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Multiple Sclerosis

Multiple Sclerosis. 85%. Population: 2.5M, 400,000 US Cost: $1000/month Market: >3 billion/yr. 10%. 5%. www.omsusa.org/pranzatelli-immune.htm http://www.hmiworld.org/hmi/issues/July_aug_2005/around_ms.html. Treatment Options. Interferon-B 1a – Avonex (40%), Rebif (15%)

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Multiple Sclerosis

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  1. Multiple Sclerosis 85% Population: 2.5M, 400,000 US Cost: $1000/month Market: >3 billion/yr 10% 5% www.omsusa.org/pranzatelli-immune.htm http://www.hmiworld.org/hmi/issues/July_aug_2005/around_ms.html

  2. Treatment Options Interferon-B 1a – Avonex (40%), Rebif (15%) Interferon-b 1b – Betaseron (15%) Glatiramer acetate - – Copaxone (30%) synthetic polypeptide of Tyr, Glu, Ala, Lys Monoclonal antibody against integrin-a4 -Tysabri Mitoxantrone -Novantrone www.rxlist.com/cgi/generic/mitoxantrone.htm www.medilac.com.tr/urun.asp?ID=269 www.natap.org

  3. Pfizer and Biogen Market Cap: $ 161.18B 87,000 employees ,>150 countries Established blockbusters are going off-patent Highly diversified portfolio Large pipeline is weakening Excellent marketing and sales departments Market Cap: $ 21.35B 3,900 employees, >70 countries Avonex is main revenue generator (90%) More focused niche markets Strong Pipeline and R&D abilities Increasing Competition in MS sector

  4. Why is Biogen Attractive to Pfizer? Blockbuster drugs have expiring patents Will lose Lipitor 2010, Viagra 2014 (50% of sales) Has lost Zoloft, Norvasc (top 20 US drugs in sales) Lack of Pipeline Lipitor Replacement (Torcetrapib) halted in trials FDA only approved 23 drugs last year Reputation as lacking innovation Established market share Avonex generates $600M in revenue Possible retention of market share Slower penetration of generic competition for biologics Promising pipeline Rituxan and potential blockbuster BG-12 in phase III Possible monopoly on RRMS treatments Synergy from owning both Avonex and Rebif

  5. Benefits: Increased pipeline Development of new niche: MS line of drugs Increased marketing capability Expedited entry of drugs to market Future Innovation Cost savings Increased monopolistic supply markets for MS drugs Improved market negotiation strategy Risks: Reducing facilities and cutting R&D staff may hamper innovation Declining AVONEX sales (US) Competitor may overtake MS market in 2009 FTC may not approve of the merger Pfizer & Biogen Partnership

  6. Facts & Assumptions • Evaluating US market only Oral treatments (e.g FTY720) erodes 30% of market Rebif expires Avonex expires Rituxan and Tysabri expires Time 2007 08 09 10 11 12 13 14 15 16 17 BG-12 hits markets; Adjusted for blockbuster potential BG-12 in Phase III Avonex 40% market Rituxan approved Rituxan f/ arthritis, Phase III FTC allows ownership of both Avonex and Rebif

  7. Pro-Forma PV for Acquisition of Biogen-Idec

  8. Unattractive Biogen Acquisition • Biogen’s size ($20 billion in market cap, plus takeover premium) would represent a huge investment for Pfizer • Biogen is attractive to many firms, making for equity prices that will exceed value • Biogen employees fear stresses of merger and loss of jobs

  9. Licensing Unattractive to Biogen • Biogen does not want to give up BG-12’s huge potential profits so close to approval • Does not need cash infusion due to Avonex’srevenue stream

  10. Co-marketing is Best Solution • Pfizer’s greater marketing and sales ability will increase sales • Better defense against new MS market entrants (Teva, Novartis, etc.) • Biogen management retains control of the company • Biogen R&D remains independent and able to innovate • Still provides Pfizer with new Revenue

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