1. Patrick Vallance Head of Drug Discovery GlaxoSmithKline
A Pharma perspective on healthcare needs and innovation in drug discovery
Patrick Vallance
Head of Drug Discovery
GlaxoSmithKline

2. “We need to adopt a new mindset. We in big pharma should never take
for granted our right to exist; our business model
is not written into any country’s constitution.
So we should be turning up to work every day
with the mindset that we are earning the right to exist.
We are earning it by meeting the expectations of society.
When you start to think like this,
you see the world differently.“
Andrew Witty, CEO, GlaxoSmithKline – Harvard, February 2009

3. Public trust is low
Science in Society – DTI MORI 2005

4. The Challenges are Significant
In the past 20 years modern drugs have revolutionised the practice of Medicine and the outlook for patients
The unmet need remains high
The bar is also high
placebo
changing expectations
cost
the public health agenda

5. Fabry’s Disease Pain throughout the body Impaired sweating
Heat/cold intolerance
Skin rashes (angiokeratomas)
Corneal whorling
Hearing problems
Gastrointestinal problems
Heart problems
Kidney problems
Nervous system problems
Psychological issues

6. Large improvement in pain in Fabry’s Disease

7. Large improvement in pain in Fabry’s Disease
Placebo
Active

8. The Challenges are Significant
In the past 20 years modern drugs have revolutionised the practice of Medicine and the outlook for patients
The unmet need remains high
The bar is also high
placebo
changing expectations
cost
the public health agenda

9. Scale-Up to Manufacture Post-Marketing Surveillance
R&D for a New Medicine: years, $1 bn+
… a big challenge for addressing both developed and developing world diseases
Drug Discovery
Regulatory Review
Scale-Up to Manufacture
Post-Marketing Surveillance
Preclinical
Clinical Trials
Phase I
Phase II
Phase III
~ 5,000 – 10,000
250 5
Compounds
1 Approved New Medicine
Pre-Discovery
IND Submitted
NDA Submitted
Number Of Patients / Subjects
20 – 100
100 – 500
1,000 – 5,000
0.5 – 2 Years
3 – 6 Years
6 – 7 Years
Indefinite
Sources: Drug Discovery and Development: Understanding the R&D Process, CBO, Research and Development in the Pharmaceutical Industry, 2006

10. R&D Productivity Gap
Source: Burrill & Company; US Food and Drug Administration.
Note: NMEs do not include BLAs

11. The realities of having the best pipeline
Lehman Brothers PharmaPipelines (Sept 2007)
Pharma Replacement Power – NPV
Pipeline renews 60% of sales
GlaxoSmithKline
Merck
Bristol Myers Squibb
Novartis
Johnson & Johnson
Sanofi-Aventis
AstraZeneca
Pfizer
Wyeth
Eli Lilly
Roche
Abbott Labs
Schering Plough
AVERAGE
LB Method: [NPV of recent launches (06-07) + NPV of pipeline opportunities from ‘08-’13] / NPV of products marketed before 2006. 11

12. Scale-Up to Manufacture Post-Marketing Surveillance
R&D for a New Medicine: years, $1 bn+
… a big challenge for addressing both developed and developing world diseases
Drug Discovery
Regulatory Review
Scale-Up to Manufacture
Post-Marketing Surveillance
Preclinical
Clinical Trials
Phase I
Phase II
Phase III
~ 5,000 – 10,000
250 5
Compounds
1 Approved New Medicine
Pre-Discovery
IND Submitted
NDA Submitted
Number Of Patients / Subjects
20 – 100
100 – 500
1,000 – 5,000
0.5 – 2 Years
3 – 6 Years
6 – 7 Years
Indefinite
Sources: Drug Discovery and Development: Understanding the R&D Process, CBO, Research and Development in the Pharmaceutical Industry, 2006

13. A disconnect between discovery and invention?
New Medicines
Scientific publications in biomedicine
The opportunity has never been greater

14. Reintroduce Scientific Judgement

15. Evolution From Monolith
External
Resources
CEEDD
Virtualization of Drug Discovery
CEDDs
Pharma
Internal
Resources
Centralized
Control/Management
De-Centralized
Control/Management

16. How should we choose where to invest discovery effort?
External
Internal
Scientific
Opportunity
Market size
Pipeline strength
Organisational
structure
Patient need

17. The Market
2006 Estimated Global Sales
90,000
80,000
The Lehman Brothers analysis of predicted global sales for 2006 does not include generic drugs and estimates that their database captures 80% of branded drug sales.
70,000
60,000
50,000
Global Sales $m
40,000
76,850
65,275
30,000
20,000
43,928
39,910
26,875
10,000
18,808
15,337
11,549
17,793
19,481
Diabetes
Cancer
CNS
Inflammation
Dermatology
Genito-Urinary
Haematology
Respiratory
Sexual Dysfunction
Immune System
Ophthalmic Drugs
Market Growth p.a. 0% 2% 4% 6% 8%
10%
12%
14%
16%
18%
Diabetes
Cancer
Inflammation
Dermatology
Metabolism/Endocrinology Drugs
Genito-Urinary
Haematology
Sexual Dysfunction
Immune System
Ophthalmic Drugs
CNS
Hormone Control
Cardiovascular
Respiratory
Gastrointestinal
Anti-Infectives
Metabolism/Endocrinology Drugs
Diabetes, cancer and inflammation projected to be the biggest growth opportunities
Source: Pharma Pipelines – Strategic Analysis and Conclusions 2006 – Lehman Brothers

18. Public Funding

19. How should we choose where to invest discovery effort?
External
Internal
Scientific
Opportunity
Market size
Pipeline strength
Organisational
structure
Patient need

20. Small integrated, empowered teams

21. Corporate Venture Fund
Pharma partnerships
New/expanded in 2008/2009 YTD
35 external engines
35 internal engines
Corporate Venture Fund

22. Scale-Up to Manufacture Post-Marketing Surveillance
R&D for a New Medicine: years, $1 bn+
… a big challenge for addressing both developed and developing world diseases
Drug Discovery
Regulatory Review
Scale-Up to Manufacture
Post-Marketing Surveillance
Preclinical
Clinical Trials
Phase I
Phase II
Phase III
~ 5,000 – 10,000
250 5
Compounds
1 Approved New Medicine
Pre-Discovery
IND Submitted
NDA Submitted
Number Of Patients / Subjects
20 – 100
100 – 500
1,000 – 5,000
0.5 – 2 Years
3 – 6 Years
6 – 7 Years
Indefinite
Sources: Drug Discovery and Development: Understanding the R&D Process, CBO, Research and Development in the Pharmaceutical Industry, 2006

23. Leading the pack – ATM Index
Source: Access to Medicines Index (Innovest) 23

24. DDW Partners – Tres Cantos