1 The Social and Economic Value in Innovation Medicines Patrizia Carlevaro Head of the International Aid Unit - Lilly Syria, Damascus April 25 and 26, 2005

2 Leading Causes of Death – estimates for 2002 DALYs Ranked by Importance Cause % of deaths in the world 1Ischaemic heart disease 12,6 2Cerebrovascular disease9,7 3Lower respiratory infections 6,8 4VIH/AIDS4,9 5Chronic obstructive pulmonary disease4,8 6Perinatal conditions4,3 7Diarrhoeal diseases3,2 8Tuberculosis2,7 9Trachea/bronchus/ lung cancers 2,2 10Road traffic accidents2,1 Death rates for all causes: 57 million in 2002 Source: WHR, 2004

3 Ranked by Importance Cause % of DALY * in the world 1Prenatal conditions 6,5 2Lower respiratory infections 6,1 3HIV/AIDS5,7 4Unipolar depressive disorder4,5 5Diarrhoeal diseases 4.2 6Ischaemic heart disease3,9 7Cerebrovascular disease 3,3 8Malaria3,1 9Road Traffic accidents 2,6 10 Tuberculosis2, Leading Health Problems 10 Disease Burdens in DALYs Source: WHR, 2004, Annex Table Burden of disease in DALYs * DALY : Disability Adjusted Life Years

4 10 Main Causes of DALY Ranked by importance Cause % of DALY* in the world 1Ischaemic heart disease 5,9 2Unipolar depression disorders5,7 3Road traffic accidents 5,1 4Cerebrovascular diseases 4,4 5Chronic obstructive pulmonary disease 4,1 6Lower respiratory infections 3,1 7Tuberculosis3,1 8War 3,0 9Diarrhoeal diseases 2,7 10VIH/AIDS 2,6 Source : WHO Report on Health in the World 1999 * DALY : Disability Adjusted Life Years Health Problems for the Year 2020

Source: UN, The population Prospects, 2002 Update Africa AsiaLatin America & Caribbean EuropeNorth America Syria Population Life Expectancy Rises Every year more prescription drugs are being prescribed to the elderly population 70.5

6 Pharmaceutical discoveries since the 1950s have helped to cut death rates for chronic as well as acute conditions 72% 74% 83% 0%10%20%30%40%50%60%70%80%90% Disease Rheumatic Fever and Rheumatic Heart Disease Arteriosclerosis Ulcer of Stomach and Duodenum Treatment Antibiotics ACE inhibitors, beta-blockers, nitrates H 2 blockers, proton pump inhibitors Source: PhRMA, 1998, Boston Consulting Group, 1993, et U.S. National Center for Health Statistics, Percent Drop in Age-Adjusted Death Rate

7 Medicine contributes a lot to health…but other factors are important as well 2- Genes 1- Environnement Genetic Disorders Cystic Fibrosis Huntington’s Chorea Hemophilia Chronic Diseases Alzheimer Disease Adult Diabetes Asthma Cancer Cardiovascular Diseases Depression Communicable Diseases HIV/AIDS Hepatitis Tuberculosis Malaria 1-Environment 2-Genes

8 Revolution in Research and Technology Chemistry Biology Genetics Manual Work Computer Robotic New medicines transform people lives

9 Medical Innovation in chronological order penicillins sulphonamides aspirin psychotropics NSAIDs H2-antagonists beta-blockers Lipids lowerers, ACE-inhibitors biotech products chronic degenerative diseases associated with aging, inflammation, cancer natural products and derivatives serendipity receptors enzymes genetic engineering cellular pharmacology and molecular niology Source: Lehman Brothers Pharmaceutical Research

10 Research & Development is a critical factor for the progression of discovery The average price from development to launching a new product on the market is close to 1 Billion $. 115 m 359 m 500 m 802 m 1 Billion (Hansen) (DiMasi-OTA)(B.C.G). ( Tuft's Center ) (Tuft’s Center) Source : PhRMA

11 One As many as 10,000 compounds must be screened to eventually find that becomes an approved drug. Research and development expenditures pay for the work on the other 9,999 too.

12 While a patent provides 20 years of protection from the application filing date, the exclusive commercial period is on average from years or less, because of the time it takes to develop the product and get it approved for sale. The pharmaceutical industry has less time to recover its investments in research & development

13 Compound Success Rates by Stages Discovery (2-10 years) Phase I healthy volunteers used to determine safety and dosage Phase II Patient volunteers used to look for efficacy and side effects Phase III Patient volunteers used to monitor adverse reactions to long term use Pre-clinical Testing Laboratory and animal testing FDA Review / Approval Additional Post-Marketing Testing YEARS Source: PhRMA Center for Study of Drug Development, Tufts University, 1995 Compound Success Rates By Stage screened 250 enter pre-clinical testing 5 enter clinical testing 1 approved by the FDA

14 Pharmaceutical Industry Investment in R&D $2.0 $8.4 $26.0$ % increase from 2003 Source: PhRMA 2004 R&D Abroad & Domestic (US) * * Estimated in 2004 * $10.5

15 Total R&D as a Percentage of Total US Sales Source: PhRMA

16 PhRMA companies estimated to spend a record $38.8 billion worldwide on research and development of new products in More than 106 m USD per day

17 Pharmaceutical manufacturers invest a much higher percentage of sales in research and development than virtually any other industry.

18 R & D Investment as a Percentage of Sales, year 2000 Research-based Pharmaceutical Companies* 15.6% R&D Global Drugs & Medicines Electrical & Electronics Office Equipment and Services Telecommunications Leisure Time Products Aerospace & Defense Metals and Mining Paper & Forest Products All Industries, excluding « Drugs and Medicines » 17.9% 12.8% 7.8% 1.2% 8.4% 5.3 % 4.7% 10.5 % Computer Software & Services 3.9% 3.8% 0.7% Automotive “Research-based Pharmaceutical Companies” based on ethical pharmaceuticals sales and ethical pharmaceutical R&D only as tabulated by PhRMA. “Drugs and Medicine” category based on total R&D and sales for companies classified within the “Drugs and Medicine” sector tabulated by Standard & Poor’s Compustat, a division of McGraw-Hill.

19 Companies have shorter and shorter times during which they can market their new drugs and companies to recoups their expenditures spent on R&D

20 Shrinking Period of Market Exclusivity Between Introduction of Breakthrough Medicines and Competing Innovators Source: PhRMA, 2000; The Wilkerson Group, 1995 Inderal Tagamet Capoten Seldane AZT Celebrex Years of Exclusivity Inderal (beta blocker for cardiovascular diseases); Tagamet (H2 antagonist for ulcers); Capoten (ACE inhibitor for cardiovascular diseases); Seldane (antihistaminic for allergies); AZT (antiviral for HIV/AIDS)

21 It takes patience, money and dedication for the long trip from the laboratory bench to medicine chest. But it’s a journey well worth the time and expenses, because it saves and improves millions of lives From Laboratory to Patient