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The Connecticut Economy: Outlook and Issues for the Pharmaceutical Industry in Connecticut

The Connecticut Economy: Outlook and Issues for the Pharmaceutical Industry in Connecticut. The Connecticut Convention Center, Hartford Friday, September 9, 2005. Moderator: Paul R. Pescatello, President & CEO of Connecticut United for Research Excellence (CURE)

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The Connecticut Economy: Outlook and Issues for the Pharmaceutical Industry in Connecticut

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  1. The Connecticut Economy: Outlook and Issues for the Pharmaceutical Industry in Connecticut The Connecticut Convention Center, Hartford Friday, September 9, 2005 Moderator: Paul R. Pescatello, President & CEO of Connecticut United for Research Excellence (CURE) Panelists: Michael Davis, Associate Director State Government Affairs, Boehringer Ingelheim Pharmaceuticals Susan Froshauer, President & CEO Rib-X Pharmaceuticals, Inc. Ricardo Orchoa, Executive Director, Pathology, Pfizer Global Pathology Leadership Team

  2. CURE Mission • CURE, as an educational organization and trade association, seeks to foster connectedness among pharma companies, biotech firms, colleges & universities, and firms that help core members do business, especially R&D. • Represent the biotechnology and pharmaceutical sectors before the state legislature and policy makers • Build a critical mass of biotech and pharmaceutical companies • Foster relationships between academic and industry research that lead to technology transfer • Be the “go to” source for information about bioscience in Connecticut

  3. The Mission, distilled At Capitol and/or with news media/opinion makers • Lobbyist • Critical mass • Tech transfer • Resource Often, the same thing To companies for state economic development efforts

  4. CURE & The BioBus Programs • Build student interest in science • Relay new scientific techniques to educators • Show how bioscience is relevant • Show students bioscience careers other than M.D. and nursing programs

  5. Connecticut’s BioBus Program Statistics Since 2001*: • 318 schools visited - 75 schools this year • 1,349 experiments • 24,000 students taught • 572 teachers trained • 123 community events • 16,000 people visited *includes BioConnection

  6. Expanding the Reach: BioConnection • Launched March 2004 • Pilot year funded by Education Dept. grant and assistance of Rosa DeLauro • 3 equipment modules loaned to schools for 2 weeks, independent of BioBus • 4,900 students taught

  7. CURE as BioScience Industry Info Source • Monthly e-newsletter • Company news • Bioscience industry trends, news and profiles • Upcoming events • CURE monitors & evaluates best practices in other states & regions • CURE: the source for lists of bioscience VC’s, biotech and biomedical firms in the state • Annual Economic Report surveys health of bioscience industry in CT

  8. Recent CURE Events • 5/18 Capitol press conference: drugs • 6/17 Guest on CPTV’s “On the Road” • 6/15 Rell stem cell bill signing • 6/19 BIO events in Philadelphia

  9. Upcoming CURE Events September 28 • CURE Annual Meeting at CT Convention Center • Sir Harold Evans speaking • Volunteers recognized • Part of Alliance for Technology event • CURE award to be presented to Governor Rell • CURE bioscience supplement in CT Business

  10. 2005 Legislation Agenda • Embryonic stem cell research safe haven • Institute rebate to biotechs for half the amount of personal income taxes paid by any new employee added each year • Extend same degree of benefits to partnerships, LLPs and LLCs • Regulation and business taxes: make more rational, user-friendly, transparent & efficient • Enhance state capital investment in biotech start-ups -- less risk averse

  11. Bioscience Sector in CT2004 Report Card • R&D Spending: up 7% to $4.4 billion • Up 45% over 5 years • CT Operations Spending: up 2% to $6.2 billion • Up 178% over 5 years • Employment: down 1% to 18,086 • Up 20% over 5 years • Lab Space: down 1% to 5.6 million square feet • Up 8% over 5 years • BioScience Job Multiplier: 3.30 vs. 2.38 (insurance); 2.90 (aircraft); 2.40 (construction); 2.28 (telecommunications; 1.30 (restaurants)

  12. CT Bioscience R&D Spending

  13. CT Bioscience Employment

  14. Connecticut Lab Space – Growth

  15. Bioscience • Jobs Multiplier highest of any industry sector

  16. Healthy Financing Window $433.25M $185.4M

  17. Pursuing the discovery, development and in-licensing of pharmaceuticals, with an initial focus on neuropsychiatric diseases Providing preclinical drug development consulting, project management and contract research Marinus Pharmaceuticals, Inc. Commercializing a proprietary automated molecular imaging technology for tissue and tissue microarrays Pharmaceuticals, Inc. A microfluidics startup company working at the interface of biology, fluidics, and optics VICUS BIOSCIENCE, LLC Bringing US & EU mid-tier and niche drugs to the untapped Chinese market RainDance Technologies, Inc. Providing life science technologies with dual use for military and civilian populations In-licensing, developing & commercializing novel cancer drugs New Connecticut Biotechs

  18. 2005 Legislative Report Card • Landmark stem cell legislation passed • R&D Tax Credit Exchange program and NOL protected • Pharma unfriendly legislation dies

  19. Messages . . . Location, location, location . . .

  20. Messages . . . The Clarity of Voice of Other Clusters CT vs San Diego County

  21. Messages . . . Reimportation = Symbol for high cost of health care Side effect worse than cure: • Importation of price controls • Innovation stagnation

  22. (Current) Canadian Drug Supply Impossibly Small to Have a Real Impact in the US Canadian Market Relative to US Market $170 billion > 3 billion 280 million $6.5 billion Source: Year: 2001. IMS (sales, US prescriptions); Epsicom Business Intelligence (Canada prescriptions)

  23. Message . . . Healthcare costs are rising. • But share of healthcare dollar attributable to medicines has held steady at 10%

  24. $1.6 TRILLION 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0 PERSONAL MEDICAL EQUIPMENT AND NON-PRESCRIPTION DRUGS RESEARCH AND CONSTRUCTION NURSING HOME AND HOME HEALTH CARE PRESCRIPTION DRUGS NET COST OF PRIVATE HEALTH INSURANCE, ADMINISTRATIVE COSTS, AND PUBLIC HEALTH PROGRAMS HOSPITAL CARE DOCTORS, DENTISTS, AND OTHER PROFESSIONAL SERVICES ‘70 ‘80 ‘90 ‘00 ‘65 ‘75 ‘85 ‘95 NOTE: 2001 AND 2002 DATA PROJECTED U.S. Annual NationalHealth Care Spending Source: Health And Human Services Department

  25. Centenarians in US Population 300 Number Per Million 250 200 150 100 50 0 1900 1920 1940 1960 1980 2000 Year 2000262 Centenarians Year 1900 46 Centenarians Source: Caplow, Theodore, et al. The First Measured Century, Wash DC: AEI, 2001:9; Pfizer

  26. Medicines Have Extended LivesDrop In Death Rates For Diseases 1965-1996 Disease Treatment Atherosclerosis Statins, ACE inhibitors, beta blockers, nitrates Ulcer of Stomach and Duodenum H2 blockers, proton pump inhibitors Ischemic Heart Disease ACE inhibitors, beta blockers, nitrates Emphysema Anti-Inflammatories, bronchodilators Anti-Hypertensives, diuretics Hypertension DEATH RATE Source: Lasker/Funding First; Pfizer

  27. Growing Access • Key Drivers of Volume Growth,1993-2001 • Over 280new drugs, many that • address previously untreated or • undiagnosed conditions • US median age increased by over • 2 years, increasing demand for all • health care services, including drugs • Expert and government panels • recommended expanded utilization • for new populations • Consumer awareness of treatment • options increased dramatically as • information sources became more • accessible (eg Internet health sites, • DTC ads) Source: IMS, CMS; utilization increases include volume growth and new product introductions

  28. Years 0 Discovery (2–10 Years) 2 Preclinical Testing Laboratory and Animal Testing 4 6 Phase I 20–80 Healthy Volunteers Used to Determine Safety and Dosage Phase II100–300 Patient Volunteers Used to Look for Efficacy and Side Effects 8 10 Phase III1,000–5,000 Patient Volunteers Used to Monitor Adverse Reactions to Long-term Use 12 FDA Review Approval 14 Additional Post-marketing Testing 16 Drug Development - A Risky and Expensive Proposition Compound Success Rates by Stage 5,000–10,000Screened 250Enter Preclinical Testing 5Enter Clinical Testing Net Cost: $802 million invested over 15 yrs 1Approved by the FDA Source: Tufts Center for the Study of Drug Development

  29. Impact of Drugs on Spending and Mortality for HIV/AIDS . . . While Monthly Costs for AIDS Patients Decreased by 16% after HAART Introduced HIV Mortality Declined Dramatically after Introduction of First “Expensive” Antiretrovirals . . . Highly Active Antiretroviral Therapy (HAART) introduced, 1996-97 Total: $1804 First new Drugs Introduced, 1995 Total: $1521 Other Costs Decreaseby 41% Drug Costs Increase by 34% Source: Costs - Bozette et al., New England Journal of Medicine Vol. 344, No. 11, March 15, 2001; Mortality - Centers for Disease Control; data on drug development from PhRMA and the NIH Office of Technology transfer; Pfizer.

  30. What are we really talking about? An international relations/trade issue. • Motivating other developed economies to pay more for the R&D that makes up the price of prescription drugs • Figuring out a way to spread the cost of healthcare across the entire population Hint #1: Greatest cost components of healthcare are the 1st and last six months of life Hint #2: The annual tab for a daily cup of Starbucks is $1,003.75

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