It Ain’t Easy

1. It Ain’t Easy Deborah Brown General Manager & Regional Vice President Serono Canada Inc. Vancouver, March 2006

2. Biotech in CanadaA quick overview • Almost 500 companies (over 1/3rd from spin offs) • Revenues of $3.8 billion • R&D expenditure nearly $1.5 billion • Directly employs 12,000 skilled workers • Biotech Human Resources Council estimates biotech activities support 2500 organizations and over 200,000 jobs • Market cap of Canada’s biotech companies estimated to be over $15 billion (70% represented by ~10 companies) Source: Statistics Canada, Uses and Development Survey 2003 2

3. A typical biotech is . . . • Private • Works in human therapeutics with an R&D focus • Three-quarters of all companies have fewer than 50 employees • Does not have a commercialized product • Has less than 12 to 18 months of funding 3

4. Pillars of Biotech Success … 4

5. Paradox “Biotechnology is an industry driven by science” “Biotechnology today is all about money." Dr. Tony Brooks, Formerly of PricewaterhouseCoopers LLP 5

6. Serono • Global biotech leader, 3rd largest in terms of revenues • Largest European based biotech • Based in Geneva, Switzerland • 100 years old as of March 10, 2006 • Almost 5,000 employees, revenues of $2.5B in 2005 • 4 therapeutic areas and an emerging TA in oncology • Blockbuster drug, Rebif, for Multiple Sclerosis 6

7. The Major Biotechnology Leaders Market cap (US$) as of Dec 31, 2004 Lead Productas % of Sales 2004 Revenues US$m 26% 46% 50% 68% 38% 17% 63% 84% 81,479 57,141 10,158 22,218 14,397 6,228 15,148 6,743 Amgen Genentech Serono Biogen-IDEC Genzyme Chiron Gilead MedImmune 7

8. Biotech Ranking Update – H1 2005 8 Data Source: Company SEC filings / Bloomberg / Analyst reports

9. Strong Financial Performance Net Income ($M) Total Revenues ($M) • Overthe last 5 years, total revenues doubled with a compounded annual growth rate (CAGR) of 16% • Net income CAGR over the last 5 years of 22% Guidance2’370 - 2’420 Guidance492 - 497 9

10. 4 Therapeutic Areas, 13 products • #1 MS product outside the USA andfastest growing MS drug in the USA • World’s #1 brand in the field of fertility • Unique portfolioof state-of-the-art fertility products • Fastest-growing product in the GH business • The only GH therapy registered for AIDS wasting • First biological therapy for psoriasis to receive EC marketing autorisation 10

11. Fostering a partnership culture 11

12. Commercial Market Environment • Favourable economic environment • Improved patient advocacy • Biotech addressing unmet needs Positive Forces • Slow (!) regulatory approvals • Limited and deteriorating market access • Biosimilars on the horizon • Declining physician numbers Negative Forces 12

13. Barriers to Success • Low odds of clinical success • Regulatory inefficiency • High expectations of new biotech entrants • Market access barriers • Heavy expenses to service niche specialty areas • Too few or too many therapeutic areas • Competing against large pharma with more resources 13

14. Probability of Clinical Success • No guarantees, even at Phase III • Auto-immune diseases are multi-factorial • Few blood pressure cuffs • Placebo-controlled trials – the paradox • Lengthy ethics approvals • Phase IV gets bigger and bigger, and GCP standard 14

15. Inefficient Regulatory System • Accept the unique nature of bioscience inventions and resource accordingly and/or adopt international standards and reviews in regulatory practices • This includes: • eliminating the backlog of new technologies • launching the creation of an Orphan Product policy that encourages and supports the development of treatments for unmet medical needs • establishing a directive to ensure government processes and policies do not delay or discourage introduction and adoption of new biotechnologies like vaccines. 15

16. Health Canada Performance is Poor 1,033 day avge 16

17. Improved Biologics Performance Anticipated??? 17

18. High Expectations • Breakthrough disease areas – they want cures • Many are injectables which increase expectations on: • Training • Supply provision • Ongoing support = Call Centers • Improved administration, tolerability, efficiency = lifecycle management! 18

19. CSP “Get Back to Living Kit” Overall Objectives: Assist patient in self-injection Ensure proper technique is applied consistently for every injection Provide helpful tools Standard Expectations for Biotech Drugse.g. The Clear Support Program 19

20. Who Pays and Will They? Reimbursement Private 60% Public 40% Managed 20% • Special authorization • Annual cap • Lifetime cap • Mimic provincial plan Conseil du Médicament Open 80% New Common Drug Review Québec Decision CDR Recommendation 6 months post submission Provincial Drug Plan Decisions 4-12 months post CDR recommendation 20

21. Cheaper by the dozen? • The expenses of servicing niche specialty areas are heavy • Too few therapeutic areas • Too many therapeutic areas 21

22. Biotechnology Lifecycle 22

23. PROS Efficient opex Intimacy with market Superior offerings vs. pharma CONS Too vulnerable to a new competitor Very difficult to build infrastructure for sales ops, CHE, market access, medical services, QA/QC, business development etc. Too Few 23

24. PROS Have resources to build shared services infrastructure Can leverage best practice across therapeutic areas Less vulnerable to one TA CONS Difficult to feed each therapeutic area Compete against big pharma and their opex Too Many 24

25. Patient and Physician Expectations Dermatologist & Derm RN Raptiva Rx (“patient”) PsO sufferer or Caregiver seeking Tx • CLEAR SUPPORT Program • (Raptiva DTP Pt Support Program) PEP Program Psoriasis education & awareness (DTC Program) 25

26. Education/ Value Added an Expectation Sponsors of Whitaker-McFarlin MS Colloquium: • Sponsors ofMS Fellows Program: • Each award is a two year fellowship ($50,000/year) • Two will be awarded to applicants from across the US, one will be awarded to a Harvard applicant • Accredited by the University of Minnesota / Endorsed by CMSC and IOMSN • Content overview: • Epidemiology, Diagnosis, and Natural History (clinical and MRI) • Disease Modifying Therapies • Symptom Management • Whole Patient Management: Practical Case Studies • Sponsors ofJohn Hopkins CME Programs: • “Maximizing Long-Term Outcomes in Multiple Sclerosis” • Steering Committee: Peter Calabrese, MD and Doug Kerr, MD (Co-Chairs), Pat Coyle, MD, Doug Goodin, MD, Norm Kachuk, MD • Sponsors ofMS Teleconnections: • 200 CME teleconferences • Accredited by Medical Education Collaborative 26

27. Competing with the Big Boys Outsized on: • Salesforce size • Promotional spend • Lobbying power • Legal, sales operations, market research, business analysis, competitive intelligence, manufacturing capability, GXP expertise, medical services, broad CRA teams. • Bundling power 27

28. It Ain’t Easy, but It’s Worth It “Advances in genetic engineering will not only have dramatic implications for people and society, they will reshape vast sectors of the world economy. The boundaries between many once-distinct businesses, from agribusiness and chemicals to health care and pharmaceuticals to energy and computing will blur, and out of their convergence will emerge what promises to be the largest industry in the world: the life sciences industry.” Enriquez & Goldberg, HBR March-April 2000 28

29. TM Thank You & Good Luck! www.biotech.ca 29