMasi, Tufts University; Office of Technology Assessment, Myers & Howe, 1997; Tufts Center for the Study of Drug Development, 2001. All figures except 2001 reflect impact of inflation as measured by the GDP Delfator.

12. COSTS VS. RETURNS: 1980’S STUDY AVERAGE PV OF RETURNS: $224 MM AVERAGE R&D COSTS: $202 MM Source: Grabowski and Vernon. “Returns to R&D on New Drug Introductions in the 1980’s.” Journal of Health Economics. Vol. 13, (November 1994): 383-406.

13. INNOVATION OF THE PHARMACEUTICAL INDUSTRY Source: PhRMA Survey; Center for the Study of Drug Development, Tufts University (1991) PATENTED BY: SOURCES OF 100 MOST PRESCRIBED DRUGS IN THE US IN 1992

15. Pharmaceutical Research and Development Process 1 in 5,000 compounds make it to market Takes 12 to 15 years from discovery to launch Average cost of nearly $500 million

16. Benefits of Pharmaceutical R&D Prevent and treat disease Reduce costly hospitalization, nursing home stays and surgeries Return patients to productive lives

17. Benefits of Pharmaceutical R&D Antibiotics and vaccines have virtually wiped out diptheria, syphilis, whooping cough, measles and polio in many parts of the world 8 out of 10 children can now survive leukemia Over the past 30 years, medicines have helped reduce heart disease and stroke by half for many populations

18. Worldwide Research Continues 96 new drugs for heart disease and stroke 316 anti-cancer medicines 122 drugs to treat AIDS 146 drugs and vaccines for children 17 new treatments for Alzheimer’s disease 29 medicines for arthritis