1. THE FUTURE OF LIFE SCIENCES IN NEW JERSEY: PUBLIC POLICY CHALLENGES AND OPPORTUNITIES ISPE NJ Supplier Showcase 2013 September 12, 2013 Dean J. Paranicas President and Chief Executive Officer HealthCare Institute of New Jersey

2.  NJ-based trade association for research-based life sciences companies  25 members, including many of the world’s largest biopharmaceutical and medical technology companies WHAT IS HINJ?  Represents the life sciences in Washington and Trenton  Advocacy organization promoting patient access, innovation and industry-NJ economic synergy HINJ 2

3. 3 Working together with labor leaders and elected officials to pursue policies that protect patients around the world while PROTECTING JOBS HERE IN NEW JERSEY WWW.HINJ.ORG WHAT IS HINJ?

4.  Industry’s economic impact on NJ  Business model and market forces  A competitive playing field  Need for a vibrant “Innovation Ecosystem” TODAY’S PRESENTATION 4

5. 5 “MEDICINE CHEST OF THE WORLD”  NJ/NY one of nation’s largest life sciences clusters  Life sciences is NJ’s largest industry sector  13 of world’s top 20 biopharmaceutical companies  11 of world’s top 20 medical technology companies  Industry nerve center global, North American or US HQ’s or significant presence LIFE SCIENCES IN NEW JERSEY

6. 6 DRIVING NEW JERSEY’S ECONOMY NEW JERSEY’S LIFE SCIENCES  $24.2 billion economic impact*  51,000+ full-time employees*  60,000 indirect jobs*  $8.4 billion in R&D spending*  $8.1 billion in purchasing from NJ vendors**  $700 million in capital construction*  $161 million in contributions to NJ charities*  $961 million in taxes and rebates paid in NJ*  501 biopharma products in development*  79 med tech new product applications* * Source: 2011 HINJ Economic Impact Report ** Source: We Work for Health 2012

7. Why New Jersey?  Opportunities to collaborate with each other  Most talented life sciences workforce in the world  Multiple research universities  Access to capital markets  Transportation hub: world-class airport, ports, surface transportation  Comprehensive and specialized vendor support  Communities of interest  Quality of life DRIVING NEW JERSEY’S ECONOMY 7

8. 8  More than 5,000 vendors located throughout NJ  Represent 60,000 spin-off jobs in NJ*  Purchase more than $8.1 billion worth of goods and services annually**  Organized into New Jersey Life Sciences Vendors Alliance (NJLSVA) – Approximately 700 members * Source: 2011 HINJ Economic Impact Report ** Source: We Work for Health 2012 DRIVING NEW JERSEY’S ECONOMY – LIFE SCIENCES VENDORS www.njlifesciencevendoralliance.org

9.  75% of health-care spending for chronic disease  Medicine represents 10.1% of the cost of health care  84% of all prescriptions are for generics medications  Medication non-adherence costs $300 billion per year 9 MARKETPLACE DYNAMICS

10.  5/5,000 compounds enter a clinical trial  ONLY 1/5 approved for market  10-15 years and $1.5 billion to develop and commercialize drugs  Patent clock starts from compound discovery RESEARCH AND DEVELOPMENT  $50 billion spent on R&D IN 2011  $8.4 billion spent in NJ 10

11.  Evolving industry business model Financial constraints Consolidation Changing dynamics  New Jersey’s continued visibility as a life sciences leader Increasing competition for industry investment  Volatile political environment  Perception of industry as a “cash cow” Plug federal budget gaps Absorb revenue reductions 11 “NEW REALITY” INDUSTRY DRIVERS

12. 12 Sequestration Medicare Part D Rebates IPAB Importation ACA Implementation FDA Key National Issues THE INDUSTRY’S FUTURE

13. 13 Intense competition from other states/countries for life sciences investment (a highly coveted industry) Where will the industry invest its next dollar(s)? New Jersey? California? Massachusetts? North Carolina? Ireland? Singapore? SUSTAINING NEW JERSEY’S LEADERSHIP

14. 14 HINJ works closely with NJ’s federal and state lawmakers to ensure an attractive US and NJ investment climate Adverse impacts on life sciences disproportionately affect NJ due to industry concentration (e.g., Medicare Part D rebates, medical device tax) SUSTAINING NEW JERSEY’S LEADERSHIP

15. Building New Jersey’s “Innovation Ecosystem” 15 SUSTAINING NEW JERSEY’S LEADERSHIP

16. 16 Life Sciences Educated workforce Venture and investment capital Centers of excellence and innovation Industry- friendly political structures Institutions of higher learning Target economic development incentives Patent protection Other associations / supporting infrastructure * Source: Jones Lang LaSalle “Life Sciences Cluster Report,” 2011 “Innovation Ecosystem” SUSTAINING NEW JERSEY’S LEADERSHIP

17. Why is Restructuring New Jersey Health Sciences Education Important? 17 “New Jersey must develop a structure to foster better collaboration between its businesses and its institutions of higher education. With better cross- pollination between public and private research, New Jersey’s economy could launch more creative entrepreneurship and more beneficial commercialization.” ─ Report of the Governor’s Task Force on Higher Education-Dec. 2010 RESTRUCTURING NEW JERSEY HEALTH SCIENCES EDUCATION

18. 18 WHAT’S INVOLVED? RESTRUCTURING NEW JERSEY HEALTH SCIENCES EDUCATION Rutgers Biomedical and Health Sciences From UMDNJ From Rutgers  Cancer Institute of New Jersey  Graduate School of Biomedical Sciences  New Jersey Medical School  Rutgers School of Dental Medicine (formerly New Jersey Dental School)  School of Health Related Professions  School of Nursing  School of Public Health  University Behavioral Health Care  Robert Wood Johnson Medical  College of Nursing  Ernest Mario School of Pharmacy  Institute for Health, Health Care Policy and Aging Research

19. CHALLENGESOPPORTUNITIES  Rutgers’ attractiveness as a partner  Convincing companies to choose Rutgers  Integration hurdles  Enhanced competitiveness  Jobs and economic growth  More innovative new products 19 IMPLICATIONS FOR NEW JERSEY RESTRUCTURING NEW JERSEY HEALTH SCIENCES EDUCATION

20. 20 KEY TAKEAWAYS The outlook: PROMISING  NJ continues to be a leader in the life sciences  Life sciences is NJ’s most important industry sector  Industry investment in NJ is continuing  State is taking necessary measures to compete  Higher ed restructuring holds great promise for NJ’s life sciences  Federal issues will be carefully monitored IN CONCLUSION…

21. 21 Questions/Discussion