1. W HAT DOES O PEN I NNOVATION L OOK LIKE FOR THE P HARMACEUTICAL I NDUSTRY ? Roy F. Waldron Senior Vice-President & Associate General Counsel Chief Counsel, Intellectual Property Pfizer Inc.

2. W HAT DO THESE COMPANIES HAVE IN COMMON ?

3. They all claim to employ “open innovation” models to advance their businesses

4. B UT WHAT IS O PEN I NNOVATION ? “…Open Innovation is a potential mechanism to source and share expertise through alliances and collaborations within a strong intellectual property framework.” D EFINITION IN THE L ITERATURE :

5. B UT PRACTICALLY SPEAKING, WHAT IS IT ? A RE THERE DEGREES OF O PEN I NNOVATION ? T YPE I. O UTSOURCING : R&D Activity performed by vendors, CROs, university researchers, incubators, etc. T YPE II. L ICENSING : R&D Activity in Collaborations, JVs, Technology Transfer, Crowdsourcing, etc. T YPE III. O PEN S OURCE : R&D in the space beyond IP

6. W HAT F ACTORS DROVE TECHNOLOGY COMPANIES TO ADOPT “O PEN I NNOVATION ”? –Need to create common platforms/technologies to create new products? –Need to compete in an evolving era of information availability? –Was Open Innovation Model the catalyst that set off the generation of new information? –O R VICE VERSA ?: Did the environment force their hand? Cost of entry for new competitors: Information! The World Became Flat for High-Tech!

7. Q UESTIONS Was it Culture? –Did collaboration and open innovation create success? Or was it the flatter world of Information Access that forced these industry sectors to collaborate to better compete? –Electronics: ‘80’s Democratization of chip-making –IT/Software: ‘90’s The Internet –New combinations/perturbations/products Reminder: This was not the Death of IP

8. Are there similar dynamics at play within the Pharma Industry driving the push towards open innovation models?

9. T HE P HARMA E NVIRONMENT IS E VOLVING … –Shrinking R&D Budgets –H UGE Development Costs (>$1 Billion/Drug) –Reduced Productivity & Pipelines –FDA NME Approvals: ~50% Down from 1998-2000 –Spending on innovative products: Down – Shift to Generics –Fully-Integrated Innovation Model Disintegrating –Revolving Door: Expertise moving freely across companies and knowledge and know-how with them –IP assets not being commercialized by companies for various reasons: Risks, Costs, Opportunities, Portfolio Fit, etc. –Convergence among industry sectors: Are we all chasing the same targets? –W HEN DOES THE WORLD BECOME FLAT FOR PHARMA ?

10. P HARMACEUTICAL F LATLAND S CORECARD Access to Information: – Health Outcomes – Mortality, Health, Illness, Behavior – Gene Banks, Tissue Banks, Biological Diversity – The Human Genome & Genetic Resources – Genomics/Biolomics Information & Informatics – In short, all the data that is most heavily protected as private or even in some instances as proprietary Understanding: Knowledge of Biological Pathways of Disease To Get New and Better Targets (See, above) Bottom Line: If we have all of and more of the above, then the Pharma World is tremendously flatter and it then becomes a race to find the therapeutic agents (= the IP focus).

11. D OES P HARMA O PEN I NNOVATION REQUIRE A C ULTURAL S HIFT OR A F LATTENED E NVIRONMENT Flatter World: –Does Pharma have enough time? –Will that flat world ever exist? –A flat world is probably needed to get the next generation of drugs Culture: Willingness to collaborate in Pharma? –Certainly Type I (outsourcing) –Increasingly more and more Type II on specific projects and disease areas contemplated or in place (licensing) –Desirable to spread costs and risks

12. E XAMPLES – F ACILITATING A CCESS TO I NFORMATION A SIAN C ANCER R ESEARCH G ROUP, I NC. Pfizer, Merck and Eli Lilly launched a not-for-profit company to accelerate research on new medicines to treat the most commonly diagnosed cancers in Asia (gastric, lung, and other forms cancer). The goal is to create one of the “most extensive pharmacogenomic cancer databases known to date” over the next two years. John Carrol, 2010 The ACRG's formation is an example of a growing trend in pre-competitive collaboration in which pharmaceutical companies combine their resources and expertise to rapidly increase knowledge. T HE S TRUCTURAL G ENOMICS C ONSORTIUM Pfizer GSK and University of Toronto, NIH, Oxford, Umeå University and other academic laboratories. Consortium aims to develop small molecules that can stimulate or block the activity of proteins involved in epigenetic control. Industrial access to genomic expertise in return for a placing biologically active compounds in public domain for research use. Industry retains options to patent certain chemical substrate with potential as therapeutics.

13. 13 E XAMPLE C ULTURE : L ICENSING & C OLLABORATION / T ECHNOLOGY T RANSFER Licensing Agreements ViiV provides royalty free licenses on its innovative current and pipeline HIV medicines to generic companies. The voluntary license policy extends to 69 countries, where 80% of all people with HIV live. Innovative Partnerships GSK launched a partnership with Brazil’s Oswaldo Cruz Foundation (Fiocruz) to develop and manufacture vaccines for pressing public health priorities in Brazil. Focus: Vaccines for dengue fever. Resources: GSK provides Fiocruz with conjugate vaccine technology for pediatric pneumococcal disease. Research Partnership Pfizer works with DNDi to allow access to the Pfizer chemical library to screen for candidate compounds for new treatments for neglected tropical disease. Testing of at least 150,000 compounds against parasites undertaken.

14. Q UESTIONS Will creation of a Culture of collaboration and open innovation create success for Pharma? Must we await a flatter world of Information Access? Do we seek to create both? How?