$191B Industry Drugs awarded 17 year patent Need to cut costs –Sales volume decreasing –Less pricing flexibility –More competition –Manufacturing costs increasing

New Plants needed for new drugs Two types of plants –Specialized plant Capacity 20000kg Cost $37.5M Cannot be modified –Flexible Plant Capacity Cost $150M Easy to switch to new drugs

Pre clinical Clinical Process Development Facilities Design & Construction FDA Review Key Project Points Produce Clinical Trial Supplies Process R&D Process Optimization Product Decision & Final Process Lockdown Facility Complete Product Launch

Chemical Product created Profits: $37.5MM Chemical Product not created Costs: $SUNK Product moves to Human Trial Costs: $ Chemical Product created Product does not move to Human Trial Costs: $SUNK 9990/ / /10 9/10 Specialized Facility

Chemical Product created Costs: $150MM Chemical Product not created Costs: $Partially Recoverable Product moves to Human Trial Costs: $ Chemical Product created Product does not move to Human Trial Costs: $SUNK 9990/ / /10 9/10 Flexible Facility

Specialized Successful Not Successful Successful Not Successful Retro-fit

Our proposal –Start each new drug in flexible plant –Assess demand and viability of new drug If Demand meets or exceeds forecast: –Option to build specialized facility If Demand is less than forecast: –Discontinue production –Design specialized plant with many small run drugs –When demand drops at end of patent protection, move production back to flexible plant

Flex-Plant Specialized Successful Not Successful New Drug Successful Not Successful Specialized New Drug

S S S S S S S S S S

SSSS F

Benefits –Process Optimization Flexible facility easier to optimize/adjust Mass Production available within weeks of Process R&D completion –Mass Production matches end of Phase III Never wait for a plant to be constructed –Up to 1 extra year of Patent protected sales Nearly $50MM in profits –Fewer facilities need to be constructed