12 January 2011

Hani Zaki, MPH, MBASenior Vice President, Late Phase Services

PRA International

Future Challenges of Clinical Development:A View from the CRO

2

Discussion Agenda

• Review Current State– Market Size– Economic Drivers– Market Dynamics– Trends:

• Volume• Geography• Price

• Future Look– Process– Technology– Geography– Regulatory– Privacy– Public Image

3

Clinical Trials By The Numbers

100,838 trials registered on ClinTrial.govas of January 3, 2011

40,998 trials are Pharma based

10,192 are “enrolling”

8,824Interventional

4,633Safety Outcome

20,982 are US based

4

Current Working Relationship

Working Standards, Process, Logistics, Efficiency & Quality Metrics

Resource Shift

5

Global CRO Market

• Current ~$22B and expect $35B through 2015; growing ~8% annually

• Over 1,000 CROs worldwide despite continued consolidation – very fragmented market

• The 5 largest CROs hold >50% of the marketSource: Business Insights

6

CRO Economic Forces

Development Research(Pharma)

Global CRO Business

Arlington Mills, Lawrence, MA in 1907

7

Clinical Research Stock Index

First Clinical Research Index (FCRI). Calculated as the mean average percentagechange from baseline, dividends excluded, adjusted for stock splits. In other words, theindices are not weighted for stock price or market capitalization. Prices are in localcurrencies. Index components may change from time to time based on new listings,mergers and other factors. Components include 11 publicly traded clinical researchstocks: BioClinica (BIOC:US), CMIC (2309:JP), Covance (CVD:US), DatatrakInternational (DATA:US), EPS Co., Ltd. (4282:JP), eResearchTechnology (ERES:US),ICON (ICLR:US), Kendle International (KNDL:US), Medidata (MDSO:US), PAREXELInternational (PRXL:US), and PPD (PPDI:US). In 2010, MDS Pharma Services (MDZ:US)exited the clinical research business, Phase Forward (PFWD:US) was acquired, andEncorium Group (ENCOD:US)’s stock price dropped below $1/share and became toovolatile to include in the index.

Vol. 7, No. 1, January 2011 “Can You Handle the Truth?”Subscribe free at www.firstclinical.com

© 2011 First Clinical ResearchFirst Clinical Research Stock Index (FCRI)

8

Current Market Pressures

GlobalPharma

Pricing Pressures• Governments• Insurers• Patients

Pricing Pressures• Governments• Insurers• Patients

Anemic approvals• 21 in 2010• 25 in 2009• 24 in 2008• 17 in 2007

Anemic approvals• 21 in 2010• 25 in 2009• 24 in 2008• 17 in 2007 IP Protection

&Generic

Competition

IP Protection&

Generic Competition

R&D ROI• Weak pipelines• Investor Demands

R&D ROI• Weak pipelines• Investor Demands

Rising R&D Expense&

Pressure for Efficiency

Rising R&D Expense&

Pressure for Efficiency

Regulatory Pressures• Heightened safety needs• “Real World” Data

Regulatory Pressures• Heightened safety needs• “Real World” Data

9

Patent Expiration 2008-2015$66B in Annual Sales

2011 expirations Total $35.2B

10

Global Pharma ROI

11

Flat R&D Budgets Pharmaceutical R&D as a Share of Sales: 1970 -2008

12

Increasing Cost of Trials

13

Relief in Sight?

Big Firms Poised to Spend Again Saturday, January 1, 2011 By JAMES R. HAGERTY and DANA MATTIOLI

14

Trends in Clinical Trial Volume

• Reflects Pharma-based clinical trials only• Some ClinicalTrials.Gov studies may include missing

fields and may be excluded from data cuts

0

1000

2000

3000

4000

5000

6000

7000

Tri

als

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Clinical Trial Annual Starts 2000 - 2010

Source: CT.gov

15

Pharma Clinical Trial Volume by Phase

Annual Clinical Study Starts by Phase 2000 - 2010

0

500

1000

1500

2000

2500

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Num

ber o

f Stu

dies

Phase I

Phase II

Phase III

Phase IV

Source: CT.gov

16

Post-Approval Shifts in Study Duration

• Average study duration has been decreasing since 2005

• Data suggests a conscious effort to design more efficient studies that are shorter in duration

• Today, 30% of post-approval studies complete in 20 months or less

• 5+ year studies do exist but there are less of them compared to 2005

17

An Early Geographic Trend

18

Geographic Density Shift

Dec 2005

• We are moving East: Asia & CEE• More studies in developing countries

Jan 2011

Source: ClinTrial.gov

19

Post-Approval Geographic Distribution of Sites

• US and EU have had equal distribution and comprise the bulk of sites

• Noteworthy “steady” growth in Asia-Pacific

• Expect the growth trend in Asia to continue through 2010 and beyond

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

2005 2006 2007 2008 2009 2010 (July)

Africa

Asia

Caribbean

Europe

Latin America

North America

Oceania

0

1000

2000

3000

4000

5000

6000

7000

2005 2006 2007 2008 2009 2010 (July)

Africa

Asia

Caribbean

Europe

Latin America

North America

Oceania

Source: ClinTrial.Gov

Source: ClinTrial.Gov

Number of SitesBy Geography

Percent SitesBy Geography

20

Comparative Costs By Geography

21

Trends in Investigator Fees

22

Phase III Cost Per Patient

• Costs increased in all Tx areas across all geographies from 2006 to 2010• Minimal increase was 4% in Eastern EU for patients with musculoskeletal diseases• Largest increase was 43% in Asia for oncology patients

Source: Data Courtesy of TTC

Western EU USA & Canada Middle East

Latin America Eastern EU Asia

23

Some Trends and Needs

Trends Needs

Significant decrease in NME approvals (revenue) at 40x the expense

Development efficiencies

Increasing cost of late phase (II, III, IV) development

New processes, technology & Innovation

Global trials with increasing needs in CEE, Asia, MENA, Africa

Global resources, training, standardization

Fierce competition for study patients Medical informatics and utilization of emerging new data resources

Pharma and Biotech relaying on outsourcing to re-structure expense from fixed to variable

CROs leading change in processes, logistics, metrics, delivery and quality

Future Look

25

Challenge: New Efficiencies

Lead Innovation Lead Efficiency

Lead Delivery Metrics

Lead Quality Metrics

Active Approach: Suppliers Setting New Standards

BalancedCollaboration

GlobalBio-Pharmaceutical

Industry

DiscoveryInnovationLicensing

Supply competitiveness, savings, flexibility, global reach, insight ….Supply competitiveness, savings, flexibility, global reach, insight ….

26

Clinical Trial Costs

Approximate % Value of Clinical Trial Segments

40%

25%

15%

13%

4%3%

Monitoring & Site Management Data ManagementAnalysis & Writing Project ManagementSafety QA

Is this the most

efficient process?

Can we do better to reduce burden? Are we

building effective

partnerships?

27

Challenge: Technology & Innovation

Must be a joint effort between industry, suppliers and regulators

Break from 1970’s thinking and processes and re-draw the mechanics of conducting clinical research based on today’s realities, resources and capabilities

28

How Fast Can We Adapt?

29

US Adoption of EMR/EHR

30

Challenge: Broader Geographies

Accelerating the rate of enrollment in clinical trials toward reduced costs and quicker results

Finding the right patients and navigating narrow inclusion and exclusion criteria

Greater competition for patients and the need for larger sample sizes to detect slight differences

Ethicalconsiderations

RegulatoryOversight

31

Challenge: Registration vs “Real World”

Safety & Efficacy Generalized Safety & Effectiveness

32

Challenge: Access to Patients

Vast cultural differences on healthcare “privacy.” Nordic countries have a tradition of health registries. Every citizen is provided with an identifier from birth and enrolled into registries to elucidate epidemiological trends. Data are used for public health research and improvement of medical care.

Can we guarantee healthcare privacy as we break new ground to accelerate research? Can we generalize across countries?

33

Challenge: Public Image & Understanding

• Imperative to improve patient understanding

• Transparency

• Enlist global patient support groups and disease societies

• Much work is needed

34

Concluding Thoughts

• Healthcare and the global Bio-Pharmaceutical market are undergoing dramatic changes

• Research methods that served us in the past can no longer sustain the industry and today’s ROI models/rates must move to higher levels, and fast

• Bio-Pharma will depend on service providers to innovate and lead transformational changes toward competitiveness, savings, flexibility, global reach, and new insights

• There are many emerging opportunities that can significantly streamline the conduct of clinical research, reduce the burden and complexity, and result in greater efficiency. Focused and deliberate collaboration between regulators, industry and service providers will be key for future advancement

• We must consider dramatic changes in process and bold new structures to transform the industry

• Globalization is here to stay – competition for patients and the need to accelerate trials dictate a worldwide strategy

• Global consensus on privacy issues and access to healthcare data will continue to be the subject of debate. Local, national and cultural differences must be respected. Trust is earned.

• We must educate patients and the general public and provide transparency and access to research information.

THANK YOU!Hani Zaki

zakihani@PRAintl.com + 1 215.444.8544