Actelion Pharmaceuticals Ltd The quest for a 2 nd partner A CONFIDENTIAL DISSERTATION SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR A POST GRADUATE DIPLOMA IN ADVANCED STRATEGY (Dip S&I) 2011 Oliver Vit Word count: 9,933
Oct 22, 2014
Actelion Pharmaceuticals Ltd
The quest for a 2nd partner
A CONFIDENTIAL DISSERTATION SUBMITTED IN PARTIAL
FULFILMENT OF THE REQUIREMENTS FOR A
POST GRADUATE DIPLOMA
IN
ADVANCED STRATEGY
(Dip S&I) 2011
Oliver Vit
Word count: 9,933
i
ABSTRACT
A Schumpeterian wave of creative destruction has swept through the pharmaceutical
industry following the unprecedented growth in biologic products where each success
represents annual revenues in excess of a billion dollars. The source of this revolution was
the discovery of recombinant DNA techniques in the 1970s which enabled researchers to
synthesize large, complex proteins previously unimaginable within the scope of traditional
organic chemistry. The result was a dual market structure in which numerous smaller
innovators linked closely to the cutting edge research of universities rivaled the stable base
upon which the relatively few large incumbents had been built. Several large
pharmaceutical firms which had ignored the full potential of these new products at the
inception of the revolution were later forced to spend valuable resources in an effort to
compete with adversaries who had profited from decisions to embrace the biotech
revolution early on. Various methods have been implemented over the last 30 years in an
effort to harness the growth potential of promising biotechs including mergers, acquisitions,
equity stakes, joint ventures and alliances. The last 20 years have witnessed alliances rise
to displace all other forms of partnerships in terms of sheer quantity primarily due to the
ease with which they can be formed and broken as investment strategies adapt and change
to the results of research.
This paper introduces Actelion Pharmaceuticals and the S1P1 agonist program it wishes to
partner within this complex environment of interwoven alliances between firms of
dissimilar sizes and competences sharing the common goal of returning value to the
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shareholders with the profits from successful development programs which met previously
unaddressed medical needs. A Stage Gate model has been applied to introduce a process
by which the hundreds of registered pharmaceutical firms can be filtered through a series of
three gates in order to identify candidates best matching Actelion’s present and future
needs. The first gate narrows down the list of potential candidates to 26. The second gate
filters the candidates further using a scoring tool which has been developed to evaluate and
compare the core competences of each candidate, i.e., research, clinical development,
marketing, along with indices for resources, growth & resiliency and productivity. The
third gate is a risk analysis of the remaining candidates leaving a robust strategy reflective
of the dual market appropriate for due diligence efforts with 6 appropriate candidates
eligible for due diligence.
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Table of Contents
Abstract i
Figures vi
Tables x
List of Abbreivations and Acronyms ix
INTRODUCTION
Actelion Pharmaceuticals Ltd 1
S1P1 agonist program 2
Autoimmune disorders 7
Product life cycle 8
Core Competences 9
Research 9
Clinical development 11
Marketing & Sales 12
4th competence 14
PARTNERING
General background 15
Types of partnering arrangements 17
Minority holdings 17
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Joint ventures 17
Research, development and marketing pacts & alliances 18
Trends over the past 20 years 18
Genesis to demise, the life cycle of pharmaceutical companies and how
partnering fits to survival in Schumpeterian landscape 22
METHODS
Stage-gate approach 28
RESULTS
Gate I 30
Gate II 32
Scoring tool 32
Research 32
Clinical development 33
Marketing & Sales 33
Resources 34
Growth & Resiliency 34
Productivity 35
Candidate profiling 39
Gate III 50
Risk assessment 50
PESTL 50
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Political 50
Economic 51
Social 51
Technological 52
Environmental 52
Legal 53
Geopgraphic risks 53
Long term risks 56
Connection highway 57
DISCUSSION 64
CONCLUSIONS 69
REFERENCES 71
APPENDIX I 74
APPENDIX II 93
APPENDIX III 119
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Figures Figure 1 Life cycle of pharmaceutical products p.9
Figure 2 Growth of newly established R&D partnerships 1960-1998 p.20
Figure 3 % of joint ventures in all newly established R&D partnerships 1960-1998 p.21
Figure 4 % of all contractual modes and joint R&D agreements from 1975-1998 p.22
Figure 5 Stage-gate model for partner selection p.29
Figure 6 Cross comparison with large pharmaceutical firms p.37
Figure 7 Cross comparison with biotechs & others p.38
Figure 8 Pfizer scoring results p.39
Figure 9 Bayer Schering scoring results p.40
Figure 10 Novartis scoring results p.41
Figure 11 Abbott scoring results p.42
Figure 12 Bristol-Myers Squibb scoring results p.43
Figure 13 Roche scoring results p.44
Figure 14 Amgen scoring results p.45
Figure 15 Merck KGaA scoring results p.46
Figure 16 Novo Nordisk scoring results p.47
Figure 17 Biogen IDEC scoring results p.48
Figure 18 Teva scoring results p.49
Figure 19 Distribution of R&D partnerships, economic regions (1960-1980) p.54
Figure 20 Distribution of R&D partnerships, economic regions split by decade p.55
Figure 21 R&D partnerships in pharmaceutical biotechnology 1975-1979 p.58
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Figure 22 R&D partnerships in pharmaceutical biotechnology 1980-1984 p.59
Figure 23 R&D partnerships in pharmaceutical biotechnology 1985-1989 p.60
Figure 24 R&D partnerships in pharmaceutical biotechnology 1990-1994 p.61
Figure 25 R&D partnerships in pharmaceutical biotechnology 1995-1999 p.62
Figure 26 Actelion scoring results as a large pharmaceutical firm p.75
Figure 27 Pfizer complete scoring results p.76
Figure 28 Johnson & Johnson overview p.77
Figure 29 Johnson & Johnson complete scoring results p.78
Figure 30 Bayer Schering complete scoring results p.79
Figure 31 Novartis complete scoring results p.80
Figure 32 GlaxoSmithKline overview p.81
Figure 33 GlaxoSmithKline complete scoring results p.82
Figure 34 Merck & Co overview p.83
Figure 35 Merck & Co complete scoring results p.84
Figure 36 Sanofi overview p.85
Figure 37 Sanofi complete scoring results p.86
Figure 38 Abbott complete scoring results p.87
Figure 39 AstraZeneca overview p.88
Figure 40 AstraZeneca complete scoring results p.89
Figure 41 Eli Lilly overview p.90
Figure 42 Eli Lilly complete scoring results p.91
Figure 43 Bristol-Myers Squibb complete scoring results p.92
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Figure 44 Actelion scoring results as a biotech p.94
Figure 45 Roche complete scoring results p.95
Figure 46 Amgen complete scoring results p.96
Figure 47 Merck KGaA complete scoring results p.97
Figure 48 Baxter overview p.98
Figure 49 Baxter complete scoring results p.99
Figure 50 Novo Nordisk overview p.100
Figure 51 Allergan overview p.101
Figure 52 Allergan complete scoring results p.102
Figure 53 CSL Limited overview p.103
Figure 54 CSL Limited complete scoring results p.104
Figure 55 Biogen IDEC overview p.105
Figure 56 Alexion overview p.106
Figure 57 Alexion complete scoring results p.107
Figure 58 Almirall overview p.108
Figure 59 Almirall complete scoring results p.109
Figure 60 Arena overview p.110
Figure 61 Arena complete scoring results p.111
Figure 62 Receptos overview p.112
Figure 63 Receptos complete scoring results p.113
Figure 64 Daiichi Sankyo overview p.114
Figure 65 Daiichi Sankyo complete scoring results p.115
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Figure 66 Ono overview p.116
Figure 67 Ono complete scoring results p.117
Figure 68 Teva complete scoring results p.118
Figure 69 R&D partnerships in pharmaceutical biotechnology 1975-1979 – reproduced
p.120
Figure 70 R&D partnerships in pharmaceutical biotechnology 1980-1984 - reproduced
p.121
Figure 71 R&D partnerships in pharmaceutical biotechnology 1985-1989 - reproduced
p.122
Figure 72 R&D partnerships in pharmaceutical biotechnology 1990-1994 – reproduced
p.123
Figure 73 R&D partnerships in pharmaceutical biotechnology 1995-1999 – reproduced
p.124
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Tables
Table I Properties of sphingosine-1-phosphates p.3
Table II Patented S1Px agonists p.5
Table III Patented S1Px agonists in clinical development p.6
Table IV Bestselling drugs in 2010 p.13
Table V Drug development success rates p.14
Table VI Top 10 pharmaceutical and biotech firms in 2010 p.31
Table VII Scoring tool valuations for large pharmaceutical firms p.36
Table VIII Scoring tool valuations for biotechs & others p.36
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List of Abbreviations and Acronyms
AS Akylosing spondylitis
BRIC Brazil Russia India China
CD Crohn’s disease
CEO Chief Executive Officer
CHF Congestive heart failure
EIM Entry Into Man
EMA European Medicines Agency
ETA Endothelin-A
ETB Endothelin-B
FDA Food and Drug Administration
GDP Gross Domestic Product
GPCR G protein-coupled receptor
HIV/AIDS Human Immunodeficiency Virus/Acquired Immunodeficiency Syndrome
HTS High Through-put Screening
ICH International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use
IPO Initial Price Offering
IT Information Technology
JAK Janus Activated Kinase
JIA Juvenile Idiopathic Arthritis
JV Joint Venture
KOL Key Opinion Leader
MA Marketing Authorization
M&A Mergers & Acquisitions
MS Multiple Sclerosis
NPV Net Present Value
PAH Pulmonary Arterial Hypertension
PD Pharmacodynamics
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PESTL Political Economic Social Technological Legal
PK Pharmacokinetics
Ps Psoriasis
PsA Psoriatic arthritis
RA Rheumatoid arthritis
R&D Research and Development
SEC Securities and Exchange Committee
SMI Swiss Market Index
S1P Sphingosine-1-phosphate
UC Ulcerative colitis
USD United States Dollar
WO World Intellectual Property Organization
WWI World War I
WWII World War II
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INTRODUCTION
Actelion Pharmaceuticals Ltd
In the 1990’s F. Hoffmann-La Roche Ltd (Roche) discovered and began developing
bosentan, the world’s first endothelin-1 receptor antagonist at endothelin-A (ETA) and
endothelin-B (ETB) protein receptor sites found on the layer of vascular cells forming the
endothelium. Endothelin-1 had been identified as an endogenous vasoconstrictor and
bosentan’s ability to counteract these effects by blocking its access to ETA and ETB
receptors was seen to represent a break-through in the treatment of cardiovascular diseases
where high blood pressure is regulated by vasoconstriction. Later Roche took the decision
to halt further development of bosentan following safety findings in an on-going Phase II
congestive heart failure (CHF) trial. Believing in the therapeutic promise of both bosentan
and its mechanism of action, five founders pooled together resources, successfully gained
the backing of venture capitalists, out-licensed two endothelin-1 receptor antagonists from
Roche, i.e., bosentan & tezosentan, and established Actelion Pharmaceuticals Ltd
(Actelion) on December 17, 1997 with the vision to continue the research and development
of drugs targeting endothelial receptors - or as the company’s name implies, to “act on
endothelium”.
Shortly after Actelion’s Initial Public Offering (IPO) in April 2000, bosentan as Tracleer®
was licensed by the U.S. Food and Drug Administration (FDA) in November 2001 and the
European Medicines Agency (EMA) in April 2002 for the treatment of a then little known
orphan disease affecting an estimated 10,000 persons: pulmonary arterial hypertension
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(PAH). As the market leader enjoying more than 75% market share Tracleer® is
prescribed to more than 40,000 PAH patients worldwide today and accrues nearly 2 billion
USD in annual revenue. Actelion has grown from a single office of 5 persons into one of
Europe’s largest biopharmaceutical industries listed along with Novartis Pharma AG
(Novartis) and Roche as one of the 20 Swiss securities composing the Swiss Market Index
(SMI) and representing more than 2,500 employees throughout 29 affiliates in 13 years
with a pipeline of more than 30 compounds all seeking to address unmet medical needs
with cutting edge research.
S1P1 agonist program
Although first isolated and identified as an endogenous signaling lipid in the late 19th
century sphingosine-1-phosphate’s function remained such an enigma that the root
“sphingo” was assigned as an intentional allegory referring to the Riddle of the Sphinx. To
date five G protein-coupled receptors (GPCR), S1P1-5, have been isolated from various
tissues with distinct attributable functions listed in Table I beneath. Circulating throughout
the body endogenous S1P agonizes any of the five S1Px receptors with physiological
consequences which may play a role in disease pathophysiology.
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Table I – Properties of sphingosine-1-phosphates
Receptor Distribution Cellular functional expression and consequences S1P1 brain
heart spleen liver lung thymus kidney skeletal muscle lymphoid
Astrocyte: migration B-cell: blockade of egress, chemotaxis Cardiomyocyte: increased β-AR positive inotropy Endothelial cell: early vascular system development, adherens junction assembly, APC-mediated increased barrier integrity Neural stem cell: increased migration Pericyte: early vascular system development (VSMC) T-cell: blockade of egress, chemotaxis, decreased late-stage maturation VSMC
S1P2 brain heart spleen liver lung thymus kidney skeletal muscle
Cardiomyocyte: survival to ischemia-reperfusion Epithelial cell (stria vascularis): integrity/development Epithelial hair cells (cochlea): integrity/development Endothelial cell (retina): pathological angiogenesis, adherens junction disruption Hepatocyte: proliferation/matrix remodeling Fibroblast (MEF) Mast cell: degranulation VSMC: decreased PDGF-induced migration
S1P3 brain heart spleen liver lung thymus kidney skeletal muscle testis
Cardiomyocyte: survival to ischemia-reperfusion Dendritic cell (hematopoietic): worsening experimental sepsis lethality/inflammation/coagulation
S1P4 lung lymphoid
T-cell: migration/cytokine secretion
S1P5 brain skin spleen
NK cell: trafficking Oligodendrocyte: survival OPC: glial process retraction; inhibition of migration
Source: Rosen et al., 2009. Sphingosine 1-Phosphate Receptor Signaling, Annual Review of Biochemistry, 78, p. 749
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Novartis successfully developed and launched the first non-selective S1P1,3-5 receptor
agonist, Gilenya® (fingolimod), for the treatment of relapsing form of Multiple Sclerosis
(MS) in 2010 and UBS analyst Fabian Wenner (Bloomberg 2011) estimates annual
revenues of Gilenya® to exceed 5.3 billion USD at peak sales. Based on the presumptions
that inhibition of lymphocyte migration offers therapeutic benefit in the treatment of
autoimmune disorders and that this activity was directly linked to the loss of function at the
S1P1 receptor, many research units in the absence of S1P1 antagonists which would block
activation at the receptor site, developed selective S1P1 receptor agonists which internalize
and destroy the receptor in a manner described as functional antagonism. Currently over 20
declared S1Px compounds are specifically patented and undergoing development within 19
pharmaceutical firms listed beneath in Tables II & IIII.
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Table II – Patented S1Px agonists
S1Px
(unknown)
S1P1
PF-991
PPI-4955
GSK1842799
Selectivity
BMS-520
LAS-189913
CompoundCompany
S1Px
(unknown)
S1P1
PF-991
PPI-4955
GSK1842799
Selectivity
BMS-520
LAS-189913
CompoundCompany
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Table III – Patented S1Px agonists in clinical development
Actelion has already conducted the research to discover selective S1P1 agonists and
successfully brought two compounds, ponesimod and ACT-334441, into clinical
development. Although Actelion has launched multiple Phase II clinical trials in both MS
and psoriasis (Ps) following the rapid establishment of in-house expertise in both neurology
and dermatology, Actelion does not possess the development experience in many other
autoimmune disease areas, e.g. rheumatology, gastroenterology, metabolic disorders, etc.
and the resources to conduct simultaneous clinical trials in parallel to the on-going MS and
psoriasis programs within the limited patent protection period. Furthermore in all cases
Actelion lacks the marketing experience to effectively launch its first selective S1P1 agonist
ONO4641
Ponesimod (ACT-128800)
ACT-334441
S1P1
Phase IIb
BAF312S1P1,5
LaunchedGilenya®
(fingolimod)S1P1,3-5
Selectivity
2018682
RPC1063
CS-0777
Compound
Phase I
Development phase
Company
ONO4641
Ponesimod (ACT-128800)
ACT-334441
S1P1
Phase IIb
BAF312S1P1,5
LaunchedGilenya®
(fingolimod)S1P1,3-5
Selectivity
2018682
RPC1063
CS-0777
Compound
Phase I
Development phase
Company
Page 7
across these multiple disciplines. Therefore Actelion is interested in establishing an
alliance with a partner who is capable of developing and marketing novel therapeutic
agents in autoimmune disorders.
Autoimmune disorders
Disorders in which the body’s immune system falsely recognizes self tissue as a foreign
antigen and begins an inflammatory T-cell driven response to eliminate the tissue are
termed autoimmune. To date over 130 have been identified inclusive of MS, Ps, psoriatic
arthritis (PsA), Rheumatoid arthritis (RA), Ulcerative colitis (UC), Crohn’s disease (CD),
Ankylosing spondylitis (AS) and Juvenile idiopathic arthritis (JIA) where biologic
therapies such as Avonex®, Copaxone®, Rebif®, Betaseron®, Tysabri®, Enbrel®,
Humira®, Stelara®, Simponi®, and Remicaide® are licensed. Sales with these products in
MS alone breached 10 bio USD in 2010 with < 20 bio USD in cumulative sales across all
indications. All biological therapies suffer from two substantial drawbacks in the form of
(1) the necessity of painful injections over the course of a patient’s lifetime and (2) the
build up of neutralizing antibodies and resultant reduced efficacy over time. Oral S1P1
agonists would possess neither of these disadvantages and could replace biologics in all
autoimmune disorders should equal or better efficacy be established with an acceptable
safety & tolerability profile.
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Product Life Cycle
All compounds are products of research units and bear tangible costs from the moment of
discovery. A product’s life cycle in the pharmaceutical industry can therefore be expressed
as a sum of expected investments and profits from the overheads involved with its
discovery to the loss of market protection in all major markets worldwide. As WO patents
grant protection for 20 years and there are various means to extending the market life of a
product, e.g. patent extensions, formulation patents, regulatory data protection, etc., the loss
of value due to inflation and amortization over time are factors which must be considered.
Net present value (NPV) which measures the value of an asset by comparing the fully
burdened costs against future revenues discounted for inflation is one common tool used to
appraise assets and relative investment risks across portfolios.
Figure I illustrates a generalized expenditure vs. profit curve across the three critical stages
of research, clinical development and marketing & sales in a successful product’s life cycle
where the revenue magnitude and timing are product specific.
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Figure 1 – Life cycle of pharmaceutical products
Core Competences Research
Although as postulated by Santos (2003) the methods of research have undergone multiple
changes from learning-by-doing to learning-before-doing, from the discovery of
acetylsalicylic acid by Franz Hoffman a chemist working at Bayer, then a German dye
manufacturer in 1897, to the isolation of penicillin at Oxford in 1937 through the synthetic
revolution of the 1960’s and underlying the astounding success of biotechnology from 1970
time
Profits
Expenses
Net profits
Research Clinical development
Marketing & Sales
Entry into man
Marketingauthorization
Patentloss
Peaksales
time
Profits
Expenses
Net profits
Research Clinical development
Marketing & Sales
Entry into man
Marketingauthorization
Patentloss
Peaksales
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to present, laboratory research remains unequivocally central to any novel compound’s
origin. Expenditure associated with research units in public hospitals, governmental
organizations, university laboratories or private interests, e.g. pharmaceutical industry, bio-
tech start-ups, etc., represent the first expenses in a product’s life cycle.
In terms of discovery research begins by selecting a medical need and a series of premises
in terms of disease pathology followed by the identification of suitable targets. Thereafter
assays are constructed based on the target(s) and a firm’s library of unique compounds are
tested in an automated fashion called High Through-put Screening (HTS) which permits
analysis of these compounds in the hundreds of thousands to be completed in relatively
short periods of time. Based on the desired activity and known toxicological profiles
structural groups are identified and modified in a continual effort to increase the potency
and selectivity of the molecule until such time as a lead candidate is accepted for further in-
vivo experiments to assess the compound’s pharmacokinetics (PK), pharmacodynamics
(PD), possible efficacy, safety and toxicological potential in two animal species prior to
Entry Into Man (EIM). Throughout the development program following EIM further
research activities are typically conducted including but not limited to long term safety,
new formulations, the search for better follow-up compounds and additional indications for
the lead compound.
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Clinical Development
Once the PK/PD and safety profile of a clinical candidate has been appropriately defined
and deemed supportive of short term human exposure, the sponsor may decide to proceed
further towards marketing authorization (MA) by entering into the first of three clinical
development phases, Phase I or clinical pharmacology studies. These are small and rapid
investigations studying the effects of the compound on healthy human subjects and the
effects of a healthy human body has upon the compound & its circulating concentrations
under various circumstances, e.g. alone at rest, in combination with other licensed therapy,
comparison of differing formulations of the same compound, under the effect of exercise,
etc.
Patients whose health by definition is jeopardized, are exposed to the compound in the
second clinical development phase, Phase II or dose-finding. In an attempt to determine the
first signs of clinical utility within the dose range explored in the Phase I experience these
clinical trials are conducted to establish both the lowest efficacious dose and its associated
safety & tolerability profile. Phase III trials represent the greatest effort and expenditure
made by a sponsor to validate the results of the Phase II trial in a much larger number of
patients potentially compared to standard of care with a statistically greater degree of
confidence regarding both the promised efficacy as well as the safety of the clinical
candidate.
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Should the compound prove efficacious with an appropriate safety & tolerability profile,
and cost effective compared to other forms of therapy where available, the sponsor may
decide to file MA dossiers with the health authorities worldwide for a review period of
between 6 to 18 months.
Marketing & Sales
Following successful independent reviews by the health authorities, a new drug can be
launched within a highly competitive marketplace circumscribed by the recommendations
of Key Opinion Leaders (KOLs), behavior of prescribing physicians, patient preferences &
compliance and the annual budgets of payors. However behind every successful launch are
thousands of individuals developing and coordinating the networks supporting the
corporate presence, pricing strategy, reimbursement terms, manufacture, international &
regional distribution, storage, pharmacovigilance and sales. A massive undertaking by any
measure these expenditures dwarf the 1.073 bio USD Tufts (2007) attributes to the average
research & clinical development costs accrued prior to an MA. Furthermore just as
daunting are the enormous potential profits from novel drugs addressing unmet medical
needs as listed in Table IV.
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Table IV – Bestselling drugs in 2010
Source: MedAdNews 200 - World's Best-Selling Medicines, MedAdNews
These annual revenues may appear discrepant when weighed against the average
profitability of only 15.3% for the eleven Fortune 500 pharmaceutical firms Fein (2011)
identifies in 2010. This apparent discrepancy between annual revenues in the billions per
product and less spectacular yearly profits is easily explained when the success rates are
factored into the evaluation as described in Table V. A cumulative probability of between
4.6 - 28.1 % to reach the market from EIM for any clinical candidate signifies that the vast
majority of drugs in clinical development simply fail to gain approval and all associated
R&D expenditures are born by the sponsor alone.
Rank 2010
Brand Name Company(ies) Disease Medical Use
Sales 2010 (mio USD)
1 Lipitor® Pfizer,Astellas Pharma Cholesterol 11,8
2 Plavix® Bristol-Myers Squibb, Sanofi-Aventis
Thrombotic events 9,4
3 Remicade® Johnson & Johnson, Schering-Plough, Tanabe
Rheumatoid arthritis 8
4 Advair® GlaxoSmithKline Asthma, COPD 7,96 5 Enbrel® Amgen, Wyeth RA, Ps, PsA, JIA, AS 7,4 6 Avastin® Hoffmann La-Roche Oncology 6,8
7 Abilify® Otsuka, Bristol-Meyers Squibb
Schizophrenia, depression, bipolar disorder
6,8
8 Rituxan® Hoffmann La-Roche NHL, CCL, RA 6,7
9 Humira® Abbott Laboratories RA, Ps, PsA, AS, UC, CD, JIA
5,49
10 Diovan® Novartis Pharma AG Hypertension 6,1
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Table V – Drug development success rates
Source: DeMasi 2001, Kola 2004, Avance cited in Valuation in Life Sciences, 2007, p.14
4th competence
It is standard practice to divide pharmaceutical development into the three preceding
competences of research, clinical development and marketing & sales, yet there is an often
underappreciated 4th competence: the ability to coordinate cross-functional development in
a robust, timely, cost effective manner maximizing a compound’s chances to be discovered,
navigate the hurdles of development, reach the market successfully and achieve its full
potential value. Although fickle and certainly intangible, this competence is represented
exclusively by the cumulative savoir-faire of the employees, the company culture and the
processes managing both the compound’s development path as well as the departments &
employees cum caretakers guiding it in this journey from discovery towards patent expiry
each and every day.
Disease Group Clinical Phase I
Clinical Phase II
Clinical Phase III
Marketing Approval
Cumulative %
Arthritis/Pain 76.9% 38.1% 78.1% 89.1% 20.4% CNS 66.2% 45.6% 61.8% 77.9% 14.5% CV 62.7% 43.3% 76.3% 84.4% 17.5% GIT 66.8% 49.1% 71.0% 85.9% 20.0% Immunology 64.8% 44.6% 65.2% 81.6% 15.4% Infections 70.8% 51.2% 79.9% 96.9% 28.1% Metabolism 47.8% 52.0% 78.9% 92.8% 18.2% Oncology 64.4% 41.8% 65.4% 89.7% 15.8% Ophthalmology 66.0% 39.0% 64.0% 92.0% 15.2% Respiratory 63.4% 41.1% 59.9% 76.9% 12.0% Urology 50.0% 38.0% 67.0% 79.0% 10.1% Women’s Health 39.0% 42.0% 48.0% 59.0% 4.6%
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Not only does this value proposition differ distinctly between companies, it can mean the
difference between the very tangible outcomes of success and failure.
Partnering
General background
Galambos (1998) and Pisano (1991) note that beginning at Stanford University in the 1972
with the discovery of recombinant DNA techniques which allowed the manufacture of
complex proteins by biologic organisms, a burgeoning scientific knowledge base drove the
pace of innovation and subsquentially a Schumpeterian wave of creative destruction spread
across the pharmaceutical sector. Roijakkers and Hagedoorn (2005) show that this resulted
in a dual market environment characterized by relatively few incumbents juxtaposed
against numerous rival new entrants within an increasingly competitive marketplace.
Large pharmaceutical companies which failed to recognize and invest in the potential of
new technological breakthroughs suffered a temporal state of “lock-out” from lucrative,
previously unforeseen opportunities, and as demonstrated by Cohen and Levinthal (1990)
sought external alliances or lost entirely at greater expense than an earlier investment would
have represented. Partnering with smaller interests active in the early stages of research at
minimal cost became a tool used within the traditional pharmaceutical industry to capitalize
upon innovation and avoid future lock-out episodes. Cohen and Levinthal (1990) coin the
term absorptive capacity to encapsulate a firm’s ability “to recognize the value of new,
external information, assimilate it and apply it to commercial ends” and show that it is
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indeed proportional to previous exposure and learning as represented by successful R&D
efforts on the part of the assessor.
While in possession of certain intellectual property (IP) representing a capacity towards
radically affecting the shape and scope of future competitive landscapes, Pisano (1991)
shows that smaller more numerous innovators similarly lacked the capital reserves and
downstream capacities of well established incumbents in the form of war chests, clinical
development & regulatory expertise, manufacture, logistics and market access. Galambos
amd Sturchio (1998) explain that larger incumbents offered downstream economies of both
scale and scope in exchange for access to the innovator’s IP.
As a means to conveniently exchange goods or services between two or more parties over a
pre-determined time span there are multiple grounds upon which to build partnerships in
the pharmaceutical industry, e.g., capital investment, in-licensing products, expanding
pipelines, complimenting research activities, market access, etc. However at the essence of
each is the recognition of a unique external competence and the desire to benefit from a
closer relationship hedged against the cost of failure. It is the prohibitive cost of failure
associated with full mergers & acquisitions (M&A) which lends partnering arrangements
particular appeal in the early stages of R&D where the likelihood of failure is distinctly
higher.
An often quoted corporate development director at what was then Glaxo Inc. aptly
summarizes this circumstance: “no emerging or established pharmaceutical company is
Page 17
large enough, or smart enough to meet all of its knowledge needs in isolation” (George
1993).
Types of partnering arrangements
Arora and Gambardella (1990) suggest that the outright purchase of a minority stake along
with the creation of joint ventures (JV), research, development & marketing pacts, and
alliances are the four types of investment tools utilized by pharmaceutical firms to
proactively remain abreast of current innovative research and trends in upcoming
technologies in the hopes of maximizing the probability of enjoying first mover advantage
and simultaneously minimizing the risk of lock-out at quantifiable and reasonable costs.
Minority holdings
Representing no more than 50% of a publically traded corporation’s stock the purchase of a
minority stake in a rival or innovative competitor allows the stock holder to profit from any
success the competitor achieves. This is an equity based strategy which permits a
pharmaceutical firm to diversify risks across an investment portfolio.
Joint ventures
JVs are independent companies founded and financially supported by the partners to further
develop and rapidly market an innovation where the influence of either partner is limited to
holding a financial interest in the JV. Although no direct reporting line continues to exist
between the JV employees and the partners, as investors the original partners continue to
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exert a direct influence at the level of the board and the informal relations between the
employees who are often recruited from within one or both of the original partners.
Research, development and marketing pacts & alliances
In an effort to limit the risks of permanent investments the instruments of short term
contracts and longer term alliances present themselves. These permit closer co-operation
between the parties without restructuring and provide incentives based on successful
outcomes of joint efforts, e.g., payments for services rendered, up-front payments,
milestone payments, royalties on sales, marketing opportunities, etc. Hagedoorn and van
Kranenberg (2003) note that joint representation on boards and project teams can be
assured with expenses shared by both parties while minimizing interdependence over
shorter investment periods.
Trends over the last 20 years
As a strictly equity based investment strategy minority holdings are certainly of interest,
however as tools to expand a pharmaceutical firm’s access to both cutting edge innovative
technology and effective development & successful marketing teams, minority holdings are
far from effective. Most early investments would be impossible as smaller innovations may
still be privately held companies and although due dividends and returns, investors have no
rights to a company’s IP.
Page 19
Hagedoorn and van Kranenberg (2003) note that the potential of JVs, pacts and alliances in
R&D across all sectors was largely underestimated by academia through the early 1990s as
the locus of academic research centered on 1980’s M&A activity. Håkansson, Kjellberg
and Lundgren (1993) also remark that “alliances are increasingly being used as strategic
tools for corporate survival and growth, shaping the present and future structure of
industries”. These agreements are specific to product(s) or a set of competences and leave
the corporate structure of individual partners largely unchanged in the absence of the large
protracted investments in both capital and infrastructural changes required to enact the
terms of a full merger or acquisition; both parties can limit risk exposure while still
profiting from a mutual association. Thus the larger degree of corporate freedom awarded
to both parties underlies the sheer quantity of R&D partnering arrangements which far
exceed mergers & acquisitions and the increased popularity as witnessed by the growth of
newly established partnerships between 1960 and 1998 as depicted in Figure 2 beneath.
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Figure 2 – Growth of newly established R&D partnerships 1960-1998
Source: Hagedoorn 2001, Inter-firm R&D partnerships: an overview of major trends and patterns since 1960 p.480
JVs suffer from the high fiscal and organizational costs of set-up as well as equally high
failure rates and as such there has been a clear decline in the number of JVs as a proportion
of new R&D pacts since 1960 as depicted in Figure 3.
Page 21
Figure 3 – % of joint ventures in all newly established R&D partnerships 1960-1998
Source: Hagedoorn 2001, Inter-firm R&D partnerships: an overview of major trends and patterns since 1960 p.481
Ruling out equity based investments and JVs, research & development pacts and alliances
remain as nearly the only form of joint R&D agreements as shown in Figure 4. Roijakkers
and Hagedoorn (2006) demonstrate that as an investment tool pacts & alliances present a
lower risk than either JVs or full M&As as the divestment costs are quantifiable contractual
stipulations and significantly lower on average.
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Figure 4 – % of all contractual modes and joint R&D agreements from 1975-1998
Source: Roijakkers 2006, Inter-firm R&D partnering in pharmaceutical biotechnology since 1975: Trends, patterns and networks p.434
Genesis to demise, the life cycle of pharmaceutical companies and how partnering fits to survival in a Schumpeterian landscape
No pharmaceutical firm has consistently grown in vacuo marketing products exclusively
developed in-house; all firms large and small are possible M&A targets as well as potential
partners.
Genetic Engineering Technology, Inc. (Genentech) provides a classic example from its
inception as a small innovator founded in 1976 by a venture capitalist and one of the
Page 23
Stanford researchers responsible for the discovery of the recombinant DNA techniques
which launched the biotech revolution through to complete integration with Roche as a
result of complete integration in 2009.
6 years following its founding and 4 years after partnering the human insulin project with
Eli Lilly and Company (Eli Lilly), Genentech received approval to market the first
biologically engineered therapeutic in the form of Humilin® (Roche 2011). Over the next
28 years Genentech received FDA approval for no less than 14 other biosynthetic products
including Rituxan®, Herceptin®, Raptiva®, Avastin®, and Terceva® which were
exclusively developed and marketed with Roche. Nor were Eli Lilly and Roche the only
partners Genentech entertained. Roijakkers and Hagedoorn (2006) show that in the periods
of 1975-1979, 1980-1984 and 1985-1989 Genentech had 3, 14 and 11 R& D partnerships
respectively as registered in the MERIT-CATI databank..
Roche was founded in 1896 primarily as manufacturer of vitamins however following an
intense period of diversification in the mid 20th century it was marketing the results of its
own in-house research programs, e.g., Valium®, Rohypnol®, Ipronaizid® (Roche 2011).
As demonstrated by Galambos and Sturchio (1998) Roche is an example of an incumbent
largely dependent on research devoted to compounds of small molecular weight which
overcame the disadvantages incurred when the biotech revolution took it unawares by
successfully marketing its core competences to smaller partners in the form of R&D
partnerships. Roijakkers and Hagedoorn (2006) demonstrate that with 41 registered
partnerships in the MERIT-CATI databank between 1995 and 1999, Roche led the industry
Page 24
in terms of the shear quantity of alliances. With reference to the Genentech collaborations,
Reuters (2009) reports that Roche began as a development partner and capitalized on its
position by continuing to increase its equity stakes in Genentech until it purchased a
controlling share representing 60% for 2.1 billion USD in 1990 prior to the full merger for
46.8 billion USD in 2009.
Galambos and Sturchio (1998) inform that Chiron Pharmaceuticals Inc. (Chiron) was
founded in 1981 by three academics from University of California as a result of a joint
effort with Merck & Co Inc. to develop Recombivax HB®, a new serum based hepatitis B
vaccine at the same time as AIDS was first recognized. Chiron continued to focus its
research activities on vaccines, biosynthetics, and blood screening techniques and between
the years of 1985 and 1989 Roijakkers and Hagedoorn (2006) list 12 R&D partnerships
with a further 13 in the years of 1990 to 1995 as documented in the MERIT-CATI
database; Fisher (1986) reports that one of its early partners was Ciba-Geigy Ltd (Ciba-
Geigy). After years of maintaining a minority stake Tansey (2006) reports that Novartis
eventually bought Chiron for an additional 5.4 billion USD.
Novartis was the product of several mergers over a period of decades. Geigy AG was a
chemical industry founded in 1901 concentrating on continuing a family interest in the
development and marketing of natural and artificial dyes born in the 18th century (Novartis
2011). The Gesellschaft für Chemische Industrie Basel was formed in 1884 by a separate
group of industrialists which manufactured the Geigy AG dies on an industrial scale
(Novartis 2011). In 1914 Geigy AG changed its name to J. R. Geigy Ltd (Geigy) and in
Page 25
1945 the Gesellschaft für Chemische Industrie Basel adopted the acronym CIBA (Novartis
2011). Both Geigy and CIBA continued as rivals until CIBA-Geigy Ltd was formed in
1971 and continued the search for unique small molecular weight compounds on an even
larger scale (Novartis 2011). CIBA-Geigy Ltd later merged with Sandoz AG, another
group with its roots in 19th century dye manufacture, in 1996 to form Novartis. None of the
research conducted by Geigy, CIBA or Sandoz AG was biologic in nature, and Novartis
much like Roche was forced to market its core competences and use its capital reserves to
invest in smaller biotech research units in an effort to survive.
Serono SA (Serono) is as another example of a biotech wonder. Founded in 1906 as
Institutio Farmalogico Serono S.p.A., it was an Italian family business which extracted
proteins from chicken eggs for medicinal purposes before discovering menotropin a
hormone in the urine of post-menopausal women and marketing it as Pergonal® to treat
fertility disturbances in the post World War II era (Funding Universe 2011). After ousting
a troublesome major share holder, Michele Sindona, in the early 1970s the headquarters
relocated to Geneva and the name was changed to Ares-Serono AG (Ares-Serono) where
research remained focused on diagnostics and infertility treatments (Funding Universe
2011). Pergonal® played an important role in the success of the world’s first test tube baby
and sales increased dramatically in time with the biotech revolution and Serono began to
investigate the possibility of using recombinant DNA techniques to develop novel
biosynthetic compounds for unmet medical needs. Ares-Serono went on to develop and
market biological products for the treatment of infertility, Multiple Sclerosis, HIV/AIDS
and other hormone deficiencies (Funding Universe 2011). In 2000 Ares-Serono renamed
Page 26
itself Serono and following astounding commercial success which brought it to the status of
the world’s 3rd largest biotech Römer and Becker (2006) report that it sold a majority stake
to Merck KGaA for 10.6 billion euros and finally became Merck-Serono.
Merck KGaA was founded by a pharmacist in the late 17th century and is the oldest
pharmaceutical firm by any standard and has its headquarters in Darmstadt, Germany
(Merck 2011). Due to its affiliation with Germany, Merck suffered set backs with the
outcomes of each world war; it lost its US based affiliate following WWI and all other
subsidiaries as a result of WWII (Merck 2011). It refounded itself in the 1950s and
remained a family business through 1995 when it was registered as Merck KGaA a
publically traded company; however the family interests still possess the controlling
majority.
1978 saw the founding of Biogen NV Inc. (Biogen) in Geneva, Switzerland by group of
independent biologists and researchers in an effort to pool the individual talents and tackle
the challenges of recombinant DNA techniques and genetic engineering (Biogen IDEC
2011). IDEC Pharmaceuticals Corporation (IDEC) was founded in San Diego five years
later and focused its research efforts on monoclonal antibody therapy in oncology(Biogen
IDEC 2011). Both companies successfully launched biosynthetics for autoimmune,
neurological and oncological disorders, e.g. Intron A®, Avonex®, Tysabri®, Rituxan®,
etc., prior to a merger in 2003 to form Biogen-IDEC Inc.
Page 27
As pharmaceutical firms grow risks are taken, research opportunities missed, market
dynamics change and occasionally a technological revolution led by numerous smaller
innovators affiliated with universities spawns a period of Schumpeterian creative
destruction. Galambos and Sturchio (1998) have shown that although large
pharmaceutical firms either rapidly develop in-house expertise with the new technology
and apply it across therapeutic areas or contract state of the art research in the form of
licensing, research and equity relationships in an effort to maintain a competitive advantage
and conclude that the latter was the more successful strategy due to IP rights and the limited
number of experts in a new field of technical expertise.
By analogy the gradual increase of equity stake in parallel to the progress made in a
successful alliance were harbingers for the eventual mergers of Roche-Genentech, Merck-
Serono, Novartis-Chiron and serve as one survival strategy for the larger pharmaceutical
firms. However the more recent hostile bid by Sanofi-Aventis SA to purchase Genzyme
Corporation clearly attests to the viability of M&A activity in the absence of a prior R&D
partnership.
Page 28
METHODS
Stage-gate approach
Taking inspiration from Wheelwright and Clark (1992) a stage-gate approach was used to
evaluate and filter the potential partnering candidates. In Stage I the pharmaceutical market
was divided into four categories: the top ten largest pharmaceutical firms ranked by 2010
annual revenues (USD), the top ten biotechs defined as firms where more than 50% of the
2010 annual revenues were attributable to the sales of biologics, those pharmaceutical firms
which have S1P1 agonists in clinical development, and any pharmaceutical company which
markets blockbuster MS product(s) and was not captured by the first three categories.
Passing the Gate I, 28 companies were identified and 26 of which were evaluated in Stage
II based on core competences & performance indices with a scoring tool to arrive at a short
list of 11 candidates. Thereafter these 11 were reviewed for attributes excluded by the
scoring tool, e.g., network, competitive products or interests, etc. in passing Gate III prior
to a due diligence offer in Stage III and eventual negotiation and contractual finalization.
This paper does not concern itself with the results of Stage III.
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Figure 5 – Stage-gate model for partner selection
In-houseS1P1 agonistprogram or
MS blockbuster
Top tenpharmaceutical
firms
Top tenbiopharmaceutical
firms
All potential pharmaceutical
partners
Selected partners
Approachwith due diligence
offer
Gate I
Gate II
Gate III
Stage I
Stage II
Stage III
Source: Wheelwright and Clark 1992, Revolutionizing Product Development, The Free Press, NY 1992
Page 30
RESULTS
Gate I
Gate I delivered 26 potential candidates, 19 of which based on annual revenues are depicted
in Table V. Additionally 6 companies which are active in the field of S1Px agonists were
identified: Bristol-Myer Squibb, Almirall SA, Arena Pharmaceuticals Inc, Receptos Inc,
Daiichi Sankyo Co Inc, and Ono Pharmaceuticals Co Inc. Marketing Copaxone® a
blockbuster in MS, Teva Pharmaceutical Industries Ltd was also added to the list.
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Table V – Top 10 pharmaceutical and biotech firms in 2010
Pharmaceutical Biotech
Company
2010
Annual revenues (bio USD)
Company
2010
Annual revenues(bio USD)
67.8 56.3
61.6 15.1
50.7 13.4*
50.6 12.8
46.2 11.7
45.9 4.9˚
43.6 4.7˚
35.2 4.7
33.3 4.1†
23.1 0.5
° Merck Serono is a division of Merck KGaA
* CSL annual revenues declared from Jun09-Jun10 † Genzyme Corporation was purchased by Sanofi-Aventis in Apr11
Source: Contract Pharma for Pharmaceutical and Biopharmaceutical Contract Servicing & Outsourcing report July 2010, individual annual reports
Page 32
Gate II
Scoring tool
In order to efficiently screen and award potential partners points appropriate to desired
strengths & capacities, data was gleaned from 2010 annual reports, SEC filings, websites,
WO patent search, and the FDA website: www.clinicaltrials.gov. Attributes were divided
into 6 categories: research, clinical development, marketing & sales, resources, growth &
resiliency and productivity. All fiscal units are reported in USD (May 2011).
Research
As the most highly guarded resource of any pharmaceutical firm, efforts to evaluate
research pipelines from publically available information are hindered by protective self-
interests of the firm itself. However SEC filings and most annual reports list the R&D
spend and comparison of the absolute values yields insight into the scale of R&D activities.
Although Actelion is not searching for a research partner it would still benefit from the
knowledge of a partner acquainted with the development of S1Px agonists, and so the
results of the WO patent search are added in an unweighted fashion to attribute more value
to those candidates which have filed WO patents in the field.
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Clinical development
R&D spends include the funds used to support on-going clinical development efforts and so
are inseparable for similar comparison however the FDA website proves a reliable
repository of clinical activity. Sponsors are encouraged to list on-going trials by the fact
that reputable journals, e.g., New England Journal of Medicine, Nature, Science, etc.,
refuse to publish articles related to trials that were not listed on the FDA website prior to
database closure. Searches were made by sponsor, phase and therapeutic area where the
raw results by phase were given a weighted score and those which were relevant to MS, Ps,
PsA, RA, UC, CD, AS or JIA were listed separately to attribute more value to activity in
these indications. Additional points were awarded for compounds which had successfully
submitted authorization packages to health authorities and for any S1P1 compound at any
stage of clinical development.
Marketing & Sales
Phase IV trials are post-marketing efforts to better understand the full capacity of a product
either within a licensed indication or as an effort to expand its therapeutic potential across
new indications. These were scored in a similar manner as Phase I-III trials under Clinical
Development. Each marketed product in the autoimmune disorders of interest or
blockbuster in any indication was awarded an individual unweighted score to allow for this
exceptional and fortunate circumstance to outweigh multiple efforts of much smaller
magnitude and relevance to the task at hand. In an effort to gauge and compare the
economies of scope and scale a candidate had to offer, the number of affiliates &
Page 34
subsidiaries, costs of sales and costs of marketing, selling & administration were given
scores based on magnitude. Lastly as many of the large pharmaceutical firms manufacture
and market non-pharmaceuticals, e.g., commercial health care products, diagnostics,
vaccines, etc., the proportion of pharmaceutical sales was given an ascending weighted
value.
Resources
Annual revenues, net income, cash & cash equivalents and the number of employees
represent capital and resources required for a successful collaboration. These attributes
were scored and recorded.
Growth & Resiliency
The equity markets of the world are another independent manner in which to gauge and
compare both the material success of a firm as well as continued investor confidence. The
global economic crisis of 2008/2009 erased billions of USD from balance sheets of
governments, industry champions and private investors alike. Where available subtracting
the stock price of Jan07 when markets were at a peak from Jan11 two years following the
aftermath has been done in an effort to establish a value reflective of resiliency and
potential continued growth in terms of investor confidence.
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Productivity
4 indices have been used in an attempt to evaluate the productivity of a potential candidate
and allow for a fair comparison irrespective of the absolute values. Dividing the annual
revenues by the number of employees reveals the productivity of the work force in terms of
capital gains. Similarly dividing the net income by the annual revenue establishes a
profitability index. Lastly an inversely proportional score was awarded to the indices
which divided the cost of sales and cost of manufacturing, selling & administration by the
annual revenues so that those firms with lower proportional costs gained higher scores.
Two different scoring matrices were established; one for large pharmaceutical firms and
one for biotechs & others as witnessed in Tables VI & VII. Actelion was evaluated with
each matrix and then the values of all companies evaluated in each grouping were plotted
on a single graph. Those companies whose aggregate score was significantly higher than
Actelion’s were then considered candidates for due diligence a process by which both
parties agree to granting mutual unrestrained access to all knowledge, processes and
activities potentially affected by a partnering agreement.
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Table VI – Scoring tool valuations for large pharmaceutical firms
PharmaceuticalsAttribute Absolute value
R&D spend ≥ 10 bio USD 7.5 - 9.9 bio USD 6.5 - 7.4 bio USD 5 - 6.4 bio USD < 5 bio USD
Development compounds per phase ≥ 40 30 - 39 20 - 29 11 - 19 < 10
Clinical trials (historical & ongoing) ≥ 600 450 - 599 300 - 449 150 - 299 < 150
Number of affiliates & subsidiaries ≥ 250 200 - 249 151 - 199 100 - 150 < 100
Cost of sales ≥ 18 bio USD 15 - 17.9 bio USD 10 - 14.9 bio USD 4 - 9.9 bio USD < 4 bio USD
Cost of marketing, selling & administrative ≥ 18 bio USD 15 - 17.9 bio USD 10 - 14.9 bio USD 4 - 9.9 bio USD < 4 bio USD
Annual revenues ≥ 65 bio USD 55 - 64.9 bio USD 45 - 54.9 bio USD 35 - 44.9 bio USD < 35 bio USD
Net income ≥ 12 bio USD 9 - 11.9 bio USD 6.5 - 8.9 bio USD 4 - 6.4 bio USD < 4 bio USD
Cash & cash equivalents ≥ 18 bio USD 13 - 17.9 bio USD 8 -12.9 bio USD 3 - 7.9 bio USD < 3 bio USD
Number of employees ≥ 100,000 80,000 - 99,000 60,000 - 79,999 40,000 - 59,999 < 40,000
Annual revenues/number of employees ≥ 1,000,000 750,000 - 999,000 500,000 - 749,999 250,000 - 499,999 < 250,000
Scoring tool value 5 4 3 2 1
Table VII – Scoring tool valuations for biotechs & others
Biotech & othersAttribute Absolute value
R&D spend ≥ 2 bio USD 1.25 - 1.9 bio USD 600 mio - 1.24 bio USD 100 mio - 599 mio USD < 100 mio USD
Development compounds per phase ≥ 20 20 - 15 10 - 14 5 - 9 <5
Clinical trials (historical & ongoing) ≥400 300 - 399 150 - 299 10 - 149 <10
Number of affiliates & subsidiaries ≥100 75 - 99 50 - 74 25 - 49 < 25
Cost of sales ≥ 5 bio USD 3 - 4.9 bio USD 1.5 - 2.9 bio USD 500 mio - 1.5 bio USD <500 mio USD
Cost of marketing, selling & administrative ≥ 5 bio USD 3 - 4.9 bio USD 1.5 - 2.9 bio USD 500 mio - 1.5 bio USD <500 mio USD
Annual revenues ≥ 15 bio USD 10 - 14.9 bio USD 5 - 9.9 bio USD 1 - 4.9 bio USD <1 bio USD
Net income ≥ 4 bio USD 3 - 3.9 bio USD 2 -2.9 bio USD 1 - 1.9 bio USD < 1 bio USD
Cash & cash equivalents ≥ 3 bio USD 2 - 2.9 bio USD 1 - 1.9 bio USD 500 mio - 900 mio USD < 500 mio USD
Number of employees ≥50,000 35,000 - 49,000 20,000 - 34,999 10,000 - 19,999 < 10,000
Annual revenues/number of employees ≥ 800,000 500,000 - 799,000 250,000 - 499,999 100,000 - 249,000 < 100,000
Scoring tool value 5 4 3 2 1
Gate II reduced the list from these 26 to a short list of 11: Pfizer Corp, Bayer Schering AG,
Novartis Pharma AG, Abbot Laboratories Inc, Bristol-Myer Squibb, F. Hoffmann-La
Roche Ltd, Amgen Inc, Merck KGaA, Novonordisk A/S, Biogen IDEC Inc, Teva
Pharmaceutical Industries Ltd illustrated in Figures 6 & 7. Detailed results can be found in
Appendices I & II.
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Figure 6 – Cross comparison with large pharmaceutical firms
‐50
0
50
100
150
200
250
Productivity
Growth & Resiliency
Resources
Marketing & Sales
Clinical Development
Research
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Figure 7 – Cross comparison with biotechs & others
‐50
0
50
100
150
200
250
Productivity
Growth & Resiliency
Resources
Marketing & Sales
Clinical Development
Research
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Candidate profiling Figure 8 – Pfizer scoring results
‐20
0
20
40
60
80
100
120
Research
Clinical development
Marketing & Sales
Resources
Growth & Resiliency
Productivity
US based Founded in 1849Merged with Wyeth, former division of American Home Products Corp. (2009)Merged with King Pharmaceuticals, Inc. (2010)110,600 employees
Key overlap marketed productsEnbrel® RA, JRA, PsA, Ps, AS (Amgen collaboration)Revatio® PAH
Key overlap development compoundstasocitinib (CP-690550) RA
DivisionsBiopharmaceutical, Diversified
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Figure 9 – Bayer Schering scoring results
0
5
10
15
20
25
30
35
40
Research
Clinical development
Marketing & Sales
Resources
Growth & Resiliency
Productivity
Germany basedFounded in 1863111,400 employeesAcquired (2010)
Key overlap marketed productsBetaseron® (interferon β-1b) CIS, RMS
Key overlap development compoundsAlemtazumab (Anti CD50) Phase III MS Riociguat (sGC stimulator) Phase III PAH
DivisionsHealthCare, Crop Science, Material Science
Page 41
Figure 10 – Novartis scoring results
‐20
0
20
40
60
80
100
Research
Clinical development
Marketing & Sales
Resources
Growth & Resiliency
Productivity
Switzerland basedFounded in 1996 by merger of CIBA Geigy & SandozMerged with Alcon, Inc. (2010)119,418 employees
Key overlap marketed productsGilenya® RMS
Key overlap development compoundsGilenya® Phase III PPMSBAF312, Phase II, MS & Polymyositis Dermatomyositis
Linked to Roche via Lucentis/Xolair Genentech, holds 33.3% of outstanding shares in Roche holding
DivisionsPharmaceuticals, Vaccines & Diagnostics, Sandoz, Consumer Health, Alcon
Page 42
Figure 11 – Abbott scoring results
0
10
20
30
40
50
60
70
80
90
100
Research
Clinical development
Marketing & Sales
Resources
Growth & Resiliency
Productivity
US basedFounded in 1888Merged with Solvay S.A. in 200990,000 employees
Key overlap marketed productsHumira® (adalimumab) RA, PsA, Ps, CD, UC, AS, JIA
Divisions
Pharmaceuticals, Nutritional Products, Medical Devices, Diagnostics
Page 43
Figure12 – Bristol-Myers Squibb scoring results
0
10
20
30
40
50
60
70
Research
Clinical development
Marketing & Sales
Resources
Growth & Resiliency
Productivity
US basedFounded in 1989 by merger of Bristol-Myers and Squibb Corporations27,000 employeesAcquired Medarex, Inc (2009)Acquired ZymoGenetics, Inc (2010)
Key overlap marketed productsOrencia® (abatacept) RA
Alliances with Sanofi (Avapro/Avalide® hypertension, diabetic nephropathy), Otsuka (Abilify® antipsychotic), Gilead (Sustiva® HIV)
Page 44
Figure 13 – Roche scoring results
Page 45
Figure 14 – Amgen scoring results
‐40
‐20
0
20
40
60
80
100
Research
Clinical development
Marketing & Sales
Resources
Growth & Resiliency
Productivity
France basedFounded in 198017,400 employees
Key overlap marketed productsEnbrel® (etanercept) RA, PsA, Ps, AS, JIA (co-marketed with Pfizer)Kineret® (anakinra) RA
Key overlap development compoundsDenosumab (monoclonal antibody) RA
Page 46
Figure 15 – Merck KGaA scoring results
‐10
0
10
20
30
40
50
Research
Clinical development
Marketing & Sales
Resources
Growth & Resiliency
Productivity
Switzerland basedFounded in 2004 by merger of Merck KGaA and Serono SA40,562 employees
Key overlap marketed productsRebif® (interferon β-1a) CIS, RMSRaptiva® (efalizumab) Ps (co-marketed with Roche)
Key overlap development compoundsMylinax® (cladribine) Phase III CIS, RMS
DivisionsMerck Serono, Pharmaceuticals, Chemicals, Laboratory, Corporate & other
Page 47
Figure 16 – Novo Nordisk scoring results
0
10
20
30
40
50
60
Research
Clinical development
Marketing & Sales
Resources
Growth & Resiliency
Productivity
Denmark basedFounded in 1989 by merger of Novo Industri A/S and Nordisk Gentofte A/S30,483 employees
Key overlap development compounds4 monoclonal antibodies, Phase I/IIa RA
DivisionsDiabetes Care, Biopharmaceuticals
Page 48
Figure17 – Biogen IDEC scoring results
0
10
20
30
40
50
60
Research
Clinical development
Marketing & Sales
Resources
Growth & Resiliency
Productivity
US basedFounded in 2003 by merger of Biogen and IDEC4,850 employees
Key overlap marketed productsAvonex® (interferon β-1a) CIS, RMSTysabri® (natalizumab) RMS, CD, PPMS (off-label) (co-marketed with Elan)Rituxan® (rituximab) RA, MS (off-label) (co-developed/marketed with Roche)Amevive® (alefacept) PsBG-12 (dimethyl fumarate) Ps
Key overlap development compoundsOcrelizumab Phase III RMS (co-developed with Roche)Fampridine Phase III RMSPegylated Interferon β-1ab Phase III RMSBG-12 (dimethyl fumarate) Phase III RMSDaclizumab Phase III MSAnti-Lingo antibody Phase I MSBaminercept (LTßR-Ig) Phase I MS, failure in RADexpramipexole Phase II ALS (co-developed with Knopp Neuroesciences, Inc.)
Page 49
Figure 18 – Teva scoring results
0
5
10
15
20
25
30
35
40
45
Research
Clinical development
Marketing & Sales
Resources
Growth & Resiliency
Productivity
Israel basedFounded in 194439,660 employeesAcquired Laboratoire Théramex (2010)
Key overlap marketed productsCopaxone® (Glatiramer Acetate) CIS, RMS
Key overlap development compoundsLaquinimod (α-4 integrin antagonist) Phase III MS, Phase II CD Copaxone® (Glatiramer Acetate) Phase II CDTLOII Phase II RA
Page 50
Gate III
Risk Assessment
PESTL
Gillespie (2007) introduces the PESTEL analysis as a widely accepted risk assessment tool
which splits possible risks into 6 categories: political, economic, social, technological,
environmental, and legal. Actelion operates exclusively within the pharmaceutical industry
and therefore any collaboration should be viewed in light of these risks the industry as a
whole faces in addition to those specific to each possible collaboration.
Political
The largest political risk to the pharmaceutical industry or any alliance would be a change
in governmental practices which incentivize & reward successful drug development. The
recent actions by the US government to reform health care insurance & re-imbursement
policies in the wake of the world economic crisis highlight first the immediate
repercussions, second particular exposure of the pharmaceutical industry to the political
environment and third the possibility that the ever increasing growth in profits within the
pharmaceutical industry may have peaked. Although not all governments provide public
health care programs, lobbyists from private insurers will continue to hold sway with
governments around the globe.
Governmental health authorities, e.g., FDA, EMA, etc., also regulate the framework for
development and manufacture of new compounds and provide specific guidance in the way
Page 51
of International Conference on Harmonisation of Technical Requirements for Registration
of Pharmaceuticals for Human Use (ICH) guidelines which seek to provide harmonized
international standards. As penultimate guidance strict accordance with these guidelines on
a case by case basis often requires dialog between the pharmaceutical industry and health
authorities at joint meetings throughout development.
Lastly barriers to trade, e.g., tarrifs, import procedures, etc., have been greatly reduced in
the last three decades, however re-introduction as a result of unexpected, protective trade
wars could sincerely disturb the manufacture, distribution and sales units of any
pharmaceutical firm.
Economic
Given the rising development costs and ever higher prices new products are commanding,
the economic risk facing the pharmaceutical industry is considerable. A sustained
economic downturn which left patients and private & public insurers unable to purchase
high priced medicines would be detrimental to the industry as a whole. Eligible partners
with the cash reserves to withstand a second recession would be desirable.
Social
The etiology of autoimmune disorders is not well understood however many speculate that
the rise in incidence which the National Institutes of Health (2009) presented to the US
Congress correlates to a reduction in the general health of the population in the developed
world consequent to the unprecedented economic growth experienced since 1970. Obesity
Page 52
and autoimmune disorders specifically are on the rise; with respect to obesity Sefer Natan
and Ehrenfeld (2009) have shown that the paediatric population’s health has suffered in
relation to the lifestyle options now available. Were social changes beneficial to its general
health to prove effective in reducing rates of autoimmune diseases, the NPV of any product
targeting autoimmune disorders would suffer along with the collaboration supporting it.
Technological
Personalized medicine, proteomics, and genomics all present the pharmaceutical industry
with the next possible Schumpeterian revolution in that at present development assumes a
universal dosage per patient with few exceptions for up-/down-titration based on efficacy &
safety signals. These innovative approaches hold the potential of disrupting future markets
in a revolutionary manner similar to that experienced following the introduction of
recombinant DNA technologies in the1970s. Research efforts by any potential partner
would be advantageous.
Environmental
The apparent increase in the number and intensity of tropical storms driven by rising
atmospheric temperatures may affect the manufacture, distribution and sales of
pharmaceutical goods worldwide. However this effect would be normalized over the entire
sector and should not effect the selection of an appropriate partner.
Page 53
Legal
The largest legal risks the pharmaceutical industry faces would be a changes in patent law
or law regulating fare trade within the market. Radical change would undermine the
manner in which business is conducted to these stalwarts can be considered minimal.
However with reference to partnering in particular, several parties previously identified in
Stage II face lawsuits over IP rights to key products and any alliance could be negatively
affected.
Geographic risks
Although geographic location of a potential partner for co-development and co-marketing
of an S1P1 agonist in autoimmune disorders would be expected to play a minimal role when
reviewing largely international pharmaceutical firms operating in the developed world
where trade barriers have been actively reduced in the past 30 years and ICH guidelines
attempt harmonizing development requirements, it is worth noting that the largest
proportion of partnerships occur between firms registered in North America and
furthermore the growth of alliances between North American and European partners has
not significantly increased between the years of 1980 and 1998 as depicted in Figures 19 &
20 beneath.
Page 54
Figure 19 – Distribution of R&D partnerships, economic regions (1960-1980)
Source: Hagedoorn 2001, Inter-firm R&D partnerships: an overview of major trends and patterns since 1960 p.488
Page 55
Figure 20 – Distribution of R&D partnerships, economic regions split by decade
Source: Hagedoorn 2001, Inter-firm R&D partnerships: an overview of major trends and patterns since 1960 p.489
1960-1969 1970-1979
1990-19981980-1989
1960-1969 1970-1979
1990-19981980-1989
Page 56
Long term risks
The patent life of ponesimod runs through 2028 and any collaboration should be viewed
from this perspective as well. Although predicting specific risks 15+ years into the future
may be an exercise in futility, scenario planning allows any partnering proposal to be
considered in light of unexpected changes in the contextual environment outside of the
transactional environment previously reviewed over this long time span. Two plausible
outcomes are posited beneath.
The US market alone represents sales largely of the same magnitude as those of Europe,
Canada and Japan combined although the US population only represents ~30% of the
combined population of the others. The economic recovery in the US was highly
dependent upon the Federal Reserve reducing interest rates and extending emergency
capital reserves at a time of extreme need. Continued economic stability is reliant upon
restoring federal revenues and encouraging fiscal responsibility upon private institutions
including households. However it is distinctly possible that in a time when the US
Government (2011) reports a debt currently over 90% of annual Gross Domestic Product
(GDP) and predicted to breach 100% in 2011, that these reserves will not be available in
the event of a double-dip recession. Such an occurrence would detrimentally affect the US
market and the revenues accrued by the pharmaceutical industry.
International trade is bound to be affected by the growth in Brazil, Russia, India and China
block (BRIC). As these countries continue to expand and develop stable middle classes
Page 57
health care expenditure will rise alongside. Growth and eventual dependence upon modern
pharmaceuticals in these markets may help to offset the inordinate reliance upon the US
market as a source of revenues.
A partner with a diversified pipeline and operationally active in BRIC would help to hedge
against the undue exposure to the US market and maximize a potential positive outcome of
continued global economic growth.
Connection highway
Knowledge in the form of IP, pre-clinical investigations, clinical relevance & applications,
manufacture, regulatory interactions, marketing prowess, processes and even IT itself is
central to the pharmaceutical industry and any partnership will involve the exchange of
such knowledge in a joint effort to capitalize on a larger body of knowledge and resources
under the competitive pressure of the market; networks in the pharmaceutical industry are
in fact networks of knowledge. Galambos (1998) makes specific mention of the need for
“scientific leaders with diplomatic skills and links to the relevant networks that would
enable building the teams and productive programs necessary to sustain biotech R&D over
the long term” driving the search for partners.
Roijakkers & Hagedoorn (2006) demonstrate that the intensity of partnerships between
large pharmaceutical firms and a growing number of biotechs has nevertheless rapidly
increased since 1975 and that the network dynamics are fluid as depicted in Figures VIII,
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IX, X, XI & XII (also reproduced in Appendix III for the sake of legibility). This is due
primary to two factors: new technological advances are many yet at the moment of
inception the IP is held in the hands of a few and the magnitude of the annual revenues a
innovative product which effectively meets present unmet medical needs is expected to
yield.
Figure VIII –R&D partnerships in pharmaceutical biotechnology 1975-1979
Source: Roijakkers 2006, Inter-firm R&D partnering in pharmaceutical biotechnology since 1975: Trends, patterns and networks p.436
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Figure IX –R&D partnerships in pharmaceutical biotechnology 1980-1984
Source: Roijakkers 2006, Inter-firm R&D partnering in pharmaceutical biotechnology since 1975: Trends, patterns and networks p.437
Page 60
Figure X –R&D partnerships in pharmaceutical biotechnology 1985-1989
Source: Roijakkers 2006, Inter-firm R&D partnering in pharmaceutical biotechnology since 1975: Trends, patterns and networks p.438
Page 61
Figure XI –R&D partnerships in pharmaceutical biotechnology 1990-1994
Source: Roijakkers 2006, Inter-firm R&D partnering in pharmaceutical biotechnology since 1975: Trends, patterns and networks p.439
Page 62
Figure XII –R&D partnerships in pharmaceutical biotechnology 1995-1999
Source: Roijakkers 2006, Inter-firm R&D partnering in pharmaceutical biotechnology since 1975: Trends, patterns and networks p.440
The undeniable trend held within these diagrams is that the power of alliances has been
unleashed over the past 3 decades due to the ability to quantify and limit the risk of
exposure and simultaneously reduce the cost of breaking an alliance should either the
compound fail in the course of development or larger corporate pipeline & partnering
strategy re-evaluations result in the need to break ties and promises.
However inherent to the risk of embarking on a closer co-operation with a partner is the
loss of competitive advantage in terms of trade secrets to its other parnters. An example of
which would be the present collaboration between Roche and Biogen-IDEC to develop
Page 63
ocrelizumab in MS whereby any collaboration with either partner bears the inherent risk of
indirectly cross-fertilizing the other’s programs in direct conflict with the terms of any
partnering agreement.
Furthermore when considering that the community of patients, physicians, and research
experts in the autoimmune arena remains relatively small and tight-knit due to lower
prevalence rates, networks of KOLs, prescribers and payors will necessarily overlap with
those of competitors. A point for due diligence would be to assess the relative depth and
breadth of the connections a potential candidate has established.
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DISCUSSION
Following Gates I and II the cumbersome number of registered and largely unsuitable
potential partners was successfully reduced to 26 and 11 respectively. The results of Gate
III are discussed beneath.
Pfizer is based in the US and unquestionably the dominant pharmaceutical firm as of 2010,
with higher scores predominantly due to marketing prowess in association with its
collaboration with Amgen to market Enbrel®, however positive results with a JAK-3
inhibitor tofacitinib in RA announce it’s own intention to enter the autoimmune market
with an oral agent (Pfizer 2011). Furthermore it is highly dependent upon the sales of
Lipitor® which accrued 11.2 bio USD in 2010 and will lose US patent protection in June
2011 ( Pfizer 2011).
Based in Germany, Bayer Schering is active in the MS market with both Betaseron® which
has successfully maintained its value due to a co-marketing agreement with Novartis to sell
the generic form at only a 20% discount and alemtazumab which is co-development with
Sanofi. Furthermore Bayer Schering is active in the PAH market which is central to
Actelion’s profitability and could provide a source of future positive synergy as its
marketed products can be viewed as complimentary to Tracleer® and Actelion’s pipeline.
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With headquarters located in Switzerland, Novartis has developed and now markets the
first non-selective S1P1 agonist, Gilenya®, in MS and has a dual S1P1,5 agonist BAF312 in
Phase II MS trials providing direct competition to Actelion’s ponesimod.
US based Abbott has developed and marketed Humira® in six autoimmune indications and
has submitted marketing authorization dossier for UC as a seventh indication (Abbott
2011). Furthermore it has an S1P1 program in Phase I well behind ponesimod and
Humira® faces direct competition from Pfizer’s oral tofacitinib in RA.
Bristol-Myers Squibb, a US interest, has a high score for clinical development and
possesses an S1P1 agonist program in Phase 0 however is not active in the marketing of
products for autoimmune disorders. However as a partner with minimal competitive
interests and large reserves of capital, it remains an interesting candidate.
Roche another Swiss based company would be an ideal partner across many of the desired
parameters, however not only does it have ocrelizumab, a competitive product in Phase II
MS development, it was Actelion’s first partner in 2005. After paying 105 million Swiss
francs in a 75 million Swiss franc up-front payment and another 30 million Swiss francs in
further milestone payments associated with clinical development programs in MS and Ps,
Roche opted to terminate the alliance in 04Q09 based on a re-evaluation of its own pipeline
and investment strategies following the Genentech merger earlier that year.
Page 66
US based Amgen also has no competitive development products in MS or psoriasis where
Actelion’s ponesimod is now currently studied in Phase II. It does have extensive
marketing capabilities in psoriasis with the sales of Enbrel®.
Merck KGaA situated in Germany markets Rebif® in MS and has suffered the rejection of
the Mylinax® authorization applications. It has an S1P1 agonist program far behind that of
Actelion’s and no other development programs in other autoimmune disorders.
The Danish Novonordisk relies heavily on the sales of diagnostics and hormonal therapies
for diabetes which account for ~75% of annual revenues. It has no experience in
autoimmune disorders including MS and psoriasis nor does it have an S1P1 agonist
program.
Biogen IDEC a US biotech markets Avonex®, Tysabri®, and Rituxan® and is heavily
reliant on these MS therapies however its market presence cannot be underestimated. It
currently markets BG-12 an oral agent for psoriasis and has published positive Phase III
data with BG-12 in MS. Biogen IDEC is co-developing ocrelizumab in MS with Roche
thereby greatly reducing the risks associated with knowledge seepage as Roche was already
privy to Actelion’s S1P1 agonist program.
The Isreali based Teva markets Copaxone® in MS, has published positive Phase III MS
results with laquinimod a competitive oral therapy and is exploring the use of both agents
in Phase II CD trials. Although its marketing prowess is limited to MS and generics
Page 67
laquinimod’s recent success speaks in favor of Teva’s recent expansion out of the generics
market to explore & develop innovative in-house compounds.
The selection process in Stage II was based on the arbitrary decision that cumulative points
significantly higher than those represented by Actelion correctly identified suitable
candidates and could have missed key opportunities. Accounting for possible elimination
errors Johnson & Johnson, Eli Lilly, AstraZeneca, Sanofi, GlaxoSmithKline and Alexion
deserve a second review. Johnson & Johnson although in possession of substantial cash &
cash equivalents suffers from a distinct lack of relevant clinical development experience.
Eli Lilly has extensive clinical development experience however as refelected in one of the
worst growth & resiliency scores, investors lack confidence in its ability to overcome the
loss of patent protection for some of its main revenue earning products. AstraZeneca is
reasonably balanced across all variables however fails to show a distinctive advantage over
Actelion. Sanofi, although a good candidate, has purchased Genzyme Corporation in 2011
and so will not likely be in the position to offer a high up-front payment. GlaxoSmithKline
is very close to Actelion and has an S1P1 agonist program with a candidate in Phase I. As
demonstrated by Roijakkers and Hagedoorn (2005) previous relationships between partners
of unequal size and competence is positively correlated with future collaborations and
therefore it is proposed to add GlaxoSmithKline to the list of firms to be approached for
due diligence. Lastly Alexion approaches Actelion as a biotech candidate however driving
its higher score is a simply a rising stock price and not related to the core competences
Actelion currently desires.
Page 68
This paper suggests balancing the risks reviewed with a selection of both large
pharmaceutical firms and smaller biotechs located in differing geographic blocs. The large
majority of these candidates should have experience in the autoimmune arena, specifically
MS and Ps as these represent ponesimod’s most advanced development destinations and
pose no direct competitive risk to ponesimod’s continued development in these indications.
An interesting point would be the identification of Almirall, Arena and Receptos as
possible M&A targets for Actelion.
Gate III left 6 potential candidates based in the US, Europe and Israel for possible due
diligence: Bayer Schering AG, Abbott Laboratories Inc, Bristol-Myers Squibb, Amgen
Inc, Merck KGaA, Biogen IDEC Inc, Teva Pharmaceutical Industries Ltd., and
GlaxoSmithKline plc.
Page 69
CONCLUSIONS
Bloomber (2011) recently published Actelion’s CEO stating that the future of the company
is to remain independent. This is highly dependent upon the success of multiple in-house
development programs including the S1P1 agonists, prior to the expiry of market
exclusivity for Tracleer® in 2015. A diversified licensing strategy representing both in-
and out-licensing across multiple partners of varying size and competences can assist in
hedging against take over bids from either a partner in successful alliances attempting to
reduce liabilities of long-term royalty payments with an immediate purchase and
integration or an external interest seeking to compliment a pipeline or product portfolio in a
cost effective manner. Actelion currently enjoys alliances with Merck & Co. Inc,
GlaxoSmithKline plc, Nippon Shinyako Co Ltd and Trophos SA on the rennin inhibitor,
orexin antagonist, oral PGI2 and olesoxime development programs respectively.
This paper has produced a robust two-fold partnering strategy and suggests entering into
due diligence proceedings with 6 candidates representing a collection of large
pharmaceutical firms and biotechs which are geographically separate and have successfully
launched products within the autoimmune market. The candidates also generally meet a
higher standard than Actelion in terms of cumulative reserves, potential for growth,
resiliency & productivity. This choice hedges against the potential risks reviewed however
in the absence of a due diligence process, no further advice can be made; risks and
opportunities emergent from the eventual due diligence process will require further
assessment and contractual negotiations to be minimized and maximized respectively.
Page 70
Specifically the due diligence process will allow the assumptions in the model to be
validated and a better understanding of the 4th competence and network potential of each
candidate to be evaluated.
Actelion stands to gain not simply a partner however another step towards maintaining its
independence. Pisano (1991) demonstrates that M&A is still on the rise and in light of the
recent activity between Chiron:Novartis, Sanofi-Aventis:Genzyme, Pfizer:Wyeth,
Abbott:Solvay, and Genentech:Roche unlikely to diminish in the future given the cash &
cash equivalents and shrinking pipelines the large pharmaceutical firms possess. This
paper proposes that Actelion entertain candidates from both sides of the post-
Schumpeterian revolution with the proposal to offer these firms collaboration in an
advanced S1P1 agonist program in exchange for the core competences needed to fully
maximize the value of its assets and/or protect against an udesirable corporate takeover.
The possibility of a larger incumbent eventually instigating a full merger following a
successful co-development program to reduce the eventual contractually stipulated royalty
payments & profit sharing terms will need to be evaluated against the risk of failure with a
smaller partner in an effort to reduce the risks associated with a loss of corporate
independence upon the results of the full due diligence process in the knowledge that only
one partner can be selected and that it is impossible to hedge against all potential risks.
Page 71
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Appendix I – Large incumbent pharmaceutical firms
Page 75
Actelion Pharmaceuticals Ltd Figure 26 - Actelion scoring results as a large pharmaceutical firm
Competences Attribute Score Absolute valuesNumber of filed S1P agonist patents 23R&D spend 1 576 mio USD
Number of Phase I compounds in pipeline 1 1Number of Phase I trials 1 1
Number of Phase II compounds in pipeline in all indications 1 6Number of Phase II trials 1 1Number of Phase II trials in MS 1 1Number of Phase II trials in psoriasis 1 2Number of Phase II trials in RA, PsA, CD, UC, AS, JIA 0
Number of Phase III compounds in pipeline in all indications 1 3Number of Phase III trials 1 1Number of Phase III trials in MS 0Number of Phase III trials in psoriasis 0Number of Phase III trials in RA, PsA, CD, UC, AS, JIA 0
Number of compounds under regulatory review 0
Number of S1P agonists in clinical development 2
Number of Phase IV compounds in pipeline in all indications 2 11Number of Phase IV trials 1Number of Phase IV trials in MS 0Number of Phase IV trials in psoriasis 0Number of Phase IV trials in RA, PsA, CD, UC, AS, JIA 0
Number of MS products marketed 0Number of psoriasis products marketed 0Number of products marketed for RA, PsA, CD, UC, AS, JIA 0
Number of blockbusters (>1 bio revenues/annum) 1
Number of affliates & subsidiaries 1 29
Cost of sales 1 238 mio USDCost of marketing, selling & administrative 1 885 mio USD% of annual revenue earned from pharmaceutical sales 10 1
Annual revenue 1 2.3 bio USDNet income 1 465 mio USDCash & cash equivalents 1 1.4 bio USDNumber of employees 1 2'441
Growth & Resiliency Jan11 stock price minus Jan07 stock price 26 (58) (32)
Annual revenue/number of employees 4 942'237Net income/annual revenue 2 0.20Cost of sales/annual revenue 9 0.10Cost of marketing, selling & administrative/annual revenue 6 0.38
10
17
Resources
Research
24
Clinical development
Productivity
4
26
Marketing & Sales
21.13
0
5
10
15
20
25
30
Research
Clinical development
Marekting & Sales
Resources
Growth & Resiliency
Productivity
Page 76
Pfizer Inc Figure 27 – Pfizer complete scoring results
Competences Attribute Score Absolute valuesNumber of filed S1P agonist patents 2R&D spend 4 9.4 bio USD
Number of Phase I compounds in pipeline 5 49Number of Phase I trials 4 689
Number of Phase II compounds in pipeline in all indications 4 35Number of Phase II trials 4 474Number of Phase II trials in MS 1Number of Phase II trials in psoriasis 3Number of Phase II trials in RA, PsA, CD, UC, AS, JIA 12
Number of Phase III compounds in pipeline in all indications 3 25Number of Phase III trials 5 601Number of Phase III trials in MS 2Number of Phase III trials in psoriasis 8Number of Phase III trials in RA, PsA, CD, UC, AS, JIA 28
Number of compounds under regulatory review 9
Number of S1P agonists in clinical development 0
Number of Phase IV compounds in pipeline in all indications 0Number of Phase IV trials 4 492Number of Phase IV trials in MS 0Number of Phase IV trials in psoriasis 13Number of Phase IV trials in RA, PsA, CD, UC, AS, JIA 48
Number of MS products marketed 0Number of psoriasis products marketed 0Number of products marketed for RA, PsA, CD, UC, AS, JIA 0
Number of blockbusters (>1 bio revenues/annum) 15
Number of affliates & subsidiaries 0
Cost of sales 4 16.3 bio USDCost of marketing, selling & administrative 5 19.6 bio USD% of annual revenue earned from pharmaceutical sales 9 0.86
Annual revenue 5 67.8 bio USDNet income 4 8.3 bio USDCash & cash equivalents 1 1.74 bio USDNumber of employees 5 110'600
Growth & Resiliency Jan11 stock price minus Jan07 stock price -9 (16) (25)
Annual revenue/number of employees 3 613'020Net income/annual revenue 1 0.12
Cost of sales/annual revenue 8 0.24Cost of marketing, selling & administrative/annual revenue 7 0.29
-9
19
6
88
98
Resources
Clinical development
Marketing & Sales
Research
15
Productivity
‐20
0
20
40
60
80
100
120
Research
Clinical development
Marekting & Sales
Resources
Growth & Resiliency
Productivity
Page 77
Figure 28 - Johnson & Johnson overview
‐10
‐5
0
5
10
15
20
25
30
Research
Clinical development
Marketing & Sales
Resources
Growth & Resiliency
Productivity
US based Founded in 1886114,000 employeesKey overlap marketed productsRemicade® RA, CD, UC, PsA, Ps, AS (co-marketed with Centocor Ortho Biotech, Merck & Co, Mitisubishi Tanabe Pharma)Stelara® (ustekinumab) Ps Simponi® (golimumab) RA, PsA, AS (co-marketed with Centocor Ortho Biotech)DivisionsConsumer, Pharmaceutical and Medical Devices & Diagnostics
Page 78
Johnson & Johnson Inc Figure 29 - Johnson & Johnson complete scoring results
Pharmaceuticalsdivision
Score Absolute values Absolute valuesNumber of filed S1P agonist patents 0R&D spend 3 6.8 bio USD 4.4 bio USD
Number of Phase I compounds in pipeline 0Number of Phase I trials 1 141
Number of Phase II compounds in pipeline in all indications 0Number of Phase II trials 1 124Number of Phase II trials in MS 0Number of Phase II trials in psoriasis 0Number of Phase II trials in RA, PsA, CD, UC, AS, JIA 3
Number of Phase III compounds in pipeline in all indications 0Number of Phase III trials 2 249Number of Phase III trials in MS 0Number of Phase III trials in psoriasis 0Number of Phase III trials in RA, PsA, CD, UC, AS, JIA 3
Number of compounds under regulatory review 4
Number of S1P agonists in clinical development 0
Number of Phase IV compounds in pipeline in all indications 0Number of Phase IV trials 1 50Number of Phase IV trials in MS 0Number of Phase IV trials in psoriasis 0Number of Phase IV trials in RA, PsA, CD, UC, AS, JIA 1
Number of MS products marketed 0Number of psoriasis products marketed 1Number of products marketed for RA, PsA, CD, UC, AS, JIA 2
Number of blockbusters (>1 bio revenues/annum) 7
Number of affliates & subsidiaries 5 >250
Cost of sales 5 18.8 bio USDCost of marketing, selling & administrative 5 19.4 bio USD% of annual revenue earned from pharmaceutical sales 4 0.36
Annual revenue 4 61.6 bio USD 22.4 bio USDNet income 5 13.3 bio USD 7.1 bio USDCash & cash equivalents 5 19.4 bio USDNumber of employees 5 114'000
Growth & Resiliency Jan11 stock price minus Jan07 stock price -6 (62) (68)
Annual revenue/number of employees 3 540'351Net income/annual revenue 2 0.22Cost of sales/annual revenue 7 0.31Cost of marketing, selling & administrative/annual revenue 7 0.31
Resources
Competences AttributeHolding
14
Research
3
Clinical development
31
Marketing & Sales
19
-6
19
Productivity
‐10
‐5
0
5
10
15
20
25
30
35
Research
Clinical development
Marekting & Sales
Resources
Growth & Resiliency
Productivity
Page 79
Bayer Schering Pharma AG Figure 30 - Bayer Schering complete scoring results
HealtCare (pharmaceuticals only)
divisionCompetences Attribute Score Absolute values Absolute values
Number of filed S1P agonist patents 0R&D spend 1 4.4 bio USD 2.5 bio USD
Number of Phase I compounds in pipeline 0Number of Phase I trials 3 161
Number of Phase II compounds in pipeline in all indicationsNumber of Phase II trials 5 285Number of Phase II trials in MS 6Number of Phase II trials in psoriasis 0Number of Phase II trials in RA, PsA, CD, UC, AS, JIA 0
Number of Phase III compounds in pipeline in all indications 2 13Number of Phase III trials 4 234Number of Phase III trials in MS 8Number of Phase III trials in psoriasis 0Number of Phase III trials in RA, PsA, CD, UC, AS, JIA 0
Number of compounds under regulatory review 6
Number of S1P agonists in clinical development 0
Number of Phase IV compounds in pipeline in all indications 2 11Number of Phase IV trials 2 112Number of Phase IV trials in MS 5Number of Phase IV trials in psoriasis 0Number of Phase IV trials in RA, PsA, CD, UC, AS, JIA 0
Number of MS products marketed 0Number of psoriasis products marketed 0Number of products marketed for RA, PsA, CD, UC, AS, JIA 0
Number of blockbusters (>1 bio revenues/annum) 4
Number of affliates & subsidiaries 5 297
Cost of sales 5 24.7 bioCost of marketing, selling & administrative 3 12.7 bio% of annual revenue earned from pharmaceutical sales 3 0.31
Annual revenue 3 50.7 bio USD 15.8 bio USDNet income 1 1.9 bio USDCash & cash equivalents 2 3.9 bio USDNumber of employees 5 111'400 38'000
Growth & Resiliency Jan11 stock price minus Jan07 stock price 27 (79) (52)
Annual revenue/number of employees 2 455'117
Net income/annual revenue 0 0.04
Cost of sales/annual revenue 5 0.49
Cost of marketing, selling & administrative/annual revenue 7 0.25
Research
1
Clinical development
Productivity
15
29
Resources
11
27
34
Marketing & Sales
Holding
0
5
10
15
20
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30
35
40
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Clinical development
Marekting & Sales
Resources
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Page 80
Novartis Pharma AG Figure 31 - Novartis complete scoring results
Pharmaceuticals division
Score Absolute values Absolute valuesNumber of filed S1P agonist patents 24R&D spend 4 9.1 bio USD 7.1 bio USD
Number of Phase I compounds in pipeline 0Number of Phase I trials 2 253
Number of Phase II compounds in pipeline in all indications 0Number of Phase II trials 4 487Number of Phase II trials in MS 10Number of Phase II trials in psoriasis 11Number of Phase II trials in RA, PsA, CD, UC, AS, JIA 22
Number of Phase III compounds in pipeline in all indications 0Number of Phase III trials 5 665Number of Phase III trials in MS 13Number of Phase III trials in psoriasis 3Number of Phase III trials in RA, PsA, CD, UC, AS, JIA 10
Number of compounds under regulatory review 8
Number of S1P agonists in clinical development 2
Number of Phase IV compounds in pipeline in all indications 0Number of Phase IV trials 3 335Number of Phase IV trials in MS 2Number of Phase IV trials in psoriasis 0Number of Phase IV trials in RA, PsA, CD, UC, AS, JIA 0
Number of MS products marketed 1Number of psoriasis products marketed 0Number of products marketed for RA, PsA, CD, UC, AS, JIA 0
Number of blockbusters (>1 bio revenues/annum) 7
Number of affliates & subsidiaries 4 229
Cost of sales 3 14.5 bio USD 5.4 bio USDCost of marketing, selling & administrative 3 13.3 bio USD 8.7 bio USD% of annual revenue earned from pharmaceutical sales 6 0.60
Annual revenue 3 50.6 bio USD 30.7 bio USDNet income 4 9.9 bio USD 8.8 bio USDCash & cash equivalents 2 5.3 bio USDNumber of employees 5 119'418 58'242
Growth & Resiliency Jan11 stock price minus Jan07 stock price -5 (54) (59)
Annual revenue/number of employees 2 423'722Net income/annual revenue 2 0.20Cost of sales/annual revenue 7 0.29Cost of marketing, selling & administrative/annual revenue 7 0.26
Resources
14
-5
18
Productivity
29
Marketing & Sales
Research
28
Clinical development
HoldingAttributeCompetences
90
‐20
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Page 81
Figure 32 – GlaxoSmithKline overview
Page 82
GlaxoSmithKline plc Figure 33 - GlaxoSmithKline complete scoring results
Pharmaceuticals division
Competences Attribute Score Absolute values Absolute valuesNumber of filed S1P agonist patents 20R&D spend 2 6.4 bio USD 5 bio USD
Number of Phase I compounds in pipeline 4 34Number of Phase I trials 1 19
Number of Phase II compounds in pipeline in all indications 5 53Number of Phase II trials 1 34Number of Phase II trials in MS 1Number of Phase II trials in psoriasis 1Number of Phase II trials in RA, PsA, CD, UC, AS, JIA 3
Number of Phase III compounds in pipeline in all indications 4 37Number of Phase III trials 1 31Number of Phase III trials in MS 1Number of Phase III trials in psoriasis 0Number of Phase III trials in RA, PsA, CD, UC, AS, JIA 1
Number of compounds under regulatory review 10
Number of S1P agonists in clinical development 1
Number of Phase IV compounds in pipeline in all indications 3 22Number of Phase IV trials 0Number of Phase IV trials in MS 0Number of Phase IV trials in psoriasis 0Number of Phase IV trials in RA, PsA, CD, UC, AS, JIA 0
Number of MS products marketed 0Number of psoriasis products marketed 0Number of products marketed for RA, PsA, CD, UC, AS, JIA 0
Number of blockbusters (>1 bio revenues/annum) 2
Number of affliates & subsidiaries 2 127
Cost of sales 2 7.4 bio USDCost of marketing, selling & administrative 3 12.3 bio USD% of annual revenue earned from pharmaceutical sales 4 0.45
Annual revenue 3 46.2 bio USD 20.6 bio USDNet income 2 6.2 bio USDCash & cash equivalents 3 9.9 bio USDNumber of employees 4 96'461 13'000
Growth & Resiliency Jan11 stock price minus Jan07 stock price -12 (40) (52)
Annual revenue/number of employees 2 483'615
Net income/annual revenue 1 0.13
Cost of sales/annual revenue 8 0.16Cost of marketing, selling & administrative/annual revenue 7 0.26
-12
Research
22
Clinical development
12
34
19
16
Resources
Productivity
Marketing & Sales
Holding
‐20
‐10
0
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Page 83
Figure 34 - Merck & Co overview
‐10
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0
5
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20
25
30
Research
Clinical development
Marketing & Sales
Resources
Growth & Resiliency
Productivity
US basedFounded in 1891 as a subsidiary of Merck KGaAIndependent since 1917 Merged with Schering-Plough Corporation in 200994,000 employees
Key overlap marketed productsSimponi® RA, PsA, AS (co-marketed with Centocor Ortho Biotech Inc)Remicaide® (infliximab) Ps (co-marketed with Centocor Ortho Biotech Inc)
Key overlap development compoundsMK-3415A Phase III Clostridium difficile infectionSCH 900222 Phase II PsSCH 697243 & SCH 039641 Phase III AllergySuvorexant Phase III Insomnia
Page 84
Merck & Company Inc Figure 35 - Merck & Co complete scoring results
Pharmaceuticals division
Competences Attribute Score Absolute values Absolute valuesNumber of filed S1P agonist patents 12R&D spend 5 11 bio USD
Number of Phase I compounds in pipeline 0Number of Phase I trials 2 276
Number of Phase II compounds in pipeline in all indications 2 17Number of Phase II trials 2 223Number of Phase II trials in MS 1Number of Phase II trials in psoriasis 0Number of Phase II trials in RA, PsA, CD, UC, AS, JIA 5
Number of Phase III compounds in pipeline in all indications 2 19Number of Phase III trials 3 436Number of Phase III trials in MS 0Number of Phase III trials in psoriasis 0Number of Phase III trials in RA, PsA, CD, UC, AS, JIA 1
Number of compounds under regulatory review 6
Number of S1P agonists in clinical development 0
Number of Phase IV compounds in pipeline in all indications 0Number of Phase IV trials 1 75Number of Phase IV trials in MS 0Number of Phase IV trials in psoriasis 0Number of Phase IV trials in RA, PsA, CD, UC, AS, JIA 0
Number of MS products marketed 0Number of psoriasis products marketed 1Number of products marketed for RA, PsA, CD, UC, AS, JIA 1
Number of blockbusters (>1 bio revenues/annum) 9
Number of affliates & subsidiaries 0
Cost of sales 5 18.4 bio USDCost of marketing, selling & administrative 3 13.2 bio USD% of annual revenue earned from pharmaceutical sales 9 0.87
Annual revenue 3 45.9 bio USD 39.8 bio USDNet income 1 982 mio USD 24 bio USDCash & cash equivalents 3 10.9 bio USDNumber of employees 4 94'000
Growth & Resiliency Jan11 stock price minus Jan07 stock price -5 (38) (43)
Annual revenue/number of employees 2 488'298Net income/annual revenue 0 0.02Cost of sales/annual revenue 7 0.29Cost of marketing, selling & administrative/annual revenue 6 0.40
Resources
11
-5
15
Productivity
29
Marketing & Sales
Research
17
Clinical development
Holding
24
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30
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Page 85
Figure 36 – Sanofi overview
‐30
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50
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Clinical development
Marketing & Sales
Resources
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Productivity
France basedFounded in 2004 by merger of Aventis SA and Sanofi-SynthélaboMerged with Genzyme (2011)101,575 employees
Key overlap marketed productsCopaxone® CIS, RMS (comarketed with Teva Pharmaceutical Industries Ltd)Cerezyme®, Type 1 Gaucher’s disease
Key overlap development compoundsCollaboration with Incyte Corp RA compound (2009)
Divisions
Pharmaceuticals, Human Vaccines
Page 86
Sanofi SA Figure 37 - Sanofi complete scoring results
Pharmaceuticals division
Competences Attribute Score Absolute values Absolute valuesNumber of filed S1P agonist patents 1R&D spend 2 6.3 bio USD 5.6 bio USD
Number of Phase I compounds in pipeline 3 21Number of Phase I trials 1 80
Number of Phase II compounds in pipeline in all indications 2 11Number of Phase II trials 2 263Number of Phase II trials in MS 6Number of Phase II trials in psoriasis 0Number of Phase II trials in RA, PsA, CD, UC, AS, JIA 5
Number of Phase III compounds in pipeline in all indications 1 7Number of Phase III trials 3 444Number of Phase III trials in MS 6Number of Phase III trials in psoriasis 0Number of Phase III trials in RA, PsA, CD, UC, AS, JIA 4
Number of compounds under regulatory review 5
Number of S1P agonists in clinical development 0
Number of Phase IV compounds in pipeline in all indications 0Number of Phase IV trials 2 244Number of Phase IV trials in MS 1Number of Phase IV trials in psoriasis 0Number of Phase IV trials in RA, PsA, CD, UC, AS, JIA 3
Number of MS products marketed 0Number of psoriasis products marketed 0Number of products marketed for RA, PsA, CD, UC, AS, JIA 0
Number of blockbusters (>1 bio revenues/annum) 6
Number of affliates & subsidiaries 3 151
Cost of sales 3 12.5 bio USD 10.5 bio USDCost of marketing, selling & administrative 3 10.9 bio USD 10 bio USD% of annual revenue earned from pharmaceutical sales 9 0.88
Annual revenue 2 43.6 bio USD 38.2 bio USDNet income 5 15.8 bio USDCash & cash equivalents 3 9.3 bio USDNumber of employees 5 101'575 16'983
Growth & Resiliency Jan11 stock price minus Jan07 stock price -21 (63) (84)
Annual revenue/number of employees 2 429'239Net income/annual revenue 4 0.36Cost of sales/annual revenue 7 0.29Cost of marketing, selling & administrative/annual revenue 8 0.25
Resources
15
-21
20
Productivity
29.76146789
Marketing & Sales
Research
3
Clinical development
Holding
38
‐30
‐20
‐10
0
10
20
30
40
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Research
Clinical development
Marekting & Sales
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Productivity
Page 87
Abbott Laboratories Inc Figure 38 - Abbott complete scoring results
Competences Attribute Score Absolute valuesNumber of filed S1P agonist patents 7R&D spend 1 3.7 bio USD
Number of Phase I compounds in pipeline 0Number of Phase I trials 1 93
Number of Phase II compounds in pipeline in all indications 0Number of Phase II trials 1 136Number of Phase II trials in MS 1Number of Phase II trials in psoriasis 8Number of Phase II trials in RA, PsA, CD, UC, AS, JIA 9
Number of Phase III compounds in pipeline in all indications 0Number of Phase III trials 2 196Number of Phase III trials in MS 0Number of Phase III trials in psoriasis 18Number of Phase III trials in RA, PsA, CD, UC, AS, JIA 53
Number of compounds under regulatory review 0
Number of S1P agonists in clinical development 1
Number of Phase IV compounds in pipeline in all indications 0Number of Phase IV trials 1 63Number of Phase IV trials in MS 0Number of Phase IV trials in psoriasis 2Number of Phase IV trials in RA, PsA, CD, UC, AS, JIA 9
Number of MS products marketed 0Number of psoriasis products marketed 0Number of products marketed for RA, PsA, CD, UC, AS, JIA 1
Number of blockbusters (>1 bio revenues/annum) 3
Number of affliates & subsidiaries 5 200+
Cost of sales 3 14.7 bio USDCost of marketing, selling & administrative 3 10.4 bio USD% of annual revenue earned from pharmaceutical sales 10 1
Annual revenue 3 35.2 bio USDNet income 3 4.6 bio USDCash & cash equivalents 2 3.6 bio USDNumber of employees 4 90'000
Growth & Resiliency Jan11 stock price minus Jan07 stock price 1 (47) (46)
Annual revenue/number of employees 3 391'111Net income/annual revenue 1 0.13Cost of sales/annual revenue 6 0.42Cost of marketing, selling & administrative/annual revenue 7 0.30
17
Resources
Research
8
Clinical development
1
12
37
Productivity
Marketing & Sales
94
0
10
20
30
40
50
60
70
80
90
100
Research
Clinical development
Marekting & Sales
Resources
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Productivity
Page 88
Figure 39 - AstraZeneca overview
‐15
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25
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40
Research
Clinical development
Marketing & Sales
Resources
Growth & Resiliency
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UK basedFounded in 1999 by merger of Astra AB and Zeneca Group plc61,000 employeesAcquired Novexel SA (2010)
Key overlap marketed productsEnbrel® RA, PsA, Ps, CD, UC, AS, JIA
Page 89
AstraZeneca plc Figure 40 - AstraZeneca complete scoring results
Competences Attribute Score Absolute valuesNumber of filed S1P agonist patents 0R&D spend 2 5.3 bio USD
Number of Phase I compounds in pipeline 4 34Number of Phase I trials 3 391
Number of Phase II compounds in pipeline in all indications 4 32Number of Phase II trials 2 241Number of Phase II trials in MS 0Number of Phase II trials in psoriasis 0Number of Phase II trials in RA, PsA, CD, UC, AS, JIA 7
Number of Phase III compounds in pipeline in all indications 1 9Number of Phase III trials 3 313Number of Phase III trials in MS 0Number of Phase III trials in psoriasis 0Number of Phase III trials in RA, PsA, CD, UC, AS, JIA 5
Number of compounds under regulatory review 4
Number of S1P agonists in clinical development 0
Number of Phase IV compounds in pipeline in all indications 2 17Number of Phase IV trials 1 119Number of Phase IV trials in MS 0Number of Phase IV trials in psoriasis 0Number of Phase IV trials in RA, PsA, CD, UC, AS, JIA 0
Number of MS products marketed 0Number of psoriasis products marketed 0Number of products marketed for RA, PsA, CD, UC, AS, JIA 0
Number of blockbusters (>1 bio revenues/annum) 10
Number of affliates & subsidiaries 3 100+
Cost of sales 2 6.4 bio USDCost of marketing, selling & administrative 3 10.5 bio USD% of annual revenue earned from pharmaceutical sales 10 1
Annual revenue 1 33.3 bio USDNet income 4 11.5 bio USDCash & cash equivalents 3 11.1 bio USDNumber of employees 3 61'000
Growth & Resiliency Jan11 stock price minus Jan07 stock price -9 (48) (57)
Annual revenue/number of employees 3 545'902Net income/annual revenue 3 0.35Cost of sales/annual revenue 8 0.19Cost of marketing, selling & administrative/annual revenue 7 0.32
Productivity
Marketing & Sales
Research
2
33
31
11
Resources
Clinical development
21
-9
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Page 90
Figure 41 -Eli Lilly overview
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Clinical development
Marketing & Sales
Resources
Growth & Resiliency
Productivity
US basedFounded in 187638,350 employeesAcquired ImClone in 2008Acquired Avid in 2010Acquired Alnara in 2010
Key overlap marketed productsOrencia® RA
Key co-development / co-marketing agreementsErbitux® BMS & Merck KGaANecitumumab BMSExenatide® Amylin Pharmaceuticals Inc.Cymbalta® Boehringer Ingelheim GmbHEffient® Daiichi Sankyo Company, Ltd
DivisionsHuman Pharmaceuticals, Animal Health
Page 91
Eli Lilly and Company Figure 42 -Eli Lilly complete scoring results
Competences Attribute Score Absolute valuesNumber of filed S1P agonist patents 0R&D spend 1 4.9 bio USD
Number of Phase I compounds in pipeline 5 42Number of Phase I trials 1 110
Number of Phase II compounds in pipeline in all indications 3 28Number of Phase II trials 2 287Number of Phase II trials in MS 4Number of Phase II trials in psoriasis 2Number of Phase II trials in RA, PsA, CD, UC, AS, JIA 7
Number of Phase III compounds in pipeline in all indications 1 10Number of Phase III trials 2 248Number of Phase III trials in MS 4Number of Phase III trials in psoriasis 0Number of Phase III trials in RA, PsA, CD, UC, AS, JIA 4
Number of compounds under regulatory review 4
Number of S1P agonists in clinical development 0
Number of Phase IV compounds in pipeline in all indications 0Number of Phase IV trials 1 131Number of Phase IV trials in MS 0Number of Phase IV trials in psoriasis 0Number of Phase IV trials in RA, PsA, CD, UC, AS, JIA 0
Number of MS products marketed 0Number of psoriasis products marketed 0Number of products marketed for RA, PsA, CD, UC, AS, JIA 0
Number of blockbusters (>1 bio revenues/annum) 9
Number of affliates & subsidiaries 2 130
Cost of sales 2 4.4 bio USDCost of marketing, selling & administrative 2 7.1 bio USD% of annual revenue earned from pharmaceutical sales 10 1
Annual revenue 1 23.1 bio USDNet income 1 5.1 bio USDCash & cash equivalents 2 6 bio USDNumber of employees 1 38'350
Growth & Resiliency Jan11 stock price minus Jan07 stock price -19 (38) (57)
Annual revenue/number of employees 3 602'347Net income/annual revenue 2 0.22Cost of sales/annual revenue 8 0.19Cost of marketing, selling & administrative/annual revenue 7 0.31
Research
1
39
26
Productivity
Resources
5
-19
Marketing & Sales
20
Clinical development
‐30
‐20
‐10
0
10
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30
40
50
Research
Clinical development
Marekting & Sales
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Page 92
Bristol-Myers Squibb Figure 43 - Bristol-Myers Squibb complete scoring results
Competences Attribute Score Absolute valuesNumber of filed S1P agonist patents 5R&D spend 1 3.6 bio USD
Number of Phase I compounds in pipeline 3 28Number of Phase I trials 2 222
Number of Phase II compounds in pipeline in all indications 3 20Number of Phase II trials 2 201Number of Phase II trials in MS 0Number of Phase II trials in psoriasis 4Number of Phase II trials in RA, PsA, CD, UC, AS, JIA 12
Number of Phase III compounds in pipeline in all indications 1 6Number of Phase III trials 2 170Number of Phase III trials in MS 0Number of Phase III trials in psoriasis 0Number of Phase III trials in RA, PsA, CD, UC, AS, JIA 23
Number of compounds under regulatory review 6
Number of S1P agonists in clinical development 0
Number of Phase IV compounds in pipeline in all indications 2 12Number of Phase IV trials 1 33Number of Phase IV trials in MS 0Number of Phase IV trials in psoriasis 0Number of Phase IV trials in RA, PsA, CD, UC, AS, JIA 0
Number of MS products marketed 0Number of psoriasis products marketed 0Number of products marketed for RA, PsA, CD, UC, AS, JIA 1
Number of blockbusters (>1 bio revenues/annum) 5
Number of affliates & subsidiaries 3 187
Cost of sales 2 5.3 bio USDCost of marketing, selling & administrative 1 3.7 bio USD% of annual revenue earned from pharmaceutical sales 10 1
Annual revenue 1 19.5 bio USDNet income 2 4.5 bio USDCash & cash equivalents 2 5 bio USDNumber of employees 1 27'000
Growth & Resiliency Jan11 stock price minus Jan07 stock price 1 (26) (25)
Annual revenue/number of employees 3 722'222
Net income/annual revenue 2 0.23
Cost of sales/annual revenue 7 0.27Cost of marketing, selling & administrative/annual revenue 8 0.19
Research
6
Clinical development
6
1
21
Productivity
58
25
Resources
Marketing & Sales
0
10
20
30
40
50
60
70
Research
Clinical development
Marekting & Sales
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Growth & Resiliency
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Page 93
Appendix II – biotechs & others
Page 94
Actelion Pharmaceuticals Ltd Figure 44 - Actelion scoring results as a biotech
Competences Attribute Score Absolute valuesNumber of filed S1P agonist patents 23R&D spend 5 576 mio USD
Number of Phase I compounds in pipeline 1 1Number of Phase I trials 1 1
Number of Phase II compounds in pipeline in all indications 2 6Number of Phase II trials 1 1Number of Phase II trials in MS 1 1Number of Phase II trials in psoriasis 1 2Number of Phase II trials in RA, PsA, CD, UC, AS, JIA 0
Number of Phase III compounds in pipeline in all indications 1 3Number of Phase III trials 1 1Number of Phase III trials in MS 0Number of Phase III trials in psoriasis 0Number of Phase III trials in RA, PsA, CD, UC, AS, JIA 0
Number of compounds under regulatory review 0
Number of S1P agonists in clinical development 2
Number of Phase IV compounds in pipeline in all indications 3 11Number of Phase IV trials 1Number of Phase IV trials in MS 0Number of Phase IV trials in psoriasis 0Number of Phase IV trials in RA, PsA, CD, UC, AS, JIA 0
Number of MS products marketed 0Number of psoriasis products marketed 0Number of products marketed for RA, PsA, CD, UC, AS, JIA 0
Number of blockbusters (>1 bio revenues/annum) 1
Number of affliates & subsidiaries 2 29
Cost of sales 1 238 mio USDCost of marketing, selling & administrative 2 885 mio USD% of annual revenue earned from pharmaceutical sales 10 1
Annual revenue 2 2.3 bio USDNet income 1 465 mio USDCash & cash equivalents 3 1.4 bio USDNumber of employees 1 2'441
Growth & Resiliency Jan11 stock price minus Jan07 stock price 26 (58) (32)
Annual revenue/number of employees 5 942'237Net income/annual revenue 2 0.20Cost of sales/annual revenue 9 0.10Cost of marketing, selling & administrative/annual revenue 6 0.38
Research
28
Clinical development
11
Marketing & Sales
20
Resources
7
26
Productivity
22
0
5
10
15
20
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30
Research
Clinical development
Marekting & Sales
Resources
Growth & Resiliency
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Page 95
F. Hoffmann-La Roche Ltd Figure 45 - Roche complete scoring results
Pharmaceuticals division
Competences Attribute Score Absolute values Absolute valuesNumber of filed S1P agonist patents 0R&D spend 5 10.7 bio USD 9.7 bio USD
Number of Phase I compounds in pipeline 3 36Number of Phase I trials 2 177
Number of Phase II compounds in pipeline in all indications 3 25Number of Phase II trials 2 260Number of Phase II trials in MS 4Number of Phase II trials in psoriasis 1Number of Phase II trials in RA, PsA, CD, UC, AS, JIA 12
Number of Phase III compounds in pipeline in all indications 2 15Number of Phase III trials 2 268Number of Phase III trials in MS 3Number of Phase III trials in psoriasis 5Number of Phase III trials in RA, PsA, CD, UC, AS, JIA 53
Number of compounds under regulatory review 10
Number of S1P agonists in clinical development 0
Number of Phase IV compounds in pipeline in all indications 0Number of Phase IV trials 2 192Number of Phase IV trials in MS 0Number of Phase IV trials in psoriasis 7Number of Phase IV trials in RA, PsA, CD, UC, AS, JIA 7
Number of MS products marketed 0Number of psoriasis products marketed 1Number of products marketed for RA, PsA, CD, UC, AS, JIA 2
Number of blockbusters (>1 bio revenues/annum) 11
Number of affliates & subsidiaries 0
Cost of sales 4 15.8 bio USD 9.5 bio USDCost of marketing, selling & administrative 3 14.7 bio USD 7.9 bio USD% of annual revenue earned from pharmaceutical sales 8 0.78
Annual revenue 4 56.3 bio USD 43.9 bioNet income 4 10.6 bio USDCash & cash equivalents 1 2.2 bio USDNumber of employees 4 80'653 53'187
Growth & Resiliency Jan11 stock price minus Jan07 stock price -9 (36) (45)
Annual revenue/number of employees 3 544'307
Net income/annual revenue 2 0.19
Cost of sales/annual revenue 7 0.28Cost of marketing, selling & administrative/annual revenue 7 0.26
102
45
13
-9
Productivity
Marketing & Sales
Holding
Resources
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Research
5
19
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120
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Page 96
Amgen Inc Figure 46 - Amgen complete scoring results
Competences Attribute Score Absolute valuesNumber of filed S1P agonist patents 6R&D spend 5 2.9 bio USD
Number of Phase I compounds in pipeline 5 21Number of Phase I trials 2 69
Number of Phase II compounds in pipeline in all indications 3 14Number of Phase II trials 3 156Number of Phase II trials in MS 0Number of Phase II trials in psoriasis 3Number of Phase II trials in RA, PsA, CD, UC, AS, JIA 18
Number of Phase III compounds in pipeline in all indications 2 9Number of Phase III trials 2 106Number of Phase III trials in MS 0Number of Phase III trials in psoriasis 10Number of Phase III trials in RA, PsA, CD, UC, AS, JIA 20
Number of compounds under regulatory review 24
Number of S1P agonists in clinical development 0
Number of Phase IV compounds in pipeline in all indications 0Number of Phase IV trials 2 36Number of Phase IV trials in MS 0Number of Phase IV trials in psoriasis 5Number of Phase IV trials in RA, PsA, CD, UC, AS, JIA 17
Number of MS products marketed 0Number of psoriasis products marketed 1Number of products marketed for RA, PsA, CD, UC, AS, JIA 2
Number of blockbusters (>1 bio revenues/annum) 4
Number of affliates & subsidiaries 1 19
Cost of sales 3 2.2 bio USDCost of marketing, selling & administrative 4 4 bio USD% of annual revenue earned from pharmaceutical sales 10 1
Annual revenue 5 15.1 bio USDNet income 5 4.6 bio USDCash & cash equivalents 5 3.3 bio USDNumber of employees 2 17'400
Growth & Resiliency Jan11 stock price minus Jan07 stock price -21 (54) (75)
Annual revenue/number of employees 5 867'816
Net income/annual revenue 3 0.30Cost of sales/annual revenue 9 0.15
Cost of marketing, selling & administrative/annual revenue 7 0.26
Research
11
Clinical development
92
49
Productivity
Marketing & Sales
17
-21
24
Resources
‐40
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Page 97
Merck KGaA Figure 47 - Merck KGaA complete scoring results
Merck Seronodivision
Competences Attribute Score Absolute values Absolute valuesNumber of filed S1P agonist patents 9R&D spend 5 2 bio USD 1.7 bio USD
Number of Phase I compounds in pipeline 2 5Number of Phase I trials 3 276
Number of Phase II compounds in pipeline in all indications 2 7Number of Phase II trials 3 223Number of Phase II trials in MS 3Number of Phase II trials in psoriasis 0Number of Phase II trials in RA, PsA, CD, UC, AS, JIA 3
Number of Phase III compounds in pipeline in all indications 2 7Number of Phase III trials 5 436Number of Phase III trials in MS 14Number of Phase III trials in psoriasis 3Number of Phase III trials in RA, PsA, CD, UC, AS, JIA 3
Number of compounds under regulatory review 2
Number of S1P agonists in clinical development 0
Number of Phase IV compounds in pipeline in all indications 0Number of Phase IV trials 2 75Number of Phase IV trials in MS 10Number of Phase IV trials in psoriasis 7Number of Phase IV trials in RA, PsA, CD, UC, AS, JIA 0
Number of MS products marketed 1Number of psoriasis products marketed 1Number of products marketed for RA, PsA, CD, UC, AS, JIA 0
Number of blockbusters (>1 bio revenues/annum) 1
Number of affliates & subsidiaries 5 276
Cost of sales 4 3.4 bio USD 1.3 bio USDCost of marketing, selling & administrative 4 3.2 bio USD 2.1 bio USD% of annual revenue earned from pharmaceutical sales 6 0.62
Annual revenue 5 13.4 bio USD 8.3 bio USDNet income 2 1.6 bio USDCash & cash equivalents 3 1.4 bio USDNumber of employees 4 40'562
Growth & Resiliency Jan11 stock price minus Jan07 stock price -5
Annual revenue/number of employees 3 399'389Net income/annual revenue 1 0.12
Cost of sales/annual revenue 7 0.25Cost of marketing, selling & administrative/annual revenue 8 0.24
19
Research
14
45
41
14
-5
Productivity
Marketing & Sales
Holding
Resources
Clinical development
‐10
0
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50
Research
Clinical development
Marekting & Sales
Resources
Growth & Resiliency
Productivity
Page 98
Figure 48 – Baxter overview
0
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12
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16
18
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Marketing & Sales
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US basedFounded in 193148,000 employeesAcquired ApaTech Ltd (2010)Acquired Edwards CRPT (2009)
Key co-development / co-marketing agreementsHemophilia-related assets Archemix Corp
DivisionsBioscience, Medical Products
Page 99
Baxter International Inc Figure 49 - Baxter complete scoring results
BioSciencedivision
Competences Attribute Score Absolute values Absolute valuesNumber of filed S1P agonist patents 0R&D spend 3 915 mio USD
Number of Phase I compounds in pipeline 1 2Number of Phase I trials 2 23
Number of Phase II compounds in pipeline in all indications 0Number of Phase II trials 2 40Number of Phase II trials in MS 0Number of Phase II trials in psoriasis 0Number of Phase II trials in RA, PsA, CD, UC, AS, JIA 0
Number of Phase III compounds in pipeline in all indications 3 14Number of Phase III trials 2 52Number of Phase III trials in MS 0Number of Phase III trials in psoriasis 0Number of Phase III trials in RA, PsA, CD, UC, AS, JIA 0
Number of compounds under regulatory review 0
Number of S1P agonists in clinical development 0
Number of Phase IV compounds in pipeline in all indications 0Number of Phase IV trials 2 27Number of Phase IV trials in MS 0Number of Phase IV trials in psoriasis 0Number of Phase IV trials in RA, PsA, CD, UC, AS, JIA 0
Number of MS products marketed 0Number of psoriasis products marketed 0Number of products marketed for RA, PsA, CD, UC, AS, JIA 0
Number of blockbusters (>1 bio revenues/annum) 1
Number of affliates & subsidiaries 2 49
Cost of sales 1 6.9 bio USDCost of marketing, selling & administrative 3 2.9 bio USD% of annual revenue earned from pharmaceutical sales 4 0.44
Annual revenue 4 12.8 bio USD 5.6 bio USDNet income 2 1.9 bio USDCash & cash equivalents 4 2.7 bio USDNumber of employees 4 48'000
Growth & Resiliency Jan11 stock price minus Jan07 stock price 5 (50) (45)
Annual revenue/number of employees 3 266'667
Net income/annual revenue 1 0.15Cost of sales/annual revenue 5 0.54Cost of marketing, selling & administrative/annual revenue 8 0.23
Holding
10
13
Marketing & Sales
Research
3
Clinical development
Resources
14
5
17
Productivity
0
2
4
6
8
10
12
14
16
18
Research
Clinical development
Marekting & Sales
Resources
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Page 100
NovoNordisk A/S Figure 50 - Novo Nordisk overview
Biopharmaceuticalsdivision
Competences Attribute Score Absolute values Absolute valuesNumber of filed S1P agonist patents 0R&D spend 4 1.5 bio USD 550 mio USD
Number of Phase I compounds in pipeline 3 11Number of Phase I trials 2 83
Number of Phase II compounds in pipeline in all indications 2 5Number of Phase II trials 2 40Number of Phase II trials in MS 0Number of Phase II trials in psoriasis 1Number of Phase II trials in RA, PsA, CD, UC, AS, JIA 4
Number of Phase III compounds in pipeline in all indications 2 5Number of Phase III trials 2 129Number of Phase III trials in MS 0Number of Phase III trials in psoriasis 0Number of Phase III trials in RA, PsA, CD, UC, AS, JIA 0
Number of compounds under regulatory review 0
Number of S1P agonists in clinical development 0
Number of Phase IV compounds in pipeline in all indications 0Number of Phase IV trials 2 62Number of Phase IV trials in MS 0Number of Phase IV trials in psoriasis 0Number of Phase IV trials in RA, PsA, CD, UC, AS, JIA 0
Number of MS products marketed 0Number of psoriasis products marketed 0Number of products marketed for RA, PsA, CD, UC, AS, JIA 0
Number of blockbusters (>1 bio revenues/annum) 4
Number of affliates & subsidiaries 4 77
Cost of sales 3 2.2 bio USD 298 mio USDCost of marketing, selling & administrative 3 2 bio USD 651 mio USD% of annual revenue earned from pharmaceutical sales 2 0.25
Annual revenue 4 11.7 bio USD 2.9 bio USDNet income 2 1.3 bio USD 60 mio USDCash & cash equivalents 5 3 bio USDNumber of employees 3 30'483
Growth & Resiliency Jan11 stock price minus Jan07 stock price 55 (100) (45)
Annual revenue/number of employees 1 95'135Net income/annual revenue 1 0.11Cost of sales/annual revenue 8 0.19Cost of marketing, selling & administrative/annual revenue 8 0.17
19
Research
4
18
18
14
55
Productivity
Marketing & Sales
Holding
Resources
Clinical development
0
10
20
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40
50
60
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Page 101
Figure 51 – Allergan overview
Page 102
Allergan Inc Figure 52 - Allergan complete scoring results
Speciality Pharmaceuticals
divisionCompetences Attribute Score Absolute values Absolute values
Number of filed S1P agonist patents 5R&D spend 3 805 mio USD
Number of Phase I compounds in pipeline 0Number of Phase I trials 2 12
Number of Phase II compounds in pipeline in all indications 0Number of Phase II trials 2 53Number of Phase II trials in MS 0Number of Phase II trials in psoriasis 0Number of Phase II trials in RA, PsA, CD, UC, AS, JIA 0
Number of Phase III compounds in pipeline in all indications 0Number of Phase III trials 2 51Number of Phase III trials in MS 0Number of Phase III trials in psoriasis 0Number of Phase III trials in RA, PsA, CD, UC, AS, JIA 0
Number of compounds under regulatory review 4
Number of S1P agonists in clinical development 0
Number of Phase IV compounds in pipeline in all indications 0Number of Phase IV trials 2 42Number of Phase IV trials in MS 0Number of Phase IV trials in psoriasis 0Number of Phase IV trials in RA, PsA, CD, UC, AS, JIA 0
Number of MS products marketed 0Number of psoriasis products marketed 0Number of products marketed for RA, PsA, CD, UC, AS, JIA 0
Number of blockbusters (>1 bio revenues/annum) 1
Number of affliates & subsidiaries 2 36
Cost of sales 2 722 mio USDCost of marketing, selling & administrative 3 2 bio USD% of annual revenue earned from pharmaceutical sales 8 0.82
Annual revenue 2 4.9 bio USD 4 bio USDNet income 1 258 mio USDCash & cash equivalents 4 2.6 bio USDNumber of employees 1 9'200 1'800
Growth & Resiliency Jan11 stock price minus Jan07 stock price 10 (68) (58)
Annual revenue/number of employees 4 532'609Net income/annual revenue 1 0.05Cost of sales/annual revenue 9 0.15Cost of marketing, selling & administrative/annual revenue 6 0.41
19
Research
8
10
18
8
10
Productivity
Marketing & Sales
Resources
Clinical development
Holding
0
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6
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18
20
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Page 103
Figure 53 - CSL Limited overview
Page 104
CSL Limited Figure 54 - CSL Limited complete scoring results
CSL Biotherapiesdivision
Competences Attribute Score Absolute values Absolute valuesNumber of filed S1P agonist patents 0R&D spend 2 335 mio USD
Number of Phase I compounds in pipeline 2 5Number of Phase I trials 1 7
Number of Phase II compounds in pipeline in all indications 1 2Number of Phase II trials 2 17Number of Phase II trials in MS 0Number of Phase II trials in psoriasis 0Number of Phase II trials in RA, PsA, CD, UC, AS, JIA 0
Number of Phase III compounds in pipeline in all indications 1 9Number of Phase III trials 2 28Number of Phase III trials in MS 0Number of Phase III trials in psoriasis 0Number of Phase III trials in RA, PsA, CD, UC, AS, JIA 0
Number of compounds under regulatory review 0
Number of S1P agonists in clinical development 0
Number of Phase IV compounds in pipeline in all indications 0Number of Phase IV trials 2 10Number of Phase IV trials in MS 0Number of Phase IV trials in psoriasis 0Number of Phase IV trials in RA, PsA, CD, UC, AS, JIA 0
Number of MS products marketed 0Number of psoriasis products marketed 0Number of products marketed for RA, PsA, CD, UC, AS, JIA 0
Number of blockbusters (>1 bio revenues/annum) 0
Number of affliates & subsidiaries 2 32
Cost of sales 3 2.3 bio USDCost of marketing, selling & administrative 2 517 mio USD% of annual revenue earned from pharmaceutical sales 2 0.19
Annual revenue 2 4.7 bio USD 883 mio USDNet income 2 1.5 bio USDCash & cash equivalents 3 1.1 bio USDNumber of employees 2 10'340
Growth & Resiliency Jan11 stock price minus Jan07 stock price 16 (34) (18)
Annual revenue/number of employees 4 541'586Net income/annual revenue 3 0.32Cost of sales/annual revenue 5 0.49Cost of marketing, selling & administrative/annual revenue 9 0.11
Resources
9
16
21
Productivity
11
Marketing & Sales
Research
2
Clinical development
Holding
9
0
5
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15
20
25
Research
Clinical development
Marekting & Sales
Resources
Growth & Resiliency
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Page 105
Biogen IDEC Inc Figure 55 -Biogen IDEC overview
Competences Attribute Score Absolute valuesNumber of filed S1P agonist patents 3R&D spend 4 1.8 bio USD
Number of Phase I compounds in pipeline 1 4Number of Phase I trials 2 41
Number of Phase II compounds in pipeline in all indications 1 2Number of Phase II trials 2 37Number of Phase II trials in MS 10Number of Phase II trials in psoriasis 0Number of Phase II trials in RA, PsA, CD, UC, AS, JIA 8
Number of Phase III compounds in pipeline in all indications 2 7Number of Phase III trials 2 28Number of Phase III trials in MS 18Number of Phase III trials in psoriasis 1Number of Phase III trials in RA, PsA, CD, UC, AS, JIA 2
Number of compounds under regulatory review 2
Number of S1P agonists in clinical development 0
Number of Phase IV compounds in pipeline in all indications 0Number of Phase IV trials 2 20Number of Phase IV trials in MS 17Number of Phase IV trials in psoriasis 0Number of Phase IV trials in RA, PsA, CD, UC, AS, JIA 0
Number of MS products marketed 3Number of psoriasis products marketed 2Number of products marketed for RA, PsA, CD, UC, AS, JIA 0
Number of blockbusters (>1 bio revenues/annum) 2
Number of affliates & subsidiaries 2 29
Cost of sales 1 400 mio USDCost of marketing, selling & administrative 2 1 bio USD% of annual revenue earned from pharmaceutical sales 10 1
Annual revenue 2 4.7 bio USDNet income 2 1 bio USDCash & cash equivalents 4 2 bio USDNumber of employees 1 4'850
Growth & Resiliency Jan11 stock price minus Jan07 stock price 12 (64) (52)
Annual revenue/number of employees 5 969'072Net income/annual revenue 2 0.21Cost of sales/annual revenue 9 0.09Cost of marketing, selling & administrative/annual revenue 8 0.21
Research
7
Clinical development
51
41
Productivity
Marketing & Sales
9
12
24
Resources
0
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40
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60
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Page 106
Figure 56 - Alexion overview
Page 107
Alexion Pharmaceuticals Inc Figure 57 - Alexion complete scoring results
Competences Attribute Score Absolute valuesNumber of filed S1P agonist patents 0R&D spend 1 98 mio USD
Number of Phase I compounds in pipeline 1 2Number of Phase I trials 1 3
Number of Phase II compounds in pipeline in all indications 2 9Number of Phase II trials 2 12Number of Phase II trials in MS 0Number of Phase II trials in psoriasis 0Number of Phase II trials in RA, PsA, CD, UC, AS, JIA 0
Number of Phase III compounds in pipeline in all indications 1Number of Phase III trials 1 6Number of Phase III trials in MS 0Number of Phase III trials in psoriasis 0Number of Phase III trials in RA, PsA, CD, UC, AS, JIA 0
Number of compounds under regulatory review 1
Number of S1P agonists in clinical development 0
Number of Phase IV compounds in pipeline in all indications 1 1Number of Phase IV trials 0Number of Phase IV trials in MS 0Number of Phase IV trials in psoriasis 0Number of Phase IV trials in RA, PsA, CD, UC, AS, JIA 0
Number of MS products marketed 0Number of psoriasis products marketed 0Number of products marketed for RA, PsA, CD, UC, AS, JIA 0
Number of blockbusters (>1 bio revenues/annum) 0
Number of affliates & subsidiaries 1 17
Cost of sales 1 64 mio USDCost of marketing, selling & administrative 1 228 mio USD% of annual revenue earned from pharmaceutical sales 10 1
Annual revenue 1 541 mio USDNet income 1 97 mio USDCash & cash equivalents 1 362 mio USDNumber of employees 1 792
Growth & Resiliency Jan11 stock price minus Jan07 stock price 49 (74) (25)
Annual revenue/number of employees 4 683'081Net income/annual revenue 3 0.28Cost of sales/annual revenue 9 0.12Cost of marketing, selling & administrative/annual revenue 6 0.42
21
Research
1
9
14
Clinical development
4
49
Productivity
Marketing & Sales
Resources
0
10
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Page 108
Figure 58 - Almirall overview
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Spain basedFounded in 19433,125 employees
20 alliances in 2011Looking for a partner for LAS18993 (S1P1 agonist) & on-going research pso program
Key overlap marketed productsSanitex® (cannabinoid mix) MS (spasticity relief)Balneum® range of emollients Ps
Key overlap development compoundsLAS186323 & LAS18993 (DHOD inhibitors) Phase I RA, MSLAS18993 (S1P1 agonist) Phase 0 MS
Page 109
Almirall SA Figure 59 - Almirall complete scoring results
Competences Attribute Score Absolute valuesNumber of filed S1P agonist patents 4R&D spend 1 208 mio USD
Number of Phase I compounds in pipeline 0Number of Phase I trials 0
Number of Phase II compounds in pipeline in all indications 1 2Number of Phase II trials 2 13Number of Phase II trials in MS 0Number of Phase II trials in psoriasis 2Number of Phase II trials in RA, PsA, CD, UC, AS, JIA 0
Number of Phase III compounds in pipeline in all indications 1 2Number of Phase III trials 1 6Number of Phase III trials in MS 0Number of Phase III trials in psoriasis 0Number of Phase III trials in RA, PsA, CD, UC, AS, JIA 0
Number of compounds under regulatory review 2
Number of S1P agonists in clinical development 0
Number of Phase IV compounds in pipeline in all indications 0Number of Phase IV trials 1 1Number of Phase IV trials in MS 0Number of Phase IV trials in psoriasis 0Number of Phase IV trials in RA, PsA, CD, UC, AS, JIA 0
Number of MS products marketed 0Number of psoriasis products marketed 1Number of products marketed for RA, PsA, CD, UC, AS, JIA 0
Number of blockbusters (>1 bio revenues/annum) 0
Number of affliates & subsidiaries 1 12
Cost of sales 1 482 mio USDCost of marketing, selling & administrative 1 522 mio USD% of annual revenue earned from pharmaceutical sales 10 1
Annual revenue 2 1.3 bio USDNet income 1 170 mio USDCash & cash equivalents 1 449 mio USDNumber of employees 1 3'125
Growth & Resiliency Jan11 stock price minus Jan07 stock price -13 (9) (21)
Annual revenue/number of employees 3 448'000Net income/annual revenue 1 0.12Cost of sales/annual revenue 7 0.34Cost of marketing, selling & administrative/annual revenue 6 0.37
9
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-13
17
Productivity
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Page 110
Figure 60 - Arena overview
Page 111
Arena Pharmaceuticals Inc Figure 61 - Arena complete scoring results
Competences Attribute Score Absolute valuesNumber of filed S1P agonist patents 8R&D spend 1 75 mio USD
Number of Phase I compounds in pipeline 1 4Number of Phase I trials 1 9
Number of Phase II compounds in pipeline in all indications 1 1Number of Phase II trials 1 4Number of Phase II trials in MS 0Number of Phase II trials in psoriasis 0Number of Phase II trials in RA, PsA, CD, UC, AS, JIA 0
Number of Phase III compounds in pipeline in all indications 0Number of Phase III trials 1 3Number of Phase III trials in MS 0Number of Phase III trials in psoriasis 0Number of Phase III trials in RA, PsA, CD, UC, AS, JIA 0
Number of compounds under regulatory review 0
Number of S1P agonists in clinical development 0
Number of Phase IV compounds in pipeline in all indications 0Number of Phase IV trials 0Number of Phase IV trials in MS 0Number of Phase IV trials in psoriasis 0Number of Phase IV trials in RA, PsA, CD, UC, AS, JIA 0
Number of MS products marketed 0Number of psoriasis products marketed 0Number of products marketed for RA, PsA, CD, UC, AS, JIA 0
Number of blockbusters (>1 bio revenues/annum) 0
Number of affliates & subsidiaries 0
Cost of sales 1 7.4 mio USDCost of marketing, selling & administrative 1 28 mio USD% of annual revenue earned from pharmaceutical sales 0 0
Annual revenue 1 17 mio USDNet income 0 (125 mio) USDCash & cash equivalents 1 151 mio USDNumber of employees 1 351
Growth & Resiliency Jan11 stock price minus Jan07 stock price -11 (2) (13)
Annual revenue/number of employees 1 48'433Net income/annual revenue 0 -0.01Cost of sales/annual revenue 6 0.44Cost of marketing, selling & administrative/annual revenue 10 0.02
Productivity
16
Marketing & Sales
5
2
Resources
Research
9
Clinical development
3
-11
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Page 112
Figure 62 – Receptos overview
Page 113
Receptos Inc Figure 63 - Receptos complete scoring results
Competences Attribute Score Absolute valuesNumber of filed S1P agonist patents 3R&D spend 0
Number of Phase I compounds in pipeline 1Number of Phase I trials 1
Number of Phase II compounds in pipeline in all indications 0Number of Phase II trials 0Number of Phase II trials in MS 0Number of Phase II trials in psoriasis 0Number of Phase II trials in RA, PsA, CD, UC, AS, JIA 0
Number of Phase III compounds in pipeline in all indications 0Number of Phase III trials 0Number of Phase III trials in MS 0Number of Phase III trials in psoriasis 0Number of Phase III trials in RA, PsA, CD, UC, AS, JIA 0
Number of compounds under regulatory review 0
Number of S1P agonists in clinical development 0
Number of Phase IV compounds in pipeline in all indications 0Number of Phase IV trials 0Number of Phase IV trials in MS 0Number of Phase IV trials in psoriasis 0Number of Phase IV trials in RA, PsA, CD, UC, AS, JIA 0
Number of MS products marketed 0Number of psoriasis products marketed 0Number of products marketed for RA, PsA, CD, UC, AS, JIA 0
Number of blockbusters (>1 bio revenues/annum) 0
Number of affliates & subsidiaries 0
Cost of sales 0Cost of marketing, selling & administrative 0% of annual revenue earned from pharmaceutical sales
Annual revenue 0Net income 0Cash & cash equivalents 0Number of employees 0
Growth & Resiliency Jan11 stock price minus Jan07 stock price 0 Privately held
Annual revenue/number of employees 0Net income/annual revenueCost of sales/annual revenueCost of marketing, selling & administrative/annual revenue
Research
3
2
0
Marketing & Sales
Productivity
0
0
0
Clinical development
Resources
0
0.5
1
1.5
2
2.5
3
3.5
Research
Clinical development
Marekting & Sales
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Page 114
Figure 64 – Daiichi Sankyo overview
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Japan basedFounded in 2005 by merger of Daiichi Pharmaceutical Co., Ltd and Sankyo Co., Ltd29,825 employeesDivisionsInnovative Pharmaceuticals, Vaccines, Established Pharmaceuticals
Page 115
Daiichi Sanky Co Ltd Figure 65 - Daiichi Sankyo complete scoring results
Competences Attribute Score Absolute valuesNumber of filed S1P agonist patents 7R&D spend 5 2.5 bio USD
Number of Phase I compounds in pipeline 0Number of Phase I trials 2 20
Number of Phase II compounds in pipeline in all indications 2 5Number of Phase II trials 2 43Number of Phase II trials in MS 0Number of Phase II trials in psoriasis 0Number of Phase II trials in RA, PsA, CD, UC, AS, JIA 0
Number of Phase III compounds in pipeline in all indications 2 7Number of Phase III trials 2 41Number of Phase III trials in MS 0Number of Phase III trials in psoriasis 0Number of Phase III trials in RA, PsA, CD, UC, AS, JIA 0
Number of compounds under regulatory review 6
Number of S1P agonists in clinical development 0
Number of Phase IV compounds in pipeline in all indications 0Number of Phase IV trials 2 24Number of Phase IV trials in MS 0Number of Phase IV trials in psoriasis 0Number of Phase IV trials in RA, PsA, CD, UC, AS, JIA 0
Number of MS products marketed 0Number of psoriasis products marketed 0Number of products marketed for RA, PsA, CD, UC, AS, JIA 0
Number of blockbusters (>1 bio revenues/annum) 0
Number of affliates & subsidiaries 2 35
Cost of sales 4 3.5 bio USDCost of marketing, selling & administrative 4 4.8 bio USD% of annual revenue earned from pharmaceutical sales 10 1
Annual revenue 4 11.8 bio USDNet income 1 521 mio USDCash & cash equivalents 5 3.2 bio USDNumber of employees 3 29'825
Growth & Resiliency Jan11 stock price minus Jan07 stock price -16 (21) (37)
Annual revenue/number of employees 3 395'641
Net income/annual revenue 0 0.04
Cost of sales/annual revenue 7 0.30
Cost of marketing, selling & administrative/annual revenue 6 0.41
Research
12
Clinical development
-16
16
16
22
13
Productivity
Resources
Marketing & Sales
‐20
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25
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Page 116
Figure 66 - Ono overview
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Japan basedFounded in 19472,661 employees
Page 117
Ono Pharmaceuticals Co Inc Figure 67 - Ono complete scoring results
Competences Attribute Score Absolute valuesNumber of filed S1P agonist patents 5R&D spend 2 494 mio USD
Number of Phase I compounds in pipeline 0Number of Phase I trials 1 6
Number of Phase II compounds in pipeline in all indications 0Number of Phase II trials 1 20Number of Phase II trials in MS 2Number of Phase II trials in psoriasis 0Number of Phase II trials in RA, PsA, CD, UC, AS, JIA 0
Number of Phase III compounds in pipeline in all indications 0Number of Phase III trials 2 14Number of Phase III trials in MS 0Number of Phase III trials in psoriasis 0Number of Phase III trials in RA, PsA, CD, UC, AS, JIA 0
Number of compounds under regulatory review 0
Number of S1P agonists in clinical development 0
Number of Phase IV compounds in pipeline in all indications 0Number of Phase IV trials 1 1Number of Phase IV trials in MS 0Number of Phase IV trials in psoriasis 0Number of Phase IV trials in RA, PsA, CD, UC, AS, JIA 0
Number of MS products marketed 0Number of psoriasis products marketed 0Number of products marketed for RA, PsA, CD, UC, AS, JIA 0
Number of blockbusters (>1 bio revenues/annum) 0
Number of affliates & subsidiaries 0
Cost of sales 1 259 mio USDCost of marketing, selling & administrative 2 937 mio USD% of annual revenue earned from pharmaceutical sales 10 1
Annual revenue 2 1.7 bio USDNet income 1 347 mio USDCash & cash equivalents 2 897 mio USDNumber of employees 1 2'661
Growth & Resiliency Jan11 stock price minus Jan07 stock price 1 (46) (45)
Annual revenue/number of employees 4 638'858Net income/annual revenue 2 0.20Cost of sales/annual revenue 8 0.15Cost of marketing, selling & administrative/annual revenue 4 0.55
19
Research
7
6
14
1
Productivity
Marketing & Sales
Resources
Clinical development
6
0
2
4
6
8
10
12
14
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18
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Page 118
Teva Pharmaceuticals Industries Ltd Figure 68 - Teva complete scoring results
Non-genericSales
Competences Attribute Score Absolute values Absolute valuesNumber of filed S1P agonist patents 0R&D spend 3 933 mio USD
Number of Phase I compounds in pipeline 0Number of Phase I trials 3 185
Number of Phase II compounds in pipeline in all indications 0Number of Phase II trials 2 50Number of Phase II trials in MS 8Number of Phase II trials in psoriasis 6Number of Phase II trials in RA, PsA, CD, UC, AS, JIA 0
Number of Phase III compounds in pipeline in all indications 0Number of Phase III trials 2 45Number of Phase III trials in MS 9Number of Phase III trials in psoriasis 0Number of Phase III trials in RA, PsA, CD, UC, AS, JIA 0
Number of compounds under regulatory review 0
Number of S1P agonists in clinical development 0
Number of Phase IV compounds in pipeline in all indications 0Number of Phase IV trials 2 28Number of Phase IV trials in MS 12Number of Phase IV trials in psoriasis 0Number of Phase IV trials in RA, PsA, CD, UC, AS, JIA 0
Number of MS products marketed 1Number of psoriasis products marketed 0Number of products marketed for RA, PsA, CD, UC, AS, JIA 0
Number of blockbusters (>1 bio revenues/annum) 3
Number of affliates & subsidiaries 3 60
Cost of sales 5 7.1 bio USDCost of marketing, selling & administrative 3 3 bio USD% of annual revenue earned from pharmaceutical sales 10 1
Annual revenue 5 16.1 bio USD 4.8 bio USDNet income 4 3.3 bio USDCash & cash equivalents 3 1.3 bio USDNumber of employees 4 39'660
Growth & Resiliency Jan11 stock price minus Jan07 stock price 19 (50) (31)
Annual revenue/number of employees 3 405'951
Net income/annual revenue 2 0.20
Cost of sales/annual revenue 6 0.44
Cost of marketing, selling & administrative/annual revenue 8 0.19
3
Clinical development
Productivity
19
39
Resources
16
Holding
19
30
Marketing & Sales
Research
0
5
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25
30
35
40
45
Research
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Page 119
Appendix III – Networks
Page 120
Figure 69 R&D partnerships in pharmaceutical biotechnology 1975-1979 – reproduced
Source: Roijakkers 2006, Inter-firm R&D partnering in pharmaceutical biotechnology since 1975: Trends, patterns and networks p.436
Page 121
Figure 70 R&D partnerships in pharmaceutical biotechnology 1980-1984 - reproduced
Source: Roijakkers 2006, Inter-firm R&D partnering in pharmaceutical biotechnology since 1975: Trends, patterns and networks p.437
Page 122
Figure 71 R&D partnerships in pharmaceutical biotechnology 1985-1989 - reproduced
Source: Roijakkers 2006, Inter-firm R&D partnering in pharmaceutical biotechnology since 1975: Trends, patterns and networks p.438
Page 123
Figure 72 R&D partnerships in pharmaceutical biotechnology 1990-1994 – reproduced
Source: Roijakkers 2006, Inter-firm R&D partnering in pharmaceutical biotechnology since 1975: Trends, patterns and networks p.439
Page 124
Figure 73 R&D partnerships in pharmaceutical biotechnology 1995-1999 – reproduced
Source: Roijakkers 2006, Inter-firm R&D partnering in pharmaceutical biotechnology since 1975: Trends, patterns and networks p.440