Strategic Product Positioning, Launch & Marketing in the EU & US

C5’s Forum on US FDA Regulation for European BioPharma Industry Players, December 2006, London

Nermeen Varawalla, MD, DPhil (Oxon), MBA Vice President, Corporate Development PRA International

Agenda: Product Positioning, Launch & Marketing R&D Early Adoption Usage: Efficacy, Safety & Compliance Pricing & Reimbursement

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Rising cost of new drug development

• • • •

Drivers High Attrition Regulatory Requirements Patient Recruitment Inefficient Processes

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New drug development continues to be lengthy
Drivers Patient Recruitment Demands on Data Incomplete Application of Technologies Pipeline Volumes
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• • • •

Biologics represent increasing proportions of new drug approvals
New research tools e.g. pharmacogenomics accelerate drug discovery with a greater application to biologics.

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Product type influences drug development outcomes.

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Early adoption of new drugs: influencing variables
Variable Pre-product Launch Company Prescribing Loyalty Total Pre-product Launch Prescribing Volume Physician’s Age Comments Trust in pharmaceutical company Less relevant in follow on drugs High prescribing volume = high patient flow hence more unmet medical need < 36 and > 65 least likely to be early adopters

Pharmaceutical Marketing Support Detailing, Free samples, advertising – DTC & professional journal Practice Type Clinical Investigator Experience Specialist in Therapeutic Area Office based > likely than hospital based, possibly more restrictions Participation in Phase III trials More likely to see treatment challenges

Source: Glass & Rosenthal, 2004

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Pharmaceutical marketing support does influence drug adoption
Detailing: interactions with drug sales representatives
most important

Prescriber advertising: medical bulletins & journals Specialist meetings, presentations, conferences and symposia: more important for new drugs Direct to Consumer advertising – US & NZ only:
anti-depressants, anti-histamines, anti-hyperlipidemic agents and anti-inflammatory agents – influence on prescribing patterns debatable
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Increasing placement of clinical trials in emerging countries
US 100% 75%
% of total 1572s filed 50%

Western Europe

Rest of World

25% 0% 1997
Source: Tufts CSDD

1999

2001

2003

2005
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Changing Mix of FDA-Regulated Clinical Investigators

Emerging countries have future commercial Value: China Example
Pharmaceutical Market Size in USD Billion
25 20 15 10 5 0

2004

2005

2010

 7th largest pharmaceutical market in the world in revenue  Rapid growth fuelled by: • Population = 1.33 bn in 2005 • 60 yr olds = 160 M in 2005, 280 M in 2025 • Relatively low baseline: per capita drug expenditure at 12 USD is 2% of that in the US • Urbanisation & affluence • Conversion from the exclusive use of Traditional Chinese Medicine  Most large pharmaceutical companies have a major presence in China
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Product usage
Blockbusters (annual sales > 1bn USD) = 1/3 global drug sales Follow on drugs add value
• 32% are priority rated

Orphan drugs – 1/3 of 2005 NMEs
• 39% not first approvals

Compliance is a challenge
• 50% compliance for chronic treatments • 70% of prescriptions not consumed
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Oncology and Neurology account for over half of R&D efforts
Match between unmet medical need / commercial potential and R&D pipelines

Source: Tufts CSDD

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Important therapeutic areas are under served
Perhaps because of less commercial potential

Source: Tufts CSDD

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New product adoption in spite of unmet need is challenging
• 2,000 unmet medical needs • 5,000 – 8,000 rare diseases • 30-50% of patients with chronic disease have unsatisfactory treatment

Source: Tufts CSDD, 2005

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Drug safety concerns making regulators more cautious
FDA receives > 400,000 AE reports / year 10 safety withdrawals since 2000 5-10 fold safety – efficacy range in normal populations
80% Share of NMEs Approved 60% 40% 20% 0% 1970-84 1985-86 1987-93 1998-04 Post marketing study commitments

• FDA is encouraging exploratory IND studies with more reliance on post marketing safety studies • Reduce cost & time to launch new drug • Product risk management plans
Source: Tufts Center, CSDD 15

Pricing and Reimbursement
Rising drug prices Rising end user prices in the US fuelling public distrust in the pharmaceutical industry > in the US Insurers & state active to contain and fund rising prescription costs
• Payer (HMO, state, NICE) becomes a customer • Imperative to engage with / lobby state & payers • Health economics end points

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US response to rising drug bill
Multi-tier cost sharing by US insurers that promote use of generics & preferred brands to further expand
• Helped reduce growth rate of Rx drugs bill from 15% in 2001 to 8% in 2004 • In 2004 70% of insurers use a 3-tier cost sharing, up from 50% in 2001

More Rx to OTC switches expected
• Following on from Claritin and Prilosec

Boost of Rx drug spending by Centers for Medicare & Medicaid Services to 70 bn USD from 8 bn USD in 2003
• Raise the profile of CMS within the drug industry

Medicare drug benefit to emphasise evidence based reimbursement
• More so for expensive and high utilisation drugs • Similar to Australia, Canada, France, Netherlands & the UK

Source: Tufts Center for the Study of Drug Development, Outlook 2006

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How does Europe differ?
Reimbursement levels for drugs in the UK and US are similar 93% vs 87% 10% of US formularies impose conditions on coverage vs 40% in the UK US health insurers demand higher co-payments than NHS in UK More formulary variation & different cost sharing practices in the US compared to EU
Source: Tufts Center for the Study of Drug Development, Outlook 2006

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Questions…..
Dr Nermeen Varawalla,
MD, DPhil (Oxon), MBA Vice President Corporate Development, PRA International Pacific House Imperial Way, Worton Grange Reading, Berkshire RG2 OTD, UK

Tel: E-mail: Website:

+44 118 918 1025 varawallanermeen@praintl.com www.prainternational.com

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