Dr Ajit Shetty

Corporate Vice President Enterprise Supply Chain Johnson & Johnson (retired)Chairman Emeritus of the Board of Directors Janssen Pharmaceutica

Indian Business Chamber of Luxembourg LuxembourgJune 18, 2012

The Pharmaceutical Industry Challenges and Opportunities

1

• J&J

• Janssen

• Health Care

• The Pharma Market

• Challenges

• Opportunities

• M&A

• Indian Pharma

• Conclusions

CONTENTS

2

Global Leader inHealth Care

More than 250 Operating CompaniesIn 60 Countries

Selling Products in More Than 175 Countries

116,000 EmployeesWorldwide

Johnson & Johnson: Global Presence

3

4

Johnson & Johnson Family of Companies

• Sixth-largest consumerhealth care company

• The world’s largest and most diverse medical devices and diagnostics company

• The world’s fifth-largestbiologics company

• The world’s eighth-largestpharmaceuticals company

Jesica HarringtonDiagnostic test fueled hope in her fight against cancer

4

2011 Sales by Segment

$24.4B6.2%*

$14.9B(0.7%*)

$25.8B1.7%*

MD&D 40%

Pharmaceuticals 37%

Consumer23%

2011 Sales: $65.1 Billion

$ U.S. Billions

*Operational YOY change5

Our Consumer Business Segment

2011 sales of $14.9 billion Broad portfolio of iconic CPG and OTC brands Based on sound science and technology Touching a billion lives every day

Our Pharmaceuticals Business Segment

2011 sales of $24.4 billion

Now unified under the Janssen name

A well-positioned pipeline– Growing demand– Emerging markets– Unmet needs around the world

Recent product approvals

Our Medical Devices & Diagnostics Business Segment

2011 sales of $25.8 billion The world’s largest medical technology business Focused on emerging markets and an aging

population Our most recent acquisition

A premier manufacturer of orthopedic devices

Dr Paul Janssen (1926-2003)

• Founder of Janssen Pharmaceutica

• One of the most prolific researchers into new therapeutics for use in anesthesia, pain management, psychiatry, gastroenterology, mycology and many other therapeutic areas

• Received 22 Honorary Doctorates and 5 Honorary Professorships

• Holder of more than 100 patents

• Over 850 scientific publications

• In the survey Belgian of Belgians (Jan. 2004) Dr. Paul Janssen has reached the third place

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Janssen Pharmaceutica Campus

Beerse I

Beerse IIOlen

Geel

Pain Management

• Fentanyl® / TTS

• Rapifen®

• Sufenta®

Fungal Infections

• Daktarin®

• Nizoral® Shampoo

• Sporanox®

HIV

• Intellence®

• ..........

• ...........

Psychiatry• Haldol ®• Risperdal ®

Neurology• Topamax®• Reminyl®

Gastroenterology• Imodium ®• Motilium ®

• ..........

• ..........

Portfolio of Leading Pharmaceutical Brands

Health Care at $5.7 trillion

is 7-8% of Global GDP

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Total Healthcare Expenditure

0

2

4

6

8

10

12

14

1960 1970 1980 1990 2002

BelgiumFranceGermany

Italy

UK

US

Japan

as a percentage of GNP at market prices

13

Ratio Healthcare Expenditure - Drug ExpenditureHealth Care as % of GNP

Hea

lthca

re e

xpen

ditu

re a

s %

of G

NP

Share of drugs in healthcare

USA

CHEDEU

CAN

SUE

FRA

ISLAUSNED

AUTDENNOOR FIN

BELGIUMNLZ

GBRLUXIRLSPJAP

POR

CZEGBC

14

12

10

8

6

0 5 10 15 20 25 30Gradient: 0.13

Constant: 9.99

Correlation coeff.:- 0.44 14

Global Pharmaceutical Market

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Growth Projections for the Pharmaceutical Industry

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The Pharmaceutical Research & Development Process

Timeline / NPD Process

Discovery/Concept

Early Development(PC, Ph1, Ph2a)

Late Development

(Ph 2b, Ph 3) Post- Launch

Regulatory Review

EarlyExploration

Clinical Trials

10 - 15 YEARS ~$1B to $1.5B Investment

FDA Approved DrugsPreclinical

IND APPLICATION SUBMITTED

NDA/BLA SUBMITTED

First in Human Ph2 Ph3

Molecule

Pharma R&D spend and new drug approval

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Global pharmaceutical market generics challenge

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J&J Counterfeit Products Position

• Our Credo responsibility

• Patients should receive genuine products

• Taking tangible steps

• Monitor markets

• Work with regulators to strengthen laws

http://www.jnj.com/connect/about-jnj/views-positions/product-safety/

The global pharmaceutical market growth remains under pressure

The near term future belongs to the payers

PHARMA INDUSTRY

Changing sourcesof growth

Intensifyingcompetition

Shifting stakeholder power

• Increasing payer power over treatment decisions• HTA controlling access• Increasing patient power• Changes in distribution patterns

• Increasing generic penetration in large therapy areas

• Declining R&D productivity

• Mature vs. emerging markets• Primary Care vs. Specialist

driven

Positive Trends

• Global expansion/emerging markets

• Demographics/aging population

• Unmet needs

• Advancing science and technology

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Drug Usage by Age Band

60% of drugs are used by people over 60

And this groupis growing

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Unprecedented Potential

Waiting for a solution for prostate cancer…ZYTIGA®Abiraterone AcetateFirst-in-class, novel orally administered for treatment of prostate cancer

Waiting for a more effective option for hepatitis C…

Telaprevir (VX-950)Potential first-in-class protease inhibitor

Waiting for a better

anticoagulant…

RivaroxabanFirst-in-class,

once-daily oral anticoagulant

Waiting for a more convenient way

to treat HIV…

TMC-278Oral once-daily

single agent/fixed dose

combination

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Innovative delivery technologywith therapeutic added value

• Oral controlled release

• Once-monthly injection

Rate- controlling semi- permeable

membrane

Drugcompartment 2

Laser- drilleddelivery orifice

Push compartment

OROS® : Osmotic - ControlledRelease Oral - Delivery System

Drug compartment 1

Outer coat

Water

Water

Cross Sector SynergiesConvergent Technologies

CYPHEREVRA

Our Vision: Comprehensive Healthcare

• Prevention

• Diagnosis

• Treatment

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Survival of the fittest: Takeovers, Mergers and JVsSmithkline RIT - BeechamRhône-Poulenc - Rorer

Kabivitrum - PharmaciaNicholas - RocheVickx Blendax - Procter & Gamble

Bristol-Myers - Squibb

Synthélabo - Delagrange & DelalandeSanofi - Winthrop

Kabi Pharmacia - FarmitaliaBrocades - YamanouchiWarner - Wellcome (OTC products)

Cyanamid - AHPRoche - SyntexRoussel - HoechstGlaxo - WellcomeBoots - Knoll

Pharmacia - UpjohnMarion Merrell Dow - Hoechst RousselRhône-Poulenc Rorer - Fisons

Ciba - SandozSankyo - Luitpold Pharma

Roche - Boehringer MannheimSanofi - Synthelabo

Astra - ZenecaHoechst-Marrion-Roussel - Rhone-Poulenc-Rorer (= Aventis)

Warner-Lambert - PfizerMonsanto - PharmaciaUpjohnGlaxoWellcome – Smithkline

Novartis acquires 20% in RocheIntense M&A activity in biotechAlza – J&JDupont- BMS

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

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Survival of the fittest: Takeovers, Mergers and JVsChugai Pharm- Hoffmann-La Roche

Hoffmann-La Roche – Novartis (Novartis owns 33% of Roche)

Pharmacia- Pfizer

Searle – Pfizer

Roche Consumer Health – Bayer

Aventis – Sanofi.Synthelabo: become Sanofi-Aventis

APS/ Berk becomes TEVA

Celltech – UCB

Genentech – Hoffmann-La Roche(Roche becomes majority owner Genentech)

Aventis Pasteur MSD becomes Sanofi Aventis MSD

Boots – Alliance Unichem becomes Alliance Boots

Altana – Nycomed

IVAX – Teva

Lifescan – becomes J&J subsidiary

Schering – Bayer becomes Bayer Schering

Wyeth - Pfizer

2002

2003

2004

2005

2006

2007

2009

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The Indian Pharmaceutical IndustryAn Awakening Giant?

Positive

• Excellent, highly skilled people

• Language is no barrier

• Cost effective

• I/P Protection ?

Improvement Areas

• Lack of patent protection

• Counterfeit

• Low prices

India’s Potential Role as a Pharma Player

From

• A low priced generic market

• An exporter of generic products

• Large presence of counterfeit products

To

• A market that rewards innovation

• A major factor in an integrated R&D / production global effort (partnership)

• A safe and effective supply chain

The future we can influence

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Conclusion

Global Competition in the Pharmaceutical Industry

= Competition through Innovation

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