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THE VALUE OF MEDICAL INNOVATION EUROPE

Discovery consists of seeing what everybody has seen and thinking what nobody has thought. “

“ Albert Szent-Györgyi, Nobel Laureate for Medicine

Good. The Scientist Speculates. 1963

2

SUMMARY

Medical innovation contributes significantly to our ability to live longer, healthier and more prosperous lives. It has had a clear impact in many diseases, including polio, diabetes, heart disease, HIV and, in recent years, cancer. Improvements in life expectancy and quality of life can be attributed directly to medical innovation, and today, patients are reaping the rewards of the significant investment made in research over the past decades. Celgene is committed to medical innovation and has delivered significant improvements in overall survival and quality of life for patients. We continue to take bold and pioneering steps with a diverse pipeline of new therapies.

Our aspiration is to change the course of the diseases that we treat, making them manageable chronic diseases and, one day, we hope to offer a cure

3

CONTENTS Introduction Chapter 1: Living longer, better & healthier

Chapter 2: The cost of the cure: exploding the myths

Chapter 3: Progress & prosperity

Chapter 4: The virtuous cycle of innovation and how to sustain it

4

BETTER & HEALTHIER 2 3 4

LIVING LONGER, BETTER & HEALTHIER MEDICAL PROGRESS, INCLUDING BIOMEDICAL INNOVATION, HAS LED TO LONGER AND HEALTHIER LIVES FOR PEOPLE ALL OVER THE WORLD.

Vaccines, antibiotics and cardiovascular medicines have accounted for tremendous medical gains in the past 100 years, but the pace of innovation in the past 5 to 10 years with respect to cancer and other deadly conditions is equally astonishing. Investment, research and development by companies like Celgene has played a critical role.

5

1

THE COST OF THE CURE: EXPLODING THE MYTHS

PROGRESS & PROSPERITY

THE VIRTUOUS CYCLE OF INNOVATION & HOW TO SUSTAIN IT


EUROPE HAS WITNESSED BREATHTAKING MEDICAL BREAKTHROUGHS IN THE PAST CENTURY

“It is difficult to convey the excitement of actually witnessing the amazing power of penicillin over infections for which there had previously been no effective treatment. I could not then imagine the transformation of medicine and surgery that penicillin would produce.” Charles Fletcher, who became the first doctor to inject a human subject with penicillin at the Radcliffe Infirmary, Oxford

6

Fletcher. Br Med J (Clin Res Ed) 1984;289:22–29





LIFE EXPECTANCY GAINS ARE CLEAR

7

OECD Health Statistics. http://dx.doi.org/10.1787/health-data-en. Accessed 21 Jan 2014

25 20 15 10 5 0 4 2 0 8 10

6

Life expectancy at age 65, 2011 and years gained since 1960 (or nearest year) Life expectancy at 65, 2011 Years gained, 1960–2011

France Spain Italy

Switzerland Portugal Austria Finland

Luxembourg Belgium Iceland Norway Sweden

Germany Israel

Netherlands United Kingdom

Slovenia Ireland Greece

United States Estonia Poland

Denmark Czech Rep. Slovak Rep.

Hungary Russian Fed.

Turkey

Men Women

N/A

N/A

N/A

N/A

Years Years





PROGRESS AGAINST DISEASES 1960–2012

8

Adapted from: American Society of Clinical Oncology. www.cancerprogress.net

1960

1970

1980

1990

2000

2010

1960 Polio Vaccine

1963 Measles Vaccine

1967 First Beta Blockers

1965 Surfactants for

Infant Respiratory Distress

1974 Meningococcal

Disease Vaccine

1981 First ACE Inhibitor to Treat High Blood

Pressure

1981 Hepatitis B

Vaccine

1986 First Monoclonal

Antibody

1987 SSRIs (Anti-

depressants)

1989 Statins for Cholesterol

1989 First HIV

Drugs

1993 First

Alzheimer’s Rx

1995 New HIV

Drugs

1994 Breast Cancer Rx 1995 – AIDS Rx

Advance (HAART)

1996 First Enzyme Replacement

Drug for Gaucher's Disease

1998 First Blood Thinners

for Heart Attack, Stroke

2001 Targeted Therapy

Approved for Leukaemia

2004 Anti-angiogenic

Approved for Colon Cancer

2008 Immunomodulator

Approved for Multiple Myeloma

2010 Targeted

Therapies for Lung, Colon, Prostate and Skin Cancer





NEW THERAPIES ARE A GREAT CONTRIBUTOR TO INCREASED LIFE EXPECTANCY

9

Lichtenberg. Pharmaceutical innovation and longevity growth in 30 developing and high-income countries, 2000-2009. NBER Working Paper No. 18235, issued in July 2012

1960 – 1997 New therapies account for 45% of

the increase in life expectancy

2000 – 2009 New therapies account for 73% of the increase in life expectancy

45% 73%





HIV/AIDS CASE STUDY: RATES OF HIV INFECTION IN EUROPE REMAIN HIGH

10

ECDC/WHO. HIV/AIDS Surveillance in Europe, 2012

0

7 6 5 4 3 2

1

1984 1986 1988 1990 1992 1994 2002 2004 2006 2008 2010 2012

12 18 19 22 23 22 25 25 25 26 26 26 26 26 26 26 26 27 26 28 30 30 30 30 30 30 30 30 30 Countries reporting

Rat

e pe

r 100

,000

pop

ulat

ion

1996 1998 2000

Year of diagnosis

Rate of reported HIV diagnoses, by year of diagnosis, in the EU/EEA, 1984–2012




BETTER & HEALTHIER 2 3 4 11

0

HIV/AIDS CASE STUDY: DECREASE IN NUMBER OF AIDS DEATHS IN EUROPE SHOWS IMPACT OF INNOVATIVE MEDICINES

Number of deaths in 17 EU countries* where Eurostat data is available, since 1994

16000

12000

8000

4000

1994 1996 1998 2006

Num

ber

2000 2002 2004 Year

EUROSTAT Mortality statistics, AIDS (HIV disease, ICD-10 B20-B24)

EuroHIV deaths notifications in AIDS cases

* CZ, DN, DE, IE, GR, SP, IT, LX, HU, NL, AU, PL, PT, SL, FI, SW, UK EMCDDA. http://www.emcdda.europa.eu. Accessed 21 Jan 2014





HIV/AIDS CASE STUDY:

12

ANTIRETROVIRALS HAVE SAVED MILLIONS OF LIVES Annual number of people dying from AIDS-related causes in low- and middle-income countries

globally compared with a scenario of no antiretroviral therapy, 1996–2012

1 000 000

500 00

3 000 000 2 500 000 2 000 000 1 500 000

AID

S-re

late

d de

aths

0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012*

*The data points for 2012 are projected based on the scaling up of programmes in 2009–2011 and do not represent official estimates of the number of annual AIDS-related deaths

EMCDDA. http://www.emcdda.europa.eu. Accessed 21 Jan 2014

AIDS-related deaths at the current coverage of ART

AIDS-related deaths without ART





“The life-saving benefits of ART are vividly evident. Before ART, about 80% of the people presenting at clinics with AIDS-defining illnesses died within two years, but even the most severely ill people living with HIV today have at least an 80% chance of survival after two years of ART.” GLOBAL UPDATE ON HIV TREATMENT 2013: RESULTS, IMPACT AND OPPORTUNITIES, JUNE 2013 WHO report in partnership with UNICEF and UNAIDS

HIV/AIDS CASE STUDY: ANTIRETROVIRALS HAVE MADE HIV A CHRONIC DISEASE THAT CAN BE MANAGED AND SURVIVED – AND INNOVATION HOLDS THE SAME PROMISE FOR CANCER

13

WHO. Global update on HIV treatment 2013. http://apps.who.int/iris/bitstream/10665/85326/1/9789241505734_eng.pdf. Accessed 21 Jan 2014





In 2005, a man diagnosed with multiple myeloma asked me if he would be alive to watch his daughter graduate from high school in

a few months. In 2009, bound to a wheelchair, he watched his daughter graduate from college. The wheelchair had nothing to do

with his cancer. The man had fallen down while coaching his youngest son's baseball team.

“ “ Dr. Siddhartha Mukherjee, Author, The Emperor of All Maladies

Mukherjee. The Emperor of All Maladies: A Biography of Cancer. 2010





Soerjomataram et al. Lancet 2012;380:1840–1850

Projected in2040

96 million

THE PROMISE OF MEDICAL INNOVATION = FEWER LIVES LOST

Life years lost to cancer

2010 160 million 40% REDUCTION





CANCER MORTALITY IS DECREASING IN EUROPE


-28 -27 -25

-23 -22 -21 -20 -20 -20 -20 -19 -17 -17 -16 -16 -15

-13 -12 -12 -10 -10

-6 -6 -4 -4 -3

0

Cha

nge

in %

ove

r the

per

iod

-40

Change in all cancer mortality rates, 1990–2011 (or nearest year)

20

10

0

-10

-20

-30





CANCER SURVIVAL RATES ARE INCREASING ALMOST EVERYWHERE IN EUROPE

Ferlay et al., Ann Onc 2010; and Ferlay et al. Eur J Cancer 2013;49:1374-1403 (CUTS data)

Cancer survival rates 2012 (1 minus mortality/incidence)

70%

60% 50% 40% 30% 20% 10%

0%

2008 data





Ann Oncol 2007;18 (suppl 3): iii67–iii77

IN A 20-COUNTRY SAMPLE, INNOVATIVE CANCER THERAPIES GENERATED A 30% DECLINE IN THE CANCER MORTALITY RATE

Contribution of the increase in cancer drug vintage to the decline in the age-adjusted cancer mortality rate

2001 2002 2003

0.85

0.80

1.05

Actual 1.00

If no increase in drug vintage 0.95

0.90

Increase in drug vintage accounts for 30% of the 1995–2003 decline in age-standardized cancer mortality rate

1995 1996 1997 1998 1999 2000





SURVIVAL RATE FOR MYELOMA PATIENTS RISES WITH NEW INNOVATIVE THERAPIES

19

National Cancer Institute, Surveillance Epidemiology and End Results. http://seer.cancer.gov/csr/1975_2009_pops09/browse_csr.php?section=18&page=sect_18_table09.html. Accessed 21 Jan 2014

47 45 43 41 39 37 35 33 31 29 27

1992 1995 2008 2000 Year of diagnosis

5-Ye

ar S

urvi

val R

ates

(%) 5-year relative survival rate, myeloma

50% INCREASE

1992–2008





FIVE-YEAR SURVIVAL FROM MYELODYSPLASTIC SYNDROMES (MDS) INCREASING

20

Smout et al. Age Period Cohort Analysis of Cancer Survival In SEER 18 Registry. Center for Medicine in the Public Interest

2004 2008

+60% 24% 38%





THE COST OF THE CURE: EXPLODING THE MYTHS THE COST OF THESE MEDICAL ADVANCES IS NOT OVERWHELMING. ON THE CONTRARY, CANCER CARE, INCLUDING INNOVATIVE MEDICINES, REPRESENTS A SMALL SHARE OF HEALTHCARE COSTS.

Innovative cancer treatments that produce longer and better lives can ultimately reduce the direct costs of cancer care to health care systems, as well as the broader economic and social burden associated with cancer across Europe.

21

2





Cancer’s Challenge for Europe

Cancer is everybody’s business. In 2012 alone, 3.2 million people in Europe will be diagnosed for the first time with cancer, about 13 million people will be affected and 1.2 million will die

from this disease. For this reason, cancer research and innovation are a priority for the European Union.

“ “ Máire Geoghegan-Quinn, EU Commissioner for Research and Innovation

European Cancer Organisation. Oncopolicy Forum 2012 Report. http://www.ecco-org.eu/Publics-affairs/Oncopolicy-Forum-and-Events/Oncopolicy-forum/2012.aspx. Accessed 21 Jan 2014





GROWTH IN PHARMACEUTICAL SPENDING HAS DECLINED


Average annual growth rates of health spending for selected functions, in real terms, OECD average, 2008–2011

4.8

5.9

6.9

2.5

3.2

4.8 4.6

6.2

2.9 2.8

6.4

3.5

0.7 0.9

5.3

0.2

-0.9

1

1.7 1.6

-1.7 -1.5 -1.7

1.7

Inpatient care Outpatient care Long-term care Pharmaceuticals Prevention Administration

8

7

6

5

4

3

2

1

0

-1

-2

-3

2007-08 2008-09 2009-10 2010-11

%





COST OF TREATING CANCER REMAINS A SMALL PORTION OF TOTAL HEALTHCARE EXPENDITURES…

Direct cost for cancer in study countries in 2002/2003. Total in million Euro, per capita Euro and share of total healthcare expenditures.

24

Karolinska Institutet. http://ki.se/content/1/c4/33/52/Cancer_Report.pdf. Accessed 21 Jan 2014

Direct costs for cancer

(€ million)

Direct costs for cancer per capita

(€)

Cancer costs as % of total healthcare costs

Total healthcare expenditure (€ million)

Population (2003) Total 54,263 120 6.4 844,800 451, 263,000

Austria 923 114 6.5 14,200 8,067,000

Belgium 1,469 142 6.5 22,600 10,372,000

Czech Republic 663 65 6.5 10,200 10,202,000

Denmark 748 139 6.5 11,500 5,387,000

Finland 587 113 6.9 8,500 5,213,000

France 7,091 119 5.3 133,800 59,768,000

Germany 12,100 150 5.4 224,000 82,502,000

Greece 1,112 101 6.5 17,100 11,036,000

Hungary 566 56 6.5 8,700 10,124,000

Ireland 468 118 6.5 7,200 3,953,000

Italy 6,578 114 6.5 101,200 57,478,000

The Netherlands 1,525 94 4.1 37,200 16,224,000

Norway 871 191 6.5 13,400 4,564,000

Poland 1,300 34 6.5 20,000 38,195,000

Portugal 943 90 6.5 14,500 10,449,000

Spain 3,855 92 6.5 59,300 41,874,000

Sweden 1,253 140 7.0 17,900 8,958,000

Switzerland 1,391 189 6.5 21,400 7,343,000

UK 10,823 182 10.6 102,100 59,554,000





…AND MEDICINES REPRESENT THE SMALLEST SHARE OF SPENDING ON CANCER CARE

Cancer healthcare costs as a proportion of total costs and distribution of direct costs of cancer on inpatient care, ambulatory care and drugs.

25

Karolinska Institutet. http://ki.se/content/1/c4/33/52/Cancer_Report.pdf. Accessed 21 Jan 2014

Cancer costs as % of total

healthcare costs

Inpatient care Ambulatory care Drugs Total

Germany (2002) 5.4% 67% + 9% other 16% 8% 100%

Sweden (1996) 6% 94% Not included in the estimate 6% 100%

Sweden (2002) 10% 75% (hospital) 15%

(including home care)

10% 100%

France (1998) 5.3% 83% 7%

+ 6% transport costs

4% 100%

The Netherlands (1994) 4.6%

60% + 11% non-hospital

institutional care 18% 11% 100%





INNOVATION CANNOT STOP: CANCER INCIDENCE IS INCREASING WORLDWIDE IN PEOPLE 55 AND OVER

26

International Agency for Research on Cancer, World Health Organization. Cancer Incidence in Five Continents CI5. 2010

1950 1960 1970 1980 1990 2000 2010 2020 2030

40

35

30

25

20

15 10

5

0

Projected 45

CAGR: Compound Annual Growth Rate

Age

55

and

Ove

r as

% o

f Pop

ulat

ion

with

Can

cer

CAGR ’10-’30 = 1.5%

CAGR ’10-’30 = 2.8%

CAGR ’10-’30 = 3.3%

Developed

Worldwide

Developing





CANCER INCIDENCE AND MORTALITY IN EUROPE ARE PREDICTED TO INCREASE BY 2020

Mortality from and incidence of cancer by main types in the European Region, 2010 and projected for 2020

27

WHO. The European health report 2012. http://www.euro.who.int/ data/assets/pdf_file/0004/197113/The-European-health-report-2012.-Charting-the-way-to-well-being.pdf. Accessed 21 Jan 2014

Colorectum

Breast

Lung

Prostate

Stomach

Bladder

Kidney

Pancreas

Non-Hodgkin’s lymphoma

Number of deaths Number of new cases

600 000 400 000 200 000 200 000 400 000 600 000 0

Mortality

2010

2020

Mortality

2010

2020





A GRAVE BURDEN: CANCER COST THE EU €126 BILLION IN 2009

28

“Cancer poses a considerable economic burden not only to healthcare systems [in Europe] but to other areas of the economy, including productivity losses through early mortality and time off work, and relatives who have to forego work/leisure to care for cancer patients.” Dr Ramon Luengo-Fernandez, Oxford University, leader of a study on the true cost of cancer for the EU

The Independent. http://www.independent.co.uk/life-style/health-and-families/health-news/cancer-costs-eu-99bn-per-year-8190248.html. Accessed 21 Jan 2014





The Stakes for Europe

There are between 6000 and 8000 rare diseases and despite their rarity, such diseases affect 6–8% of the population,

representing approximately 30 million EU citizens. “ “ The Alliance for Biomedical Research in Europe

http://www.eacr.org/user_uploads/files/news/Draft%20Scientific%20Case%20Studies%20BioMed%20Alliance.pdf. Accessed 21 Jan 2014





PROGRESS & PROSPERITY MEDICAL INNOVATION LEADS TO GREATER ECONOMIC GROWTH AND PROSPERITY.

Medical innovation leads to improved health outcomes, higher productivity, reduced disability, and greater economic value to society. The biomedical sector, including companies like Celgene, make significant contributions to Europe’s economy.

30

3





Over the last half century, improvements in health have been as valuable as all other sources of economic growth and productivity combined. “ “

University of Chicago Economists Kevin Murphy, Ph.D., and Robert Topel, Ph.D.





LIVING LONGER, BETTER AND HEALTHIER BENEFITS SOCIETY

32

*Extended survival contributes to economic stimulus by affording people more time to purchase and enjoy leisure activities

Murphy and Topel. J Political Econ 2006;114(5):871–904

Maximizes life expectancy

Improves quality of life

Boosts the economy

$500 billion In Societal Value

A 1%

REDUCTION in CANCER-related DEATHS in the USA





The European-based pharmaceutical industry makes a major contribution to the EU, not just in economic terms but also in terms of high-quality employment, investment in the science base and

in terms of public health. “ “

Pharmaceuticals in Europe: Facts and Figures, The European Commission, DG Enterprise and Industry

European Commission. http://ec.europa.eu/enterprise/sectors/healthcare/competitiveness/importance/facts-figures_en.htm. Accessed 21 Jan 2014





NEARLY A QUARTER OF ALL BIOPHARMACEUTICAL INNOVATION ORIGINATES IN EUROPE Europe produces nearly one quarter of all new innovative therapies and biotech patents in the world

34

Macher and Mowry. Innovation in Global Industries: U.S. Firms Competing in a New World (Collected Studies), Washington DC: The National Academies Press, 2008

E.U. (24.8%)

USA (64.4%)

Japan (10.7%)

Other OECD (6.0%)

India (1.1%)

China (0.2%)

Other (2.8%)





GREAT SOURCE OF HIGH-QUALITY JOBS IN EUROPE

35

EFPIA. http://www.efpia.eu/facts-figures. Accessed 21 Jan 2014

OPEN

Each direct biopharmaceutical job supports 3–4 additional

jobs in other sectors

TOTAL JOBS SUPPORTED Over 2 million total EU jobs supported by the

biopharmaceutical sector

BIOPHARMA JOBS More than 700,000 jobs in the EU biopharmaceutical sector





INVESTMENTS IN MEDICAL INNOVATION YIELD

36

SIGNIFICANT ECONOMIC BENEFITS TO EUROPE The European Union’s top 5 pharmaceutical trading partners – EU Exports 2012

In 2012, medical innovators contributed a trade surplus of 80 billion euros to the EU

EFPIA http://www.efpia.eu/index.php?mact=FactsFigures,cntnt01,default,0&cntnt01limit=6&cntnt01orderby=category%20ASC&cntnt01page=1&cntnt01returnid=23&cntnt01returnid=23. Accessed 21 Jan 2014





THE BIOPHARMACEUTICAL SECTOR IS THE MOST R&D-INTENSIVE IN THE EU

Ranking of industrial sectors by overall sector R&D intensity (R&D as percentage of net sales – 2011)

37

Pharmaceuticals & biotechnology

Software & computer services

Technology hardware & equipment

Leisure goods

Health care equipment & services

Electronic & electrical equipment

Automobiles & parts

Aerospace & defence

All sectors

Chemicals

Industrial engineering

General industrials

Banks

Fixed line telecommunications

Food producers

Oil & gas producers

0 5 10 15 20 Note: Date relate to the top 1,500 companies with registered offices in the EU, Japan, the USA and the Rest of the World,

ranked by total worldwide R&D investment (with R&D investment above €34.9 million) EFPIA. http://www.efpia.eu/uploads/Figures_Key_Data_2013.pdf. Accessed 21 Jan 2014





…biomedical and clinical research generates more than 50 per cent of the research output in Europe, as measured by the number of journal

papers and citation. “ “ Professor Roger Bouillon of the European Medical Research Councils Core Group

Science Business. http://www.sciencebusiness.net/news/75940/Why-we-need-a-new-strategy-for-health-research-in-Europe. Accessed 21 Jan 2014





WHY INCENTIVISE THE INNOVATORS? A CASE STUDY

39

Celebration of Science. www.celebrationofscience.org/about. Accessed 10 Sept 2012

$3.8 billion US investment in the Human Genome Project

1990 2003 ROI on Human Genome Project: $796 billion 310,000 jobs





Medical innovation is turning knowledge about disease mechanisms at the genetic and cellular level into products that cure or prevent illness. Medical innovation in particular brings about a virtuous cycle of better health, longer life and greater prosperity that in turn stimulates additional investment in even more advanced innovations for preventing and treating disease.

40

4

THE VIRTUOUS CYCLE OF INNOVATION & HOW TO SUSTAIN IT MEDICAL INNOVATION IS THE BEST HOPE OF LONGER LIFE AND BETTER HEALTH FOR ALL.





All too often, health is still primarily perceived as a cost, a drain, a burden – and not as an

investment for the future which can pay great dividends. “ “

Tonio Borg, European Commissioner for Health and Consumer Policy

http://ec.europa.eu/commission_2010-2014/borg/docs/04092013_speech_futur_public_health_en.pdf. Accessed 21 Jan 2014





INNOVATION REQUIRES INVESTMENT, WHICH LEADS TO FURTHER INNOVATION

42

Investment Innovation results from continuous

investment by both public and private actors, including biopharmaceutical

companies such as Celgene

Innovation Celgene has a proven track record of delivering better outcomes with

better healthcare through innovation

Access Access and reimbursement

for current innovative therapies fund investment in future innovation

Commitment The unprecedented survival results reported with Celgene’s innovative therapies are direct results of the

company’s commitment to improving the lives of patients worldwide

Virtuous Cycle of Innovation

Improvements in healthcare are an

important source of gains in health, longevity and productivity globally





MEDICAL INNOVATION IS A SELF-SUSTAINING PROPOSITION

43

Drug Discovery and Development: Understanding the R&D Process. Congressional Budget Office, Research and Development in the Pharmaceutical Industry, 2006. www.innovation.org. Accessed 15 Nov 2012

Clinical trials

5 Compounds

IND

SU

BM

ITTE

D

Indefinite 10 – 12 Years

Pre- discovery

FDA Review & Scale-

up to Mfg.

0.5 – 2 Years

3 – 6 Years

~5,000 – 10,000

Compounds

ND

A S

UB

MIT

TED

PHASE I II III

Number of volunteers

20- 100-501,000-5, 100 0 000

6 – 7 Years

Preclinical

Developing a new medicine takes an average of 10–15 years; the Congressional Budget Office reports that “relatively few drugs survive the clinical trial process.” Innovative therapies have a limited time in their lifecycle to recapture

investment and fund future innovation Discovery & development Innovator exclusivity Generic

One FDA- Approved Therapy





MAXIMIZING THE PROMISE OF SCIENCE: 5,000+ MEDICINES IN DEVELOPMENT IN 2011

44

454 Musculoskeletal

Diseases

1,247 Neurological

disorders

650 Cardiovascular

disorders 412

Diabetes mellitus

204 HIV/AIDS

and related conditions

69 Liver disease and related conditions

1,586 Infectious diseases

1,795 Rare diseases

731 Immunological

conditions

3,436 Cancer

142 Lung cancer 95 Breast cancer

383 Blood cancers 63 Colorectal cancer

105 Skin cancer

Reflects compounds in all phases of development, including having been filed with the FDA, or approved by the FDA, but not yet on the market in the U.S. as of January 2013. Medicines with multiple indications may appear in more than one category, but in the total number (5,000+ medicines), only the initial indication is counted. PhRMA. Innovation in the Biopharmaceutical Pipeline. http://phrma.org/sites/default/files/pdf/2013innovationinthebiopharmaceuticalpipeline-analysisgroupfinal.pdf. Accessed 21 Jan 2014





ORPHAN DRUG REGULATION HAS A CRITICAL IMPACT

45

ON THE VIRTUOUS CYCLE OF INNOVATION IN EUROPE

Office of Health Economics. Assessment of the Impact of OMPs on the European Economy and Society. Report November 2010. http://www.ohe.org/publications/article/assessment-of-the-impact-of- orphan-medicinal-products-on-europe-15.cfm. Accessed 13 Dec 2012

The Orphan Drug Regulation (EC) 141/2000, together with national incentives, have contributed to the discovery and development of much needed treatments. Orphan drug expenditures are expected to

account for less than 5% of total European pharmaceutical expenditures by 2020, confirming both the affordability of orphan drugs and the sustainability of this new model for healthcare systems

8

68 80 70

60

50

40

30

20

10

0

165

480

0

100

200

300

400

500

600

Pre-Orphan Drug Legislation (2000)

Post-Orphan Drug Legislation (2010) 2000 2008

Drugs for rare diseases receiving marketing authorization in Europe

European investment in orphan drug R&D, 2000 and 2008

Num

ber o

f Dru

gs A

vaila

ble

Mill

ions

€





IT TAKES 12 YEARS OR LONGER TO BRING A NEW TREATMENT TO PATIENTS

46

The drug development pyramid

1

2

2-5

5-10

10-20 Substances

10,000-30,000 Substances

Synthesis, Examination &

Screening

Preclinical Tests

(Animal)

Clinical Tests (Human)

Product surveillance Phase IV

Phase III

Phase II

Phase I

Basic Research

Development

Introduction Registration

PHARM R&D

Years 12 11 10 9 8 7 6 5 4 3 2 1 0

Briggs. Effective Use of Health Technology Assessment to Maximize Market Access. http://www.iconplc.com/icon-files/insight-newsletter/June11/effective.html. Accessed 16 Nov 2012





Vernon et al. Health Econ. 2010 Aug;19(8):1002-5

EVEN AFTER APPROVAL, FEW MEDICINES RECOVER THEIR R&D COSTS

New medicines introduced between 1990 and 1994, grouped by tenths, by lifetime sales

2000

1500

1000 %

Just 2 in10 approved medicines produce revenues

that exceed average R&D costs

After-tax average R&D costs

500

0

1 2 3 4 5 6 7 8 9 10 Note: Prescription drug development costs represent after-tax out-of-pocket costs in 2000 dollars for drugs introduced from 1990–94. The same analysis found that the total cost of developing a new drug was $1.3 billion in 2006. Average R&D costs

include the cost of the approved medicines as well as those that fail to reach approval.





DEVELOPING NEW CANCER THERAPIES TAKES EVEN LONGER, WITH LOWER SUCCESS RATES

48

65

35

64

83

64

28

45

82

10

0

40

30

20

70

60

50

90

80

Phase l to Phase ll Phase ll to Phase lll Phase lll to NDA/BLA NDA/BLA to Approval

Succ

ess

rate

s

Non-Oncology 2011 Oncology 2011

BIOtech Now. Oncology Clinical Trials – Secrets of Success. http://www.biotech-now.org/business-and-investments/2012/02/oncology-clinical-trials-secrets-of-success. Accessed 15 Nov 2012





WORTH THE INVESTMENT: MORE PEOPLE ARE SURVIVING AS MORE NEW THERAPIES ARE DEVELOPED (US DATA)

49

1980 1990 2000 2010

4.57

9.5 11.7

43

129 140

120

100

0

60

40

20 15

14

12

10

0

6

4

2

Cumulative number of new cancer therapies

Cancer survivors

80 85 8 6.6

Number of cancer

therapies Millions of people

National Cancer Institute, Surveillance Epidemiology and End Results (SEER). http://seer.cancer.gov/csr/1975_2009_pops09/index.html. Accessed 31 Oct 2012 U.S. Food and Drug Administration’s Drug Approval Database. http://www.accessdata.fda.gov/scripts/cder/drugsatfda/index.cfm. Accessed 16 Nov 2012





THE GENERICS MARKET IS PART OF THE VIRTUOUS CYCLE AND DEPENDS ON INNOVATION

Share of generics in the total pharmaceutical market, 2011 (or nearest year)

50


35

28 24

44

36

17 15 18 17 15

23

12 16

9 8 3

76 75 72 70

51

42 36 35 34 34

30 25

21 18 16

9

100 90 80 70 60 50 40 30 20 10

0

%

1 Reimbursed pharmaceutical market.

Value Volume





Philipson et al. Health Affairs 2012; 31:4. http://imgsrv.wben.com/image/wben2/UserFiles/File/Philipson%20FF.pdf. Accessed 21 Jan 2014

PUBLIC POLICIES CAN HAVE DIRECT CONSEQUENCES FOR CANCER PATIENTS

USA EUROPE

Average survival of patients diagnosed with cancer

11.1 years Average survival of patients

diagnosed with cancer

9.3 years

Differences in US costs reflect more rapid uptake of new technologies that may lead to difference in survival. “

“ THE COST OF THE CURE: EXPLODING THE MYTHS




CELGENE IS COMMITTED TO THE VIRTUOUS CYCLE OF INNOVATION IN EUROPE

Over half our clinical trial sites and patients in Celgene’s global programme established in Europe

•   We have been conducting clinical trials in Europe since 2004, two thirds of which are still ongoing

•   More than 5,000 patients have benefited from innovative treatments in the framework of our clinical research in 27 countries across Europe

52

1 -100

101 - 400

401 - 800

801 +

Number of patients enrolled in CTs

European countries with patients enrolled in Celgene clinical trials since 2004





CELGENE: DELIVERING ON ITS PROMISE OF

53

BRINGING NEW TREATMENTS TO PATIENTS IN NEED

The products represented as in development and found in the product pipeline are intended for investors and members of the media to provide general information on Celgene. This information is not represented to be a complete description and is subject to change without notice. Celgene Corporation may from time to time update this information but does not warrant that will take place at any particular time nor assume any obligation to update this information

0

200

400

600

800

1000

1200

1400

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Celgene R&D investment in millions of dollars non-GAAP

Celgene’s has already developed innovative therapies that bring tremendous benefits to providers, patients and healthcare systems worldwide:

Reducing hospitalisations

Preventing disability

Eliminating surgeries

Improving quality of life

Extending survival





260

225

180 170

120 120

75

55 55

25 25 20 10

0

50

100

150

200

250

300

54

Based on Kantar Health’s CancerMPact® epidemiology database for the US, EU5 and Japan. 2011

CELGENE RESEARCH SPANS BROAD RANGE OF HAEMATOLOGICAL MALIGNANCIES

Most prevalent haematologic cancers

US,

EU

-5, J

apan

Pre

vale

nce

(000

s)

Celgene Studies: Active/Planned Currently, No Active Programs

250,000 People will die this year from haematologic cancers that are considered orphan diseases

DLBC CLL MDS ALL AML CML Hodgkin Lymphoma

MCL PTCL Myelofibrosis CTCL Follicular Myeloma





CELGENE’S LEADING HAEMATOLOGY PIPELINE

55

HAEMATOLOGY EU Regulatory Pre-clinical Phase I Phase II Phase III Filing & Approval

MULTIPLE MYELOMA (MM) Relapsed/Refractory MM

Relapsed/Refractory MM

Newly diagnosed MM

Newly diagnosed MM

Maintenance MM

MYELODYSPLASTIC SYNDROMES (MDS) MDS Deletion 5q

Non-deletion 5q

Lower-risk MDS

ACUTE MYELOID LEUKEMIA (AML) AML (20%-30% blasts)

AML (>30% blasts)

Post-induction AML Maintenance

Combination Therapy for AML

MYELOFIBROSIS Myelofibrosis






CELGENE’S LEADING HAEMATOLOGY PIPELINE (continued)

56

HAEMATOLOGY EU Regulatory Pre-clinical Phase I Phase II Phase III Filing & Approval

LYMPHOMA

Relapsed/Refractory Peripheral T-cell Lymphoma

Maintenance Diffuse Large B-cell Follicular Lymphoma

First-line Peripheral T-cell Lymphoma

Relapsed/Refractory Mantle Cell Lymphoma

Relapsed/Refractory Diffuse Large B-cell

CHRONIC LYMPHOCYTIC LEUKAEMIA (CLL) First-line CLL

Maintenance CLL

CLL Btk Inhibitor

ANAEMIAS

Renal Anaemia with Metabolic Bone Disease

Diamond Blackfan Anaemia

Beta-thalassaemia

MDS

Beta-thalassaemia

MDS The products represented as in development and found in the product pipeline are intended for investors and members of the media to provide general information on Celgene. This information is not represented to be a complete description and is subject to change without notice. Celgene Corporation may from time to time update this information but does not warrant that will take place at any particular time nor assume any obligation to update this information





CELGENE’S EXPANDING ONCOLOGY PIPELINE

57

ONCOLOGY EU Regulatory

Pre-clinical Phase I Phase II Phase III Filing & Approval

Metastatic Breast

First-line Advanced Pancreatic

First-line Advanced Non-small Cell Lung

First-line Metastatic Melanoma Relapsed/

Refractory Small Cell Lung Cancer

First-line Metastatic Breast

Dual TORK Inhibitor

Nucleoside Analogue

Dual TORK/DNA PK Inhibitor

Pleiotropic Pathway Modulator






CELGENE’S INFLAMMATION AND IMMUNOLOGY

58

Psoriasis

Psoriatic Arthritis

Ankylosing Spondylitis

Behçet’s Disease

Rheumatoid Arthritis

Crohn’s Disease Cutaneous Lupus Erythematosus

Systemic Sclerosis

EMERGING PRODUCT PIPELINE INFLAMMATION & IMMUNOLOGY

EU Regulatory Pre-clinical Phase I Phase II Phase III Filing & Approval






WE ARE AT A CRITICAL CROSSROADS FOR MEDICAL INNOVATION

59

A

MAJOR PARADOX The potential of science is

greater than ever …

But the outlook for investment has never been more

uncertain

R&D investment = longer, better, healthier lives




BETTER & HEALTHIER 4

WHAT’S AT STAKE…

60

Today’s investments in healthcare and R&D can create a world free from cancer for our children and our children’s children

OFFER HOPE

2 3

GENE MAPPING

CELLULAR THERAPIES

GENE THERAPY

IMMUNOMODULATORS

PERSONALISED MEDICINE

NANOTECHNOLOGY EPIGENETICS





The best way to predict the future is to invent it “ “

Alan Kay, Computer Scientist

Remark taken from Kay's address before the 20th annual meeting of the Stanford Computer Forum




Celgene International Sàrl Route de Perreux 1, 2017 Boudry Switzerland

Date of preparation: January 2014

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