Future Pharma India

7/31/2019 Future Pharma India

1/40

PHARMACEUTICALS

Future PharmaFive Strategies to Accelerate

the Transormation o the

Pharmaceutical Industry by 2020

kpmg.com


2/40

Five Strategies to Accelerate the Transormationo the Pharmaceutical Industry by 2020

ContentsExecutive Summary

Key Challenges Facing the Pharmaceutical Industry 1

1. Delivering shareholder/stakeholder value 2 - 6

2. Low growth business environment 7 - 10

3. R&D productivity 11 - 15

4. Rising risks and loss o trust 16 - 18

A Vision o the Pharmaceutical Industry in 2020 and Beyond 19 - 24

Five Strategies to Accelerate Industry Transormation 25

1. Reassess product strategy 26

2. Invest in the marketing and sales inrastructure o 2015 and beyond 27 - 29

3. Acquire more talent and experience rom other industries 30

4. Use internal rate o return to prioritise and rationalise the R&D portolio 31 - 32

5. Review and revise governance standards 33 - 34

I you would like to discuss any o the ideas in this report or how they

can be implemented, please contact any o our pharmaceutical team.

FuturePharma


3/40

Executive

SummaryThis paper explores some o the majorchallenges acing the pharmaceuticalindustry today.

Four Major Challenges Facing

the Pharmaceutical Industry:

1. Delivering shareholder/stakeholder value

2. Low growth business environment

3. R&D productivity

4. Rising risks and loss o trust

We believe that there is a realopportunity or the industry to redeneitsel in the minds o shareholders,stakeholders, consumers andgovernments, ollowing thedisappointing business and shareprice perormance o recent years.

Stagnation in mature Western Markets(WM) combined with rapid growth oEmerging Markets will change theshape and needs o the industry.Operating margins are peaking and the

impact o Emerging Market growth onthe current cost base will bring marginsdown. Businesses need to ensureinvestment in growth markets refectsthe new industry and not a templaterom the past. Social media andinormation technology oer potentiallysignicant new ways to contactprescribers and consumersmore eciently.

R&D productivity has been sub-optimaland poorly measured. We assess that

returns on capitalised R&D spendinghave been steadily alling. A shit toan internal rate o return measure odevelopment spending is needed,together with some inormation aboutwhy the companies believe thatspending on development projects willgive shareholders a return greater thanthe cost o capital or the company.

Scientic, political, legal and personnelrisks are all rising. We see a need or areview o governance standards romBoard level downwards, together with aresh look at internal appraisal systemsto ensure the best qualied employeesare in the key roles and get the besttraining or the changing marketplace.

Pharmaceutical companies must winback trust; they have created theperception that they put theircommercial goals above the interestso governments, payors, prescribersand patients.

This situation can be changed as part o aseries o transormational steps in boththe operations and culture including betterinternal and external communication orisks and more consistent compliancewith regulatory standards.

There are many new relationships todevelop with government agencies inthe growth markets, in addition toincreasing complexity in relations withgovernments and payors in establishedmarkets. Improving these relationships

can best be achieved by adopting betterstandards o governance at all levels othe industry.

In our vision or 2020 we see an industrythat will be simpler or investors tounderstand not because it will bestructurally simpler: developing newmedicines will be an ever morecomplex process.

With well chosenstrategies combinedwith disciplinedimplementation, I believe

the pharmaceuticalindustry has the platormrom which to prosper

over the next 10 years.

Chris Stirling, European Sector Leader

But because the geographically diversenature o its business will increase withthe growth o Emerging Marketinfuence, the pharmaceutical industrycould take on the appearance o a highvalue consumer products industry to itsshareholders. Whether a diversied orspecialist business model is better tomeet the 2020 challenges is a muchmore company specic analysis thatwe have not attempted to cover here.

We have identied ve strategies toaccelerate the transormation o theindustry to meet them.

Five Strategies to AccelerateIndustry Transormation:

1. Reassess product strategy

2. Invest in the marketing and salesinrastructure o 2015 and beyond

3. Acquire more talent and experiencerom other industries

4. Use internal rate o return to prioritiseand rationalise the R&D portolio

5. Review and revise governancestandards

The industry is responding positively

to a number of other important issues,

such as working with governments and

providers to address the rising cost

of healthcare.

The selective and focused approach

that we have chosen means that this

paper does not cover these other

challenges in any detail.


4/40

1 | Future Pharma

Facing the Pharmaceutical Industry

Key Challenges

1. Delivering shareholder/stakeholder value

2. Low growth business environment

3. R&D productivity

4. Rising risks and loss o trust


5/40

0

50

100

150

200

250

07/01/2005

07/01/2011

07/01/2006

07/01/2007

07/01/2008

07/01/2009

07/01/2010

Future Pharma | 2

Delivering Shareholder/Stakeholder Value

Challenge 1

Key

STOXX Europe 600 Index

Health Care

Utilities

Food and Beverages

Tobacco

Personal & Household Goods

Europe Pharma

US Pharma

Negatives:

Increasing speed and intensity oproduct competition(Figure 4)

Increasing rebates to governmentand third party providers in the US

Budget decit driven price reductionsin Europe

Exposure to loss o revenuesollowing patent expiration (Figure 2)

Ferocity o early generic competition

Higher regulatory hurdles, leading togreater uncertainty and ewerproduct approvals

Greater restrictionson reimbursement

Declining R&D productivity

The pharaceutical industry has perormeddisappointingly over the last ten years,relative to other industries (Figure 1).This is the result o a complex ebb andfow o positive and negative actors onboth revenues and prots that hasmarginally avoured the negatives.

Factors infuencing revenues include:

Positives:

Strong growth in Emerging Markets(Figure 2)

Aging populations

Price increases in the US(Figure 3)

Infuenza pandemics

Enduring willingness o payors tosupport demonstrablyinnovative therapies

Figure 1

Relative Share Price Perormance

rom 2005 Source: Bloomberg


6/40

3 | Future Pharma

Challenge 1

The balance o actorsinfuencing prots hascontributed to making theconsistent delivery oshareholder/ stakeholdervalue more dicult and

this continues to bethe case.

Positives:

An industry-wide drive to reduce costsand improve eciency

Improved operating margins(Figure 5)and

Strong cash fow growth uellingincreased cash returns toshareholders through increaseddividend pay-out ratios and sharerepurchase programmes (Figure 6)

Negatives:

Royalty payments increasing due togreater collaboration and risk sharing

Increased legal settlements withplaintis and governments

Increased clinical trial demands

Increased regulatoryling requirements

M&A activity that has addedcomplexity, whilst rarely generatingobviously better returns

Growing saety requirementspost-approval

Factors infuencing prots and earnings

Delivering Shareholder/Stakeholder Value

1150

1100

1050

7002010 Brand

growthPatent

expirationsGeneric Emerging

MarketsOther 2015E

750

800

850

900

950

1100

$856bn

$1081bn

119 -120

47

150

29

Figure 2Emerging Markets are the Key

Drivers o Total Spending Source: IMS MarketPrognosis; KPMG

TotalSpending$bn


7/40

Future Pharma | 4

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%1970s 1980-1984 1985-1989 1990-1994 1995-1999

23%

50%

71%

77%

90%

Percent o First-in-class medicines witha competitor in phase II testing at thetime o approval.

9%

8%

7%

0%

1%

2%

3%

4%

5%

6%

2005 2006 2007 2008 2009

6% 6.1%

7%

7.9%8.3%

Source: DiMasi and Faden; Tuts Center or the Study o Drug

Development, Working paper 2009; PhRMA

Source: AARP RxWatchdog Report, August 2010

Figure 3

Average Annual Percent Change in US Retail Prices

or Widely Used Brand Name Prescription Drugs

Figure 4Speed and Intensity o Competition


8/40

5 | Future Pharma


9/40

We believe that over the next ten yearsthe pharmaceutical industry coulddeliver growth in line with real GDP(3-5%), which is respectable and meritsa higher market value than that o today.We see a real opportunity orthe industry to redene itsel in theminds o shareholders, stakeholders,consumers and governments.

This will require a shit in how theindustry operates, particularly regardinghow it spends its shareholders undsand how it communicates the valueits products and delivers its services.The industry has to demonstratethat it can deliver better returns oninvestment than in the past by changingmany aspects o how it operates.

This is likely to be uncomortable but willbe, we suspect, a continuation o aprocess which has already started.Novartis management has made a stepin the right direction by discussing cashfow return on invested capital, and howit planned to improve it or each division,at its November 2010 Strategy &Innovation Forum1.

Future Pharma | 6

32%

33%

OperatingMargin

32%

31%

Aggregate pharmaceutical industry operating margins in USD

28%2005 2010

28%

29%

29%

30%

30%

31%

32%

29%

Figure 5

Industry Pharmaceutical Division Operating MarginsSource: KPMG estimates

Industryposttax

cashfow$

bn

02003 2004 2005 2006 2007 2008

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

2009 2010

68

,465

87,612

98,233

118,327

123,104

122,893

144,797

134,955

Source: KPMG estimates

Figure 6

Pharmaceutical Industry post Tax cash fows

1 http://www.novartis.com/downloads/investors/presentations-events/pipeline-update/2010/2010-11-17-

generating-nancial-returns-rom-the-portolio.pd


10/40

Revenue growth modestly

slowing in 2010-2015

2 The Global Use o Medicines: Outlook Through 2015. IMS Institute or Healthcare Inormatics May 2011

Low Growth BusinessEnvironment

The impact o $120bn oproduct revenues losingpatent protection in majorWestern Markets rom 2011-2015 will be largely matchedby on-patent brand growth,leaving Emerging Marketgrowth and genericspending as the maindrivers o global spending.

Source: IMS Health

$bn

50

90

70

2010 2015

20

30

Oncology

Asthma/COPDLipid lowering

Diabetes

Angiotensin inhibitors

or CV disease

60

40

80

7 | Future Pharma

The pharmaceutical industry is acing auture with lower growth prospects thanin the past. IMS orecasts global spendingon medicines will reach $1.1 trillion by2015 but the revenue growth rate willslow rom 6% between 2005 and 2010to 3-6% between 2010 and 2015.

The impact o $120bn o productrevenues losing patent protection inmajor Western Markets rom 2010-2015will be largely matched by on-patentbrand growth, leaving Emerging Marketgrowth and generic spending as themain drivers o global spending. Per IMSthe combined US and EUR share ospending will shrink rom 61% in 2005 to44% by 2015 and Emerging Markets will

grow rom 12% in 2005 to 28% by 2015.

Policy changes seen in 2010 in the US,Japan, Europe and China are unlikely tobe the last made as governmentsstruggle with growing budget decitsand look or ways to spend moreeectively on healthcare, urtherpressurising growth.

Major therapeutic classes drivingbrand growth between 2010 and2015 are expected to be Oncology(+5-8% annually to $75-80bn), diabetes(+4-7% annually to $43-48bn) andautoimmune diseases (+6% to circa$30bn), with continuing i slower growthor asthma/COPD (+2-5% to $41-46bn),angiotensin inhibitors (+1-4% to$28-33bn) and platelet aggregationinhibitors (+4-7% to $18-22bn), bothor cardiovascular disease (Figure 7).

Biologic therapies as a class are a majorgrowth contributor, orecast to growrom $138bn in 2010 to $190-200bn by2015, or an increase rom 16% o globaldrug spending to 18%.

Figure 7

Forecast Therapeutic ClassGrowth 2010-2015

Challenge 2


11/40

Future Pharma | 8

Aggregate Emerging Market

revenues are orecast to growat a compound 14% between2010 and 2015.

I Western Market stagnation/declinecontinues and Emerging Market growthslows to around 10% per annum thenglobal revenues would grow on average4% per annum between 2015-2020(Figure 8).

I the pressure on US and EU marketlessens post the patent expiration cliand low levels o growth return (say3%) then global growth would be 4%between 2015 and 2020.

1400

1200

1000

800

600

400

200

02010E 2015E

US EU EM Other

$856bn

188

238

300

154

303 487

205 205 195

308 335 335

$1,081bn

CAGR

3%CA

GR4%

$1,318bn

2020E

$bn

Source: 2010, 2015 IMS Health; 2020 KPMG estimates

Figure 8

Pharmaceutical Industry 2010 to2020 by Major Geographic Market


Figure 9

Estimated Industry Cost and

Margin breakdown

2010E

Revenues 100%

Cost o sales -25%

General and administrative costs -7%

Marketing & sales -20%

R&D -16%

Operating prot 32%

Pre R&D operating prot 48%

Operating Margins Peaking

and Set to Decline

We believe that the pharmaceuticalindustry currently achieves close to50% pre-R&D operating margins,on average.


12/40

Source: 2010, 2015 IMS Health;

2020 KPMG estimates

Figure 11

Changing Geographic Contributionto Global Pre-R&D Operating Prot

9 | Future Pharma

Based on data rom various industrysources we have estimated thecontribution by major geographicregion to industry pre-R&Doperating prot (Figure 10).

This table highlights the

lower margins availablein Emerging Markets.

Challenge 2

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

2010 2015E

US EU EM Other

18%

12%

21%

48%

20%

21%

16%

42%

21%

30%

13%

36%

2020E

Region % 2010 global

revenues

Revenues

$bn

Est Pre-R&D

margin

Pre-R&D

op. prot $bn

US 36% 308 65% 200

EU 24% 205 43% 88

EM 18% 154 33% 51

Other 22% 188 40% 75

Total 856 48% 415

Figure 10

Estimated 2010 Geographic Contribution toGlobal Pharmaceutical Sales and Prots

Source: IMS Health;

KPMG estimates

Low Growth BusinessEnvironment

Growth o Emerging Markets couldresult in these countries togethercontributing as much to global protsas the US by 2020 (Figure 11).


13/40

Future Pharma | 10

Source: IMS Health; KPMG estimates

Figure 12

Assumptions o Compound Annual RevenueGrowth and Geographic Margin 2010-2020

Source: 2010, 2015 IMS Health; 2020 KPMG estimates

Figure 13

Pre-R&D ProftMargins Pressureddue to Emerging Markets

2010E 2015E

Revenues $bn Pre R&D op prot $bn

856

1081

1318

415474

566

2020E

Pre-R&D

margin 48%

Pre-R&D

margin 44%

Pre-R&D

margin 43%

The importance o Emerging Marketsand the pressure on margins we believemerits a wholesale review o themarketing and sales investment in both

growth markets and those in decline,the personnel talent required to managethese businesses and above all the R&Dportolio being developed to supplyappropriate products that payors willund in these dierent markets overthe next 10 years.

We nd that the pre-R&Dindustry operating margincould decline rom an

estimated 48% in 2010 to43% by 2020.

Using the assumptions shown in(Figure 12) we conclude that globalmargins will inevitably come underpressure as the contribution rom lower

margin Emerging Markets continues togrow rapidly relative to the matureWestern Markets. We nd that thepre-R&D industry operating margincould decline rom an estimated 48%in 2010 to 43% by 2020 (Figure 13).

2010-15

Revenue CAGR

2015 Pre-R&D

op. margin

2015-20 Revenue

CAGR

2020 Pre-R&D

op. margin

Assumptions

US 2% 60% 0% 60%

EU 0% 38% -1% 38%

EM 14% 33% 10% 35%

Other 5% 40% 5% 40%

Global 5% 45% 4% 43%

This gure illustrates the protmargin impact o the growth othe industry in Emerging Markets.


14/40

Over the past decade thenumber o applications orapproval o new medicalentities being made toFDA has averaged 30 peryear. However, in 2010 only

23 applications were led,the second lowest numberin a decade(Figure 14).

Poor R&D productivity

The number o new medical entities(excluding line extensions) beingapproved in the US has not shownany trend change (Figure 15) overthe past decade. It is hard to correlateapplication numbers with approvals

because o the dierence in approvaltimes. FDA data indicates that betweenJanuary 2006 and October 2009 61%o new medical entity applicationswere approved. Comparative data orthe equivalent European authority,the EMEA, indicates 68% wereapproved in the same period3.

2011 is looking a lot better than 2010and could be an above average year.

3 http://www.da.gov/downloads/AboutFDA/CentersOces/CDER/UCM192786.pd4 http://www.rstwordpharma.com/node/886309

Challenge 3

Figure 14

Number o Applications or

New Medical Entities to FDA

40

35

30

25

20

15

10

5

01999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Numb

eroapplicationsornewmedicalenti

tiestoFDAbyyear

11 | Future Pharma

R&D Productivity

So ar this year (through 7th July) 20new medicines have been approvedcompared with 21 in the whole o 20104.This looks like the pattern o 2005 and2009 being repeated. There is no basisto assume the overall number oapprovals is on a long term up trend.

Source: FDA


15/40

Future Pharma | 12

R&D productivity based onnumbers o approvals relativeto R&D spending is worsening.

R&D spending has, however, beenclimbing inexorably, running at acompound annual growth rate o 10%1999-2007, although there has been asignicant slowdown since 2007 (CAGR1%). These calculations are based ondata or member companies o the

Pharmaceutical ManuacturersAssociation o America and thereoreunderstate global R&D spending.

New drug approvals R&D spent

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

NumberonewU

Sdrugapproval

AnnualUSIndustryspent

40

35

30

25

20

15

10

5

0

55,000

50,000

45,000

40,000

35,000

30,000

25,000

20,000

R&D productivity based on numberso approvals relative to R&D spendingis worsening.

Looking at R&D productivity another way,industry success rates in bringing a drugrom research to market was just 4%between 2005 and 20095. This is clearlyan unsustainably low rate.

Figure 15

New Medical Entity Approvals and

Annual R&D Spending 1999-2010 Source: PhRMA and FDA

5 Linda Martin KMR, Bernstein R&D Conerence 2011, cited in Roche 1H2011 results presentation


16/40

Return on R&D alling

We have made an illustrative calculationo the post-tax return on R&D spendingover 15 years (Figure 16).

The steady decline over the past 20 yearsis no surprise, but it illustrates the need toaddress the expectations o uture returnsrom current spending both rom a peaksales perspective and rom a cost omarketing and sales support point o view.

R&D returns havenearly halved overthe last 10 years.

13 | Future Pharma

Challenge 3

R&D Productivity


17/40

1990

1991

1992

1993

1994

1995

1996

1998

1999

2

000

2001

2

002

2

003

2

004

2

005

2

006

2

007

2

008

2

009

2010

1997

PostTaxreturnonR&Dex

penditure

8%

10%

12%

14%

16%

18%

20%

4%

6%

Source: PhRMA data; KPMG estimates

Figure 16

Illustrative Post Tax Returnon R&D Expenditure

Future Pharma | 14


18/40

R&D Productivity

Ineectively Assessed

Industry focuses on numbers of projects

in R&D, not returns, nor forecasts

Corporate presentation o the value oR&D tends to ocus on numbers o

product candidates in development.Mention o how much was spent rarelyeatures prominently in the annual reportto shareholders and we could nd onlyone company, GlaxoSmithKline, amongthe industry majors that highlights itstarget return on R&D spending.

Phrases that industry participants use todescribe their R&D pipelines include:

strongest

one of the best

one of the most innovative

strongest and most productive

uniquely broad

peer-leading

The subjective nature o thesedescriptions is not unreasonable. There islittle numerical basis or comparison withother companies whose needs or uturegrowth may be smaller or greater. The

recent history o the industry wouldsuggest that hubris is to be avoided at allcosts. The point is that these commentsand the detailed explanations o theindividual development projects give noinormation about why the companiesbelieve that spending on these projectswill give shareholders a return greaterthan the cost o capital or the company.Or put another way, why these projectswill result in a reversal o the long-termtrend illustrated in Figure 16.

15 | Future Pharma

Challenge 3

A predictable delivery onew drugs over a multi-yearperiod is the most likelymeans or companies tocapture an element o their

pipeline value in theirmarket capitalisation.

6 2 March 2011 | Nature 471, 17-18 (2011

We believe that there is little or no valuebeing ascribed to pipelines, based oncurrent market capitalisations and thecash fow value o on market drugs. Somevalue should be allocated, although nottoo much given the inherent

unpredictability o medical research. Apredictable delivery o new drugs over amulti-year period is the most likely meansor companies to capture an element otheir pipeline value in their marketcapitalisation. However, in the shorterterm, exposition o an understandableassessment o the returns that have beenachieved and indications o why the uturereturns will be better would also help.

A systematic explanation o why productcandidates ailed or why products had to

be withdrawn rom the market and whatwas learnt rom these ailures would helpshow that the R&D process is moreconsidered than in the past and that pastmistakes are not being repeated.

Some measure o scientic quality is alsoneeded. The best science is not alwaysconducted in large-capitalisationpharmaceutical companies as illustratedby the industry seeking new ways topartner with academia6.

R&D Productivity


19/40

Future Pharma | 16

Rising scientic risk

In the inormation age it is reasonable toassume that everyone knows everything,and thereore that competitors may beworking on similar biological targets withsimilar chemical or biological entities. In

the recent past the speed with whichseveral companies have simultaneouslydeveloped new chemical entities istestament to this. We see it as key tounderstand the end game at the start:integrate inormation on what value anew drug or new drug class could bringand the attitude o those that will pay orthe medicine as early as possible into thedevelopment process.

We were very surprised to nd that only5/13 (38%) o major companies include a

Board committee with an explicit mandateto provide assurance to the Board aboutthe quality, competitiveness and integrityof the Companys R&D/scientic

activities. This would seem an essentialcheck and balance on the path to greaterrigour in agreeing R&D expenditure giventhe importance o innovation.

Rising political risk

Political risk in the US and the EuropeanCommunity is well understood and willbe part of all companies planning

process. There are probably noexpectations that pressure romgovernments to reduce the cost omedicines and o treating chronicdisease is going to reduce. The industryis cash generative and relatively cashrich. Working with governments topromote innovation, while achievingadequate commercial returns, willbe important.

Challenge 4

Staying close to governmentthinking will be critical tosecuring a continuing strongposition in the industry.

We think that a systematic approach tothe changing nature o governmentpolicy in Emerging Markets is key toreducing long-term political risk. In amajority o Emerging Markets, theconsumer pays or prescription

medicines, but governments infuencethe price paid to varying degrees.Staying close to government thinkingwill be critical to securing a continuingstrong position in these markets.

Rising legal risk

In spite o extensive risk managementinput to Board audit committees, therehas been a rise in the number osettlements or violations o a variety olaws as exemplied by data rom the USover the past twenty years with a very

rapid rise since 2003 (Figure 17, Figure 18).

We suppose that the rate o increase inthese settlements could be viewed by

some as a positive, because the decksare being cleared and historic longrunning litigation risk is being reduced.We see this as stretching the point.

The industry needs toreverse these trends to beginto win back condence andtrust rom consumers andgovernments alike.This is no small task.

Rising Risks andLoss o Trust


20/40

17 | Future Pharma

Challenge 4

The value o these settlements has also risen dramatically over the past decade.

Source: Public Citizen

Source: Public Citizen

Figure 17

Number o Pharmaceutical Industry Settlements

with US State and Federal Government 1991-2010

Figure 18

Value o Pharmaceutical Settlements with

US State and Federal Government 1991-2010

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

40

35

30

25

20

15

10

5

0

4000

4500

$bn

5000

3500

3000

2500

2000

1500

1000

10 22 1 0 10 7 4 3 100500

0

404

Rising Risks andLoss o Trust

889

549

967 999 1067

3976

1441 1445

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

4405

3517


21/40

Future Pharma | 18

Rising personnel risk

The changing nature o the growth driverswithin the pharmaceutical industry andthe cultural shit in how the industryspends money, suggests to us that thereis rising personnel risk. Risk because thebest qualied sta may be tempted bycompetitors, or by opportunities orcareer development. Risk because thewrong sta may be retaining keymanagement positions or too long.Risk because senior management hasnot asked the hard questions o itsemployees requently enough. It could

be argued that Boards o Directors andexecutive management should put inplace plans to increase the diversity osenior talent to match the evolving needso the global healthcare market. Inaddition a review o managementstructures would also seem essential tothe growing importance o EmergingMarkets not only as growth drivers, butalso as important sources o scienticand medical research talent.

Loss o Trust

Pharmaceutical companies have createdthe perception that they put theircommercial goals above the interestso governments, payors, prescribersand patients and lost the trust o thesestakeholders. Investors too remainsceptical o the longer term outlookin the wake o serial R&D pipelinedisappointments. Justied or not, thepharmaceutical industry aces a scepticalaudience regarding the integrity o itscommercial operations. Goldenparachutes that reward executives in

spite o poor perormance exacerbate thesituation. Fines, court cases and productwithdrawals are all prevalent and serveto draw attention to the industrys

weaknesses. This situation can bechanged as part o a series otransormational steps in both theoperations and culture including betterinternal and external communication o

corporate priorities, corporateresponsibilities and o the risks that thecompany is prepared to take and why.

There are many new relationships to

develop with government agencies in thegrowth markets, in addition to increasingcomplexity in relations with governmentsand payors in established markets.Improving these relationships andavoiding the creation o new risks canbest be achieved by adopting betterstandards o governance at all levelso the industry.

Stakeholders need aclear understanding othe risk prole to whichthey are exposed either asemployees, shareholdersor both.


22/40

19 | Future Pharma19 | Future Pharma

A Vision o the

PharmaceuticalIndustry in2020 and

Beyond


23/40

Future Pharma | 20

Figure 19

Future Industrial Success Factors

7 http://www.gsk.com/investors/presentations/2011/Abbas-Hussain-10March2011.pd

Bases o competitive advantage today Bases o competitive advantage in 2020

Development resources, sales and marketing scale Value o products and services, distribution strength

Global high prices, restricting access Pricing based on ability to pay driving volume uplit

Multiple competitors in major therapeutic areas,

scale permitting successFewer competitors in a broader range o diseases

Multi-billion dollar drug revenues covering high fxed costs More products with lower revenues and lower costs

End to end operational capabilities or sel-sufciency strategySignicant outsourcing o operations such as manuacturing

and support unctions

Acquisitions o technologies and products to augment

product pipeline Greater collaboration with academia, biotech and peers

Focus on mature Western Markets Focus on Emerging Markets

Source: KPMG estimate

A Vision o the PharmaceuticalIndustry in 2020 and Beyond

Having laid out some o the keychallenges that we believe the industry isacing, we outline a vision o the how theindustry might look in 2020 and beyond.We believe that to be successul in tenyears time companies will need to be

dierent rom today in the way that theyare organised and operate. (Fig. 19)

Companies that can demonstrate thevalue their products (and services) bringto patients will be able to access broadpatient populations in both Western andEmerging Markets. Scale will still beimportant but marketing muscle alonewill not be sucient.

Companies with the courage to priceaccording to ability to pay and not solelywedded to a global high Western basedprice will reap the volume benets, as orexample GlaxoSmithKline has reportedollowing an Emerging Market price cutor anti-allergy medication Avamys.7

Companies that candemonstrate the value theirproducts (and services)bring to patients will beable to access broad patient

populations in both Westernand Emerging Markets.

In addition, the pharmaceutical industryhas a signicant opportunity to play animportant role in the broader healthcareecosystem as the pressures toreduce cost, improve quality, andincrease access to care impact nearly all

countries healthcare systems. Paymentor healthcare products and services,which has historically been based onunit or episode, is expected to move toa new economic system that rewardsdemonstrably better health outcomesand lower costs. In this scenario, theinterests o the pharmaceutical industrywould converge with those o healthcareproviders and payers in increasinglyintegrated delivery and nancingmodels. Given pharmaceuticalcompanies deep knowledge of testing

and measuring quality outcomes andrelated costs, the industry can play asignicant role in the evolving, broaderhealthcare enterprise.


24/40

21 | Future Pharma

Historically, companies have acedcompetition at an ever increasing pacebecause markets have sustainedmultiple products with little orno dierentiation (Figure 20).

We see this trend slowly reversingbecause o the need to ocus R&Dspending on the most dierentiatedproducts. The growth obiopharmaceuticals is also likely to havean impact on the number o competitors

per disease. New biological targets arebeing identied or less common butdebilitating or lie threatening disease orwhich no treatments exist, including rarediseases. In these areas we expectewer competitors.

We think that by 2020 there will be moreproducts selling less on average thantoday as a result o more targetedtherapies and the genericisation o many

o the major primary care therapeuticareas. But new products should havebetter returns on capital thanks to moreecient development spending, ewerailures and much lower levels omarketing and sales investment.

The scarcity o new product opportunitieshas driven up the price to in-licensedevelopment stage compounds. But theproblem is that the ailure rates have beenrising or all late stage compounds andare higher or in-licensed compounds

than or in-house projects.

8 CMR 2011 Pharmaceutical R&D Factbook

Source: Tuts Center or the Study o Drug Development; PhRMA

Figure 20

Competing MedicinesRace or Approval

2

4

6

8

10

Mediannumberofyears

The average time a medicine is the only drug available in itstherapeutic class has declined dramatically rom more than10 years in the 1970s to less than 2 years by 1998

12

01970s 1980s 1990s

According to a recent report rom theCentre or Medicines Research therewere 55 phase III drug terminationsduring 2008-2010, more than double the

number o terminations during 2005 2007; and in addition the number o drugsentering phase III clinical trials ell by 55per cent in 20108. We see a growing trendor large pharmaceutical companies tobypass the small biotechs and orgecollaborations directly with academia. Wesee leaner organisations with networkso academic collaborations and smallcompany partnerships uelling theresearch process and more ocuseddevelopment organisations usinggenomic proling allowing smaller clinicaltrials to be conducted with more powerand at lower cost. Companion diagnostic

tests will be much more common andwill be integral to development, marketaccess and penetration. More risksharing with other industry participants

should help improve researchproductivity. The creation o ViiVHealthcare by GlaxoSmithKline andPzer, should provide both companieswith a better outcome or their HIVtherapies than either going it alone and isa good example o how to retainintellectual capital on the one hand andaccess a commercial platorm or adevelopment assets on the other.Companies will need to maximisethe return on dierentiatedresearch skills and avoid losingintellectual capital.



25/40

Future Pharma | 22

A predictable delivery onew drugs over a multi-yearperiod is the most likelymeans or companies tocapture an element o theirpipeline value in theirmarket capitalisation.

Companies in the industry have alreadystarted unpicking, to various degrees,their long-established network o internalcapabilities that were built up during theheady days o ree pricing and lesscompetition. We see this trendaccelerating, with the potential orsignicant portions o not just primarymanuacturing being outsourced. It is onote that the markets to which manycapabilities are being outsourced are the

very same Emerging Markets that aredriving industry growth.

Emerging Markets will be the drivers oindustry growth and successulcompanies beyond 2020 will have deeplocal relationships including signicantinvestments in R&D acilities, as well asthe already growing manuacturinginvestments in these key markets.

We believe that there is a signicantopportunity or creating shareholder value

by rebalancing the risk that shareholdersperceive they are taking with morepredictable rewards rom betterorganised and governed companies.

Returns need to be more predictableand with the optional upside romserendipitous discoveries not basedon the need to be creative to order.

Shareholders need to see an explanationo the returns on historic R&D spendingand the criteria or uture returns tobelieve that R&D spending is worthwhile.Boards o directors need to believe thiseven more and sooner.

Successul companies in 2020 couldpursue either a diversied or a specialistbusiness model; the key will be tomaximise the individual companys

strengths, to improve internal processesand to understand if the companys

product oering and uture productoering deliver sustainable value toits customers.

Clear articulation o the strategy both toaccess Emerging Market growth whilenot missing opportunities in mature

markets will be needed to persuadeshareholders that companies havemoved on rom the old pharma model.Trust needs to be restored. Visibilityand honesty will be key to achievethis. Simpler, less complex businesseswill make this easier.


Figure 21

Potential Success Factors in

Creating Shareholder Value

Bases o competitive advantage in the past / Today Bases o competitive advantage in 2020

Serendipity and scale drive returns rom R&D More predictability and eciency drive returns

Number o R&D projects the basis or a strong pipelinePortolio with range o IRR orecasts based on

historic track record

Emphasis on earnings per share growth Emphasis on volume/revenue growth

Inadequate articulation o systemic risk Risk better governed and managed

Unintended complexity Transparent and simpler business model easier to understand


26/40

23 | Future Pharma


Scientic and medical research isunpredictable and serendipitousdiscovery will continue to occur.However, the competitive nature o thebusiness now (likely to be even moreso by 2020) means that in our view agreater element o predictability needsto be introduced to regain investors

condence in the value the sector candeliver. Show regular and steadygrowth. Minimise business surprises.

R&D in 2020 will be a much morenumerically driven process than today.We cannot see any way to justiy thespending needed without bettermeasures o the historic return oncapital based on IRR. The seeds o anew approach are being sown, orexample at Pzer9, Novartis10.

The dominance o Emerging Marketeconomies by 2020 could result in ashit back to volume growth as a key

measure o perormance, with earningsgrowth ollowing. Improving eciencyis the right strategy, but until it isaccompanied by sustainable revenuegrowth it is not likely to see theindustrys valuation expand, all other

actors in the stock market being equal.While returning cash to shareholders

9 http://www.pzer.com/les/investors/presentations/barclays_capital_031711.pd10 http://www.novartis.com/downloads/investors/presentations-events/pipeline-update/2010/2010-11-17-changing-

the-practice-o-medicine.pd

through share repurchase or enhanceddividends is a positive use o excessree cash fow, it is not likely to berewarded by a high valuation.

Lastly, we see an industry in 2020that will be simpler or investors tounderstand not because it will bestructurally simpler; developing newmedicines will be an ever more complexprocess. But because the geographicallydiverse nature o its business will

increase with the growth o EmergingMarket infuence, the pharmaceuticalindustry could take on the appearanceo a high value consumer productsindustry to its shareholders.

We think successulcompanies in 2020 will havea more dynamic approach torisk reporting, with greaterdisclosure o potential andactual risk. The industry willbe perceived to be bettergoverned as a consequence.


27/40

Future Pharma | 24Future Pharma | 24


28/40

25 | Future Pharma

Strategies toAccelerate theTransormation othe PharmaceuticalIndustry by 20205


29/40

The recent volume increases reported bysome companies or products or whichprices have been substantially reducedindicate in our view the path the industrymust pursue in the long term althoughbalancing the need or aordable priceswith the risk o commoditisation. Valuedelivery must be demonstrable.

Emerging Markets oer largely blankslates; the continuing application o anadapted old Western model o the drugindustry, which is currently ongoing, willmiss a signicant opportunity to redrawhow the industry interacts with patientsand governments.

Future Pharma | 26

The driver o industry growth isEmerging Markets. While thesemarkets are currently being driven bythe growth o classic primary careproducts or major diseases the verytherapeutic categories that are beinggenericised in western markets, thissituation is unlikely to persist. There isthereore a strategic dilemma because

most companies do not possess anideal Emerging Markets portolio.

To what extent should investment intodays needs be made versus the longer

term? Because in the longer term, thekey Emerging Market consumers andgovernments will want access tothe very best medicines, but it isinconceivable that they will be preparedor able to pay the prices currently paid inthe US or even in Europe. The volumesand thereore the costs would simply be

too high. There could be twice as manypeople with income above $10,000 inthe top 13 Emerging Markets comparedwith the US and EU combined11.

Strategy 1

11 http://www.gsk.com/investors/presentations/2011/Abbas-Hussain-10March2011.pd12 http://www.roche.com/investors/ir_agenda.htm?tab=2 Sanord Bernstein Conerence 1st June 2011, p10

Products must takeinto account the needso consumers inEmerging Markets.

There is an argument or ocusingbusiness strategy on delivering highvalue modern medicines to EmergingMarkets at much lower prices than havebeen accepted in Western Markets.This would underpin a root and branchreassessment o the costs o bringingthese medicines to market, the marketingand sales support required and the risk

o countereiting and parallel trade.This should drive strategy in clinicaldevelopment, location o trials,marketing plans, sales inrastructureand manuacturing investment. Theopportunity or biologic therapiesor cancer or instance is very large,providing the right pricing strategycan be developed12.

Emerging Market governments aremoving rapidly to increase medicalconsumer spending. The established

branded generic Emerging Marketsgrowth route could run out o steam asgenerics become commoditised. Thissuggests that every possible opportunityto drive consumer/OTC business inEmerging Markets should be explored inaddition to a ocus on speed to market,lowering the costs o developmentand ecient delivery o appropriate,dierentiated quality prescription products.

Reassess Product Strategy


30/40

Accelerate the modernisation o selling

and marketing in mature markets

New technology has come relativelyslowly to the pharmaceutical industry.

Now the challenge or the pharmaceuticalindustry is to balance innovation andcreativity in its use o new technologyagainst perceived value and the cost ocreation. The key is mapping the newtechnology opportunity with the businessin a sustainable and updatable way.

Integrating fexible technologies such asQR barcodes as a means or doctors tocommunicate with the industry usingsmartphones is one example o howtechnology investment could make a

sales orce more ecient. It providesa more rapid and fexible responsemechanism or a physician to contactthe pharmaceutical company thansimply ticking a box or even llingin an online orm.

Partnership with technology companiescould be a route to more rapidintegration o modern technologyplatorms. Potentially partnership withconsumer companies might also revealopportunities or greater eciency.

Invest in the Marketing andSales Infrastructure of 2015and Beyond

Strategy 2

Many companies have started to addressthe need to reduce marketing and salesinrastructure in mature markets o the USand Western Europe. However, we think

the pace o change could be acceleratedand may be a key component opreserving margins in the ace oincreasing pressure on price. Newtechnology, such as the iPad, is enablinggreater eciency according to severalcompanies including Novartis13, Otsuka14.Pzer launched an iPhone app toencourage doctors to send questionsdirectly to the company15 and AstraZenecahas an iPhone, iTouch and iPad app to helpeducate healthcare proessionals with

genetic testing or lung cancer16

.AstraZeneca also recently launched a liveclick-to-chat unction on its US Crestorand Nexium consumer websites17.

The basis or assessing marketingand sales eectiveness needs tobe addressed.

We see communication o evolvingcorporate strategy in the ace o therapidly changing industry as essential.This is no straightorward or simple taskand merits a major commitment rom

executive management.

27 | Future Pharma

13 http://www.pharmalot.com/2011/03/novartis-the-ipad-35000-more-visits-to-docs/14 http://www.bloomberg.com/news/2010-06-08/ipads-to-help-otsuka-pharmaceutical-sales-orce-market-drugs-

to-doctors.html15 http://www.pharmalot.com/2010/06/one-more-way-to-minimize-the-sales-rep/16 http://www.astrazeneca.co.uk/Media/latest-press-releases/2010/FIRST_IAPP_TO_HELP_EDUCATE_HPa_ON_

EGFR_GENETIC_TESTING?itemId=1216702917 http://astrazeneca-us.com/about-astrazeneca-us/newsroom/all/12379170?itemId=12379170

Focus on the longer term

in Emerging Markets

Emerging Markets are not going toreplicate the development o the

Western pharmaceutical markets o thelast 25 years but will take new pathsdened by the pressures rom largepopulations, rapid growth o bothpersonal and national wealth but alsothe clear need or individuals andgovernments to balance spending onhealthcare with multiple other demands.

Business leadership in key growth

Emerging Markets needs to develop a plan

or investment in the markets that these

key countries will become, not those that

they are today. Merely adding more and

more sales reps on the ground in a

traditional model does not seem an

appropriate strategy or the uture. It could

be valid to build a presence but the pace

o change is such that plans should be

regularly reviewed and realigned.


31/40

Figure 22

Social media use by Fortune100 Companies in 2009

Future Pharma | 28

Source: Burson-Marseller: Social Media Use by

Fortune 100 Companies 29th July 2009

IndustryPercentage with

a blog

Percentage on

Facebook

Percentage on

Twitter

Telecommunications 75% 100% 100%

Computer, oce

equipment67% 100% 67%

Specialty retailer 50% 50% 100%

Food and drug stores 17% 33% 50%

Pharmaceuticals 33% 0% 33%

The diverse nature o Emerging Marketsmerits a careul renement o investmentstrategy; while Brazil, Russia, India,China, Mexico and Turkey may contribute

hal o Emerging Market sales, dozenso other smaller markets make up theother hal.

One recent example o the need to planor change can be ound in China. Animportant element o the historic growthexperienced by most internationalcompanies has come rom brandedgenerics, where the manufacturers

name is a proxy or high quality. Brandedgenerics have enjoyed higher prices(reerred to as separate pricing) than local

equivalents that are limited to a lowermaximum price (known as generalpricing). A new price list issued inNovember 2010 reduced separate pricingon nearly 50 drugs out o 200 on theEssential Drug List. It is believed thatseparate pricing could be reduced oreliminated across the board over thenext 4 years.

At the same time there is likely to be agovernment push to increase use o OTCdrugs sold at retail pharmacies. Thesemoves by government will very likely

result in material changes in the Chinesemarket and will need dierentinrastructure rom 2011 to maximiselong term returns.

Accelerate development and

integration o social media

and mobile-health policy

The pharmaceutical industry has laggedother major industries in its use o socialmedia. At ace value this is understandablegiven the high levels o regulatoryscrutiny imposed on all aspects o the

industrys interaction with patients,

prescribers and payors.

Since 2009 there has been a signicantinvestment in social media.

From a survey o the websites o the 13companies that we dene as the largecapitalisation pharmaceutical industry,15% have a blog, 54% are on Facebook

and 77% are now on Twitter.

However it is clear that there is anopportunity not only to lead theregulators and help develop regulatorypolicy but, or internal planning purposes,being prepared to use social mediamight be a key competitive advantagein many markets.

For instance Emerging Marketpenetration o social media use is higherthan in Western markets, with over

70% o the population o the Philippinesand Malaysia or example as activeonline users.


32/40

29 | Future Pharma

Philip

pines

Indonesia

Mala

ysia

Brazil

Russia

India

Singapo

re

Polan

d

Mexico

Hong

Kong US

Canada

China

Australia

Netherlan

dsUK Italy

Spain

France

Germ

any

SouthKo

rea

Japan

Globa

lAverage

80%

%Activeonlineusers

70%

60%

50%

40%

30%

20%

10%

0%

Strategy 2

18 Financial Times 12th March 2010, Patients groups distrust big pharma

Figure 23

Global Social Network Penetration

Source Global Web Index

The rising power o patient groups in thedata age will continue at pace. I thepast ve years has seen the industryocus on regulatory and reimbursementoutcomes then the next ve yearsshould see a greater emphasis on howto improve the outcome or patients.The spread o social media use seemscertain to be giving patient groups a

greater voice and empoweringindividuals, with a potential impact atall levels o healthcare provision anddelivery. The use o social media oersthe industry a route to restoring trustwith patients rom its current low ebb18.

The industry needs only to look backin history at the power exerted byorganised patient groups (e.g. in theast-tracking o the rst AIDS drugs).

Source Global Web Index

Patient groups are becoming moreorganised, better inormed, andconnecting across borders using socialmedia. Greater interaction with suchgroups in a structured way shouldbenet all aspects o the pharmaceuticaldevelopment process and the sae andappropriate use o medicinesonce marketed.

Invest in the Marketing andSales Inrastructure or 2015and Beyond

Strategy 2


33/40

Future Pharma | 30

The growth markets o the uture lookmore like consumer brand driven marketsthan the traditional pharmaceuticalmarkets o the 20th century. This begsthe question o what leadership talent willbe required to capture the opportunitiespresented by these new markets whilemaximising the most ecient returnsrom mature Western Markets.

Our research indicates that in aggregateless than 20% o executive teammembers within the industry have comerom outside the pharmaceutical industrywithin the last 5 years, within a range o0%-50%. The most common role nowlled by individuals with industrialexperience rom outside thepharmaceutical sector is that o chienancial ocer. The impact o theattendant resh thinking has been visibleon how individual companies spendshareholder unds and the scale andspeed o eciency programmes.

Strategy 3

This could cover all major business areas.Manuacturing and administration areareas in which new talent has beenrecruited by some companies but theneed or greater urgency is pressing.Even in R&D there have been some verysuccessul hires o highly skilled academicresearchers to lead drug discovery.

However, it could be argued that lookingor resh approaches to key accountmanagement in the changing world omarketing and sales is the businessactivity with the greatest need, given theshiting nature o both traditional Westernand Emerging Markets. In particularregional and country management wouldbenet rom having experience romother sectors, as opposed to just romthe pharmaceutical industry. With the oldsales rep calling on doctor model nowbeing gradually consigned to history, webelieve that the industry should look toimport key account managementtechniques rom other sectors,notably in the consumer space.

Acquire more Talent andExperience from other Industries

We believe that seniormanagement in the industryshould actively seek talentand experience rom outsidethe traditional group opharmaceutical competitors.

More diversity o talentthroughout any givenorganisation should enhanceand strengthen the business.


34/40

Research spending is the minor part o

industry R&D investment (circa 30%).

It should be reviewed or how and why

spending is taking place but also scrutinised

as to who is doing the spending i.e. the

quality o the individuals leading

the projects.

This scrutiny, which could be along the lines

o is this best biology/best molecule/best

target and are these the best people, begs

the question o how do you know that you

have the best o anything?

Patent applications fled, scientifc papers

published (and the proportion in the

prestigious journals, such as Nature andScience), and the number o times

scientists working in research have been

cited by their peers all spring to mind as

potential measures o quality. Assessment

by an independent panel o experts is a

urther possibility.

Use Internal Rate of Return toPrioritise and Rationalise the

R&D Portfolio

Strategy 4

Development spending and the post

launch investment needed to deliver

acceptable returns is the big issue.

We believe all companies should have a

standardised approach to be able to show

on an ongoing basis what internal rate o

return (IRR) has been achieved on past

investment and an internal perspective on

what range o returns is orecast rom the

current investments, and what

assumptions are used in these projections.

Such analyses should also include o

balance sheet unding through partnerships

and minority investment in third party

companies (typically developmentstage biotechnology companies).

We believe this type o IRR based

inormation could transorm the

investment decisions recommended by

senior management in the industry and

signed o by boards o directors.

I more efcient development can be

achieved, and marketing and sales

practices are modernised, lower peak

revenue numbers will still permit internal

rates of return well above the industrys

cost o capital.

It is hard to believe that every late stage

portolio in the industry is optimal and that

none o the projects carries a potentiallymarginal or negative return. We

recommend re-evaluation o the value

proposition o all phase II, phase III and

registration assets on an IRR basis.

This review should include a detailed

review o the assumptions that

supported development o these

assets. Consideration could be given

to whether the orecast returns could

be improved by partnerships or

co-marketing arrangements.

There is also a need to be clearabout the true cost o capitalor any individual company.

31 | Future Pharma


35/40

We think that the most successulcompanies have complemented theirscientic agenda with businessperormance management goals and anintegrated approach to R&D Finance.R&D Finance is key to reducingoperational obstacles that slow theprogress o product candidates tomarket by timely analysis and nancialreview through the introduction o earlywarning indicators and go/no gocheckpoints based on nancialanalysis and evaluation.

We also recommend the ollowing actions as part o the R&D review:

Set up an R&D team with the express role of working out how to beat

the companys key innovative compounds - an internal fast follower team

Assess whether the compounds with the highest potential return are

optimally unded to bring them to market as rapidly as possible with thebest possible label

Consider introducing an external perspective to this process

Host an internal R&D day for all R&D employees worldwide to showcase

their research to each other and drive higher levels o collaboration

Clearly articulate policy on collaborations, both with academia, with

biotechnology companies and smaller pharmaceutical companies aswell as with peers

Look for ways to maintain a return on the intellectual capital built up during

a periods o success in any given therapeutic area. Too oten companiesdiscard this intellectual capital once patents have expired

Future Pharma | 32


36/40

Strategy 5

33 | Future Pharma

Change should start at the top. It couldbe argued that the industry is stillperceived poorly by consumers andsome parts o government. The aimshould be to revise and improve Boardgovernance standards to not only a

higher level than any industrycompetitor, but to the best practicelevels seen in any industry.

Companies need to conduct a rootand branch review o governance andenterprise risk management across theentire value chain to understand betterthe activities, appreciate the impactrom speed o change and theincreasing pressures on each link othe chain rom early research anddevelopment, through late stage

development, manuacturing to salesand marketing.

Review and ReviseGovernance Standards

Changing elements o the value chain where we see these newpressures include:

Increased (volume and value of) research collaborations to source innovation

New social media use leading to exponential growth in data collection

and storage

Changing IT landscapes (e.g. cloud computing)

Doing business in Emerging Markets (e.g. competitive landscape, the waythings are done around here, anti-bribery and corruption, intermediary risk)

Regulators all gaining teeth regulators tend to regulate rules not going to

get any easier going orward

Increasing use of third parties (e.g. CROs in late stage development, CMOs

in manuacturing, IT organisations)

We see using a specialist approach asthe best way to deal with these newrisks, whereby personnel are employedin specialist risk/governance roles,together with a three-step approach:

1. Internal independent checks andbalances where people review eachstage and have a reporting lineoutside of that areas particular

vertical with direct access toc-suite executives.

2. Give power and credence tointernal audit groups and ocuson their outputs.

3. Use completely independent andexternal experts who are allied withethics, risk and governance as a nal

check and balance or each elemento the value chain.

We expect all companiesin the sector will have inplace robust and modernemployee appraisalsystems. We think a

thorough review o allsenior management jobdescriptions should be acomponent o the reviewo the product portolioand the investment inmarketing and salessupport described earlier.


37/40

Future Pharma | 34

Change

should startat the top.


38/40


39/40


40/40

The inormation contained herein is o a general nature and is not intended to address the circumstances o any particular individual

or entity. Although we endeavour to provide accurate and timely inormation, there can be no guarantee that such inormation

Contact us

European Sector Leader

Chris Stirling

KPMG in the UKT: +44 20 7311 8512E: [email protected]

In Belgium

Ludo Ruysen

KPMG BelgiumT: +32 382 11 837E: [email protected] Denmark

Lau Bent Baun

KPMG DenmarkT: +45 381 83 530E: [email protected]

In France

Wilrid Lauriano do Rego

KPMG S.A.T: +33 1 55 68 68 72E: [email protected]

In Germany

Vir Lakshman

KPMG AGWirtschatspruungsgesellschatT: +49 211 475 6666E: [email protected]

In Italy

Johan Bode

KPMG S.P.AT: +39 026 7631E: [email protected]

In Netherlands

Lex Gardien

KPMG N.V.T: +31 10 453 4163E: [email protected]

In Spain

Jorge Rioperez Orta

KPMG S.A.T: +34 914 568 080E: [email protected]

In Sweden

Bjorn Flink

KPMG ABT: +46 8 7239482E: [email protected]

In Switzerland

Erik Willems

KPMG AGT: +41 44 249 45 20E: [email protected]

In Turkey

Nesrin Tuncer

KPMG TurkeyT: +902 12 317 7400E: [email protected]

Global Chair

Ed Giniat

KPMG UST: +1 312 665 2073E: [email protected]

Global Advisory Leader

David Blumberg

KPMG UST: +1 267 256 3270E: [email protected] Tax Leader

Frank Mattei

KPMG UST: +1 267 256 1910E: [email protected]

Asia Pacic Chair

Norbert Meyring

KPMG ChinaT: +86 21 2212 2707E: [email protected]

Documents

Future Pharma India