1 Un médicament est: 1/ un Produit 2/ une Documentation et un Engagement

2 1/Un médicament est un « produit » -A-Principe actif -B-Formulation galénique -C-Emballage

3 2/ Une « documentation » Cette documentation :  est établie au cours des différentes phases d’essais cliniques  permet d’obtenir l’autorisation de mise sur le marché  sert de base à l’information du prescripteur  sert à démontrer aux organismes payeurs le service médical rendu et son amélioration.

Drug substance (Active pharmaceutical ingredient) API Drug product (Dosage form; Finished product)

5 Le Principe actif / API 1.Substance ayant un effet pharmacologique susceptible de se traduire par une application thérapeutique 2.Substance pouvant être produite sous forme pure à grande échelle, de manière reproductible et économiquement viable 3.Substance susceptible d’être dosée ainsi que ses impuretés, ses produits de dégradation et ses métabolites 4.Toxique potentiel

Global excipients market: USD 5 billion in 2011 Global overall API market: US$108 billion in 2010, Total excipient + API:US$ 113 billion High Potency Active Pharmaceutical Ingredients: US$ 9 billion in 2011, Global pharmaceutical market: US$ 956 billion 6

The U.S. is the largest market for API; followed by Japan and Germany in 2010.

Menaces sur la s é curit é de nos m é dicaments Par St é phanie Benz - publi é le 08/11/2012 à 11:01 Les principes actifs, ces molécules au coeur de nos pilules et de nos sirops, sont massivement importés d'Asie. Les risques de pénurie, de fraude ou de mauvaise qualité rendent alarmante cette dépendance stratégique. SÉCURITÉ DES MÉDICAMENTS - Près de 80% (en volume) des molécules qui sont au cœur de nos médicaments viennent d'Asie.

Principe actif Classe pharmaceutique Boîtes vendues en 2010 (France) Producteurs en Europe* Producteurs hors d'Europe* ParacétamolAnalgésiques265 millions0 %100 % AmoxicillineAntiobiotiques38 millions39 %61 % Metformine Médicaments du diabète 21 millions18 %82 % IbuprofèneAnti-inflammatoires18 millions0 %100 % Oméprazole troubles de l'acidité gastrique 13 millions30 %70 % Doxycycline Antibiotiques2 millions0 %100 % Menaces sur la sécurité de nos médicaments - Stéphanie Benz - Publié dans l’expansion le 08/11/2012 à 11:01

(1)includes cost of goods sold without cost for raw material; (2)assessment of direct personnel cost reduction from approximately 60 to 6 € total salary dollars (tsd)/FTE (3)assessment of direct personnel cost reduction from approximately 6 to 3 € tsd/FTE 10

Why Asia? Cost Comparison: West vs. Asia Source: Arthur D. Little

14 Drug Product A finished dosage form, for example, tablet, capsule, or solution that contains a drug substance, generally, but not necessarily, in association with one or more other ingredients.”

API : Active Pharmaceutical Ingredient (Principe Actif) accounts for the expenses of raw materials, reagents and solvents among others COGS : Cost of Goods Accounts for API / Formulation / Packaging the contribution of the API is 10–12% at its maximum value and 0.5% at its minimum. Overall manufacturing price of the formulated drug in-house value of the product at the stage of readiness for delivery to customers

API : Active Pharmaceutical Ingredient (Principe Actif): accounts for the expenses of raw materials, reagents and solvents among others COGS : Cost of Goods Sold (couts de Production) Accounts for API / Formulation / Packaging The share of the API in the COGS varies substantially for individual drugs: from 5% to 40%

J Pharm Innov (2008) 3:30–40

"Average Wholesale Price" (AWP) Prix de gros moyen La ThalidomideLèpre et Myélome multiple

Entre 1998 et 2004, Celgene a augmenté le prix de la thalidomide de $6.00 à $29.00 pour une gélule de 50 mg  Cout par kg = $ / kg En 2008, la thalidomide est vendue au prix de $ 107 pour une gélule de 50 mg $ 207 pour une gélule de 200 mg  Cout par kg = $ / kg (gélule de 50 mg) Le prix d’une gélule de 100 mg de thalidomide au Brésil est $0.07.  Cout par kg = 700 $ / kg 19

the rate of return on stock is equal to the increase in the share price, plus the dividend yield R&D and return on stocks for big Pharmas and profitable Biotechs 20

Synthèse semi industrielle de la thalidomide 21

Synthèse semi-industrielle de la thalidomide The procedure can easily be used to prepare thalidomide at the 100-g scale in the laboratory, and it was successfully scaled up to the multikilogram scale. 22

US$ 550 / kgUS$ 250 / kg US$ 2000 / kg US$ 1000 / kg 23

US$ 550 / kg MW = 219 US$ 250 / kg MW = 146 US$ 2000 / kg MW = 162 US$ 1000 / kg MW = Thalidomide MW = 258

US$ 50 / mole US$ 55 / mole US$ 224 / mole US$ 122 / mole Cout total / mole: = US$ 451 Thalidomide MW = 258 Reagents Cost / kg ~ 1800 US$ 25

Synthèse industrielle de la thalidomide 26

US$ 750 / tonne US$ 900 / tonne US $240 / tonne US $1000 / tonne MW: 148 MW: 147 MW: 102 MW: 60 Thalidomide MW =

148 x 750 $ x = 0,11 $ 147 x 900 $ x = 0,13 $ 102 x 1000$ x = 0.1 $ 60 x 240 $ x = 0.01 $ Total réactifs = 0.35 $ / mole Thalidomide MW = 258  ~ 1.4 US$ par kg Synthèse industrielle de la thalidomide Cout des produits de départ Cout de la fabrication? 28

Please call Celgene ( ) to register for the S.T.E.P.S.™ program. 29

S.T.E.P.S. TM Process of obtaining thalidomide… Physician visit Consent signed Mandatory contraceptive counseling Pregnancy testing Educational video Prescription provided to a pharmacist registered with S.T.E.P.S. TM Physician phone survey Patient phone survey Pharmacist phones Celgene gives authorization #, receives dispensing authorization Receive an authorization # for prescription Celgene Interactive Voice Response System Patient receives Thalidomid ® 30

TERATOLOGY THE JOURNAL OF ABNORMAL DEVELOPMENT 54: (1996) Thalidomide, a Current Teratogen in South America 32

where leprosy is common, the thalidomide-children are more frequent Brazil consumes only 400 kg of the 1200 kg thalidomide produced in the country each year. Two thirds of the drug is either exported - legal or smuggled - or sold on the Brazilian Black Market. 33

34 La Simvastatine

The industrial process to produce Simvastatin from Lovastatin is a Merck Sharp and Dhome modified method consisting in eight steps 35

36

overall yield from 1 to 2 :49%. 37

Simvastatin10 mg50 Comprimés €76 Simvastatin20 mg50 Comprimés €84 Simvastatin10 mg70 Comprimés €93 Simvastatin20 mg70 Comprimés €101 Simvastatin10 mg100 Comprimés €118 Simvastatin20 mg100 Comprimés €127 Prix par gramme selon le packaging: 50 cps à 10 mg76 € / 500 mg = 152 € 100 cps à 20 mg127 € / 2000 mg = 63,5 € 38

39 Prix par gramme: 76 € / 500 mg = 152 € 127 € / 2000 mg = 63,5 € Prix par kg de PA dans le médicament: 76 € / 500 mg = € 127 € / 2000 mg = € Standard:EP5 Productivity: 5 MT/month Unit Price/Payment: USD 430 /kg - China USD 4780/ kg - India Company: Shanghai Jiangbei Pharmaceutical Co., Ltd. Prix par kilo de principe actif:

336 x 20 = 6,720 g  8$ / g  8000$/kg

Effect of generic competition between 2000 and 2001 of triple combination therapy made up of stavudine (d4T)+lamivudine (3TC)+nevirapine (NVP) - 30mg+ 150mg+ 200mg. Price per patient per year

DosagePrix de l’API / Kg stavudine (d4T)30mg370 $ lamivudine (3TC) 150mg160 $ nevirapine (NVP) 200mg150 $ stavudine (d4T) + lamivudine (3TC) + nevirapine deux fois par jour Quel est le cout annuel en API?

Cout de l’API / 38 Kg stavudine (d4T)3Kg370 x 3 = 1110 $ lamivudine (3TC)15Kg160 x 15 = 2400 $ nevirapine (NVP)20Kg150 x 20 = 3000 $ total38Kg6510 $ Prix au Kg1Kg6510 / 38 = 171,3 $ API dans le traitement annuel ( ) x 2 x 365 = 0,277 Kg 47,4 $

Since 2005, the originator price has decreased by 32% whereas the generic price has dropped by 61%. Evolution of the lowest price quoted for developing countries since 2005:

47 Pharmaceutical Value Chain Cost of active pharmaceutical ingredient (API) Raw materials 41% 100% 4% Cost of Final Product 3% 26% Tax 7% Mnfctr 17% Overhead 2% Formulation production (excipients, mnfctr, packing) Corporate overhead, sales & marketing R&D Additional cost for formulation manufacturer

48 Targets for Savings Large reductions at the API level: Sourcing to low-cost API suppliers, Driving efficiency through scale, Reducing gross margin Cost of active pharmaceutical ingredient (API) Raw materials 41% 100% 4% Cost of Final Product 3% 26% Tax 7% Mnfctr 17% Overhead 2% Formulation production (excipients, mnfctr, packing) Corporate overhead, sales & marketing R&D Additional cost for formulation manufacturer Reductions in formulation costs: Cross-subsidization of overhead Reductions in margin Scale-based savings (very small)

49 Lower Production Costs Lower Overhead And Margin Description Manufacturing cost – direct (labor, power) and indirect (capital amortization) – per unit decreases with scale (volume). Production cost also falls with better chemistry and/or cheaper raw materials. F&A and S&M overheads can be reduced and/or cross- subsidized. Interest necessary can fall with prompt payment. And margin can be less while keeping business profitable/sustainable. Targets for Savings (DETAIL) Relevance These reductions are largely relevant for API manufacture/synthesis, which accounts for ~70% of total costs. These reductions can reduce API price but are the driver of reductions at the formulation level (e.g, overhead allocation fell from 30% to 10%). CHAI Role By modeling costs, CHAI consultants could agree with companies on cost curves that quantified savings based on anticipated volumes in partner countries. CHAI negotiation with executives encouraged a shift from regarding HIV/AIDS as “low- volume, high-margin” to “high-volume, low- margin” given that AIDS is an emergency.

Tales from the Pharm: The $15000 delivery error :: OnThePharm Today before my shift I got a phonecall asking me to stop by one of our other stores to pick a mis-delivery of Enbrel that had been delivered the day before

Today before my shift I got a phonecall asking me to stop by one of our other stores to pick a mis-delivery of Enbrel that had been delivered the day before. Lucky for us, the pharmacist over there opened the box and saw what it was and was able to refrigerate it before it got warm. What you see in the picture below has an AWP of… $15, The average wholesale price (AWP) is a prescriptions drug term referring to the average price at which wholesalers sell drugs to physicians, and pharmacies,.

« I wonder if armored car drivers often make delivery errors on this scale? And if their deliveries have to be stored at a specific temperature? To give you an idea of how valuable this is, the entire volume of liquid here is 56mL. Assuming that it has the density of water, that means there’s 56g of fluid, which is a hair under 2 ounces. Right now, Gold is sitting at $480 an ounce. Enbrel has a value of $7500 an ounce ($ a kilo). » PRIX au kilo: Etanercept API:Euro € Or:Euro € ENBREL is available as 25 mg/0.5 mL or 50 mg/mL prefilled syringes (2%)

Enbrel Production Problems 2002: “It's no secret that Immunex can't make enough of its Enbrel etanercept rheumatoid arthritis drug to meet demand”

The main patent on Enbrel in the US was set to expire in October 2012, and in Europe in February But a new patent could prevent biosimilar competition in the US until 22 November By that time, Enbrel will have been on the market for 30 years.

39 NMEs were approved by the FDA in 2012 the highest in more than a decade — 63% higher than the average of 24 NMEs from 2003 through were first in class, 22 received Fast Track designation, Priority Review and/or accelerated approval. The total cost for one course of treatment with the 32 NME approved in 2012 and having disclosed prices would be about $2.4 million.

58 Research and Development Process 3-6 YEARS6-7 YEARS YEARS PRE-DISCOVERY DRUG DISCOVERY PRE CLINICAL CLINICAL TRIALS FDA REVIEW LARGE SCALE MFG IND SUBMITTED TO FDA NDA SUBMITTED TO FDA PHASE 1 PHASE 2 PHASE 3 Number of Volunteers PHASE 4: POST MARKETING SURVEILLANCE 5,000-10,000 COMPOUNDS ONE FDA- APPROVED DRUG SOURCE: PhRMA 2008, Stages of Drug Development Process and attrition rate of compounds as they travel through the drug development process over time.

59 Treatment Cost per patient = R&D cost Number of patients + Cost of Production + MG&A For one Treatment patients 400 millions $ patients 1000 millions = $ = 100 $ Blockbuster Model Orphan Drug Model