The Connecticut Economy: Outlook and Issues for the Pharmaceutical Industry in Connecticut

1
The Connecticut Economy Outlook and Issues for
the Pharmaceutical Industry in Connecticut
The Connecticut Convention Center,
Hartford Friday, September 9, 2005

• Moderator Paul R. Pescatello, President CEO
  of
• Connecticut United for Research
  Excellence (CURE)
• Panelists Michael Davis, Associate Director
  State Government
• Affairs, Boehringer Ingelheim
  Pharmaceuticals
• Susan Froshauer, President CEO
• Rib-X Pharmaceuticals, Inc.
• Ricardo Orchoa, Executive Director,
  Pathology,
• Pfizer Global Pathology Leadership
  Team

2
CURE Mission

• CURE, as an educational organization and trade
  association, seeks to foster connectedness among
  pharma companies, biotech firms, colleges
  universities, and firms that help core members do
  business, especially RD.
• Represent the biotechnology and pharmaceutical
  sectors before the state legislature and policy
  makers
• Build a critical mass of biotech and
  pharmaceutical companies
• Foster relationships between academic and
  industry research that lead to technology
  transfer
• Be the go to source for information about
  bioscience in Connecticut

3
The Mission, distilled
At Capitol and/or with news media/opinion makers

• Lobbyist
• Critical mass
• Tech transfer
• Resource

Often, the same thing
To companies for state economic development
efforts
4
CURE The BioBus Programs

• Build student interest in science
• Relay new scientific techniques to educators
• Show how bioscience is relevant
• Show students bioscience careers other than M.D.
  and nursing programs

5
Connecticuts BioBus Program Statistics

• Since 2001
• 318 schools visited
• - 75 schools this year
• 1,349 experiments
• 24,000 students taught
• 572 teachers trained
• 123 community events
• 16,000 people visited

includes BioConnection
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Expanding the Reach BioConnection

• Launched March 2004
• Pilot year funded by Education Dept. grant and
  assistance of Rosa DeLauro
• 3 equipment modules loaned to schools for 2
  weeks, independent of BioBus
• 4,900 students taught

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CURE as BioScience Industry Info Source

• Monthly e-newsletter
• Company news
• Bioscience industry trends, news and profiles
• Upcoming events
• CURE monitors evaluates best practices in other
  states regions
• CURE the source for lists of bioscience VCs,
  biotech and biomedical firms in the state
• Annual Economic Report surveys health of
  bioscience industry in CT

8
Recent CURE Events

• 5/18 Capitol press conference drugs
• 6/17 Guest on CPTVs On the Road
• 6/15 Rell stem cell bill signing
• 6/19 BIO events in Philadelphia

9
Upcoming CURE Events

• September 28
• CURE Annual Meeting at CT Convention Center
• Sir Harold Evans speaking
• Volunteers recognized
• Part of Alliance for Technology event
• CURE award to be presented to Governor Rell
• CURE bioscience supplement in CT Business

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2005 Legislation Agenda

• Embryonic stem cell research safe haven
• Institute rebate to biotechs for half the amount
  of personal income taxes paid by any new employee
  added each year
• Extend same degree of benefits to partnerships,
  LLPs and LLCs
• Regulation and business taxes make more
  rational, user-friendly, transparent efficient
• Enhance state capital investment in biotech
  start-ups -- less risk averse

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Bioscience Sector in CT2004 Report Card

• RD Spending up 7 to 4.4 billion
• Up 45 over 5 years
• CT Operations Spending up 2 to 6.2 billion
• Up 178 over 5 years
• Employment down 1 to 18,086
• Up 20 over 5 years
• Lab Space down 1 to 5.6 million square feet
• Up 8 over 5 years
• BioScience Job Multiplier 3.30 vs. 2.38
  (insurance) 2.90 (aircraft) 2.40
  (construction) 2.28 (telecommunications 1.30
  (restaurants)

12
CT Bioscience RD Spending
13
CT Bioscience Employment
14
Connecticut Lab Space Growth
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Bioscience

• Jobs Multiplier highest of any industry sector

16
Healthy Financing Window
433.25M
185.4M
17
New Connecticut Biotechs
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2005 Legislative Report Card

• Landmark stem cell legislation passed
• RD Tax Credit Exchange program and NOL protected
• Pharma unfriendly legislation dies

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Messages . . . Location, location, location
. . .
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Messages . . . The Clarity of Voice of Other
Clusters CT vs San Diego County
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Messages . . .

• Reimportation
• Symbol for high cost of health care
• Side effect worse than cure
• Importation of price controls
• Innovation stagnation

22
(Current) Canadian Drug Supply Impossibly Small
to Have a Real Impact in the US

Canadian Market Relative to US Market
170 billion
3 billion
280 million
6.5 billion
Source Year 2001. IMS (sales, US
prescriptions) Epsicom Business Intelligence
(Canada prescriptions)
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Message . . .

• Healthcare costs are rising.
• But share of healthcare dollar attributable to
  medicines has held steady at 10

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U.S. Annual NationalHealth Care Spending
Source Health And Human Services Department
25
Centenarians in US Population
300
Number Per Million
250
200
150
100
50
0
1900
1920
1940
1960
1980
2000
Year 1900 46 Centenarians
Year 2000262 Centenarians
Source Caplow, Theodore, et al. The First
Measured Century, Wash DC AEI, 20019 Pfizer
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Medicines Have Extended LivesDrop In Death Rates
For Diseases 1965-1996
Disease
Treatment
Atherosclerosis
Statins, ACE inhibitors, beta blockers, nitrates
Ulcer of Stomach and Duodenum
H2 blockers, proton pump inhibitors
Ischemic Heart Disease
ACE inhibitors, beta blockers, nitrates
Emphysema
Anti-Inflammatories, bronchodilators
Anti-Hypertensives, diuretics
Hypertension
DEATH RATE
Source Lasker/Funding First Pfizer
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Growing Access

• Key Drivers of Volume Growth,1993-2001
• Over 280 new drugs, many that
• address previously untreated or
• undiagnosed conditions
• US median age increased by over
• 2 years, increasing demand for all
• health care services, including drugs
• Expert and government panels
• recommended expanded utilization
• for new populations
• Consumer awareness of treatment
• options increased dramatically as
• information sources became more
• accessible (eg Internet health sites,
• DTC ads)

Source IMS, CMS utilization increases include
volume growth and new product introductions
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Drug Development - A Risky and Expensive
Proposition
Compound Success Rates by Stage
5,00010,000Screened
250Enter Preclinical Testing
5Enter Clinical Testing
Net Cost 802 million invested over 15 yrs
1Approved by the FDA
Source Tufts Center for the Study of Drug
Development
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Impact of Drugs on Spending and Mortality for
HIV/AIDS
. . . While Monthly Costs for AIDS Patients
Decreased by 16 after HAART Introduced
HIV Mortality Declined Dramatically after
Introduction of First Expensive Antiretrovirals
. . .
Highly Active Antiretroviral Therapy (HAART)
introduced, 1996-97
Total 1804
First new Drugs Introduced, 1995
Total 1521
Other Costs Decrease by 41
Drug Costs Increase by 34
Source Costs - Bozette et al., New England
Journal of Medicine Vol. 344, No. 11, March 15,
2001 Mortality - Centers for Disease Control
data on drug development from PhRMA and the NIH
Office of Technology transfer Pfizer.
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What are we really talking about?

• An international relations/trade issue.
• Motivating other developed economies to pay more
  for the RD that makes up the price of
  prescription drugs
• Figuring out a way to spread the cost of
  healthcare across the entire population
• Hint 1
• Greatest cost components of healthcare are the
  1st and last six months of life
• Hint 2
• The annual tab for a daily cup of Starbucks is
  1,003.75