GlaxoSmithKline vs Pfizer UBI Business & Competitive Intelligence Presentation by : Aksenov Yuri Pascal Andrea Hendricx Chris Brussels, December 15th 2006

Key Intelligence Topic The future of pharma: Prevent or Cure ?

Analysis of key factors Industry Figures   Players, market shares, evolution Who are Pfizer and GSK   Performances, products, policies Investors outlook In depth analysis   Risks, Opportunities, Capabilities Implications Recommendations   Strategies, positioning Conclusions   Sources

* both companies are at the top Top 10 Pharmaceuticals companies in the world Analysis of key factors

Top 10 markets evolution Analysis of key factors

Market segmentation Analysis of key factors

Company fact sheet Corporate views and values Mission - to improve the quality of human life Purpose – dedicated to better health and greater access to healthcare. Research based pharmaceutical company Shape a flexible R&D organisation that can respond to the challenges and the opportunities Mission - become the world's most valued company to patients, customers, colleagues, investors, business partners. Purpose – dedicated to better health and greater access to healthcare. Growth through innovation Research based pharmaceutical company

Company fact sheet Customer Customer understanding and responding to their often changing needs. understanding and responding to their often changing needs. Personnel policy Personnel policy GSK business employs over 100,000 people in 116 countries GSK business employs over 100,000 people in 116 countries Over 15,000 people work in research teams to discover new medicines Over 15,000 people work in research teams to discover new medicines For employees, we create an environment that allows them to do their best work by being themselves For employees, we create an environment that allows them to do their best work by being themselves Stakeholders Stakeholders we must provide the right information in a timely and effective way. we must provide the right information in a timely and effective way. Customer Customer deeply committed to meeting the needs of our customers, and we constantly focus on customer satisfaction deeply committed to meeting the needs of our customers, and we constantly focus on customer satisfaction Personnel policy Personnel policy Pfizer employs 122,000 people in 60 countries and has sales in more than 150 countries. Pfizer employs 122,000 people in 60 countries and has sales in more than 150 countries. People are the cornerstone of Pfizer's success, we value our diversity as a source of strength, and we are proud of Pfizer's history of treating people with respect and dignity People are the cornerstone of Pfizer's success, we value our diversity as a source of strength, and we are proud of Pfizer's history of treating people with respect and dignity Stakeholders Stakeholders We work with stakeholders to share knowledge, skills and goals on how to prevent or manage diseases, how to get medicine to the people who need it, and how to promote good health. We work with stakeholders to share knowledge, skills and goals on how to prevent or manage diseases, how to get medicine to the people who need it, and how to promote good health. Corporate views and values

Segment portfolio Analysis of key factors

FINANCIAL PERFORMANCE GSK FINANCIAL PERFORMANCE PFIZER groupgroup SALES PoundsSALES USD EBIT PoundsEBIT USD PAT PoundsPAT USD EPS PoundsEPS USD R&D PoundsR&D USD SALES GROWTH ---58% % R&D growth % % R&D as % of sales % % EBIT growth % ----*-18 % 31 % 22 % Analysis of key factors

Source: Evaluate, Internal Analysis Industry Supplements internal R&D with BD&L/M&A Activity Analysis of key factors

Investor outlook Analysis of key factors

Performance analysis, outlook Analysis of key factors US continued to remain the largest market for pharmaceuticals in the world US continued to remain the largest market for pharmaceuticals in the world Pfizer, Sanofi-Aventis and GSK remained as the top three companies in terms of pharma salesPfizer, Sanofi-Aventis and GSK remained as the top three companies in terms of pharma sales Three relatively smaller players namely Amgen, Abbott Labs and AstraZeneca, however, reported a double digit growth during 2005 with Amgen recording the highest growth rate of 20.5 per cent. Three relatively smaller players namely Amgen, Abbott Labs and AstraZeneca, however, reported a double digit growth during 2005 with Amgen recording the highest growth rate of 20.5 per cent. Pfizer's own sale in the US market fell by 11.8 per cent to billion dollars in 2005 from billion. Pfizer's own sale in the US market fell by 11.8 per cent to billion dollars in 2005 from billion. GSK’s US sales fell by 3.5 per cent during 2005.GSK’s US sales fell by 3.5 per cent during Eli Lilly stood out as the largest spender of R&D in 2005 with its spending of 20.7 per cent of gross turnover. Amgen, another relatively smaller player among the 15, has spent 18.6 per cent of its turnover on R&D. On the other hand, Pfizer's R&D expenditure declined by 3.1 per cent to 7.44 billion dollars in 2005 from 7.68 billion.Eli Lilly stood out as the largest spender of R&D in 2005 with its spending of 20.7 per cent of gross turnover. Amgen, another relatively smaller player among the 15, has spent 18.6 per cent of its turnover on R&D. On the other hand, Pfizer's R&D expenditure declined by 3.1 per cent to 7.44 billion dollars in 2005 from 7.68 billion. The pharma companies are taking this threat from the generic players quite seriously by spending more on R&D.The pharma companies are taking this threat from the generic players quite seriously by spending more on R&D.

Sales M&S R&D G&A Price Units EBIT Sales Units Price M&S R&D G&A EBIT Price Pressures limits Industry ability to use price for growth Industry continues to consolidate in order to cut infrastructure costs: -Reduce sales reps - Eliminate TA areas in Research -Reduce duplication in support functions Consolidations protects Earnings growth & Capital value Price pressures drive consolidations to maintain earning levels Analysis of key factors

Overview Methodology Methodology Risks Risks Opportunities Opportunities Implications Implications Future Business Impact Assessment

Exclusively developed to study the two companies in their competitive environment, understanding the impact of future events for their future business strategy. Exclusively developed to study the two companies in their competitive environment, understanding the impact of future events for their future business strategy. Each risk and opportunity assessed in its magnitude, considering two additional company dimensions: Each risk and opportunity assessed in its magnitude, considering two additional company dimensions: RiskOpportunity Likelihood PreparednessCapabilities ExposureAttractiveness The PHA ® Model Future Business Impact Assessment

Product Recall & Litigations Product Recall & Litigations Patent Expiration Patent Expiration BRIC Competition & Generics BRIC Competition & Generics Free Access & Price Dumping Free Access & Price Dumping Public opinion pressure Public opinion pressure Events (risks) Future Business Impact Assessment

“Safe Zone” “Danger Zone” Bubble size denotes event likelihood Risk assessment Future Business Impact Assessment

“Danger Zone” “Safe Zone” Bubble size denotes event likelihood Risk assessment Future Business Impact Assessment

Cancer Treatment Cancer Treatment Pandemic & Bioterrorism Pandemic & Bioterrorism Healthcare & Animal Healthcare & Animal Online Pharmacy Online Pharmacy Developing World Developing World Markets (opportunities) Future Business Impact Assessment

“Addressable” “Missed” Bubble size denotes market likelihood Opportunity assessment Future Business Impact Assessment

“Addressable” “Missed” Bubble size denotes market likelihood Opportunity assessment Future Business Impact Assessment

Exposed to animal rights activists and public opinion pressure. Exposed to animal rights activists and public opinion pressure. Betting on pandemic flu vaccine as next large pharma opportunity. Betting on pandemic flu vaccine as next large pharma opportunity. Implications Reliant on blockbusters and over-the-counter medicaments. Reliant on blockbusters and over-the-counter medicaments. Heavily exposed to product recall and BRIC competition on generics. Heavily exposed to product recall and BRIC competition on generics. Future Business Impact Assessment

In the near future, risks for pharma seem higher than the opportunities. In the near future, risks for pharma seem higher than the opportunities. The best equiped to face the new challenges will win. The best equiped to face the new challenges will win. Summary Future Business Impact Assessment

Pfizer : 1 st Recommendation Recommendations Pfizer Big company Big company Loose pieces Loose pieces No course of action No course of action Align the business Get smaller and align the business align the business Be clear : Vision Vision Mission Mission Strategy Strategy Be manageable

Pfizer : 2 nd recommendation Recommendations Co-marketing with generic drug manufacturers

Pfizer : 3 rd recommendation Recommendations Go on-line e-business Pharmacy Wholesaler

Pfizer : 4 th recommendation Recommendations Promotion : Brand or efficacy of product

Pfizer : 5 th recommendation Recommendations Research & Development : Better focus Improve OTC portfolio Improve OTC portfolio Avoid entering areas where excellence is reached Avoid entering areas where excellence is reached

Glaxosmithkline : 1 st Recommendation Recommendations Research & Development : CONTINUE

Glaxosmithkline : 2 nd recommendation Recommendations Vaccination Continu efforts

Glaxosmithkline : 3 rd recommendation Recommendations Go for prevention Less sofisticated drugs needed. Competition ?

Glaxosmithkline : 4 th recommendation Recommendations Focus on neglected diseases HIV/AIDS HIV/AIDS Tuberculosis Tuberculosis Malaria Malaria Obesitas – Cholesterol Obesitas – Cholesterol etc … etc … Enhance participation in community programmes Animal testing Animal testing Human testing Human testing Image building Image building PR PR

Glaxosmithkline : 5 th recommendation Recommendations Acquisition OTC Candidate good prospect for product diversification

General for the pharmaceutical market Opportunities Entering new markets : China, East-Europe, Latin-America, Vietnam Entering new markets : China, East-Europe, Latin-America, Vietnam Alliance with BioTech companies : Technology, innovation Alliance with BioTech companies : Technology, innovation

Distinguishing markets Conclusion Future key players: Generics manufacturers Future Key Players: Pharma innovators “Cure” market “Prevent” market

Distinguishing markets Conclusion pastpresent future Cure R&D Focus Prevent Sales Focus

Questions

Secondary sources Annual report Pfizer 2005 Annual report Pfizer 2005 Annual report GSK 2006 Annual report GSK 2006 IMS Health Global Pharma forecast Feb IMS Health Global Pharma forecast Feb NYSE, sept.2006 NYSE, sept.2006 MIDAS, new market segmentation Feature Dec MIDAS, new market segmentation Feature Dec Neil Mahoney - Global Business Management Concepts, presentation Neil Mahoney - Global Business Management Concepts, presentation PharmaBiz, "Struggle of the giants", May PharmaBiz, "Struggle of the giants", May Wood McKenzie Wood McKenzie BCG e-Health Reports BCG e-Health Reports Wall Street Journal Wall Street Journal