PharmaTrends SM 2001 Year In Review U.S. Sales

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1 PharmaTrends SM 2001 Year In Review U.S. Sales 1

2 Agenda PharmaTrends SM 2001 Key Market Events Sales and Prescriptions Leading Corporations, Classes, and Products Promotion Payment Type, Managed Care, and PBMs Launches, Drug Approvals, and R & D 2

3 Agenda (cont.) Mergers and Acquisitions Patent Expirations and Franchise Protection Patient Data September 11 th Industry Impact Legislation Ancillary Healthcare Markets 2002 and Beyond 3

4 2001 Key Market Events A sixth consecutive year of double-digit growth Lipitor snagged the #1 product slot from Prilosec A slowdown in promotion spending Medicare reform remained at a standstill Mighty Prozac went generic and that s just the beginning 4

5 Sales & Prescriptions 5

6 Total Pharmaceutical Sales: Billions $250 $ % 17.9% $ % $100 $50 $128.3 $150.7 $176.4 $207.9 $0 1998* WAC Dollars Source: NDC Pharmaceutical Audit Suite *Mail order projected from 4/98, includes CMOP Facilities Non-Retail projected from 11/98 6

7 Total Sales by Channel: Billions $250 $200 $24.1 $150 $100 $12.9 $38.8 $15.4 $41.9 $19.9 $45.5 $54.2 $50 $76.6 $93.4 $111.0 $129.6 $ Retail Non-Retail Mail Order Source: NDCHealth Source Database NDC Pharmaceutical Audit Suite 7

8 Sales by Class of Trade: Class of Trade 2000 WAC $ 2001 WAC $ % Change 2000 % of Sales 2001 % of Sales Change Chains $66.5 $ % 37.7% 37.6% 0.1 Independents $22.9 $ % 13.0% 12.5% -0.5 Food Stores $15.3 $ % 8.7% 8.5% -0.2 Mass Merchandisers $6.2 $ % 3.5% 3.7% 0.2 Mail Order $19.8 $ % 11.2% 11.6% 0.4 Hospitals $24.9 $ % 14.1% 13.7% -0.4 Clinics $9.0 $ % 5.1% 5.5% 0.4 LTC Providers $5.2 $ % 2.9% 2.9% 0.1 Pharma Wholesalers $2.5 $ % 1.4% 1.7% 0.3 Home Health $1.4 $ % 0.8% 0.8% 0.0 Managed Care $1.0 $ % 0.6% 0.4% -0.2 All Others $1.7 $ % 1.0% 0.9% -0.1 TOTAL $176.4 $ Source: NDCHealth Source Database NDC Pharmaceutical Audit Suite 8

9 Total Sales by Class of Trade: WAC = $207.9 Billion Hospitals 13% Clinics 6% LTC Providers 3% Pharma Wholesalers 2% Home Health 1% Chains 37% Mass Merchandisers 4% Mail Order 12% Food Stores 9% Independents 13% Source: NDCHealth Source Database NDC Pharmaceutical Audit Suite 9

10 Channel Sales: Billions $140 $ % 16.8% $ % $80 $60 $40 $20 $0 21.1% 29.2% 19.4% $24.1 $12.9 $15.4 $19.9 $111.0 $93.4 $76.6 $129.6 $ % $ % $45.5 Mail Order* Retail Non-Retail 19.1% $ Source: NDCHealth Source Database NDC Pharmaceutical Audit Suite * Mail Order Channel includes CMOP Facilities 10

11 Retail Sub-Channel Sales: Billions $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 18% $78 $67 14% 16% $23 $26 $15 $18 23% $6 $8 Chains Independents Food Stores Mass Merchandisers Source: NDCHealth Source Database 11

12 Retail Channel Sales Mix: 2001 Retail WAC = $130 Billion Food Stores 14% Mass Merchandisers 6% Independents 20% Chains 60% Source: NDCHealth Source Database 12

13 Non-Retail Sub-Channel Sales: Billions $30 $25 14% $20 $15 $10 $5 $0 $29 $25 $9 28% $12 $5 18% $6 40% Hospitals Clinics LTC Providers Pharma Wholesalers 24% -13% 31% $3 $4 $1 $2 $1 $1 $1 $2 Home Health Managed Care All Other Source: NDC Pharmaceutical Audit Suite 13

14 Non-Retail Channel Sales Mix: WAC = $54 Billion Pharma Wholesalers 7% Home Health 3% Managed Care 2% All Other 3% LTC Providers 11% Hospitals 53% Clinics 21% Source: NDC Pharmaceutical Audit Suite 14

15 Total Prescriptions: Millions 3,500 3, % 7.9% 6.6% 2,500 2,000 1,500 1,000 2,618 2,891 3,120 3, Total Dispensed Prescriptions Source: NDCHealth Source Database NDC Pharmaceutical Audit Suite 15

16 Retail and Mail Order TRx: Millions 3,500 3, % 7.7% 6.4% 2,500 2,000 1,500 1,000 2,499 2,738 2,949 3, % 12.5% 9.9% Mail Order Retail Source: NDC Pharmaceutical Audit Suite 16

17 Retail TRx: Sub-Channel 2000 TRx (millions) 2001 TRx (millions) % Change 2000 % of TRx 2001 % of TRx Change Chains 1,738 1, % 58.9% 59.0% 1.0 Independents % 19.7% 19.1% -.6 Food Stores % 15.0% 15.0% 0.0 Mass Merchandisers % 6.3% 6.8%.5 TOTAL % Source: NDCHealth Source Database NDC Pharmaceutical Audit Suite 17

18 Retail Sub-Channel TRx: Millions 2,000 1,800 1,600 1,400 1,200 1, % 1,852 1, % Chains Independents Food Stores Mass Merchandisers % 15.3% Source: NDCHealth Source Database NDC Pharmaceutical Audit Suite 18

19 Retail Sub-Channel TRx Mix: 2001 Retail TRx = 3.1 Billion Food Stores 15% Mass Merchandisers 7% Independents 19% Chains 59% Source: NDCHealth Source Database 19

20 Total New RXs: Millions 2,000 1,800 1,600 1,400 1,200 1, % 5.4% 9.1% 1,566 1,671 1,761 1, Total New RXs Source: NDCHealth Source Database NDC Pharmaceutical Audit Suite 20

21 Retail and Mail Order NRx: Millions 1,800 1,600 1, % 6.5% 5.1% 1,200 1, , , , , % 10.4% 32.3% Mail Order Retail Source: NDC Pharmaceutical Audit Suite 21

22 Retail Sub-Channel NRx: Millions 1,200 1, % 1, % Chains Independents Food Stores Mass Merchandisers % 14.6% Source: NDCHealth Source Database NDC Pharmaceutical Audit Suite 22

23 NRx as a % of TRx: % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 45% 46% 46% 47% 55% 54% 54% 53% Total Prescriptions New Prescriptions Source: NDCHealth Source Database NDC Pharmaceutical Audit Suite 23

24 Retail TRx Dollar and Unit Growth Retail dollar growth outpaced unit growth by 11.5% Retail dollar growth outpaced TRx growth by 10.4% % change Measure TRx's 2,948,502,980 3,137,995, % Units 157,059,333, ,453,216, % WAC Dollars $110,996,766, $129,619,208, % Source: NDC Pharmaceutical Audit Suite 24

25 Prescription Dollar Growth: Actual vs. Real Growth TRx Dollar Growth 25% 20% 15% 10% 5% 21.90% 11.70% 18.80% 7.10% 16.80% 5.90% 0% % Acutal Growth % Real Growth Year TRx $ Growth Price / Unit Growth Real Growth % 10.2% 11.7% % 11.7% 7.1% % % Source: NDC Pharmaceutical Audit Suite 25

26 Average Prescription Size: Rx Size Source: NDC Pharmaceutical Audit Suite 26

27 Leading Corporations 27

28 Top 20 Corporations: Total Sales Corporation 2001 Rank 2000 Rank WAC Dollars (Millions) % of Total % Change PFIZER, INC 1 1 $17, % 10.3% GLAXOSMITHKLINE 2 2 $16, % 17.9% JOHNSON & JOHNSON 3 5 $12, % 28.3% MERCK & CO.,INC 4 3 $11, % 10.8% ASTRAZENECA 5 6 $10, % 15.8% BRISTOL-MYERS SQUIBB CORP 6 4 $10, % 6.0% AMERICAN HOME PRODUCTS 7 8 $9, % 24.5% NOVARTIS 8 7 $9, % 10.9% PHARMACIA & UPJOHN 9 11 $7, % 12.5% ELI LILLY $7, % 5.1% TOTAL TOP 10 $113, % 14.2% TOTAL MARKET $207, % 15.9% Source: NDC Pharmaceutical Audit Suite 28

29 Top 20 Corporations: Total Sales (cont.) Corporation 2001 Rank 2000 Rank WAC Dollars (Millions) % of Total % Change SCHERING-PLOUGH CORP $7, % 2.7% ABBOTT LABS $6, % 5.4% MYLAN $5, % 16.6% AVENTIS $5, % 28.4% TAP PHARMA $5, % 1.6% TEVA PHARMACEUTICALS $4, % 26.2% WATSON PHARMA $3, % 7.4% HOFFMAN-LAROCHE INC $3, % 0.7% AMGEN $3, % 14.0% BAYER $2, % 6.4% TOTAL TOP 20 $162, % 12.9% TOTAL MARKET $207, % 15.9% Source: NDC Pharmaceutical Audit Suite 29

30 Top 20 Corporations: Total Sales Share 2001 WAC Total = $207,942,284,847 All Other 21.9% Top % PFIZER, INC GLAXOSMITHKLINE JOHNSON & JOHNSON MERCK & CO.,INC ASTRAZENECA BRISTOL-MYERS SQUIBB AMERICAN HOME PRODUCTS NOVARTIS PHARMACIA & UPJOHN ELI LILLY SCHERING-PLOUGH CORP. ABBOTT LABS MYLAN AVENTIS TAP PHARMA TEVA PHARMACEUTICALS WATSON PHARMA HOFFMAN-LAROCHE INC AMGEN BAYER OTHERS Source: NDC Pharmaceutical Audit Suite 30

31 Top 20 Corporations: Retail Sales Corporation 2001 Rank 2000 Rank WAC Dollars (Millions) % of Total % Change PFIZER, INC 1 1 $13, % 12.7% GLAXOSMITHKLINE 2 2 $11, % 20.8% MERCK & CO.,INC 3 3 $7, % 13.4% BRISTOL-MYERS SQUIBB CORP 4 4 $6, % 11.1% ASTRAZENECA 5 5 $6, % 15.2% JOHNSON & JOHNSON 6 6 $6, % 25.3% NOVARTIS 7 7 $5, % 11.4% PHARMACIA & UPJOHN 8 9 $5, % 12.0% SCHERING-PLOUGH CORP. 9 8 $5, % 3.4% AMERICAN HOME PRODUCTS $5, % 7.8% TOTAL TOP 10 $74, % 13.8% TOTAL MARKET $129, % 16.8% Source: NDC Pharmaceutical Audit Suite 31

32 Top 20 Corporations: Retail Sales (cont.) Corporation 2001 Rank 2000 Rank WAC Dollars (Millions) % of Total % Change ELI LILLY $4, % 4.4% MYLAN $4, % 16.5% TEVA PHARMACEUTICALS $3, % 31.0% ABBOTT LABS $3, % 20.3% AVENTIS $2, % 27.9% TAP PHARMA $2, % 12.2% WATSON PHARMA $2, % 9.1% HOFFMAN-LAROCHE INC $1, % 5.8% BAYER $1, % 0.3% BARR LABS $1, % 69.9% TOTAL TOP 20 $105, % 14.6% TOTAL MARKET $129, % 16.8% Source: NDC Pharmaceutical Audit Suite 32

33 Top 20 Corporations: Retail Sales Share All Other 18.9% 2001 WAC Total = $129,619,208,796 Top % PFIZER, INC GLAXOSMITHKLINE MERCK & CO.,INC BRISTOL-MYERS SQUIBB ASTRAZENECA JOHNSON & JOHNSON NOVARTIS PHARMACIA & UPJOHN SCHERING-PLOUGH CORP. AMERICAN HOME PRODUCTS ELI LILLY MYLAN TEVA PHARMACEUTICALS ABBOTT LABS AVENTIS TAP PHARMA WATSON PHARMA HOFFMAN-LAROCHE INC BAYER BARR LABS OTHERS Source: NDC Pharmaceutical Audit Suite 33

34 Top 20 Corporations: Non-Retail Sales Corporation 2001 Rank 2000 Rank WAC Dollars (Millions) % of Total % Change JOHNSON & JOHNSON 1 2 $4, % 36.6% GLAXOSMITHKLINE 2 1 $4, % 15.8% AMERICAN HOME PRODUCTS 3 7 $3, % 88.4% AMGEN 4 4 $3, % 13.5% ABBOTT LABS 5 3 $2, % -9.9% PFIZER, INC 6 5 $2, % -3.8% BRISTOL-MYERS SQUIBB CORP 7 6 $2, % 6.0% ELI LILLY 8 9 $2, % 11.9% ASTRAZENECA 9 11 $2, % 28.5% MERCK & CO.,INC $2, % 9.5% TOTAL TOP 10 $29, % 18.7% TOTAL MARKET $54, % 19.0% Source: NDC Pharmaceutical Audit Suite 34

35 Top 20 Corporations: Non-Retail Sales (cont.) Corporation 2001 Rank 2000 Rank WAC Dollars (Millions) % of Total % Change AVENTIS $1, % 34.9% PHARMACIA & UPJOHN $1, % 15.8% NOVARTIS $1, % 16.5% TAP PHARMA 14 8 $1, % -19.3% SCHERING-PLOUGH CORP $1, % -0.8% HOFFMAN-LAROCHE INC $1, % -12.3% BAXTER PARENTERAL PROD $1, % 61.0% GENENTECH INC $1, % 42.6% BAYER $ % 31.0% WATSON PHARMA $ % 6.3% TOTAL TOP 20 $43, % 16.6% TOTAL MARKET $54, % 19.0% Source: NDC Pharmaceutical Audit Suite 35

36 Top 20 Corporations: Non-Retail Sales Share All Other 20.3% 2001 WAC Total = $54,183,845,620 Top % JOHNSON & JOHNSON GLAXOSMITHKLINE AMERICAN HOME PRODUCTS AMGEN ABBOTT LABS PFIZER, INC BRISTOL-MYERS SQUIBB ELI LILLY ASTRAZENECA MERCK & CO.,INC AVENTIS PHARMACIA & UPJOHN NOVARTIS TAP PHARMA SCHERING-PLOUGH CORP. HOFFMAN-LAROCHE INC BAXTER PARENTERAL PROD GENENTECH INC BAYER WATSON PHARMA OTHERS Source: NDC Pharmaceutical Audit Suite 36

37 Absolute Growth Leaders: Total Sales Corporation Volume Growth (Millions) % Change JOHNSON & JOHNSON $2, % GLAXOSMITHKLINE $2, % AMERICAN HOME PRODUCTS $1, % PFIZER, INC $1, % ASTRAZENECA $1, % AVENTIS $1, % MERCK & CO.,INC $1, % TEVA PHARMACEUTICALS $1, % NOVARTIS $ % PHARMACIA & UPJOHN $ % TOTAL TOP 10 $15, % * $100 Million or more in 2001 WAC Dollars Source: NDC Pharmaceutical Audit Suite 37

38 Absolute Growth Leaders: Retail Sales Corporation Volume Growth (Millions) % Change GLAXOSMITHKLINE $1, % PFIZER, INC $1, % JOHNSON & JOHNSON $1, % MERCK & CO.,INC $ % TEVA PHARMACEUTICALS $ % ASTRAZENECA $ % BRISTOL-MYERS SQUIBB CORP $ % AVENTIS $ % MYLAN $ % BARR LABS $ % TOTAL TOP 10 $10, % TOTAL MARKET $18, % * $100 Million or more in 2001 WAC Dollars Source: NDC Pharmaceutical Audit Suite 38

39 Absolute Growth Leaders: Non-Retail Sales Corporation Volume Growth (Millions) % Change AMERICAN HOME PRODUCTS $1, % JOHNSON & JOHNSON $1, % GLAXOSMITHKLINE $ % NOVO NORDISK PHARMA $ % AVENTIS $ % ASTRAZENECA $ % BAXTER PARENTERAL PROD $ % AMGEN $ % GENENTECH INC $ % NOVARTIS $ % TOTAL TOP 10 $6, % TOTAL MARKET $8, % * $100 Million or more in 2001 WAC Dollars Source: NDC Pharmaceutical Audit Suite 39

40 Leading Growth Companies: Total Sales Corporation % Change WAC Dollars (millions) RANBAXY 235.3% $347 NOVO NORDISK PHARMA 157.1% $899 GENZYME 134.9% $122 SEPRACOR INC 120.2% $138 PAR PHARM 112.7% $979 CEPHALON INC 106.2% $208 EON LABS 103.0% $480 BARR LABS 80.2% $1,958 APOTEX CORP 74.6% $144 TARO PHARMACEUTICALS 73.9% $344 TOTAL TOP % $5,621 TOTAL MARKET 15.9% $207,942 * $100 Million or more in 2001 WAC Dollars Source: NDC Pharmaceutical Audit Suite 40

41 Leading Growth Companies: Retail Sales Corporation % Change WAC Dollars (millions) RANBAXY 247.2% $314 EON LABS 123.7% $405 SEPRACOR INC 121.1% $103 PAR PHARM 111.0% $756 CEPHALON INC 110.6% $164 FUJISAWA 85.9% $231 TAKEDA 71.7% $780 BARR LABS 69.9% $1,511 TARO PHARMACEUTICALS 65.8% $286 SHIRE RICHWOOD 61.0% $621 TOTAL TOP % $5,171 TOTAL MARKET 16.8% $129,619 * $100 Million or more in 2001 WAC Dollars Source: NDC Pharmaceutical Audit Suite 41

42 Leading Growth Companies: Non-Retail Sales Corporation % Change WAC Dollars (millions) NOVO NORDISK PHARMA 515.4% $654 BARR LABS 267.9% $182 IVAX CORP 146.3% $382 PAR PHARM 99.1% $149 AMERICAN HOME PRODUCTS 88.4% $3,723 BAXTER PARENTERAL PROD 61.0% $1,236 AMERICAN RED CROSS 59.3% $236 GENENTECH INC 42.6% $1,139 AMERICAN PHARMA PARTNERS 40.0% $498 JOHNSON & JOHNSON 36.6% $4,815 TOTAL TOP % $13,014 TOTAL MARKET 19.0% $54,184 * $100 Million or more in 2001 WAC Dollars Source: NDC Pharmaceutical Audit Suite 42

43 Top 20 Corporations: TRx Corporation 2001 Rank 2000 Rank TRx Count (Millions) % of Total % Change PFIZER, INC % 6.9% NOVARTIS % 2.9% MYLAN % 11.3% TEVA PHARMACEUTICALS % 15.9% GLAXOSMITHKLINE % 4.1% WATSON PHARMA % -5.8% AMERICAN HOME PRODUCTS % -6.4% BRISTOL-MYERS SQUIBB CORP % 0.1% SCHERING-PLOUGH CORP % -5.8% MERCK & CO.,INC % 4.7% TOTAL TOP 10 1, % 3.2% TOTAL MARKET 3, % 6.4% Source: NDC Pharmaceutical Audit Suite 43

44 Top 20 Corporations: TRx (cont.) Corporation 2001 Rank 2000 Rank TRx Count (Millions) % of Total % Change PHARMACIA & UPJOHN % 3.3% JOHNSON & JOHNSON % 11.1% ASTRAZENECA % 11.9% ABBOTT LABS % 5.7% IVAX CORP % 9.2% BARR LABS % 28.8% ELI LILLY % -5.8% AVENTIS % 13.3% FAULDING % 12.2% QUALITEST % 3.9% TOTAL TOP 20 2, % 4.8% TOTAL MARKET 3, % 6.4% Source: NDC Pharmaceutical Audit Suite 44

45 Top 10 Biotechs: Total Sales Corporation WAC Dollars (Millions) % Change AMGEN $3, % GENENTECH INC $1, % BIOGEN $ % SERONO $ % MEDIMMUNE $ % CEPHALON INC $ % GENZYME $ % CELGENE CORPORATION $ % INTERMUNE $ % COLLAGENEX $ % TOTAL TOP 10 $6, % Source: NDC Pharmaceutical Audit Suite 45

46 Top 10 Biotechs: TRx Corporation TRx Count % Change CEPHALON INC 931, % COLLAGENEX 643, % GENZYME 493, % BIOGEN 421, % SERONO 340, % AMGEN 261, % CELGENE CORPORATION 79, % GENENTECH INC 60, % MEDIMMUNE 31, % GILEAD SCIENCES 13, % TOTAL TOP 10 3,276, % Source: NDC Pharmaceutical Audit Suite 46

47 Leading Classes 47

48 Top 10 Therapeutic Classes: Total Sales Therapeutic Class 2001 Rank 2000 Rank WAC Dollars (Millions) % of Total % Change PSYCHOTHERAPEUTIC DRUGS 1 1 $23, % 16.8% CARDIOVASCULAR THERAPY 2 2 $16, % 5.2% ANTISPASMODIC/ANTISECRETORY GI/GU 3 3 $14, % 15.8% ANTIINFECTIVES, SYSTEMIC 4 4 $13, % 11.8% CHOLESTEROL REDUCERS & LIPOTROPICS 5 5 $12, % 19.4% ANALGESICS,ETHICAL 6 7 $8, % 20.4% RESPIRATORY THERAPY 7 6 $8, % 17.2% ANTIARTHRITICS 8 8 $8, % 13.5% CANCER/TRANSPLANT THERAPY 9 9 $8, % 14.1% DIABETES THERAPY $7, % 20.2% TOTAL TOP 10 $122, % 14.8% TOTAL MARKET $207, % 15.9% Source: NDC Pharmaceutical Audit Suite 48

49 Top 10 Therapeutic Classes: Total Sales Share 2001 WAC total =$207,942,284,847 PSYCHOTHERAPEUTIC DRUGS CARDIOVASCULAR THERAPY All Other 41.1% ANTISPASMODIC/ANTISECRETORY GI/GU ANTIINFECTIVES, SYSTEMIC CHOLESTEROL REDUCERS & LIPOTROPICS ANALGESICS,ETHICAL RESPIRATORY THERAPY ANTIARTHRITICS Top % CANCER/TRANSPLANT THERAPY DIABETES THERAPY OTHERS Source: NDC Pharmaceutical Audit Suite 49

50 Top 10 Therapeutic Classes: Retail Sales Therapeutic Class 2001 Rank 2000 Rank WAC Dollars (Millions) % of Total % Change PSYCHOTHERAPEUTIC DRUGS 1 1 $17, % 20.9% CARDIOVASCULAR THERAPY 2 2 $11, % 6.7% ANTISPASMODIC/ANTISECRETORY GI/GU 3 3 $10, % 12.0% ANTIINFECTIVES, SYSTEMIC 4 4 $8, % 10.4% CHOLESTEROL REDUCERS & LIPOTROPICS 5 5 $8, % 21.3% ANALGESICS,ETHICAL 6 7 $6, % 24.4% RESPIRATORY THERAPY 7 8 $6, % 21.8% ANTIARTHRITICS 8 6 $6, % 13.7% DIABETES THERAPY 9 9 $5, % 25.0% ANTIHISTAMINES, SYSTEMIC $5, % 23.2% TOTAL TOP 10 $87, % 16.8% TOTAL MARKET $129, % 14.4% Source: NDC Pharmaceutical Audit Suite 50

51 Top 10 Therapeutic Classes: Retail Sales Share 2001 WAC total = $129,619,208,796 All Others 32.6% PSYCHOTHERAPEUTIC DRUGS CARDIOVASCULAR ANTISPASMODIC ANTIINFECTIVES, SYSTEMIC CHOLESTEROL REDUCERS ANALGESICS,ETHICAL RESPIRATORY THERAPY ANTIARTHRITICS Top % DIABETES THERAPY ANTIHISTAMINES OTHERS Source: NDC Pharmaceutical Audit Suite 51

52 Top 10 Therapeutic Classes: Non-Retail Sales Therapeutic Class 2001 Rank 2000 Rank WAC Dollars (Millions) % of Total % Change CANCER/TRANSPLANT THERAPY 1 1 $5, % 17.6% ANTIINFECTIVES, SYSTEMIC 2 2 $4, % 14.7% BLOOD GROWTH FACTORS 3 4 $4, % 29.7% PSYCHOTHERAPEUTIC DRUGS 4 3 $3, % 7.0% HOSPITAL SOLUTIONS 5 7 $3, % 59.0% ANTISPASMODIC/ANTISECRETORY GI/GU 6 6 $2, % 35.9% HEMOSTATIC MODIFIERS 7 5 $2, % 18.4% BIOLOGICALS 8 18 $2, % 101.2% CARDIOVASCULAR THERAPY 9 8 $1, % 0.3% RESPIRATORY THERAPY 10 9 $1, % 12.4% TOTAL TOP 10 $33, % 23.7% TOTAL MARKET $54, % 19.0% Source: NDC Pharmaceutical Audit Suite 52

53 Top 10 Therapeutic Classes: Non-Retail Sales Share All Others 21.9% 2001 WAC total = $54,183,845,620 CANCER/TRANSPLANT THERAPY ANTIINFECTIVES, SYSTEMIC BLOOD GROWTH FACTORS PSYCHOTHERAPEUTIC DRUGS HOSPITAL SOLUTIONS ANTISPASMODIC/ANTISECRET ORY GI/GU HEMOSTATIC MODIFIERS BIOLOGICALS Top % CARDIOVASCULAR THERAPY RESPIRATORY THERAPY OTHERS Source: NDC Pharmaceutical Audit Suite 53

54 Leading Products 54

55 Products Generating $1+ Billion: Source: NDC Pharmaceutical Audit Suite 55

56 Top 20 Products: Total Sales Sales % Product Rank Rank Class Manufacturer (millions) change LIPITOR (1296) 1 2 Cholesterol Pfizer $5, % PRILOSEC (0989) 2 1 GI/GU AstraZeneca $4,354 (1.0%) PREVACID (0595) 3 3 GI/GU TAP $3, % ZOCOR (1291) 4 5 Cholesterol Merck $3, % PROCRIT 5 11 Blood Growth J & J $2, % CELEBREX (1298) 6 8 Anti Arthritics Pharmacia $2, % EPOGEN 7 9 Blood Growth Amgen $2, % PAXIL (1292) 8 7 Psych GSK $2, % ZYPREXA (0996) 9 12 Psych Lilly $2, % PROZAC (1287) 10 4 Psych Lilly $2,298 (29.3%) TOTAL TOP 10 $31,572 PERCENT OF 2001 TOTAL SALES 15.2% Source: NDC Pharmaceutical Audit Suite 56

57 Top 20 Products: Total Sales (cont.) Sales % Product Rank Rank Class Manufacturer (millions) change ZOLOFT (1291) 11 6 Psych Pfizer $2, % CLARITIN (1293) Antihistamines Schering $2, % VIOXX (0599) Anti Arthritics Merck $2, % GLUCOPHAGE (0395) Diabetes BMS $1, % NORVASC (0792) Cardiovascular Pfizer $1, % AUGMENTIN (0884) Anti Infectives GSK $1, % NEURONTIN (1293) Neurological Pfizer $1, % PREMARIN (pre82) HRT AHP $1, % PRAVACHOL (1091) Cholesterol BMS $1, % RISPERDAL (1293) Psych J & J $1, % TOTAL TOP 20 $49,845 PERCENT OF 2001 TOTAL SALES 24.0% Source: NDC Pharmaceutical Audit Suite 57

58 Top 20 Products: Total Sales Top % All Other 76.0% ALL OTHER LIPITOR PRILOSEC PREVACID ZOCOR PROCRIT CELEBREX EPOGEN PAXIL ZYPREXA PROZAC ZOLOFT CLARITIN VIOXX GLUCOPHAGE NORVASC AUGMENTIN NEURONTIN PREMARIN PRAVACHOL RISPERDAL Source: NDC Pharmaceutical Audit Suite 58

59 Top 20 Products: Retail Sales Sales % Product Rank Rank Class Manufacturer (millions) change LIPITOR (1296) 1 1 Cholesterol Pfizer $5, % PRILOSEC (0989) 2 2 GI/GU AstraZeneca $3,802 (1.4%) PREVACID (0595) 3 3 GI/GU TAP $3, % ZOCOR (1291) 4 5 Cholesterol Merck $2, % CELEBREX (1298) 5 6 Anti Arthritics Pharmacia $2, % CLARITIN (1293) 6 7 Antihistamines Schering $2, % PAXIL (1292) 7 9 Psych GSK $2, % PROZAC (1287) 8 4 Psych Lilly $2,011 (23.6%) ZOLOFT (1291) 9 8 Psych Pfizer $1, % VIOXX (0599) Anti Arthritics Merck $1, % TOTAL TOP 10 $27,222 PERCENT OF 2001 RETAIL SALES 18.1% Source: NDC Pharmaceutical Audit Suite 59

60 Top 20 Products: Retail Sales (cont.) Sales % Product Rank Rank Class Manufacturer (millions) change NORVASC (0792) Cardiovascular Pfizer $1, % ZYPREXA (0996) Psych Eli Lilly $1, % GLUCOPHAGE (0395) Diabetes BMS $1,592 (0.8%) AUGMENTIN (0884) Anti Infectives GSK $1, % PRAVACHOL (1091) Cholesterol BMS $1, % NEURONTIN (1293) Neurological Pfizer $1, % PREMARIN (pre82) HRT AHP $1,285 (6.6%) OXYCONTIN (1295) Analgesics Purdue $1, % ZITHROMAX (1191) Anti Infectives Pfizer $1, % ATENOLOL (0788) Cardiovascular Various $1, % TOTAL TOP 20 $41,384 PERCENT OF 2001 RETAIL SALES 27.5% Source: NDC Pharmaceutical Audit Suite 60

61 Top 20 Products: Retail Sales Top % All Other 72.5% ALL OTHER LIPITOR PRILOSEC PREVACID ZOCOR CELEBREX CLARITIN PAXIL PROZAC ZOLOFT VIOXX NORVASC ZYPREXA GLUCOPHAGE AUGMENTIN PRAVACHOL NEURONTIN PREMARIN OXYCONTIN ZITHROMAX ATENOLOL Source: NDC Pharmaceutical Audit Suite 61

62 Top 20 Products: Non-Retail Sales Sales % Product Rank Rank Class Manufacturer (millions) change EPOGEN 1 1 Blood Growth Amgen $2, % PROCRIT 2 2 Blood Growth J & J $2, % LUPRON (0485) 3 3 Cancer TAP $857 (32.3%) NEUPOGEN 4 4 Blood Growth Amgen $ % PREVNAR Vaccine/Pneum AHP $ % LOVENOX (0393) 6 6 Hemostatic Aventis $ % ZYPREXA (0996) 7 8 Psych Lilly $ % PREVACID (0595) 8 5 Psych TAP $ % RITUXAN 9 16 Cancer Genentech $ % ROCEPHIN (1284) 10 7 Anti Infectives Hoffman $ % TOTAL TOP 10 $10,440 PERCENT OF 2001 NON-RETAIL SALES 19.3% Source: NDC Pharmaceutical Audit Suite 62

63 Top 20 Products: Non-Retail Sales (cont.) Sales Product Rank Rank Class Manufacturer (millions) % change ZOCOR (1291) Cholesterol Merck $ % LEVAQUIN (1296) Anti Infectives J &J $ % REMICADE Musculoskeletal J & J $ % PRILOSEC (0989) 14 9 GI/GU AstraZeneca $ % ZOFRAN (0191) Anti Nauseants GSK $ % AREDIA (1091) Musculoskeletal Novartis $ % NOVOSEVEN Hemostatic Novo Nordisk $ % RISPERDAL (1293) Psych J & J $ % CAMPTOSAR (0696) Cancer Pharmacia $ % CIPRO (0496) Anti Infectives Bayer $ % TOTAL TOP 20 $15,673 PERCENT OF 2001 NON-RETAIL SALES 28.9% Source: NDC Pharmaceutical Audit Suite 63

64 Top 20 Products: Non-Retail Sales Top % All Other 71.1% ALL OTHER EPOGEN PROCRIT LUPRON DEPOT NEUPOGEN PREVNAR LOVENOX ZYPREXA PREVACID RITUXAN ROCEPHIN ZOCOR LEVAQUIN REMICADE PRILOSEC ZOFRAN AREDIA NOVOSEVEN RISPERDAL CAMPTOSAR CIPRO Source: NDC Pharmaceutical Audit Suite 64

65 Top 20 Products: Retail TRx TRx % Product Rank Rank Class Manufacturer (millions) change HYDROCODONE 1 1 Analgesics Various % W/APAP LIPITOR (1296) 2 3 Cholesterol Pfizer % PREMARIN 3 2 HRT AHP 48 (11.4%) ATENOLOL (0788) 4 5 Cardiovascular Various % SYNTHROID 5 4 Thyroid Therapy Abbott 44 (0.9%) ZITHROMAX (1191) 6 6 Anti Infectives Pfizer % FUROSEMIDE 7 7 Diuretics Various % AMOXICILLIN 8 18 Anti Infectives Various % NORVASC (0792) 9 9 Cardiovascular Pfizer % ALPRAZOLAM (1093) Psych Various % TOTAL TOP PERCENT OF 2001 RETAIL TRx 13.4% Source: NDC Pharmaceutical Audit Suite 65

66 Top 20 Products: Retail TRx (cont.) TRx % Product Rank Rank Class Manufacturer (millions) change ALBUTEROL Respiratory Various % CLARITIN (1293) Antihistamine Schering % HYDROCHLOROTHIAZIDE Diuretics Various % PRILOSEC (0989) 14 8 GI/GU AstraZeneca 29 (5.4%) ZOLOFT (1291) Psych Pfizer % PAXIL (1292) Psych GSK % TRIAMTERENE W/HCTZ Diuretics Various % PREVACID (0595) GI/GU TAP % IBUPROFEN Analgesics Various % CELEBREX (1298) Anti Arthritic Pharmacia % TOTAL TOP PERCENT OF 2001 RETAIL TRx 21.8% Source: NDC Pharmaceutical Audit Suite 66

67 Top 20 Products: Retail TRx Top % All Other 78.2% ALL OTHER HYDROCODONE W/APAP LIPITOR PREMARIN ATENOLOL SYNTHROID ZITHROMAX FUROSEMIDE AMOXICILLIN NORVASC ALPRAZOLAM ALBUTEROL CLARITIN HYDROCHLOROTHIAZIDE PRILOSEC ZOLOFT PAXIL TRIAMTERENE W/HCTZ PREVACID IBUPROFEN CELEBREX Source: NDC Pharmaceutical Audit Suite 67

68 Promotion 68

69 Total Promotion Spend: Billions % 19.2% 5.9% * $8.0 $9.9 $11.8 $ Source: Quintiles Informatics, Inc. * 2001 DTC Dollars projected for Dec 01 69

70 Billions Total Promotion Spend by Channel: $14 $12 $10 $8 $6 $4 $2 $0 $5.8 $5.4 $1.9 $1.3 $0.5 $6.9 $7.2 $2.5 $2.8 $0.5 $0.4 $1.3 $1.7 $1.9 $ Meetings & Events Journal Advertising Direct to Consumer Advertising Detailing Source: Quintiles Informatics, Inc 2001 DTC Dollars projected for Dec 01 70

71 Total Promotion Spend Mix: 2001 Journal Advertising 3% Direct to Consumer Advertising 23% 2001 Promotional Spend = $12.5 Billion Meetings & Events 17% Detailing 57% Source: Quintiles Informatics, Inc DTC Dollars projected for Dec 01 71

72 Detail Spend by Audience: Billions $6 $5 9% 8% 4% $4 $3 $2 $4.4 $4.8 $5.2 $5.4 $1 $0 $1.0 $1.0 $1.0 $1.1 $0.7 $ Physicians Hospitals NP's & PA's Source: Quintiles Informatics, Inc. 72

73 Detail Spend by Audience: Spend = $7.2 Billion Hospitals 17% NP's & PA's 1% Physicians 82% Source: Quintiles Informatics, Inc. 73

74 Detail Units by Audience: Millions % 3% 0% Physicians Hospitals NP's & PA's Source: Quintiles Informatics, Inc. 74

75 Detail Units by Audience: Details = 69.5 Million Hospitals 11% NP's & PA's 14% Physicians 75% Source: Quintiles Informatics, Inc. 75

76 Total Sampling Units: Millions % 3.7%.5% Source: Quintiles Informatics, Inc. 76

77 Meetings and Events Spend: Billions $2.5 $ % 11.8% 10.5% $1.5 $1.0 $0.5 $1.3 $1.7 $1.9 $2.1 $ Source: Quintiles Informatics, Inc. 77

78 Meetings and Events Units: Thousands % 11.3% 17.9% Source: Quintiles Informatics, Inc. 78

79 Journal Advertising Spend: Millions $500 $450 $400 $350 $300 $250 $200 $150 $100 $50 $0-1.3% -25.0% $474.0 $467.7 $ Source: Quintiles Informatics, Inc. 79

80 Journal Advertising Spend for Top 5 Brands: Millions $60 $50 $40 $30 $20 $10 $0 23.3% $ % $43.0 $44.1 $9.3 $5.6 $5.9 $7.5 $8.4 $6.3 $11.7 $9.7 $11.8 $10.6 $10.8 $10.7 $6.5 $12.7 $ Lipitor Norvasc Celexa Nexium Prevacid Protonix Effexor XR Source: Quintiles Informatics, Inc. 80

81 DTC Advertising Spend: Billions $3.0 $ % 12.0% * $ % $1.5 $2.5 $2.8 $1.0 $1.9 $0.5 $1.3 $ Source: Quintiles Informatics, Inc. *2001 Data projected from YTD/Nov 81

82 DTC Advertising Spend for Top 5 Brands: Millions $600 $500 $400 $300 $ % $354.6 $320.7 $79.4 $49.8 $35.7 $53.5 $41.4 $ % 9.9%* $546.1 $106.1 $91.6 $91.2 $97.2 $539.6 $85.4 $87.0 $95.8 $135.0 $100 $0 $141.3 $123.4 $160.1 $136.4 $52.5 $ Celebrex Vioxx Allegra Claritin Viagra Zocor Flonase Paxil Prilosec Source: Quintiles Informatics, Inc. *2001 DTC Dollars projected for Dec 01 82

83 Sales Force Representatives: Thousands % 19.1% 8.9% Source: Quintiles Informatics, Inc. 83

84 Sales Force Size: Top 10 Companies 8,000 7,000 6,000 5,000 4,000 3,000 2,000 7,336 6,886 6,470 5,317 5,159 4,999 4,657 4,280 4,031 3,689 1,000 0 GSK Pfizer Merck J & J BMS AZ Pharmacia Novartis Aventis AHP # of Sales Reps Source: Quintiles Informatics, Inc. 84

85 Total Promotion as % of Total Sales: % 6.6% 6.4% 6.2% 6.0% 5.8% 6.2% 6.6% 6.7% 6.0% 5.6% Source: NDC Pharmaceutical Audit Suite 85

86 Payment Type, Managed Care, and PBMs 86

87 Retail TRx by Payment Type 100% 90% 80% 70% 60% 65.4% 69.1% 70.8% 72.4% 50% 40% 30% 20% 10.6% 10.5% 10.8% 11.2% 10% 0% 24.1% 20.4% 18.4% 16.5% Cash Medicaid Third Party Source: NDC Pharmaceutical Audit Suite 87

88 Third Party Growth: TRx Volume & Dollars 30% 28% 25% 20% 15% 10% 16% 10% 21% 9% 19% 5% 0% -5% % Change in TRx % Change in TRx $ Source: NDC Pharmaceutical Audit Suite 88

89 Third Party Retail TRx: PBM Managed PBM Managed* 71% Not PBM Managed 29% Source: NDCHealth MCO Statistical Overview * 4 th Quarter

90 PBM Processed/Managed Retail Prescriptions Advance PCS 29% Merck-Medco 29% Express Scripts/DPS(Incl ValueRx) 16% Wellpoint Pharmacy Management 5% Eckerd Health Services (Incl Genplus) 2% Caremark Prescriptions Services 5% Prescriptions Solutions 4% Medimpact Healthcare Systems 4% Argus Health Systems, Inc 2% National Prescription Administrators 4% Source: NDCHealth MCO Statistical Overview 90

91 Managed Care Enrollment: Enrollment by Type (millions) 2000 % of Total 2001 % change % of Total HMO % % 44.7% PPO % % 55.3% TOTAL Source: Managed Care Online 91

92 Premium Trends: % 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% Source: Managed Care Online 92

93 Top 10 MCO s: Largest MCO s by Enrollment 10 Largest MCO s by Revenue MCO Enrollment MCO Revenue (millions) (billions) Aetna 18.3 Aetna 5.1 UnitedHealth Group 16.5 UnitedHealth Group 5.0 Cigna HealthCare 14.3 Kaiser Health Plans 4.9 Wellpoint Health Networks 9.8 Cigna HealthCare 3.8 Kaiser Health Plans 8.2 PacifiCare 3.0 Health Net 5.5 Humana 2.4 PacifiCare 3.8 Wellpoint Health Networks 2.4 Humana 2.4 Health Net 2.1 Coventry Health Care 1.7 Oxford Health Plans 1.1 Oxford Health Plans 1.5 Coventry Health Care.75 Source: Managed Care Online 93

94 2001 Launches 94

95 2001 Selected Launches Generating $50MM+ Average Product Class Manufacturer Retail (millions) Non Retail (millions) YTD Sales (millions) Monthly Revenue/ December Revenue (millions) ADVAIR (3/01) Respiratory GSK $511 $78 $589 $58/$98 NEXIUM (3/01) GI/GU AstraZeneca $457 $38 $495 $49/$106 PEG-INTRON (2/01) Cancer Schering $107 $28 $135 $12/$29 GEODON (3/01) Psych Pfizer $80 $31 $111 $11/$14 GLEEVEC (5/01) Cancer Novartis $62 $21 $83 $10/$12 REBETOL (10/01) Hepatitis C Schering $61 $21 $82 $27/$37 CLARINEX (12/01) Allergy Schering $131.00* - $5** - Source: FDA/Rx Factstat and NDC Pharmaceutical Audit Suite 12/29/01 through 1/4/02 ** 12/29/01 through 1/31/02 95

96 Selected Launches: Total Sales $120 $100 $80 $60 $40 $20 $0 96. January-01 February-01 March-01 April-01 May-01 June-01 July-01 August-01 September-01 October-01 November-01 December-01 ADVAIR NEXIUM PEG-INTRON GEODON GLEEVEC REBETOL Source: NDC Pharmaceutical Audit Suite

97 Drug Approvals 97

98 New Drug Application Approvals: Other NDAs New Molecular Entities (NMEs) Source: FDA 98

99 Generic Drug Approvals: Source: FDA 99

100 New Drug Approvals: 2001 Product Name Indication Applicant NME AccuNeb Bronchospasm in patients age 2-12 Dey L.P. Adderall XR Attention deficit hyperactivity disorder Shire Labs Advicor Hypercholesterolemia Kos Alphagan P Glaucoma, ocular hypertension Allergan Arestin Destructive periodontitis Orapharma Arixtra Deep vein thrombosis Fonda BV! Atropine Sulfate Muscarinic blockade Abbott Augmentin Bacterial infection SKB Avagard Surgical hand scrub 3M Health Avelox Pneumonia, bacterial sinusitis Bayer Axert Migraine Pharmacia & UpJohn! Bayer Migraine Migraine Bayer Bextra Osteoarthritis, adult rheumatoid arthritis Searle Pharms! Canasa Rectal mesalamine for ulcerative colitis Axcan Scandipharm Cancidas Invasive aspergillosis Merck Research Labs! Cefuroxime Dextrose Bacterial infection B. Braun Clarinex Allergy Schering Plough! Definity Ultrasound contrast agent DuPont! Diovan Hypertension Novartis DuoNeb Bronchospasm associated with COPD Dey Labs Elidel Atopic dermatitis Novartis! Entocort EC Chrohn's disease AstraZeneca Focalin Attention deficit hyperactivity disorder Celgene Foradil COPD, asthma and bronchospasm Novartis Foradil Aerolizer COPD, asthma and bronchospasm Novartis! Source: FDA/RxFactstat 100

101 New Drug Approvals (cont.): 2001 Product Name Indication Applicant NME Frova Migraine Elan! Geodon Schizophrenia Pfizer! Gleevec Chronic myeliod leukemia Novartis! Infuvite Pediatric Multiple vitamins for infusion Sabex Invanz Bacterial infection Merck! Kytril Nausea and vomiting associated with cancer therapy Hoffman-LaRoche Levoxyl Hypothyroidism Jones Lumigan Glaucoma, ocular hypertension Allergan! Metadate Attention deficit hyperactivity disorder Celltech Monistat 3 Vaginal yeast infections Personal Products Name Pending Benign prostatic hyperplasia GlaxoSmithKline! Natrecor Congestive Heart Failure Scios! Nexium Helicobacter pylori, erosive esophagitis, GERD AstraZeneca Novolog Mix 70/30 Hyperglycemia Novo Nordisk NuvaRing Monthly vaginal ring for birth control Organon! Ortho Evra Contraceptive Patch R.W. Johnson! Periostat Adult periodontitis Collagenex PhosLo Hyperphospatemia Braintree Lab Prevacid Acid reflux disease Tap Protonix Gastroesopageal reflux disease Wyeth-Ayerst Prozac Weekly Depression Eli Lilly Remeron SolTab Depression Organon Reminyl Alzheimers Janssen Research! Reminyl Alzheimers Janssen Research Spectracef Bacterial infection Tap! Source: FDA/RxFactstat 101

102 New Drug Approvals (cont.): 2001 Product Name Indication Applicant NME Tavist Cough, cold, allergy Novartis Teveten HCT Hypertension Unimed Tracleer Pulmonary arterial hypertension Actelion, Ltd.! Travatan Glaucoma, ocular hypertension Alcon! Trelstar LA Prostate cancer Debio Recherche Tricor Hypercholesterolemia Abbott Trileptal Epilepsy Novartis Trimethoprim Urinary tract infection Able Labs Ultracet Acute pain R.W. Johnson Valcyte Cytomegalovirus retinitis in AIDS patients Roche Ventolin HFA Bronchospasm GlaxoSmithKline Viread HIV Gilead Sciences! Yasmin Oral Contraceptive Berlex Labs! Zometa Hypercalcemia of malignancy Novartis! Zomig ZMT Migraine AstraZeneca Zyrtec-D 12 Hour Allergy Pfizer Source: FDA/RxFactstat 102

103 Research and Development 103

104 R & D Spending: Pharmaceutical Industry Source: PhRMA 104

105 R & D Trends Average cost to develop a new drug has escalated to over $800MM Steady increase from $231MM in 1991 Majority of increase is due to rising clinical trial costs Drug development time has increased from 8 years in 1960 to approximately 15 years today Only one in every 5,000-10,000 compounds screened becomes an approved drug Source: Tuft Center for Study of Drug Development 105

106 R & D Trends U.S. pharmaceutical companies will spend more than $30 billion on research and development this year, an increase of almost 19 percent over 2000 During the past two decades, the industry's percentage of sales allocated to R&D has jumped from 11.9 percent in 1980 to 18.5 percent in Pharmaceutical companies invest a higher percentage of sales in research and development than almost any other industry. Source: Tuft Center for Study of Drug Development 106

107 R & D Trends The industry has over 1,000 medicines in development in human clinical trials or awaiting FDA approval for cancer for special needs of children Heart disease Stroke AIDS Mental Illness 26 Alzheimer s 25 Diabetes Source: U.S. Pharmacist 107

108 Blockbusters in Waiting Product Indication Manufacturer 2005 Projected Sales (in Millions) Crestor Cholesterol Reduction AstraZeneca 3,500 Cialis Erectile Dysfunction Eli Lilly/ICOS 2,000 Arcoxia Arthritis and pain Merck 2,000 Avastin Cancer Genentech 2,000 Exubera Diabetes Aventis/Pfizer 2,000 Source: SG Cowen/MedAd News 108

109 Mergers and Acquisitions 109

110 Mergers and Acquisitions Billions $200 $180 $160 $140 $120 $100 $80 $60 $40 $20 $ Source: SG Cowen 110

111 2001 Mergers & Acquisitions Month Acquiror Target Transaction Value $(MM) February Andrix Armstrong Pharmaceuticals 18 February ILEX Oncology Symphar SA 30 March Abbott Labs Hokurika Seiyaku 450 March Biotechnology General Myelos 61 March Johnson & Johnson ALZA 11,070 April Vertex Aurora Biosciences 554 May Xenova Cantab 90 May Shire Pharmaceuticals BioChem Pharma 4,000 May Merck Rosetta Inpharmatics 620 May Inhale Therapeutics Shearwater 191 May Sequenom Gemini Genomics 229 May Bristol-Myers Squibb DuPont Pharmaceuticals 7,800 June Celera AXYS Pharmaceuticals 196 June Barr Laboratories Duramed 594 August Genzyme Novazyme Pharmaceuticals 136 August King Pharmaceuticals Bristol-Myers Squibb 285 August Eos Biotechnology Pharmacopeia 197 October Medicis Pharmaceutical Ascent Pediatrics 110 October Bausch & Lomb Pharmos 25 October BioMarin Pharmaceuticals Ibex Technologies 20 October New York Health Care Bio Balance 103 November Serologicals Intergen 45 Total Transaction Value $26,824 Source: SG Cowen 111

112 Patent Expirations and Franchise Protection 112

113 2001 Major Expirations Product Class Manufacturer Patent Expiration Date 2000 Sales (Millions) PROZAC Psych Eli Lilly Aug 01 $2,966 MEVACOR Cholesterol Merck Dec 01 $273 TOTAL $3,239 Source: USFDA NDC Pharmaceutical Audit Suite 113

114 Prozac (8/01) Franchise Protection: Total Sales Source: NDC Pharmaceutical Audit Suite FLUOXETINE PROZAC PROZAC WEEKLY 114

115 Prozac (8/01) Franchise Protection: TRx Source: NDC Pharmaceutical Audit Suite FLUOXETINE PROZAC PROZAC WEEKLY 115

116 Estimated Annual Sales of Major Brands Losing Patent Protection Billions $12 $ % 22.6% $8 $6 $ % $8.4 $10.3 $2 $2.6 $5.4 $ Source: SG Cowen 116

117 Prilosec (2002) Franchise Protection: Total Sales Source: NDC Pharmaceutical Audit Suite NEXIUM PRILOSEC 117

118 Prilosec (2002) Franchise Protection: TRx Source: NDC Pharmaceutical Audit Suite NEXIUM PRILOSEC 118

119 Claritin (2003) Franchise Protection: Total Sales. $60 $50 $40 $30 $20 $10 7/6/2001 7/13/2001 7/20/2001 7/27/2001 8/3/2001 8/10/2001 8/17/2001 8/24/2001 8/31/2001 9/7/2001 9/14/2001 9/21/2001 9/28/ /5/ /12/ /19/ /26/ /2/ /9/ /16/ /23/ /30/ /7/ /14/ /21/ /28/2001 1/4/2002 1/11/2002 1/18/2002 1/25/2002 2/1/2002 2/8/2002 $0 Source: NDC Pharmaceutical Audit Suite CLARINEX CLARITIN 119

120 Claritin (2003) Franchise Protection: TRx 700, , , , , , ,000 7/6/2001 7/13/2001 7/20/2001 7/27/2001 8/3/2001 8/10/2001 8/17/2001 8/24/2001 8/31/2001 9/7/2001 9/14/2001 9/21/2001 9/28/ /5/ /12/ /19/ /26/ /2/ /9/ /16/ /23/ /30/ /7/ /14/ /21/ /28/2001 1/4/2002 1/11/2002 1/18/2002 1/25/2002 2/1/2002 2/8/ Source: NDC Pharmaceutical Audit Suite CLARINEX CLARITIN 120

121 Top 10 Generic Products: TRx Dollars Product Rank 2001 Rank 2000 TRx Dollars ALPRAZOLAM (Xanax) 1 3 $1,008,420, RANITIDINE HCL (Zantac) 2 1 $977,969, ATENOLOL (Tenormin) 3 2 $905,178, HYDROCODONE W/APAP 4 4 $874,221, FLUOXETINE (Prozac) 5 - $623,235, NAPROXEN (Naprosyn) 6 5 $540,747, ALBUTEROL (Proventil) 7 8 $539,251, CEPHALEXIN 8 6 $538,295, LORAZEPAM (Ativan) 9 7 $466,681, ENALAPRIL MALEATE (Vasotec) $432,759, Source: NDC Pharmaceutical Audit Suite 121

122 Patient Data 122

123 Patient Counts: Prozac & Generic Prozac 1,800,000 1,600,000 1,400,000 Number of Patients 1,200,000 1,000, , , , ,000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec GENERIC PROZAC PROZAC Source: NDC Patient Database 123

124 Nov-01 Patient Counts: Nexium 3,000,000 2,500,000 2,000,000 1,500,000 1,000, , Number of Patients Jan-00 Mar-00 May-00 Jul-00 Sep-00 Nov-00 Jan-01 Mar-01 May-01 Jul-01 Sep-01 ACIPHEX NEXIUM PREVACID PRILOSEC Source: NDC Patient Database

125 Patient Counts: Statin Market 4,500,000 Number of Patients 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 0 Jul-00 Aug- 00 Sep- 00 Oct-00 Nov-00 Dec- 00 Jan-01 Feb-01 Mar-01 Apr-01 May- 01 Jun-01 Jul-01 Aug- 01 Sep- 01 Oct-01 Nov-01 Dec- 01 BAYCOL LESCOL/LESCOL XL LIPITOR MEVACOR PRAVACHOL ZOCOR LOVASTATIN (Generic Mevacor) Source: NDC Patient Database 125

126 Number of Patients in Top 10 Categories: Sept 2001 vs. Sept 2000 Projected Total Patients Sep-00 Sep-01 % Change in Patients Codeine, Other 8,163,722 8,373, % Antiarth, Sys 8,311,995 7,991, % Antihst, Cap/Tab 5,964,735 6,406, % Antispas, Other 6,782,783 7,175, % Beta Blockers 6,698,676 7,137, % Calcium Channel Blockers 6,454,214 6,113, % Cholesterol Reducers 7,667,841 8,192, % O/C Estr/Progest 6,320,767 6,493, % Diabetes, Oral 4,552,382 4,778, % Antidepress, Other 6,395,669 7,064, % Source: NDC Patient Database 126

127 September 11th Industry Impact 127

128 NRx Trends: ,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 0 SSRI/SSNI Benzodiazepines AntiAnxiety Cipro Sleep Aids Source: NDC Pharmaceutical Audit Suite 128

129 SSRI/SSNI National NRx: January February March April May June July August September October November December Source: NDC Pharmaceutical Audit Suite

130 SSRI/SSNI Regional NRx: , , , , , ,000 90,000 80,000 70,000 60,000 50,000 January February March April May June July August September October November December Miami-Ft Lauderdale Metro New York DC Area Source: NDC Pharmaceutical Audit Suite 130

131 December Benzodiazepines National NRx: November. January February March April May June July August September October Source: NDC Pharmaceutical Audit Suite

132 Benzodiazepines Regional NRx: ,000 85,000 75,000 65,000 55,000 45,000 35,000 January February March April May June July August September October November December Miami-Ft Lauderdale Metro New York DC Area Source: NDC Pharmaceutical Audit Suite 132

133 Anti-Anxiety National NRx: January February March April May June July August September October November December Source: NDC Pharmaceutical Audit Suite 133

134 Anti-Anxiety Regional NRx: ,000 30,000 25,000 20,000 15,000 10,000 5,000 January February March April May June July August September October November December Miami-Ft Lauderdale Metro New York DC Area Source: NDC Pharmaceutical Audit Suite 134

135 Sleep Aids National NRx: January February March April May June July August September October November December Source: NDC Pharmaceutical Audit Suite

136 Sleep Aids Regional NRx: ,000 65,000 55,000 45,000 35,000 25,000 15,000 January February March April May June July August September October November December Miami-Ft Lauderdale Metro New York DC Area Source: NDC Pharmaceutical Audit Suite 136

137 Antibiotics National NRx: ,000,000 26,000,000 24,000,000 22,000,000 20,000,000 18,000,000 16,000,000 14,000,000 January February March April May June July August September October November December Source: NDC Pharmaceutical Audit Suite 137

138 December Cipro National NRx: January February March April May June July August September October November Source: NDC Pharmaceutical Audit Suite

139 Cipro Regional NRx: ,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 January February March April May June July August September October November December Florida Metro New York DC Area Source: NDC Pharmaceutical Audit Suite 139

140 Legislation 140

141 Legislation 2001 A do-nothing year for healthcare Medicare and Social Security reform privatization efforts derailed Medicare prescription drugs nothing happened The uninsured nothing accomplished Patients rights legislative stalemate 141

142 Legislation 2001 (cont.) Key impact legislation HIPAA transaction delayed major exception for those using accredited clearinghouses such as NDCHealth Outpatient Prospective Payment System (OPPS) delayed until April 1,

143 Ancillary Markets Hospitals, Retail Pharmacies, Physicians 143

144 Hospital Trends Expenditures on hospital services grew 5.1% in 2000 the main driver of overall healthcare spending growth since hospital services represent 32% of the market Yet another year of falling margins hospital profit margins fell to 4.2% in 2000 marking the fourth straight annual drop since 1996 Aggregate revenue for community hospitals grew 6.4% to $368.1 B Expenses increased at a higher rate of 6.6% to $353.1 B Approximately one third of community hospitals had negative margins Source: American Hospital Association 144

145 Hospital Trends Nearly three-fifths lost money on Medicare Nearly two-thirds lost money on patient care services Number of community hospitals decreased slightly to 4,915 Inpatient admissions increased 2.5% to 32.6 M Average length of stay remained unchanged at 5.2 days Source: American Hospital Association 145

146 Retail Pharmacy: Rx Cost Distribution $50 $40 $30 $43.06 $0.99 $9.47 (22%) $45.79 $1.05 $10.07 (22%) $20 $10 $32.60 (75.7%) $34.66 (75.7%) $0 Q3 ' Manufacturer Retailer Wholesaler Source: NACDS 146

147 Retail Pharmacy Trends Increased pressure to protect pharmacy margins Verify eligibility and collect appropriate co-pay Implement government/hipaa regulations Comply with government-mandated prescription plan discounts By 2005, the US pharmacist supply will increase by an estimated 4.5% whereas dispensed Rx are projected to increase by 29% 147

148 Retail Pharmacy Trends Electronic prescribing Race to develop an electronic prescribing engine for the retail pharmacy market February 2001: Merck/Medco, Advance PCS, and Express Scripts formed Rx Hub August 2001: NACDS and NCPA formed SureScript 148

149 Physician Practice Trends Physicians are struggling to survive units of work are growing yet margins are decreasing Malpractice insurance increases Managed care control HIPAA compliance looming Information technology spend increasing The uninsured: humanitarian vs. good business struggle 149

150 Physician Practice Trends Physicians are battling for clinical focus through streamlining administrative activities Claims processing Referrals Encounter reporting A palm top future Electronic prescribing Patient records Lab results 150

151 2002 and Beyond 151

152 2002 and Beyond: Market Challenges Politics Patent Expirations Costs of Research Genomics (near term) Managed Care 152

153 2002 and Beyond: Market Positives Demographics DTC works Tiered co-pay plans Price inelasticity Pending Medicare Coverage New Blockbusters 153

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