Agenda Overview: the Bio-Pharma industry Major challenges for developers Genzyme: Innovations for unmet medical needs

Overview: the Bio-Pharma industry

TOP 10 TRENDS ON THE PHARMA INDUSTRY HORIZON Industry consolidation will accelerate Increased risk-sharing across development projects Continued separation of PC and specialty companies Increased pricing and regulatory pressures in Europe Slow, steady experimental re-engineering of commercial model Shift to more serious tone in DTC advertising Increasing risk-sharing to the consumer Increased Rx interest in Gx (generics) and other LCM(Low cost medications) Continued productivity and cost transformation Drug safety and healthcare compliance ???

New Drug Approvals Are Not Keeping Pace with Rising R&D Spending Source: Tufts CSDD Approved NCE Database, PhRMA, 2005 R&D expenditures are adjusted for inflation R&D Expenditures NCE Approvals

Pharma Industry Sales are Generally Keeping Pace with R&D Spending Source: PhRMA, Tufts CSDD Analysis, 2005 R&D Expenditures Pharma Sales

Source: FDA NME Approvals are Declining –Biologics are Filling the Void

Growing Percentage of NME Approvals are from Small/Mid-Tier Pharma Firms Source: Ventiv Health,

Major challenges for developers

Innovation Challenge: Drug Discovery is a Long, Rigorous Process INDEFINITE Drug DiscoveryPreclinicalClinical TrialsFDA ReviewScale-Up to Mfg. Post-Marketing Surveillance ONE FDA- APPROVED DRUG 0.5 – 2 YEARS 6 – 7 YEARS3 – 6 YEARS NUMBER OF VOLUNTEERS PHASE 1PHASE 2 PHASE ~ 5,000 – 10,000 COMPOUNDS PRE-DISCOVERY 20– –5001,000–5,000 IND SUBMITTED NDA SUBMITTED

Innovation at Risk Today: US Biopharma Business Model Becoming Unstable Investment companies reported that through Sept 2008, biotech financing fell to $8.2 billion, 54% lower than the $17.9 billion raised in In late 2008, Jefferies & Co. reported that “87% of biotech companies still remain unprofitable.” In 2008, Pfizer pulled out of cardiovascular and other disease areas in order to stay profitable.

Innovation at Risk Today: Access to New Innovation Highly Uncertain Private insurers and government drive nearly all use of medicines to generics and “preferred” brands, making it harder for new medicines to reach patients and succeed in the marketplace Formularies List of covered drugs Tiered Copays Higher cost to patients for brands than for generics and preferred brands Prior Authorization Physicians required to justify medicine’s use before it’s covered, diminishing prescribing of such drugs Step Therapy Patients must try and fail on alternatives before certain medicines are covered Financial Incentives Payments to physicians and/or pharmacies for high generic prescribing rate or switching patients to preferred drugs

Government Policy Challenges Drug Safety Efficacy Comparative Effectiveness Cost Effectiveness ObjectiveSubjective

Challenges : Legal RegulatoryEconomicPolitical Doctors/Patients Drugs GovernmentalScientific

Can value judgments be made by third parties? “Value, like beauty, is in the eye of the beholder.” - Twila Brase

Major Threats to Pharmaceutical Innovation Industry productivity and output  Rapidly rising R&D costs  Increasing size of clinical trials  Increasing regulatory pressure Political threat of price controls in US  Rising global healthcare costs  Global price disparities Public discontent  Safety of prescription drugs  Regulatory agency accountability  Industry Rx marketing practices

Genzyme Innovations for unmet medical needs

Unmet medical needs Novel/innovative products Well defined patient and physician populations Complex regulatory & reimbursement strategies not an obstacle Definable pathway to commercialization Sustainable shareholder value Genzyme Strategic Principles for External New Product Opportunities

Commercial Stage Product Opportunity Clinical Stage Product Opportunity Preclinical Stage Product Opportunity Preclinical Stage Research Opportunity Diagnostic Test Opportunity What are We Looking For?

New product within pre-existing Genzyme markets –Additional product for existing call-point –Expand geographic coverage –Expand indications –Improve product penetration White space expansion –First entry into new commercial space –Backfill pipeline Commercial Stage Product Opportunity

–Area(s) of common scientific interest –Complementary skills, reagents or experience –Often identified by Science staff Preclinical Stage Research Opportunity

Genzyme External Opportunity Evaluation: FAQ What kind of deals does Genzyme do? Broad spectrum of deals : –Acquisition –Joint Ventures –Product/Opportunity in-license –Sponsored Research Agreements –Joint Research Programs Product Focused

The search process is not bound by : $, country, partners Competitors : Partners :

Every General Manager act as :

Genzyme Focus Areas Established focus areas (products/services) –Lysosomal Storage Diseases / Genetic Diseases –Renal –Transplantation –Endocrinology –Oncology –Orthopaedics –Diagnostics Emerging focus areas –Cardiovascular disease –Autoimmune diseases –Neurological diseases White space opportunities

All is Clear ? Any Questions?