US Pharmaceutical Market

The US Pharmaceutical Market: Trends, Issues, & Outlook

BY: Doug Long, VP Industry RelationsPresented to NCPOJanuary 7, 2011

All reproduction rights, quotations, broadcasting,publications reserved. No part of this publication may bereproduced or transmitted in any form or by any means,electronic or mechanical, including photocopy, recording, orany information storage and retrieval system, withoutexpress written consent of IMS HEALTH.

2011 Strategic management presentation

2010 YTD November sales growth slows to 2.3% and 1.1% TRX growth

$0

$50

$100

$150

$200

$250

$300

$350

2005 2006 2007 2008 2009 YTDNov2010

0

1

2

3

4

5

6

7

8

9

10DollarsGrowth

SALE

S U

S$B

N

% C

HAN

GE

Source: IMS Health, National Sales Perspectives, Nov 2010

0

1

2

3

4

5

2005 2006 2007 2008 2009 YTDNov2010

0

1

2

3

4

5TRxUS TRx growth

TRX V

OLU

ME

BN

% C

HAN

GE

Source: IMS Health, National Prescription Audit Plus, Nov 2010

5.1%

1.1%2.3%

2.1%

US market growth in MAT Oct 2010 was 3.2%; 2.4% in YTD 2010

0

5

10

15

20

$0

$50

$100

$150

$200

$250

$300

$350

% C

HAN

GE

SALE

S U

S$B

N

Source: IMS Health, National Sales Perspectives, Oct 2010

OTC dollar sales showing 2% sustained growth over timeHighest growth of 4.9% achieved in 2007

$17

$18

$19

$20

$21

$22

$23

2005

2006

2007

2008

2009

Lat

52 W

ks

SALE

S U

S$B

N

(5.0)

0.0

5.0

10.0

15.0

% G

RO

WTH

US$

Source: IRI Infoscan Total US FDMx Latest 52 weeks ending July 11, 2010

0.0

1.0

2.0

3.0

4.0

5.0

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

MAT S

ep 201

0

TRX V

OLU

ME

BN

-1012345678910

TRX P

PG

US Growth Rate

Source: IMS Health, National Prescription Audit Plus, Sep 2010

US prescription growth at 1.5% for MAT Sep 2010

6

162

100

40

80

45 39

020406080

100120140160180200

2006 2007 2008 2009 MAT Nov2010

YTD Nov2010

AC T

Rx M

N

Incremental prescription growth

Source: IMS Health, National Prescription Audit, Nov 2010

Absolute TRx growth

Brands are declining in script volume

2.3%

-0.1%

16.7%

-5%

0%

5%

10%

15%

20%

YTD Sep 2010

% G

RO

WTH

1.0%

5.9%

-10.5%-15%

-10%

-5%

0%

5%

10%

YTD Sep 2010

% G

RO

WTH

Source: IMS Health, National Prescription Audit, Branded generics disaggregated, Sep 2010

Source: IMS Health, National Sales Perspectives, Branded generics disaggregated, Sep 2010

Jan 2010 to Sep 2010Jan 2010 to Sep 2010% Growth US$ % Growth TRx

Branded Generics Disaggregated

Total market Brands Generics

Brand growth declines to -0.2% in MAT Nov 2010

2.8%

-0.2%

5.4%

22.1%

1.0%

5.2%6.7%

3.8%

-5%

0%

5%

10%

15%

20%

25%

MAT Nov 2010

% G

RO

WTH

Total Market Brand Branded GenericGeneric Primary Care Driven Atcs Specialist Driven AtcsBiologic Molecules Oncologics

Twelve months ending Nov 2010% Growth US$


Growth remains low for both segments, but growth rates converge in latest periods

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

2006 2007 2008 2009 MAT Nov2010

% G

RO

WTH

US$

USPrimary care drivenSpecialist driven

Primary care driven

Primary care driven

Specialist driven

Specialist driven

21%

56%

79%

44%

MAT Nov 2010


% Market share US$

% Absolute change US$

US is impacted by continued patent expiries, and historically low contribution from new products

Source: IMS Health, Market Prognosis, IMS Consulting, Sep 2009

US market growth: 2009 5.2%;

• Protected brands “list" price growth

• Increasing generic volume and less price deflation

• H1N1/CCF• Fewer safety events

• Demographic factors• Approvals of innovative

therapies

• Protected brands volume decline

• Slow uptake of recently launched products

• Patent expiries• Greater substitution of

generics

-8.0-6.0-4.0-2.00.02.04.06.08.0

10.0

Mar

-06

Jun-

06

Sep

-06

Dec

-06

Mar

-07

Jun-

07

Sep

-07

Dec

-07

Mar

-08

Jun-

08

Sep

-08

Dec

-08

Mar

-09

Jun-

09

Sep

-09

Dec

-09

Mar

-10

Jun-

10

Quarter Ending

AC U

S$B

N

Protected Brands - Volume Protected Brands - Pricing New BrandsExisting LOE New LOE Old GenericsNew Generics Safety Net Growth

Protected brand volume growth has declined to negative levels in 2010

Growth by Segment

Source: IMS Health, National Sales Perspectives, June 2010

-0.40-0.21

-0.04

0.480.48

0.240.02

0.390.11

-0.32-0.26

-0.32-0.36

-0.12-0.03

-0.36-0.49-0.58-0.79-0.32

-0.93-0.91

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Mar

-05

Jun-

05

Sep

-05

Dec

-05

Mar

-06

Jun-

06

Sep

-06

Dec

-06

Mar

-07

Jun-

07

Dec

-07

Mar

-08

Jun-

08

Sep

-08

Dec

-08

Mar

-09

Jun-

09

Sep

-09

Dec

-09

Mar

-10

Jun-

10

Sep

-10

CO

NTR

IBU

TIO

N T

O G

RO

WTH

US$B

N All Other Therapies Cough, Cold & Flu

Cough, cold, and flu has contributed negative growth in 2010

Source: IMS Health, National Sales Perspectives, Sep 2010

Growth by Segment

Patient visits remain below peaks in 2006

Source: IMS Health, National Disease and Therapeutic Index, Nov 2010

TOTAL PATIENT VISIT IN US

1,529 Nov10

1,616 Aug09

1.563 Jun04

1.656 Jun05

1.641 Jun06

1.653 Jun07

1.676 Sep05

1.607 Jun08

1.671 Dec06

1.450

1.500

1.550

1.600

1.650

1.700

1.750

1.800Ju

n-03

Aug

-03

Oct

-03

Dec

-03

Feb-

04Apr

-04

Jun-

04Aug

-04

Oct

-04

Dec

-04

Feb-

05Apr

-05

Jun-

05Aug

-05

Oct

-05

Dec

-05

Feb-

06Apr

-06

Jun-

06Aug

-06

Oct

-06

Dec

-06

Feb-

07Apr

-07

Jun-

07Aug

-07

Oct

-07

Dec

-07

Feb-

08Apr

-08

Jun-

08Aug

-08

Oct

-08

Dec

-08

Feb-

09Apr

-09

Jun-

09Aug

-09

Oct

-09

Dec

-09

Feb-

10Apr

-10

Jun-

10Aug

-10

Oct

-10

ROLLING MAT

PATI

ENT

VIS

ITS B

N

Source: IMS Health, National Disease and Therapeutic Index, Nov 2010, Confidence Interval shown (+/-3.9%)

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

Jan-

08

Mar

-08

May

-08

Jul-

08

Sep

-08

Nov

-08

Jan-

09

Mar

-09

May

-09

Jul-

09

Sep

-09

Nov

-09

Jan-

10

Mar

-10

May

-10

Jul-

10

Sep

-10

Nov

-10

ROLLING MAT

RO

LLIN

G M

AT

GRO

WTH

Patient Visit Growth

Patient visit trends remain negative with -4.7% growth in MAT Nov 2010

Patient visit growth trends vary among classes; antipsychotic recovering and DPP-IV continue growth

Source: IMS Health, National Disease and Therapeutic Index, Nov 2010

-15%

-10%

-5%

0%

5%

10%

15%Sep

-08

Nov

-08

Jan-

09

Mar

-09

May

-09

Jul-

09

Sep

-09

Nov

-09

Jan-

10

Mar

-10

May

-10

Jul-

10

Sep

-10

Nov

-10

ROLLING MAT

RO

LLIN

G M

AT

GRO

WTH

Patient Visit GrowthStatinsPPIAnti-PsychoticsRes Fixed Dose CombDPP-IVAntiplatelets

The economic crises impact all stakeholdersThe danger for pharma is losing share of voice!

Patients1

2

3

4

Stakeholders

•Reduced spend on promotion •Rationalisation of product lines• Mergers/acquisitions

•Cash-flow and credit issues•Reduced inventories to minimise financial exposure•Increase in distribution costs•Consolidation among local distributors

•Changed prescribing practices •Increase generic / therapeutic substitution

Likely reactions

Manufacturers

Distributors

Healthcare Providers

•Significant increase in price sensitivity•‘Down-trading’ to cheaper drugs or generics•Deferral of treatment

5 Payers•Shifting costs to patients•Increased focus on evidence and value•Formulary control intensifies

The declines in consumer sentiment in the US were not matched by TRx declines or claims

40

50

60

70

80

90

100

110

120

Jan-

07Fe

b-07

Mar

-07

Apr

-07

May

-07

Jun-

07Ju

l-07

Aug

-07

Sep

-07

Oct

-07

Nov

-07

Dec

-07

Jan-

08Fe

b-08

Mar

-08

Apr

-08

May

-08

Jun-

08Ju

l-08

Aug

-08

Sep

-08

Oct

-08

Nov

-08

Dec

-08

Jan-

09Fe

b-09

Mar

-09

Apr

-09

May

-09

Jun-

09Ju

l-09

Aug

-09

Sep

-09

Oct

-09

Nov

-09

Dec

-09

Jan-

10Fe

b-10

Mar

-10

Apr

-10

IND

EX

Index of Consumer SentimentCar SalesIndex of EmploymentTRX

Source: IMS Health, National Prescription Audit, Jun 2010, LifeLink Apr 2010; Reuters / University of Michigan Surveys of Consumers, Jul 2010; Bureau of Labor Statistics, Jul 2010; Car sales from Bureau of Economic Analysis, National Economic Accounts, Last Revised on Aug 2010

Data for the last month of reported claims remains volatile until late reporting physician’s claims are added

Market Indicators Indexed to January 2007

Prescriptions grow 1.1% in MAT Nov 2010

Channels TRxs mn % Market Share % Growth

Retail 3,645 92.0 1.1

Chain/Mass 2,171 54.8 2.3

Independents 749 18.9 -0.9

Mail service 236 6.0 -0.8

Food stores 489 12.3 0.2

Non retail channels 318 8.0 1.0

LTC 318 8.0 1.0

Total 3,964 100.0 1.1

MAT Nov 2010

Source: IMS Health, National Prescription Audit, Nov 2010

US market grows 2.3% in YTD Nov 2010

Channels US$bn % Market Share % Growth

Retail 198.5 71.5 2.0

Chain/Mass 97.6 35.2 2.6

Mail service 47.3 17.1 2.1

Independents 34.2 12.3 1.3

Food stores 19.2 6.9 0.2

Institutional 79.2 28.5 2.9

Clinics 32.8 11.8 4.2

Hospitals 29.0 10.4 0.7

Long-term care 13.3 4.8 6.2

Home health care 2.2 0.8 -0.2

HMO 1.0 0.4 -3.9

Others 0.9 0.3 -1.7

Total 277.6 100.0 2.3

YTD Nov 2010


Drug accounts for 58% of total OTC sales volume and grew at 2.2% in latest 52 weeks period

Channels Sales US$bn % Market Share % Growth

FDMx $22.1 100.0 2.2

Drug $12.9 58.2 2.2

Food $6.8 30.9 1.2

Massx $2.4 10.9 5.2

Last 52 Wks


• 22

1416

10

19

15

25 25

10

19

810

0

5

10

15

20

25

30

35

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

CO

NSTA

NT

US$B

N

0%

2%

4%

6%

8%

10%

12%

% O

F PR

IOR Y

EAR'S

SALE

S

Const US$bn

% of Prior Year's Sales

$95bn at risk to generic competition in the US by 2014

Value of products at risk 2004-2014

Source: IMS Health, MIDAS, Market Segmentation, Jun 2010

$95bn

• 23

25.4

10.3

19.2

24.8

15.2

0

5

10

15

20

25

30

35

2010 2011 2012 2013 2014

CO

NSTA

NT

US$B

N

0%

2%

4%

6%

8%

10%

12%

% O

F PR

IOR Y

EAR'S

SALE

S

Const US$bn

% of Prior Year's Sales




$95bn

LOE date changes since March 2010 forecast

•Lovenox LOE date from future unknown to 6/2010 ($2.6b)

•Strattera from 5/2015 to 8/2010 ($510m) - patent invalidated Aug 2010 for lack of enablement/utility

•Alimta from 9/2011 to 7/2016 ($930m)- patent term extension granted

• 24

15.2

24.8 25.4

10.3

19.2

7.1

6.15.7

4.6

4.2

3.8

3.4

3.0

2.9

2.7 2.7

2.6

0

5

10

15

20

25

30

35

2010 2011 2012 2013 2014

CO

NSTA

NT

US$B

N

ALL OTHERS LIPITOR NEXIUM PLAVIXADVAIR DISKUS SEROQUEL SINGULAIR ACTOSOXYCONTIN CYMBALTA ZYPREXA LEXAPROLOVENOX Total LOE sales




LOE date changes since March 2010 forecast

•Lovenox LOE date from future unknown to 6/2010 ($2.6b)

•Strattera from 5/2015 to 8/2010 ($510m) - patent invalidated Aug 2010 for lack of enablement/utility

•Alimta from 9/2011 to 7/2016 ($930m)- patent term extension granted

8

12 12

4 5

11

1

2

3

14

1

11

9

8

62

2 110

8

19

10

2525

15

19

10

1614 13

0

5

10

15

20

25

30

35

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

CO

NSTA

NT

US$B

N

Biologics protection expiries

Small molecule protection expiries

Long term LOE exposure



Key Biologics and U.S. Patent Expiries

Brand Name Molecule Year Launched Patent Expiry Year U.S. Sales (US$b)

NEUPOGEN FILGRASTIM 1997 2009 $0.9

ENBREL ETANERCEPT 1989 2012 $3.1

EPOGEN/PROCRIT EPOETIN ALFA 1989 2014 $4.7

LANTUS INSULIN GLARGINE 2001 2014 $2.7

COPAXONE GLATIRAMER ACETATE 1997 2014 $1.8

HERCEPTIN TRASTUZUMAB 1998 2014 $1.4

NEULASTA PEGFILGRASTIM 2002 2015 $2.9

AVONEX INTERFERON BETA-1A 1996 2015 $1.3

REBIF INTERFERON BETA-1A 2002 2015 $0.9

HUMIRA ADALIMUMAB 2002 2016 $2.6

RITUXAN RITUXIMAB 1997 2016 $2.5

ARANESP DARBEPOETIN ALFA 2001 2016 $1.3

AVASTIN BEVACIZUMAB 2004 2017 $2.9

LUCENTIS RANIBIZUMAB 2006 2019 $1.2

REMICADE INFLIXIMAB 1989 2021 $3.1

Source: IMS Health, MIDAS MAT Jun 2010

%Dollars %Total prescriptions dispensed

87.5% 86.4% 86.1% 85.8% 85.3% 83.4%

44.0% 40.3% 36.5% 32.3% 29.6% 26.4%

12.5% 13.6% 13.9% 14.2% 14.7% 16.6%

56.0% 59.7% 63.5% 67.7% 70.4% 73.6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2005 2006 2007 2008 2009 YTDSep2010

2005 2006 2007 2008 2009 YTDSep2010

% M

AR

KET S

HA

RE

Brands Generics

Generic Share continues to grow

Source: IMS Health, National Sales Perspectives, Sep 2010, National Prescription Audit, Sep 2010, Branded generics disaggregated


Brands Contribution to growth is declining

2006

Brands74%

26%

MAT Sep 2010

Brands32%

Generics68%

Source: IMS Health, National Sales Perspectives, Branded generics disaggregated, Sep 2010

AC = +$10bnAC = +$23bn

% Contribution to growth US$


Average cost of treatment for major therapy areas has declined significantly in recent years

• Across 9 therapy areas that now account for over 25% of total sales, an average 38% reduction in the daily cost of therapy has occurred within 12 months

• The impact of loss of exclusivity of a major product affects the average cost for the total therapy area

• Over the past seven years, generics share of total scripts has increased from 51% to 74%− The market available for direct generic substitution has increased from

61% of total scripts to 81%− The percentage of scripts dispensed as generic when one is available

(“generic efficiency rate”), has increased from 84% to 92%

• Most major molecules that have lost exclusivity now have over 10 generic competitors

• Price competition within the generic market is intense and contributing to the decline in average therapy costs

-80%

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

Aver

age

Antin

ause

ant 5

Ht3 A

ntag

onist

Bisp

hosp

hona

tes

Prot

on Pum

p In

hib

Lipid

Regu

lator

s

Alph

a-Be

ta B

locke

r

Antid

epre

ssan

ts

Non-b

arbit

urate, O

ther

s

Calci

um B

locke

rs

Antim

igran

e

Anti-

epile

ptics

% C

HA

NG

E IN

CO

ST

PER

DA

Y (

12

MTH

S P

OS

T EV

ENT)

(W

HO

LES

ALE

)An average 38% reduction in the daily cost of therapy has occurred in many major classes with recent expiries

Source: IMS Health, National Sales Perspectives, National Prescription Audit, Dec 2009

Lipid Regulators

0.00

0.50

1.00

1.50

2.00

2.50

3.00

Jan-

05Ap

r-05

Jul-0

5Oc

t-05

Jan-

06Ap

r-06

Jul-0

6Oc

t-06

Jan-

07Ap

r-07

Jul-0

7Oc

t-07

Jan-

08Ap

r-08

Jul-0

8Oc

t-08

Jan-

09Ap

r-09

Jul-0

9Oc

t-09

Lipid regulators

Zocor generic


CO

ST

PER D

AY

($)

Lipid Regulators

0.00

0.50

1.00

1.50

2.00

2.50

3.00

Jan-

05Ju

l-05

Jan-

06Ju

l-06

Jan-

07Ju

l-07

Jan-

08Ju

l-08

Jan-

09Ju

l-09

Jan-

10Ju

l-10

Jan-

11Ju

l-11

Jan-

12Ju

l-12

Jan-

13Ju

l-13

Jan-

14Ju

l-14

Lipid regulators (projected)

Lipitor generic


CO

ST

PER D

AY

($)

33

The leaky bucket

50-70%go to

pharmacy

48-66%come out ofpharmacy

25-30%are takenproperly

15-20%are refilled

as Rx’d

100 Rxs

Industry figures derived from IMS data

972943

893582

468406383364359

332-113-118-129-130-144

-211-220

-308-1,002-1,027

(in-line products) Antidiabetics

(in-line products) Autoimmune disease

ACE Inhibitors (generic Altace)

Source: IMS Health, National Sales Perspectives, Jun 2010

Major therapy class losses are driven by generic entries

(in-line products) Anti-Alzheimers

(new products) Respiratory Agents(in-line products) Antipsychotics(in-line products) HIV Antivirals

(in-line products) Anti-Platelets

(new products) Anti-Acne Preps

(in-line products, new products) ADHD Therapies(in-line products) Oncologics

BPH Products (generic Flomax)

Calcium Antagonists (in-line products)

Advanced Imaging Agents (in-line products)

IMM-Glob Antivirals (in-line products)

Fluoro-Quinolones (in-line products)

Antiulcerants (generic Prevacid)

Immunosuppressants (in-line products)

Anti-epileptics (generic Topamax, Lamictal)

Anti-migrane (generic Imitrex)

Top ten classes accounting for gains & losses in US in YTD June 2010

GAIN OR LOSS US$MN

$-4.1bn in loss

$10.2bn in gains

Antacid tablets and mineral supplements grew more than $100mn each in the latest 52 weeks with 1&2 Letter Vitamins and cold/allergy/sinus at nearly $100mn

Leading classes by absolute growth US$mnAbsolute sales

growth $mn

Total OTC $22,141 $482

1 ANTACID TABLETS $1,240 $126

2 MINERAL SUPPLEMENTS $1,629 $115

3 1 & 2 LETTER VITAMINS $496 $96

4 COLD/ALLERGY/SINUS TABLETS/PACKETS $2,635 $92

5 MULTI-VITAMINS $877 $57

6 EYE/LENS CARE SOLUTIONS $971 $37

7 WEIGHT CONTROL/NUTRITIONALS LIQ/PWD $932 $34

8 LIQUID VITAMINS/MINERALS $185 $30

9 LAXATIVE/STIMULANT LIQ/PWDR/OIL $354 $27

10 ADULT INCONTINENCE PRODUCTS $712 $25

Last 52 Wks


Private Label had the strongest absolute growth followed by Nature’s Bounty

Dollars ACUS$mn

Private Label PRIVATE LABEL 552

Natures Bounty US NUTRITION 69

Nature Made PHARMAVITE CORP 35

Sensodyne GLAXOSMITHKLINE 25

One A Day BAYER AG 20

Olay PROCTER & GAMBLE 18

Claritin MERCK 17

Advil PFIZER 13

Poise KIMBERLY CLARK CORP 12

Alcon NESTLE S.A. (SWITZERLAND) 11

Source: IRI Infoscan Total US FDMx, Latest 52 weeks ending July 11, 2010

1,253

Phase I20.5%

1,516

Phase II24.8%

444

Phase III7.3%

185

Pre-reg/reg3.0%

Global R&D pipeline compared against previous year

Source: IMS Health, R&D Focus, Jun 2010

Number of active products in the pipeline to date = 6,119

2,721

Pre-clinical 44.5%

420958

601172 82

% share of active pipeline

103

1,763

833915

272

(patterned segment) Specialist Driven Products

22 25 2217

11

21 2214 11 12

19 18

1516

1115

13

914

6 126

7 10

3741

33 32

24

30

36

2023

18

2628

11-139

13-15

11

26-28

20

0

5

10

15

20

25

30

35

40

45

50

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

YTD

2010

(f)

Primary care drivenSpecialist driven

Applications on FDA’s review calendar in 2H 2010 are unlikely to bring total NCE count above prior year levels

NU

MBER

OF

NCE

APP

RO

VALS

Source: FDA, IMS Health, Market Insights Team Analysis, Sep 2010

Expected major 2010-11 NCE launches include 11 products with blockbuster potential

Source: IMS Health, Market Insights, Sep 2010. Potential blockbuster

Product Company Indication Stage Launch

Daxas (roflumilast) Forest Respiratory (Chronic Obstructive Pulmonary Disease) Marketed 2010

Menveo (meningitis vaccine) Novartis Vaccines (meningitis) Marketed 2010

Prevnar 13 (13-valent pneumococcal vaccine) Pfizer Vaccines (bacterial infection) Marketed 2010

Prolia (denosumab) Amgen Osteoporosis Marketed 2010

Provenge (sipuleucel-T) Dendreon Vaccines (prostate cancer) Approved 2010

Gilenya (fingolimod) Novartis Multiple sclerosis Approved 2010

apixaban BMS Proteinase inhibitors (thrombosis) Pre-reg 2010-11

belatacept BMS Immunosuppressants for organ transplants Pre-reg 2010-11

Brilinta (ticagrelor) AZ Platelet aggregation inhibitors (acute coronary syndrome) Pre-reg 2010-11

Benlysta (belimumab) GSK, HSG Autoimmune disease (lupus, RA) Pre-reg 2010-11

ipilimumab BMS Oncology (metastatic melanoma) Pre-reg 2011-12

telaprevir Vertex/J&J Viral Hepatitis Products (hepatitis C) Pre-reg 2011-12

bapineuzumab Wyeth Alzheimer’s disease Phase III 2011-12

dapagliflozin BMS/AZ Diabetes (type II diabetes, weight mgmt) Phase III 2011-12

iniparib Sanofi-Aventis Oncology (breast cancer) Phase III 2011-12

vorapaxar / TRA Merck Proteinase inhibitors (acute coronary syndrome) Phase III 2011-12

Pre Market Safety Data FDA Analysis of

Safety Profile• Statistical (SAS, STATA)• Clinical• Integration of all

information

Voluntary AE reportingAE ReportsFrom public, Point-of-Care,Industry, Government

Drug Use Data• IMS• Verispan• US• Prevnar (?)

Other surveillanceSystems• NEISS• TESS• DAWN

Large data sets• HMD• CMS• VA• Other

Industry driven studies

Electronic HealthRecords• GPRD• VA DOD• Cigna (?)

Other safety data sources

Registries• Personal

health records• Drug specific• Disease

specific

Regulatory decisions

Data communication

REMS programs and a more active FDA safety program will bring new risk/benefit dynamic

Source: FDA PDUFA IV Information Technology Plan, DRAFT, Dec 2007

2008 FDA approvals of NCEs took place in a challenging environment

Fewer new product submissions24 in 2008* vs. 34 in 2007

Fewer “me-too” products

Source: IMS, Market Insights Research. *Jan-Oct 2008.

Review delays20% of PDUFA goals missed in 2008*

FDA staff shortage

Delayedor denied market access36 complete response or not-approvable letters

Restricted market access21 Risk Evaluation & Mitigation Strategies

26 NCE approvals

Debate in the US on healthcare reform was broadly centered on core issues of access, affordability and quality

• Providing insurance to the currently uninsured

• Lowering costs of existing activities

• New sources of funding

• Improving the quality of care that is deliveredQuality

Affordability

Access

Medicare Part DRetail Rx payment type

Source: IMS Medicare National Tracking Report

Week Ending Total 2008 Total 2009 October 1, 2010

Total RXs

Current Week YTD Cum

TRx % TRx % TRx % TRx %

3,429,188,979 100.0% 3,531,115,463 100.0% 71,093,924 100.0% 2,680,853,692 100.0%

Cash 322,409,855 9.4% 309,343,038 8.8% 5,413,571 7.6% 212,953,870 7.9%

Medicaid 274,375,086 8.0% 300,350,761 8.5% 7,055,905 9.9% 256,074,256 9.6%

3rd Party minus Medicare Part D 2,171,927,926 63.3% 2,221,505,378 62.9% 43,298,792 60.9% 1,645,271,680 61.4%

Medicare Part D 660,476,112 19.3% 699,916,288 19.8% 15,325,656 21.6% 566,553,887 21.1%

Walgreens Year In Review • July 201044

The most certain impacts are negative in the short term but more positive or uncertain longer term

Closure of donut hole

UpsideExpanded coverage of current uninsured

Expanded Medicaid coverage

Medicaid price cut

Part D donut hole subsidy

Annual feesBiosimilar regulatory pathway

Downside

2010 20192014

IMP

AC

T

TIMING

Reform of insurance practices

Independent Payment Advisory BoardPatient Centered Outcomes Res. Inst.Pilots, demonstration projectsPreventive care incentivesPhysician payment

sunshine rules

0

50

100

150

200

250

300

350

400

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

NU

MBER

OF

PEO

PLE

(MIL

LIO

NS)

Exchanges

Uninsured

Nongroup/Other

Employer

Medicaid/CHIP

Medicare

Source: CMS, CBO Healthcare Reform Reconciliation Bill Analysis, Mar 2010

The reforms will move tens of millions of people to or from coverage types by 2019

COVERAGE AFTER REFORM

+24 +24

-32 -27

-5 -2

-4 +8

+16 +11

0 +14

Impact on 2019 (Mn)

Vs. no-reform Vs. 2010

0

50

100

150

200

250

300

350

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010(f)

2011(f)

SALE

S U

S$BN

0%

5%

10%

15%

20%

GRO

WTH

CO

NST

US$

Sales Growth

Source: IMS Health, Market Prognosis, Sep 2010

U.S. forecast to grow under 5% in 2011 as patent expiries and lack of innovation hamper growth

US Sales and Growth, 2001-2011

$310-320

$320-330

$301

3-4% 3-5%5.5%1.6%4.0%

$281$270$247$216 $234$197$176

9.1%5.4%8.5%9.8%11.8%18.4%

$285

0

250

500

750

1,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010(f)

2011(f)

SALE

S U

S$B

N

0%

5%

10%

15%

GRO

WTH

CO

NST

US$

Total world Growth

Source: IMS Health, Market Prognosis, Sep 2010

Global pharma market expected to exceed $880 bn in 2011 with growth of 5-7%Global Sales and Growth, 2001-2011

$840-850

$880-890

$812

4-6% 5-7%7.1%5.8%6.9%

$781$715$646$556 $601$497$431$395

7.2%7.3%7.7%9.1%9.1%12.1%

Longer-term upsides to pharma growth are possible

49

Growing share of healthcare budget for

pharmacotherapy

Accelerated uptake of healthcare information

technology

Increased diagnosis of asymptomatic conditions

Improved compliance and persistency rates

Expanded patient access to healthcare

Greater clinical evidence of drug efficacy

Emergence of new therapeutic platforms

Aging population and economic development

Thank youVisit www.imshealth.com for more

information on IMS’ Viewpoint

Doug Long [email protected]

Branded products Rx growth is sharply negative

3.4%0.7%

5.7%

20.0%

0%

5%

10%

15%

20%

25%

MAT Sep 2010

% G

RO

WTH

1.5%

-9.3%

7.2%

-9.3%

-15%

-10%

-5%

0%

5%

10%

MAT Sep 2010

% G

RO

WTH

Source: IMS Health, National Prescription Audit, Sep 2010Source: IMS Health, National Sales Perspectives, Sep 2010

Total market Brands Unbranded generics

Twelve months ending Sep 2010Twelve months ending Sep 2010

Branded generics

% Growth US$ % Growth TRx

Sales growth for the top 10 generic companies grow at 21.1%

US$mn % Market Share % Growth

US Industry 36,863 12.1 20.0

1 Teva 7,925 21.5 12.8

2 Mylan Labs, Inc. 3,789 10.3 10.3

3 Sandoz (Novartis) 3,457 9.4 53.0

4 Watson Pharma 2,125 5.8 7.6

5 Greenstone (Pfizer) 1,470 4.0 -9.5

6 Par Pharma 1,380 3.7 18.2

7 Hospira Inc 1,173 3.2 20.5

8 Actavis US 992 2.7 93.4

9 Global Pharm Corp 980 2.7 255.3

10 Boehringer Ingelheim 878 2.4 23.7

Top 10 24,169 65.6 21.1

MAT Sep 2010Sales of unbranded generics by leading corporations


Top 20 generic companies grow at 17.7%


11 Fresenius Kabi 800 2.2 21.0

12 Ranbaxy Labs Limit 786 2.1 235.7

13 Covidien 604 1.6 -34.3

14 Lupin Pharma 540 1.5 39.1

15 Sun Pharmaceutical 476 1.3 283.6

16 Qualitest Products 463 1.3 26.1

17 Dr Reddy Inc 460 1.2 -47.6

18 Taro Pharm 403 1.1 21.1

19 Apotex Corp 368 1.0 -62.3

20 Amneal Inc 368 1.0 116.1

Top 20 29,436 79.9 17.7

MAT Sep 2010Sales of unbranded generics by leading corporations


Sales of leading therapy classes


US Industry 305,670 100.0 3.4

1 Lipid regulators 17,207 5.6 1.5

2 Antipsychotics,oth 15,717 5.1 10.0

3 Proton pump inhib 11,842 3.9 -14.5

4 Anti-depressants 11,490 3.8 1.1

5 Angiotensin II antagonists 8,653 2.8 6.3

6 Antineo monoclonal antib 8,348 2.7 6.7

7 Analogs of human insulin 7,150 2.3 19.2

8 Antiarth,biol resp mod 6,772 2.2 10.0

9 Anti-platelets,oral 6,506 2.1 11.5

10 Analeptics 6,419 2.1 15.9

Top 10 100,105 32.7 4.3

MAT Sep 2010

Leading classes


Sales of leading therapy classes


11 Erythropoietins 6,187 2.0 -2.6

12 Steroid,inhaled bronch 5,827 1.9 10.6

13 GI anti-inflam 5,266 1.7 10.9

14 Codeine & comb 5,243 1.7 11.9

15 HIV antiviral combination 5,157 1.7 13.1

16 Glitazones 4,708 1.5 1.7

17 Alzheimer-type dementia 4,438 1.5 16.4

18 Anticoag,inj 4,184 1.4 6.7

19 Leukotriene agents 4,064 1.3 9.5

20 Seizure disorders 4,047 1.3 -37.1

Top 20 149,226 48.8 3.6

MAT Sep 2010

Leading classes


Lipid lowering agents now rank second in Rx volume

1 Anti-depressants 247 6.3 3.0

2 Lipid regulators 243 6.1 2.8

3 Codeine & comb 204 5.2 2.7

4 Ace inhibitors 164 4.2 1.3

5 Beta blockers 126 3.2 -2.4

6 Proton pump inhib 118 3.0 -0.8

7 Seizure disorders 110 2.8 6.7

8 Thyroid hormone,synth 105 2.7 2.6

9 Calcium blockers 95 2.4 4.6

10 Benzodiazepines 90 2.3 3.4

Top 10 1,503 38.0 2.3

Source: IMS Health, National Prescription Audit, Sep 2010

Rx growth in the top 20 classes is 1.9%

US TRX mn % Market Share % Growth

11 Angiotensin II antagonists 81 2.0 -3.1

12 Antiarth,plain 79 2.0 2.5

13 O/C estrogen/progestogen 79 2.0 -3.0

14 Macrolides & related 67 1.7 0.8

15 Beta agonists 63 1.6 3.6

16 Penicillins 61 1.5 -0.3

17 Biguanides 61 1.5 6.0

18 Non-barb,oth 59 1.5 1.4

19 Antipsychotics,oth 53 1.3 1.8

20 Mus relx,non-surg 52 1.3 4.6

Top 20 2,158 54.6 1.9

MAT Sep 2010

Leading therapy class


Dollars ACUS$mn Total Rx dispensed AC

TRxs mnAntipsychotics,oth 1423.9 Anti-depressants 7.1

Analogs of human insulin 1151.2 Seizure disorders 6.9

Analeptics 881.6 Lipid regulators 6.6

Anti-platelets,oral 671.4 Vitamin D 6.2

Alzheimer-type dementia 625.4 Codeine & comb 5.4

Antiarth,biol resp mod 614.0 Calcium blockers 4.2

HIV antiviral combination 598.1 Analeptics 4.1

Steroid,inhaled bronch 558.3 Biguanides 3.4

Codeine & comb 557.8 Benzodiazepines 3.0

Antineo monoclonal antib 520.5 Thyroid hormone,synth 2.7

Leading Absolute Growth Vs. Yr. Ago-Classes

Source: IMS Health, National Sales Perspectives, Sep 2010, National Prescription Audit, Sep 2010

Dollars ACUS$mn Total Rx dispensed AC

TRxs mnQuinolones, systemic -203.6 Hormones,estrogens -1.3

Calcium blockers -231.4 Diuretics,comb -1.5

Ace inhibitors -234.3 GI stimulants -1.6

Herpes Antivirals -344.1 Glitazones -1.8

UT benign prostate -397.4 Quinolones, systemic -2.2

Immunosup/transplant age -455.3 Synth narc,analg -2.4

Platinum coordination -520.3 O/C estrogen/progestogen -2.4

Anti-migraine -637.1 Angiotensin II antagonists -2.6

Proton pump inhib -2012.8 Beta blockers -3.1

Seizure disorders -2384.7 Osteoclast Inhibitors -3.7

Leading Absolute Declines Vs. Yr. Ago-Classes


Sales of leading products


US Industry 305,670 100.0 3.4

1 Lipitor 7,275 2.4 -4.3

2 Nexium 6,328 2.1 2.0

3 Plavix 6,002 2.0 11.0

4 Advair Diskus 4,743 1.6 3.4

5 Abilify 4,423 1.4 16.2

6 Seroquel 4,324 1.4 6.3

7 Singulair 3,984 1.3 9.3

8 Crestor 3,605 1.2 28.8

9 Actos 3,516 1.2 5.7

10 Epogen 3,349 1.1 6.8

Top 10 47,548 15.6 6.7

MAT Sep 2010

Products


Sales of leading products


11 Remicade 3,294 1.1 3.2

12 Enbrel 3,247 1.1 1.0

13 Avastin 3,152 1.0 8.4

14 Oxycontin 3,149 1.0 14.6

15 Cymbalta 3,060 1.0 12.2

16 Neulasta 2,994 1.0 1.2

17 Zyprexa 2,890 0.9 10.6

18 Humira 2,796 0.9 14.4

19 Lexapro 2,765 0.9 1.0

20 Rituxan 2,730 0.9 5.6

Top 20 77,625 25.4 6.8

MAT Sep 2010

Products


Watson’s hydrocodone with APAP replaces Lipitor as the most prescribed product

TRxs mn % Market Share % Growth

US Industry 3,954 100.0 1.5

1 hycd/apap 58 1.5 -3.6

2 hycd/apap 50 1.3 -3.9

3 Lipitor 46 1.2 -13.2

4 levothyroxine 41 1.0 6.0

5 lisinopril 36 0.9 2.0

6 Plavix 29 0.7 -0.7

7 amoxicillin 29 0.7 -17.4

8 Nexium 29 0.7 -5.6

9 Singulair 28 0.7 -0.1

10 simvastatin 28 0.7 40.1

Top 10 375 9.5 -2.1

MAT Sep 2010

Leading Products


Top 20 drugs show positive growth


11 metoprolol tart 28 0.7 7.0

12 simvastatin 27 0.7 13.7

13 Lexapro 26 0.7 -7.6

14 Synthroid 25 0.6 -2.2

15 azithromycin 24 0.6 62.3

16 levothyroxine 24 0.6 9.8

17 Crestor 24 0.6 14.5

18 metformin hcl 23 0.6 7.7

19 Proair Hfa 23 0.6 -3.6

20 sertraline hcl 22 0.5 20.3

Top 20 622 15.7 2.1

MAT Sep 2010

Leading Products


Leading Absolute Growth Vs. Yr. Ago-Products


Dollars ACUS$mn Total Rx Dispensed AC

TRxsmn

Crestor® (Azn) 807 metoprolol succin (wts) 9.8

valacyclovir hcl (rby) 623 azithromycin (tev) 9.4

Abilify® (Ots) 616 simvastatin (lu.) 8.1

Plavix® (Bsa) 596 cephalexin (lu.) 7.8

Prevnar 13® (Pfz) 446 omeprazole (rx) (myn) 7.2

Oxycontin® (Puf) 401 gabapentin (am9) 6.8

Atripla® (Bmg) 400 Atripla® (Bmg) 6.4

budesonide (tev) 394 pravastatin sod (tev) 6.2

venlafaxine hcl er (tev) 387 warfarin sod (tar) 5.8

Seroquel Xr® (Azn) 386 omeprazole (rx) (sdz) 5.4

Sales of leading corps


US Industry 305,715 100.0 3.4

1 Pfizer (incl Greenstone / Wyeth) 26,654 8.7 -3.7

2 Merck & Co (inc S-P) 19,037 6.2 -3.1

3 AstraZeneca 18,584 6.1 5.3

4 Novartis (incl Sandoz) 15,180 5.0 17.6

5 Roche (incl Genentech) 14,079 4.6 3.0

6 Lilly 14,062 4.6 9.3

7 GlaxoSmithKline 14,021 4.6 -7.3

8 Teva 13,318 4.3 10.3

9 Amgen Corporation 12,633 4.1 1.9

10 Johnson & Johnson 12,599 4.1 -5.9

Top 10 160,168 52.2 1.8

MAT Sep 2010

Leading corporations


Sales of leading corps


11 Abbott 10,791 3.5 2.2

12 Sanofi-Aventis 10,411 3.4 -7.7

13 Bristol-Myers Squibb 9,564 3.1 9.6

14 Boehringer Ingelheim 6,768 2.2 -6.3

15 Takeda 6,259 2.0 -23.3

16 Eisai Corp 4,683 1.5 9.7

17 Forest Lab 4,625 1.5 8.1

18 Gilead Sciences 4,488 1.5 21.4

19 Otsuka America Ph 4,482 1.5 16.7

20 Mylan Labs 4,337 1.4 12.0

Top 20 226,576 73.9 1.5

MAT Sep 2010



Teva leads in prescription volume with more than 16% share


US Industry 3,954 100.0 1.5

1 Teva 639 16.2 2.0

2 Mylan Labs, Inc. 368 9.3 10.7

3 Novartis (incl Sandoz) 262 6.6 10.4

4 Pfizer (incl Greenstone) 251 6.3 -4.3

5 Watson Pharma 232 5.9 -1.0

6 Lupin Pharma 121 3.1 38.4

7 Qualitest Products 117 3.0 21.9

8 Amneal Inc 90 2.3 51.5

9 AstraZeneca 88 2.2 -5.0

10 Covidien 84 2.1 -10.0

Top 10 2,251 56.9 6.1

MAT Sep 2010



Prescription growth among the top 20 corporations at 4.1%


11 GlaxoSmithKline 75 1.9 -5.0

12 Merck & Co 73 1.9 -14.5

13 Boehringer Ingelheim 69 1.7 -2.3

14 Actavis US 68 1.7 -6.1

15 Dr Reddy Inc 62 1.6 -8.5

16 Abbott 61 1.5 -6.5

17 Lilly 49 1.2 -1.0

18 Zydus Pharma 49 1.2 60.7

19 Forest Lab 44 1.1 -5.5

20 Bristol-Myers Squibb 42 1.1 -4.2

Top 20 2,844 71.9 4.1

MAT Sep 2010



Leading Absolute Growth Vs. Yr. Ago-Companies

Dollars AC US$BN TRx AC TRx mn

Novartis (incl Sandoz) 2.3 Mylan Labs, Inc. 35.7Lilly 1.2 Lupin Pharma 33.5Teva 1.2 Amneal Inc 30.6AstraZeneca 0.9 Novartis (incl Sandoz) 24.7Bristol-Myers Squibb 0.8 Qualitest Products 21.0Gilead Sciences 0.8 Zydus Pharma 18.3Global Pharma Corp 0.7 Glenmark Pharma 12.4Novo Nordisk 0.7 Teva 12.4Otsuka America Ph 0.6 West Ward 11.2Mylan Labs, Inc. 0.5 Northstar Rx 10.1


THERAPY DAY AVERAGE COSTS 0310 DRAFT • Enter fixed date manually [View>Header and Footer...]70

Daily cost of therapy is declining across major therapy areas

Average price calculation: Weight Avg. Cost/Day = Tablet cost X Tabs per Day X Tablets share of class (this calculation is done at the form strength level then summed to Class )12 and 24 months post generic: average of the cost per day for available months if it is less than 12 or 24 months after the event

*If post generic timeframe has not occurred, post generic pricing (to date) is trended to full 12 or 24 month range

ClassPre

Generic avg price

12 months post generic

avg price

24 months post generic

avg price

% reduction 12 months

% reduction 24 months

Key Brand(s)

LOE month

Antinauseants 59.73 25.69 14.93 57.0% 75.0% Zofran Dec-06Bisphosphonates 2.01 1.35 0.32 32.7% 84.1% Fosamax Jan-08Proton Pump Inhib 3.15 2.84 2.76 9.6% 12.4% Prevacid* Nov-09Lipid Regulators 2.52 2.13 1.86 15.3% 26.2% Zocor Jun-06Alpha-Beta Blocker 2.45 0.60 0.49 75.5% 80.1% Coreg Sep-07Antidepressants 1.60 1.03 1.06 35.8% 33.8% Zoloft Jun-06

1.30 0.83 0.82 36.6% 36.8% Effexor Jun-08Non-barbiturate, Others 2.33 1.32 1.24 43.5% 46.9% Ambien Apr-07Calcium Blockers 1.20 0.67 0.57 44.8% 52.7% Norvasc Mar-07Antimigrane 9.35 6.47 5.82 30.8% 37.7% Imitrex Feb-09Anti-epileptics 2.35 1.24 1.12 47.0% 52.3% Lamictal* Jan-09

2.32 1.20 1.08 48.1% 53.3% Topamax* Mar-09

US biologic growth over time

US$

SALE

S G

RO

WTH

0

10

20

30

40

50

60

70

MAT Mar

1999

MAT Mar

2000

MAT Mar

2001

MAT Mar

2002

MAT Mar

2003

MAT Mar

2004

MAT Mar

2005

MAT Mar

2006

MAT Mar

2007

MAT Mar

2008

MAT Mar

2009

MAT Mar

2010

US$B

N

0

5

10

15

20

25

30Sales Growth

Source: IMS Health, MIDAS, MAT Mar 2010, US Biologic market at trade level

Rank US$MN % Market Share % Growth

US Biologic Market 65,475.2 100.0 6.5

1 L4B Anti-Tnf Products 9,482.7 14.5 9.7

2 L1X All Other Antineoplastic 8,039.5 12.3 4.5

3 A10C Human Insulin+Analogues 7,865.8 12.0 18.7

4 B3C Erythropoietin Products 6,297.8 9.6 -2.4

5 L3A Immunostim Ag Ex Intfron 5,951.5 9.1 5.5

6 J7A Pure Vaccines 3,988.0 6.1 -2.8

7 B1B Heparins 3,281.6 5.0 6.0

8 L3B Interferons 3,201.4 4.9 10.5

9 J6C Polyval Immuno-Globl I.V 1,752.1 2.7 10.2

10 B2D Blood Coagulation 1,650.5 2.5 4.5

Top 10 51,510.9 78.7 6.6

MAT Jun 2010

Source: IMS Health, MIDAS, MAT Jun 2010, US Biologic Market at trade level

US biologic leading classes 1- 10

US Pharmaceutical Market

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