Life Sciences -Industry, Challenges,

Opportunities

Christine Fernandez and

Mike Costas

October 2012

Disclaimer The material in this presentation has been prepared

solely for informational purposes by Chubb Insurance Company of Canada. The material is compiled from

external sources and from proprietary Chubb data. We do not represent as to its accuracy or completeness.

The content of this presentation is intended to provide a general guide to the subject matter discussed. For specific circumstances, specialist advice should be

sought.

Agenda

• Global Market vs Canadian Market

• Targeted life science segments

• Property considerations

• Liability considerations

• Human clinical trials

• Why choose Chubb?

Life Sciences Opportunity: Global Market – Dynamic Growth

• Medical Devices - $350B+ Market • Biotechnology - $250B+ Market • Pharmaceuticals - $1.1 Trillion by 2014• Dietary supplements - $74B+ Market• Emerging segments:

– Drug Discovery– Proteomics – Bioinformatics– Genomics– Nanotechnology– Health Information Technology

Life Sciences Opportunity:Canadian Market

• Medical Devices• Revenue of $3B + • Approx 1,000 development and manufacturing firms• Approx 600 firms engaged in wholesale distribution

• Biotechnology/biopharmaceuticals• Biopharmaceutical market has 180 private and public firms, all

in different phases of the development cycle• 500 new products currently in development• Focus: Toronto, Vancouver and Quebec

• Pharmaceuticals and Biopharmaceuticals• Pharmaceutical market place is still dominated by US owned

brand name drugs – 78% of sales.

Life Sciences Opportunity:Canadian Market

Reasons for optimism:• Low-cost advantage• Favourable tax treatment for R&D

» Scientific research and experimental development program

• Supportive network of associations» BIOTECanada» Ontario Bioscience Industry Organization» MaRS

Chubb’s Targeted Life Science Industry Segments

• Medical Devices• Biotechnology / Pharmaceuticals• Healthcare Product Service Organizations

• Third party outsourcing

• Dietary Supplements• Drug Discovery Technologies

• Bioinformatics, genomics, proteomics, combinatorial chemistry, high throughput screening, computational sciences, etc.)

Medical Device Target Customers

• Clinical Applications• Monitoring Equipment• Diagnostic Imaging Equipment• Surgical/Dental/Therapeutic Equipment &

Instruments• Lab/Research Equipment & Instruments• Medical Software/Healthcare Information

Technology• Optical/Ophthalmic Instruments & Lenses

Pharmaceuticals - Biotechnology Target Customers

• Therapeutic Products• Diagnostic Test Kits (including reagents)• Biotech Equipment• Bioinformatics Software• Drug Delivery Systems• Veterinary Products• Healthcare Information Technology• Industrial and Agricultural biotechnology

products are not targeted

Service Organizations

• Companies performing drug and device development services for others:

1. Contract Research Organizations2. Contract manufacturers3. Contract sales organizations

• $5.5 Billion industry with rapid growth

Important Property Considerations for Life Sciences

Companies• Changing nature of operations over time,

exposures evolve over a firm’s life cycle• Unique exposures - i.e. spoilage, change

in temperature/humidity, radiation, contamination

• Need for backup power, temperature alarms, disaster recovery planning

• Complex supply chains

Important Property Considerations for Life Sciences

Companies

• High-valued lab equipment

• Protection for Scientific Animals

• Research & Development Income

• Pollutants/contamination

• Lengthy recovery due to delays in validation and regulatory approval

Important Liability Considerations for Life Sciences Companies

• Off-label Study Information Dissemination

• Invasion of Privacy

• Faster Review Periods by Regulatory Bodies

• Clinical Trial Controls

• TV & Internet Advertising/Promotion/social media

• Plaintiff lawyers monitoring of FDA information

• Post Market Surveillance

Clinical Research Process

• Pre-Clinical - animal testing, cell cultures, computer modeling

• Phase 1 - Safety focus

• Phase 2 - Safety & efficacy

• Phase 3 - Safety & efficacy (large scale)

• Approvals by health regulatory agencies

• Phase 4 - Post-Market studies

Clinical Trials“Clinical trials are voluntary research studies, conducted in people, that are designed to answer specific questionsabout the safety and/or effectiveness of drugs, vaccines, other therapies, or new ways of using existing treatments.”

• Over 50,000 trials conducted worldwide with 20MM+ people enrolled in those trials

• Many countries require compulsory local insurance to protect their citizens – Germany, France, Spain, Columbia, Brazil, Australia.

Most Common HCT Claim Allegations

• Failure to monitor study properly• Failure to select qualified/competent clinical

investigators/staff• Failure to properly inform (therapeutic

misconception, risk, rights)• Failure to perform per contract-CRO’s• Failure to adhere to research standards

– Conflict of interest– Non-compliance– Privacy

Sample of Clinical Trial Cases

• TeGenero/Paraxel – U.K. TGN1412 clinical trial case.

• Fialuridine (FIAU) (NIH,Lilly, and others)• Jesse Gelzinger vs. UPenn • Ellen Roche vs. John Hopkins• Quinn vs. Abiomed• Nicole Wan vs. Rochester MIT• Suthers /Martin vs. Amgen

Source: http://www.sskrplaw.com/gene/index.html

Sold Product Allegations

• Failure to warn (labeling, advertising, safety surveillance, off-label, study results, etc,)

• Product Defects• Product not doing what it was intended to do

(design defect)• Fraud• Negligence

High Profile Cases

• Vioxx - Cox 2 inhibitor • Hormone replacement therapies• Anti-depressants• Accutane• Drug Eluting Stents• Contact Lens solution• Metal-on metal hip implants• Surgical mesh

Coverages tailored to unique Life Sciences property exposures

• Property enhancements– Spoilage / Change in Temperature Coverage – R&D Property (research animals, cell cultures, etc.)– R&D Business Income (contemplates grants, milestone

payments, endowments, etc)– Ordinary payroll coverage included – Pollutants (radioactive contamination, microorganisms) – Radioactive Contamination (Typical PD / BI sublimit $250,000)– Physical vs. Operational Restoration of Property, Unlimited

Extended Period of Indemnity– Contingent Business Interruption (Dependent Business

Premises - worldwide)

Coverages tailored to unique Life Sciences Liability exposures

• Premises Operations on Occurrence trigger, defence costs outside the limit

• Product Liability - Claims Made, defence within limit• Human Clinical Trials • Ability to insure admitted foreign trials in many

jurisdictions• Professional Liability Endorsements (clinical

investigators, medical sales personnel)• Errors & Omissions –cyber liability and privacy

remediation available • Product Withdraw Expenses - $25,000 included with

higher limits available

WorldCert for Foreign Trial Placements

• State-of-the-art, interactive clinical trial insurance and certificate management system.

• Web based system features include:• Instant trial insurance quotes.• User-controlled – no waiting for an insurer to complete back-

end processes for certificate issuance. • Instant issuance and modification of global clinical trial

insurance certificates.• Database of country-specific insurance requirements.• Certificate issuance in the local language.• Capability to email certificates to anyone worldwide.• Customized insuring options

• World-class claim service based on a no-hassle philosophy

• The strongest level of underwriting acumen

• The ability to grow with companies throughout their life cycle

• A willingness to engage on companies of all hazard groups• Tongue depressors to pacemakers

• Vitamins to Vaccines

• Superior, well-diversified portfolio of broad language policies.

• One of the largest specialty Loss Control teams globally

• Global Network and Financial Strength

Chubb Value Proposition

Chubb Life Sciences

Thank you for your participation