This document provides an overview of the pharmaceutical industry in early 2019 with several key points: - R&D investments vary significantly across companies and industries. Pharma R&D is no longer the highest. - There has been a significant increase in R&D for rare and orphan diseases. - While 2018 FDA drug approvals may seem positive, the increase is largely due to orphan indications. - Pharma R&D faces challenges of declining output despite advances in technology. Reasons include limited biological understanding, translational errors, disconnect from reality, and managerial complexity.

1. An initiative managed by BaselArea.swiss in close collaboration
with the Canton of Basel-Stadt

2. Disclaimer:
Everything presented and explained here today are my own words,
thoughts and opinions so do not represent those of Idorsia or any other
organization.

3. PHARMA IN NUMBERS

4. A snapshot of the industry in KPIs early 2019

5. R&D Investments are highly variable across the
industry

6. R&D Investments are highly variable across the
industry
Total Revenue ( $bn) R&D Spend( $bn) R&D as percentage of sales( $bn)

7. Pharma R&D Investments no longer highest across
industries
From Bloomberg Company reports 2017

8. Significant increase in R&D for rare and orphan
diseases

9. SO IT’S ALL GOING GREAT…
….RIGHT?

10. From the 2018 FDA drug approvals you may think
so….
1 0
From Mullard, Nature Reviews Drug Discovery (2019)

11. ….the jump is caused by orphan indications
1 1
From Mullard, Nature Reviews Drug Discovery (2019)

12. Eroom‘s law
…Moore‘s law in reverse: halving the output every 9 years
1 2
From Scannell, Nature Reviews Drug Discovery (2012)

13. ….the jump is caused by orphan indications
1 3
From Kevin Scott, Linked in Post 2016

14. Pharmaceutical R&D in the 21st Century:
professional gambling or industrialized science?
1 4

15. Managing the unknown
1 5

16. Unknown-unknowns
Known-
unkowns
Infinite complexity?
1 6
Known-knowns

17. What are the causes of decline despite all great
new technologies?
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• Science: limited understanding of biological complexity
(..and the reproducibility problem)
• Medical practice: old fashioned medical diagnosis (Drugs
tested in the wrong disease)
• A rat is not a small patient: translational errors
• Disconnect from reality, shareholder driven:
overestimation
• Increasingly more complex and specialized funcions:
managerial complexity and decision making (company
size)
• Short term incentives, industrialized science with target
numbers per year ( A drug takes 12-16 year to arrive to
the market)
• …….

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An initiative managed by BaselArea.swiss in close collaboration
with the Canton of Basel-Stadt
Thank You, let’s debate!