The perspective of a U.S. Multinational Company

Liz Barrett Regional President Europe Innovative Pharmaceuticals, Pfizer Rome - October 22nd,2014

The main driver for the future growth is…

The Key factor to compete and prosper in the 21st century global economy

BioPharma: our role in supporting innovation

Generating new medicines

Investing in R&D

Ensure access to financial capital

Employing highly qualified talent

…still high unmet medical needs

84

47

31

20

13

13

12

12

7

6

- 20 40 60 80 100

Cardiovascular diseases

Malignant neoplasms

Mental and behavioraldisorders

Musculoskeletal diseases

Neurological conditions

Digestive diseases

Respiratory diseases

Infectious and parasitic diseases

Diabetes mellitus

Genitourinary diseases

DALYs* lost, 2013 (m)

TOTAL: 308m DALYs*

lost

Burden of disease associated with 10 highest-burden diseases in 2013

Death rate decreases for selected diseases treated with pharmaceuticals

* Disability Adjusted Life Years

-25%

-13%

-29%

-45%

-49%

-51%

-60% -50% -40% -30% -20% -10% 0%

All Causes

Cancer

Ischaemic heart disease

Ulcers

Pneumonia

Respiratory diseases

% decrease in mortality 1980-2011

Sources: 1) WHO Global Health Estimates 2013: Burden of Disease 2) WHO European Mortality Database (MDB), last updated April 2014

Medicines as a cost effective public health investment

Disease treatment cost savings vs. cost of childhood vaccination

Government revenue benefits vs. cost of adult vaccination

Hospital cost savings vs. cost of treatment with cardiovascular medicines

Return on investment in health interventions1,2,3

Sources: 1) Centers for Disease Control (CDC). Immunizations and Respiratory Factsheet (USA); 2) Supporting Active Ageing Through Immunisation (SAATI) Partnership (2013), Adult vaccination: A key component of healthy ageing (Netherlands); 3) Lichtenberg, F (2009), Have newer cardiovascular drugs reduced hospitalization? Evidence from longitudinal country-level data on 20 OECD countries, 1995-2003, Health Econ. 18(5):519-34 (20 OECD countries);

x10.2

x4.0

x3.7

The Value of Statins 1/2

1) Grabowski, David C., et al. (2012). The Large Social Value Resulting From Use Of Statins Warrants Steps To Improve Adherence And Broaden Treatment. Health Affairs, 31; 10 2276-2285; 2) Lakdawalla, Darius N., et al. (2010). An economic evaluation of the war on cancer, Journal of Health Economics 29 (2010) 333–346;3 Philipson, Tomas J. and Jena, Anupam B. (2005). Who benefits from new medical technologies? Estimates of consumer and producer surpluses for HIV/AIDS drugs, National Bureau of Economic Research Working Paper 11810

Benefits and Costs of Statin use, by Period of Inflation, U.S. 1987–2008

In one year alone... From 1987-2008 benefits estimated in…

$ 1.25 trillion

The Value of Statins 2/2

Source: Lindgren et al.: Cost–effectiveness of statins revisited: lessons learned about the value of innovation, (2011) - Sweden

On-patent period

Off-patent period

54

237

454

40 4 5

-

50

100

150

200

250

300

350

400

450

500

1987 - 2002 2003 - 2008 2009 - 2018

Patient Surplus Manufacturer Surplus

€m

npe

r mn

inha

bita

nts

Patient and manufacturer surplus

No innovation

No generics

No surplus to distribute

A look to the Global Scenario

Source : IMS data , Global Insights

Turnover trend, 2007-2017 (B$ and annual average growth)

Advanced Economies BRIC and rest of the world

Investments trend in the pharmaceutical industry (% of total)

0

20

40

60

80

100

2017 2006 2010 2014 2002

705

+11,3%

+4,5%

+12,5%

+0,8% 149

288 462

723 552

2017 2012 2007 0

1200

1000

800

600

400

200

Growth and investments move to the emerging economies

Pfizer contribution to global health challenge

Pfizer in the EU

Pfizer Worldwide

Strong science based regulatory

system Economic,

Political and Healthcare Scenarios

Taxation rate

HC access, coverage and

payment

Cost of Business Operations

Market opportunities

Quality of Resources

IP Protections

Key factors in decision making process

Economic scenario varies considerably in Europe

EU/EEA1 Macroeconomic Indicators - 2015

Worst Avg. Best

GDP Growth 0.4% 2.0% 4.4%

Unemployment rate 24.9% 9.9% 3.0%

Gross Public Debt (% GDP) 171% 72% 10%

Govt. Budget Balance (% GDP) -5.2% -1.8% 9.9%

Non-EU2 Macroeconomic Indicators - 2015

Worst Avg. Best

GDP Growth 0.1% 4.4% 12.5%

Unemployment rate 28.0% 11.5% 0.6%

Gross Public Debt (% GDP) 73% 37% 9%

Govt. Budget Balance (% GDP) -6.9% -2.5% 4.1%

>5

>4.5

>4

>3.5

3.5 or below

Composite Risk Score:

Composite Economic Risk Score

Source: IMF data

Healthcare Spend (%GDP) 2015 7.86%

Pharma Spend (%GDP) 2015 1.65%

Market access conditions in Italy vs other big EU countries

Source: BCG

Access conditions

Before Launch

National Guidelines

Risk Sharing Agreement

P&R setting (HTA)

Regional Guidelines

Authorization/PTOs(*)

Web-monitoring

Product Spend ceiling

Category Spend ceiling

Product Registries

National Spend Ceiling

After Launch

Hospital budget

Physicians prescription

Me-too drugs quotas

Me-too drugs quotas

Reg

ional

Nati

onal

Nati

onal

Reg

ional

Condition generally/widely applied Condition applied only in selected/specific cases

(*) Hospital formulary

Conditions at market launch for new medicines

400 300 200 100 0

314

300

221

61

38

150 100 50 0

IT 100

SP 106

UK 113

GE 120

FR 140

Further delays for regional

access

Average prices at launch (sales/units, Italy index=100)

Time to market (average days of delay compared to the EMA authorization)

60 40 20 0

Nr of new products (authorized by EMA from 2010 to 2012)

46

14

21

22

39

Survey from January 2010 to September 2012

More stable and attractive scenario

Improve access to innovation

Respect of IP and therapeutic “differences”

Remove pharma expenditure ceiling

How Italy can improve its attractiveness

Thank you for your attention!