5. The Perfect Storm for Pharma
REGULATORY
HURDLES
PRICING &
REIMBURSEMENT
PATENT
EXPIRIES
6. The Patent Cliff
Patent Expiring
Condition Company 2010 U.S. Sales
in 2011
Lipitor cholesterol Pfizer $5,329,000,000
Zyprexa antipsychotic Eli Lily $2,496,000,000
Johnson &
Levaquin antibiotics $1,312,000,000
Johnson
Johnson &
Concerta ADHD/ADD $929,000,000
Johnson
Protonix antacid Pfizer $690,000,000
7. Patent Expiring in
Condition Company 2010 U.S. Sales
2012
Bristol-Myers
Plavix anti-platelet Squibb / $6,154,000,000
Sanofi-Aventis
Seroquel antipsychotic AstraZeneca $3,747,000,000
Singulair asthma Merck $3,224,000,000
Actos type 2 diabetes Takeda $3,351,000,000
Enbrel arthritis Amgen $3,304,000,000
9. Health Technology Assessment Agency
reimbursement decisions
Disease Recommend Recommend Not recommended Total
Decision R* Decision Decisions
Cardiovascular 23 27 Decision
14 64
(36%) (42%) (22%) (100%)
Cancer 29 52 49 130
(22%) (40%) (38%) (100%)
Total decisions 52 79 63 194
(27%) (41%) (32%) (100%)
*R = Recommended decision with restriction to clinical classification or patient group.
Source – Health Economics Consortium, 2008
10. Impact on the pharmaceutical industry
AstraZeneca 2011 annual results
2011 2010 Actual CER
$m $m growth growth
Revenue 33,591 33,269 +1% -2%
Core Operating Profit 13,167 13,603 -3% -4%
Core EPS $7.28 $6.71 +9% +7%
Reported EPS $7.33 $5.60 +31% +29%
Full Year Dividend $2.80 $2.55
11. •Fewer successful product launches
•Negative growth
•Long term sustainability of pharma
operating model questioned
12. Pharma’s response
Cost constraints
Divert resources to filling and progressing late-
stage pipeline
Consequential reduction in resourcing of drug
discovery
13. Pharma’s challenge
How do we secure long-term sustainability through
innovative drug discovery?
15. Collaboration models
- the old and the new
• Pharma fully funds • Pharma and academia share
• Pharma retains all rights resources, risk and reward
• Pharma reaps all commercial • Payment for successful outcomes
benefit rather just for the work being done
• Significant success means
significant reward
• Hand-back rights to academic
partner if Pharma does not
prosecute
• Pharma contribution in kind such
as access to compound collection
16. AstraZeneca-Cancer Research Technology
Strategic Alliance in Cancer Metabolism
CRT show
selected
targets in
theme area Joint activities within a JMT managed portfolio of projects
with 50/50 resourcing (approx. 30 FTE in total)
Target Assay Early Lead
Validation Development HTS Hit-to-Lead Optimisation
Joint project
acceptance via
JMT. Project
Project passes
managed by JPT
to AZ but
monitored via
JMT until
enters AZ
Development
17. Deal terms – financial structure
• Access fee - in recognition of AstraZeneca gaining access to CR
UK’s network of scientific investigators in cancer metabolism
• Each party covers its own costs
• Success based milestone payments
- Each project start (start of screening)
- Each project that successfully delivers (adopted by AZ)
- Formal entry to AZ Development
- Clinical development milestones through to launch
• Royalty on product sales
18. AZ – MRCT AZ pursue – Research
Collaboration / licence
Model or
AZ & MRC pursue jointly Study /
licence
Research Collaboration
•AZ licence joint results
& MRC compound if
H2
Exercise Option 2
£20K Option Fee
£20K Option Fee
Exercise Option1
L
Selected required
Ch
MR
e
Target
m
C
i st
Sc
ree
ry
n
•AZ assigns
interest in joint
results
•MRC licence AZ
compound if
Reject Option 1
Reject Option 2 required
MRC
Rejected pursue
Target
•No further obligations to AZ
Hit from MRC CC •AZ assigns interest in joint
MRC can screen up to 5 Rejected Targets results
using the AZ CC – AZ retains Options
•AZ grants use of joint results /
1&2
Hit from AZ CC AZ compound to allow MRC
to perform H2L chemistry
•AZ retains Option 2