2. Inventions

3. Research & Development (R&D) in Pharmaceuticals DISCOVERY Enzymes, receptors, & genetics, DEVELOPMENT Safety, quality and efficacy tests PRODUCTION Quality assurance REGISTRATION Medical and marketing approval MONITORING Physician and patient satisfaction Longer than 10 years More than $800 m

4. Chronology of Drug Innovation SOURCES/INNOVATIONS natural products & derivatives serendipityreceptorsenzymesgenetic engineering cell pharmacology/ molecular biology penicillins sulphonamides aspirin psychotropics NSAIDS H 2 -antagonists beta blockers lipid lowerers ACE inhibitors biotech drugs chronic de- generative disease associated with aging, inflammation cancer NEW THERAPEUTIC CYCLES 1900195019601970198019902000201020202030 Source: Lehman Brother Pharmaceutical Research

5. R & D in Pharma From discovery to patient Patent application 1 medicinal product Acute toxicity Pharmacology Chronic toxicity Phase I clinical trials Phase II Phase III Registration and transparency Price Reimbursement Pharmacovigilance 05 years10 years15 years20 years Patent expiry Supplementary Protection SOUTH AFRICA? 10 years of research 2 to 3 years of administrative procedures Source: “Recherche & Vie”, LIM (AGIM)

6. R&D: Scientific Risk Discovery & development of a successful medicine 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 YEARS INTRODUCTION /REGISTRATION DEVELOPMENT BASIC RESEARCH POST-MARKETING SURVEILLANCE CLINICAL TEST (HUMANS) PRECLINICAL TEST (ANIMALS) SYNTHESIS, EXAMINATION & SCREENING 1 2 2 - 5 5 - 10 3,000 – 10,000 PHASES IV III II I QUANTITY OF SUBSTANCES Source: Based on PhRMA analysis, updated for data per Tufts Center for the Study of Drug Development (CSDD) database

7. Length of Drug Development 15.3 14.2 11.6 8.1 Source: Tufts CSDD, NCE Database, 1995 Total time from synthesis to approval

8. Cost of Drug Development Source: R Hansen, PhD, University of Rochester; J.A. DiMasi, Tufts University; Office of Technology Assessment, Myers & Howe, 1997; Tufts Center for the Study of Drug Development 2001. All figures except 2001 reflect impact of inflation as measured by the GDP Deflator. U of RochesterTufts OTAMyers & HoweTufts

9. Drug Development Costs vs Returns: 1980’s Study Source: Grabowski and Vernon, “Returns to R&D on New Drug Introduction in the 1980’s.” Journal of Health Economics Vol. 13, (November 1994): 383-406 AVERAGE PV OF RETURNS: $224 MM AVERAGE R&D COSTS: $202 MM

10. Innovation of the Pharmaceutical Industry PATENTED BY: Source: PhRMA Survey; Center for the Study of Drug Development, Tufts University (1991)

11. Pharmaceutical Research and Development Process  1 in 5,000 compounds make it to market  Takes 12 to 15 years from discovery to launch  Average cost of nearly $800 million

12. Benefits of Pharmaceutical Research and Development  Prevent and treat disease  Reduce costly hospitalization, nursing home stays and surgeries  Return patients to productive lives

13. Benefits of Pharmaceutical Research and Development  Antibiotics and vaccines have virtually wiped out diptheria, syphilis, whooping cough, measles and polio in many parts of the world  8 out of 10 children can now survive leukemia  Over the past 30 years, medicines have helped reduce heart disease and stroke by half for many populations

14. Worldwide Drug Research Continues  96 new drugs for heart disease and stroke  316 anti-cancer medicines  122 drugs to treat AIDS  146 drugs and vaccines for children  17 new treatments for Alzheimer’s disease  29 medicines for arthritis