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INTRODUCTIONTen Transormative Trends

A perect storm is brewing in oncology. Wedo not say this lightly. Big pharmas highly re-dundant oncology pipeline has created intensecompetition. At the very time when oncologydevelopers need most to dierentiate their

products in the marketplace, traditional com-mercialization tools are being swept away. Bigpharma nds itsel in very dierent waters

rom those o a decade beore, and many com-panies are ill prepared to weather the comingstorm.

Oncology is a therapeutic area with cutting-edge science and high per-patient revenue.

Our clients have increasingly engaged us ononcology licensing and launches, and we sawthe need or an insiders view o commercial

changes in the industry not generally availablein the primary literature or analyst reports.Hence, we initiated the Oncology NationalCommercial (ONC) study. In ONC, we surveyedindustry experts, physicians, payers, and keyopinion leaders (Box 1).

Oncology National Commercial StudyTen Transormative Trends

Campbell Alliance Thought Leadership

Report prepared by Jeff Stewart and Nader Naeymi-Rad

1

Box 1

Methodology

Campbell interviewed industry leaders, payers, key opinion leaders, and physicians. We supplemented the results o these interviews with industryinsights and secondary data. Campbell analyzed the oncology pipeline held by midsize and large pharmaceutical companies over the past decade.We selected these companies to analyze because their pipelines are those with the most commercial backing, and changes in these pipelines refectmainstream market expectations. Analyzed companies included Abbott, Alkermes, ALZA, American Home Products, Amgen, Astellas, AstraZeneca,Aventis, Bayer, Bayer Schering, Biogen IDEC, Bristol-Myers, Bristol-Myers Squibb, Celgene , Chugai, Daiichi, Daiichi Sankyo, Dainippon, Eisai, Eli Lilly,Endo, Enzon, Fujisawa, Genentech, GlaxoSmithKline, Ilex Oncology, Johnson & Johnson, Medivation, Merck, Mitsubishi, Myriad, Nektar, Novartis, Pzer,Pharmacia, Roche, Sankyo, sano-aventis, Schering-AG, Schering-Plough, Takeda, Teva, Watson, and Yamanouchi. Note that some o these companiesexisted as independent entities at only one part o the decade.

Primary Research

Secondary Research

Industry Oncology-focused pharma/biotech

Senior leadership interviewed

9 top 20 companies

6 multinational and regional

Industry Insights Experience from over 300 oncology projects in the last 3 years alone

Campbell proprietary data

Our Dealmakers Intentions Survey

Payers National and regional plans

Some integrated delivery

systems

Key Opinion Leaders 10 highly published, internation-

ally respected oncologists

Experienced clinical trial

investigators

Pipeline Analysis Large pharma oncology pipeline

2000 and 2010

MOA, tumor types, and product composition by phase

Physicians 20 community hematologists/

oncologists

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Box 2

Ten Transormative Trends

Oncology National Commercial (ONC) Study, 2000-2010 Ten Transormative Trends

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We were not surprised to nd that the oncol-ogy market had changed over the past decade,but the scope o the change did surprise us.When we consolidated the changes reportedto us, an alarming pattern emerged. The oncol-ogy space had transormed in such a way thatnever-beore-seen competition is now built

into the marketplace, yet ew companies areprepared to operate in the ace o this intensecompetition.

We conrmed our ndings with additionaldata on big pharmas oncology pipeline andcommercialization eorts. Here, we present

these ndings so that our clients may preparethemselves to survive in rough seas.

Our ndings may be summarized as TenTransformative Trends (Box 2).

1. Large pharma has dramatically

expanded its oncology pipeline

2. The oncology pipeline has become

increasingly targeted

3. Multiple oncology therapies target the

same molecular pathways

4. Multiple agents are now tested against

even rare tumors

5. Biomarkers are ragmenting the

oncology market

6. Oncology has become a blockbuster

machine

7. Oncology is saturated with sales reps

8. Oncologists are no longer the sole

decision makers

9. Payers are beginning to manage

oncology

10. Oncology asset valuation may be a

bursting bubble

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The rst trend is the growth in the oncologypipeline held by large pharma. Large pharmahas developed and bought its way into oncolo-gy to the point where there were two and a haltimes as many compounds in clinical trials in2010 as in the large pharma pipeline of 2000.

Furthermore, the pipeline includes many moreearly-stage agents than beore (Figure 1).1

All the largest pharmaceutical companies thatpublish areas o in-licensing interest activelyrequested additional oncology products ortheir pipelines in 2010 (Figure 2).2 Hence, thetrend toward having more in the oncology pipe-line is likely to continue. The bottom-line eectis that competition is sharply higher based ongross numbers.

TREND 1Large pharma has dramatically expanded its oncology pipeline

Figure 1

Large pharmas oncology pipeline expanded by a actoro 2.5 between 2000 and 2010.

Figure 2

In 2010, large companies continued to state an interest in in-licensing oncology assets.

Evolution o the Large Pharma Oncology Pipeline by Phase, 2000-2010

140

120

100

80

60

40

20

0

Pzer

Roche

S-A

Novartis

AstraZeneca

Abbott

Merck & Co

BMS

Eli Lilly

LargePharmaOncologyTrials

Angiogenesis

Apoptosis

Cytotoxics

DNArepair

Growthfactors

Hematology

Immunotherapyand

vaccines

Kinases

RNAi

Signaltransduction

Solidtumors

Stemc

ells

I II III

Phase

32

4.1x 130

45

2.4x 110

46

1.5x

70

2000 2010

General interest

Specic interest

1Cowen Therapeutic Categories Outlook 2000 and 2010; Company annual reports; National Cancer Institute; clinicaltrials.gov; Campbell Analysis.2Company websites. Accessed January 2010. Note that some large pharma companies (GSK and JNJ, for example) do not publish areas of partnering interest.

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Oncology National Commercial (ONC) Study, 2000-2010 Ten Transormative Trends

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The second trend is the shit away rom thera-peutics such as cytotoxic agents and broadcell-cycle inhibitors that treat cancer with littlespecicity. The agents lling the 2010 pipelineare much more targeted than the agents ll-

ing the 2000 pipeline (Figure 3).3 The shitis even more dramatic when consideringnovel agents (as opposed to line extensions).Targeted therapeutics have obvious benetsincreased ecacy and potentially lower side

eects. However, an unintended consequenceo exquisite targeting is exquisite competi-tion. There is now great overlap in particularmechanisms o action and targets among thelarge-pharma oncology pipeline.

TREND 2The oncology pipeline has become increasingly targeted

Figure 3

Oncology therapies are increasingly targeted.

Cell surace receptor (e.g., ADCC)

DNA repair

Growth factor/GFR

Angiogenesis

Prolieration (typically kinases)

Apoptosis

Other MOA

Matrix metalloproteinase

Immune modulator

Hormone

Cell cycle (typically cytotoxics)

4.4%

3.5%

9.7%

5.3%

5.3%

2.7%

9.7%

1.8%

7.1%

10.6%

39.8%

7.5%

3.1%

17.3%

18.4%

20.8%

4.7%

2.0%

5.9%

4.3%

16.1%

1.7X

0.9X

1.8X

3.5X

2.9X

1.7X

0.2X

0.0X

0.8X

0.4X

0.4X

LessTargeted

MoreT

argeted

Mechanism o ActionPipeline

Share, 2000Pipeline

Share, 2010 Multiple Trend

3Note: Includes solid tumors and hematologic tumors; excludes supportive care.

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The third trend is the increasing number ocompounds targeting the same molecularpathways. Multiple companies have, orexample, mTOR inhibitors, PARP inhibitors,and VEGF inhibitors in clinical trials. In 2000,oncology agents in clinical trials arose rom

shing expedition screening eorts thatyielded a generally diverse set o targets and

mechanisms o action. Large pharmaceuticalcompanies in 2000 could expect somebutar rom intensedirect competition.

This situation did not outlast the decade. The2010 large pharma oncology pipeline has been

driven by new understanding o molecularpathways. Agents are increasingly engineered

to their targets. The same scientic transparencyhas led to intense competition (Figure 4). I wefocus on the top 10 targets (Figure 5), outsideo the top 5, all o the other targets had only oneor two agents targeted to them in the pipelinein 2000. Contrast this with 2010, where many

more agents are targeting the same pathways(typically kinases within these pathways).

TREND 3Multiple oncology therapies target the same molecular pathways

Figure 4

Oncology agents increasingly overlap.

2000Low Target Overlap, Low Competition

2010High Target Overlap, High Competition

Relatively few agents

Diverse (if less effective) target pathwayscompounds found

thro