Innovation & the Pharmaceutical Research & Development Industry

1. Innovation & the Pharmaceutical Research & Development Industry

2. Inventions

3. Research & Development (R&D)in Pharmaceuticals Longer than 10 years More than $800 m DISCOVERY Enzymes, receptors, & genetics, DEVELOPMENT Safety, quality and efficacy tests PRODUCTION Quality assurance REGISTRATION Medical and marketing approval MONITORING Physician and patient satisfaction

4. Chronology of Drug Innovation SOURCES/INNOVATIONS cell pharmacology/ molecular biology natural products & derivatives serendipity receptors enzymes genetic engineering chronic de- generative disease associated with aging, inflammation cancer biotech drugs lipid lowerers ACE inhibitors H2-antagonists beta blockers NSAIDS psychotropics penicillins sulphonamides aspirin NEW THERAPEUTIC CYCLES 1900 1950 1960 1970 1980 1990 2000 2010 2020 2030 Source: Lehman Brother Pharmaceutical Research

5. R & D in Pharma From discovery to patient Patent application Acute toxicity Pharmacology Phase I clinical trials Chronic toxicity Registration and transparency Phase II Phase III Reimbursement Pharmacovigilance Price 1 medicinal product 0 5 years 10 years 15 years 20 years Patent expiry Supplementary Protection SOUTH AFRICA? 10 years of research 2 to 3 years of administrative procedures Source: “Recherche & Vie”, LIM (AGIM)

6. R&D: Scientific Risk Discovery & development of a successful medicine YEARS PHASES IV III II I 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 INTRODUCTION /REGISTRATION POST-MARKETING SURVEILLANCE 1 CLINICAL TEST (HUMANS) DEVELOPMENT 2 2 - 5 5 - 10 PRECLINICAL TEST (ANIMALS) BASIC RESEARCH SYNTHESIS, EXAMINATION & SCREENING 3,000 – 10,000 QUANTITY OF SUBSTANCES Source: Based on PhRMA analysis, updated for data per Tufts Center for the Study of Drug Development (CSDD) database

7. Length of Drug Development Total time from synthesis to approval 15.3 14.2 11.6 8.1 Source: Tufts CSDD, NCE Database, 1995

8. Cost of Drug Development U of Rochester Tufts OTA Myers & Howe Tufts Source: R Hansen, PhD, University of Rochester; J.A. DiMasi, Tufts University; Office of Technology Assessment, Myers & Howe, 1997; Tufts Center for the Study of Drug Development 2001. All figures except 2001 reflect impact of inflation as measured by the GDP Deflator.

9. Drug DevelopmentCosts vs Returns: 1980’s Study AVERAGE PV OF RETURNS: $224 MM AVERAGE R&D COSTS: $202 MM Source: Grabowski and Vernon, “Returns to R&D on New Drug Introduction in the 1980’s.” Journal of Health Economics Vol. 13, (November 1994): 383-406

10. Innovation of the Pharmaceutical Industry PATENTED BY: Source: PhRMA Survey; Center for the Study of Drug Development, Tufts University (1991)

11. Pharmaceutical Research and Development Process • 1 in 5,000 compounds make it to market • Takes 12 to 15 years from discovery to launch • Average cost of nearly $800 million

12. Benefits of Pharmaceutical Research and Development • Prevent and treat disease • Reduce costly hospitalization, nursing home stays and surgeries • Return patients to productive lives

13. Benefits of Pharmaceutical Research and Development • Antibiotics and vaccines have virtually wiped out diptheria, syphilis, whooping cough, measles and polio in many parts of the world • 8 out of 10 children can now survive leukemia • Over the past 30 years, medicines have helped reduce heart disease and stroke by half for many populations

14. Worldwide Drug Research Continues • 96 new drugs for heart disease and stroke • 316 anti-cancer medicines • 122 drugs to treat AIDS • 146 drugs and vaccines for children • 17 new treatments for Alzheimer’s disease • 29 medicines for arthritis