PepTech Corporation

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PepTech Corporation
The Current Trends of Chinas CRO Industry
Bruno Tse, Ph.D., M.B.A. VP, Business
Development PepTech Corporation
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PepTech Corporation

• PepTech Corp Basic Facts
• Pharma CRO Industry
• Outsourcing to China Current Trends
• What to look for in a Chinese CRO

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Drug Development Process
PepTech
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PepTech CorporationBasic Facts

• 15-year track record of providing top chemistry
  services and products to the pharmaceutical
  industry
• gt800 Customers worldwide
• HQ in Massachusetts 2 plants in Shanghai (RD
  center Metric-ton Manufacturing Plant)

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PepTech CorporationBasic Facts

• Organic Growth Independent
• Problem-Solving and Broad Chemistry Expertise

Chiral Building Blocks (e.g. amino acids)
Heteroaromatic Chemistry (e.g. boronic acids)
Medicinal Chemistry Compounds Libraries
Process RD and Manufacturing (up to MT)
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Pharma RD SpendingOn the Rise
CAGR 8.7

65.2 bn
CAGR 8.5
Source PhRMA Oppenheimer Co. and www.eatg.org
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Need for Outsourcing

• In need of faster, more cost-effective RD
• Patent Expiration (65 bn revenue void in four
  years)
• Pipelines to fill
• -- Need to streamline drug development process
• Mounting RD costs per drug gt1 bn per drug
• -- Need to cut costs
• Complexity of the drug development process
• -- Vast fields of expertise and knowledge
• required from research to regulatory

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Pharma OutsourcingOn the Rise
14 growth
Pharma insights marketresearch.com
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Outsourcing on the Rise
How much do you expect your RD outsourcing
spending to grow in the next year?
Why do you outsource RD spending?
Focus on core competencies 42
None 17
gt10 more 21
Temporary lack of capacity 29
Less 7
1-5 more 17
Company is virtual 21
6-10 more38
Lifecycle Management 8
Source Contract Pharma Outsourcing Survey, May
2008
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CRO Market
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CRO Market 14 growth

• Shift toward Outsourcing Continues
• Pharma RD spending gt 60 bn 8.5 growth
• Main reasons for outsourcing
• Focus on core competencies
• Reduce cost and RD time
• CROs can save up to 9-11 months to reach IND
• Can save pre-IND costs by up to 55
• Access to specific expertise new
  technologies
• Lack of Capacity
• Virtual Company
• Greater acceptance of and confidence in
  outsourced work
• Current CRO market at 19bn (preclinical 4.4
  bn)
• 14 annual growth

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Reasons for Outsourcing to China

• Why outsource to China?
• Lower costs
• Lower cost of living
• FTE in China approx. 1/3 that of US
• Highly skilled labor
• Large supply of scientists and lab technicians
• 5 times as many graduates in chemistry at B.S.
  level
• 3 times as many graduates in chemistry
  at graduate level
• (China population 1.3 bn US population 300
  MM)
• Strengthening of IP laws (WTO 2002)

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Main Reason for Lower CostsLower Labor Costs
All three categories are degree holders with at
least 1 year of related experiences and recruited
locally China Salary mainly refers to
Zhangjiang, Shanghai where many Chinese CRO
companies locate Compensation expenses include
salaries and salaries related expenses likes
taxes and various contributions the employers
have to pay. Source BNP Paribas estimates
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Outsourcing to China Other Facts

• Pharma outsourcing market in china
• 3.4 bn USD (2006) 7.2 bn USD (2011)
• Large patient pool easier to find and recruit
  patients
• Patient enrollment time in China ½ that in
  US
• Rich animal resources
• China supplies 80 of primates used in
  preclinical testing
• 1,000/monkey in China versus 10,000-20,000/monk
  ey in US

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Outsourcing to China Other Facts

• Chinese government invests 600 MM per year in
  RD
• ln 2006, launched a 15-year plan to become
  one of the top
• countries for innovations in science and
  technology.
• Many multinational pharma companies have
  established
• presence in China, particularly in Shanghai
  Zhangjiang
• Attractive consumer opportunity for pharma
  products
• Pharmaceutical consumer market 20 annual
  growth
• Expected to be the ninth largest by 2009
  with 20 bn sales annually

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Chinese CRO Industry

• Crowded field with a few dominant players
• Key factors for a company to sustain in long
  term
• HIGH QUALITY (ideally with lower cost)
• Differentiated products/services
• Timely deliveries
• Communication with clients
• Track record
• Broad service portfolio

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What to look for in a Chinese CRO?
Track Record History References Quality
Communications (Advantage with US-based HQ)
Evaluate your needs, e.g. Short-term versus
long-term (start with smaller projects,
audits) Info handling

Timely Deliveries, Competitive Pricing
Security (Procedures to handle sensitive informati
on)
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PepTech Corporation
The most influential import from China in recent
years is ___________________
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PepTech Corporation
YAO MING !!!
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PepTech Corporation
Thank You !