A.T. Kearney

1
Pharma RD Moves Offshore

• A.T. Kearneys Pharmaceutical RD Location
  Attractiveness Index

University of Chicago Graduate School of
Business Bio-Pharma Alumni Organization
October 2006
2
A.T. Kearneys Pharma RD off-shoring research
has generated extensive interest in the media
3
Executive Summary

• Although Pharmaceuticals is a global industry,
  clinical studies are largely conducted in the
  U.S. and Western Europe driven by relevant
  expertise and intellectual property protection
  considerations
• In the last two years, companies have
  increasingly turned to offshore locations to
  supplement their primary clinical trials, with
  the goal of increasing speed to market and the
  benefit of lower costs
• To provide a systematic framework for evaluating
  geographical options for offshoring clinical
  trials, A.T. Kearney developed a structured
  country attractiveness index
• We evaluated15 representative countries the
  outcome China ranked the highest overall,
  followed by India and Russia
• The fact-based approach to the index provides
  insight into the future direction of clinical
  trials and specifically the attractiveness of
  locations based on structured criteria
• The index should be considered a tool to support
  decision making in offshoring decisions and is
  flexible to be customized based on corporate
  priorities
• Country attractiveness doesnt suggest a narrow
  focus, but rather should be leveraged as a basis
  for diversifying clinical trial activities
• Risks clearly exist in any offshoring of clinical
  trials, requiring careful planning and management
  in trial design and execution

4
The pharmaceutical industry has historically
lagged other industries in off-shoring
Offshore Industry Lifecycle Curve
Pharmaceutical vs. Other Industries
Stage 1Capacity Augmentation Stage 2Proof of Concept Stage 3Value Realization Stage 4Strategic Supplier Management Stage 5Global Operating Model

Automotive Ford
Consumer Products Retail PG, Nestlé
Financial Institutions GE, Citi, Amex, HSBC
Utilities Southern Company AEP
Pharmaceuticals
Other
However, the pace of off-shoring within the
pharmaceutical industry has intensified over the
last 1 2 years
Source A.T. Kearney analysis
5
RD, particularly clinical trials, is better
suited to off-shoring when compared to other
parts of the pharmaceutical value chain
48
Post Approval Trials and Drug Sales
Clinical Trials and Lifecycle Management
Stages of a Drugs Life Cycle
New Compound Discovery
FDA Approval
Phase
Comments
Comments
Phase
Comments
Sub Activities
Testing an experimental drug or treatment in a
small group of people (20-80) for the first time
to evaluate its safety, determine a safe dosage
range, and identify side effects
Post marketing studies delineate additional
information including the drug's risks, benefits,
and optimal use
New molecules are discovered here Molecules are formulated as drugs tested on animals for efficacy and safety as part of pre-clinical development and evaluation
Early Exploratory
IV
I
Late Exploratory
The experimental study drug or treatment is given
to a larger group of people (100-300) to see if
it is effective and to further evaluate its safety
II
Discovery
The experimental study drug or treatment is given
to large groups of people (1,000-3,000) to
confirm its effectiveness, monitor side effects,
compare it to commonly used treatments, and
collect information that will allow the
experimental drug or treatment to be used safely
III
Pre-Clinical Evaluation
Clinical trials for a drug can cost up to 1
Billion and can take as many as 14 years to
complete
6
Top pharmaceutical companies are increasingly
conducting clinical studies outside the US and in
offshore locations
48
Top 12 Pharma companies as a percentage of total
industry studies
Number of studies by top 12 Pharma companies1
Number of studies sponsored by industry Number of studies conducted by Top 12 Pharma Percentage of studies conducted by Top 12 Pharma
2910 1201 41
Number of studies sponsored by industry with location outside the US Number of studies with location outside the US sponsored by Top 12 Pharma companies Percentage of studies with location outside the US by Top 12 Pharma companies
1125 544 48
Pharma company-ranked by total of studies Total of studies Studies with location in the US Studies with location outside the US
BMS 186 180 87
GSK 173 142 90
Roche 148 129 70
Pfizer 147 129 67
Novartis 139 119 37
Eli Lilly 131 105 72
Abbott 67 60 29
Astra Zeneca 56 49 19
Johnson Johnson 48 41 24
Schering-Plough 44 40 27
Wyeth-Ayerst 35 29 13
Aventis 27 23 9
Total 1,201 1,046 544
48 of trials conducted by Top 12 Pharma have
locations outside the US
Notes (1)The top 12 companies account for only
2 of all pharma companies. Posting on the site
clinicaltrials.gov is voluntary but increasingly
popular. The data represent a snapshot in time
and covers almost 600 companies worldwide
Source Clinicaltrials.gov (as of 08/26/05) and
A.T. Kearney analysis excludes studies where
locations were not provided
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Most major pharma companies are pro-actively
off-shoring clinical trials to attractive,
low-cost destinations
48
Number of active clinical trial studies sponsored
by Top 12 Pharma outside the US (March 2006, Feb.
2007) (2)
Notes (1) Posting on the site clinicaltrials.gov
is voluntary but increasingly popular. The data
represent a snapshot in time (2) Total number of
studies is less than the sum over all countries
due to the use of multiple locations for most
trials Source Clinicaltrials.gov (as of March
2006, February 2007) and A.T. Kearney analysis
excludes studies where locations were not provided
8
Off-shore clinical trial activity has increased
by 20 in just the past year
48
Number of active clinical trial studies sponsored
by Top 12 Pharma outside the US
20 increase in off-shoring activity in 1 year
Notes (1) Posting on the site clinicaltrials.gov
is voluntary but increasingly popular. The data
represent a snapshot in time (2) Total number of
studies is less than the sum over all countries
due to the use of multiple locations for most
trials Source Clinicaltrials.gov, A.T. Kearney
analysis excludes studies where locations were
not provided
9
A higher percentage of Phase 3 clinical trials
are conducted offshore relative to other phases
Percentage and Number of Studies in US and
Offshore Locations by Phase
Observations
1299
1549
606
284

• Phase 3 studies are more likely to have locations
  outside the US
• Patient populations required are large
• Investigator grants and patient compensation is a
  large part of trial cost, making certain offshore
  locations attractive
• Phase 1 studies have comparatively fewer offshore
  locations
• Ethical considerations as this phase determines
  safety of the trial drug
• Focus on healthy volunteers vs. specific patient
  profile
• Phase 4 studies are increasingly including
  locations/ data from patients in countries
  outside the US once the drug is on the market

38
30
26
12
Source Clinicaltrials.gov ( as of 8/10/05) and
A.T. Kearney analysis
10
Speed to market and reduced costs have been cited
as primary reasons for offshoring clinical trials
Long Term Offshoring Goals Reduce Costs, Gain In-Country Experience, Develop New Markets
Many low-cost countries are improving their regulatory conditions and level of clinical trials expertise Pharma companies are positioning themselves to gain operating experience in these countries, where per patient costs can be as low as one third of the U.S. costs Several low-cost countries, including India and China are attractive as potential new markets for innovative drugs
Short Term Offshoring Goals Supplement U.S. and Western European Trials
Offshore trials can rescue a U.S. trial that is lagging due to slow patient recruitment Companies have used offshore trials for parallel development tracks when FDA concerns caused delays in the U.S. Full disclosure with the offshore countrys regulatory authorities is needed to avert ethical concerns Introduction of vaccines in developing countries prior to introduction in U.S. has been shown to be successful
Selection of Offshoring Location

?
A structured and fact-based approach to
identifying country attractive for clinical
trials is an important component of any
offshoring strategy
Source Global clinical trial conference
discussions and and A.T. Kearney analysis
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A.T. Kearney developed an index to assess the
attractiveness of countries for conducting
clinical trials
Country Attractiveness Index Criteria and
Weighting
Patient Pool (30)
Size and availability of suitable patient pool
Regulatory Conditions (20)
Food and Drug Administration visibility Countrys regulatory laws Strength of intellectual protection
Cost Efficiency (20)
Cost efficiency of labor Cost efficiency of facilities and travel
Relevant Expertise (15)
Number of clinical research organizations Number of clinical trials Size and availability of labor force with relevant skills
Infrastructure and Environment (15)
Protection of intellectual property Health-care infrastructure Country infrastructure Country risk factors
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Our research indicates that China and India are
the most attractive offshore locations to perform
clinical trials outside the US
Overall Country Attractiveness Index1
Note (1) Higher scores indicate higher level of
attractiveness (2) The set of 15 countries
analyzed has been selected based on size,
diversity, and geographical distribution, and is
not meant to be comprehensive across all
potential locations for offshoring
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Large patient pools, availability of relevant
expertise, and lower costs make China and India
attractive
Country Attractiveness Components Patient Pool,
Relative Expertise and Cost Efficiency
Large
Increasing bubble size indicates greater cost
efficiencies
Patient Pool
Small
Relevant Expertise
Low
High
Sources World Bank 2003, World Development
Indicators database 2003 and A.T. Kearney analysis
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Improvements in regulatory conditions and the
infrastructure of emerging markets will drive the
pace of change of offshoring
Country Attractiveness Components Regulatory
Conditions, Infrastructure/Environment and
Patient Pool
Available patient pool size of bubble is
proportional to the size of the available patient
pool
Favorable
Regulatory Conditions
Unfavorable
Infrastructure and environment
Unfavorable
Favorable
Source A.T. Kearney analysis
15
Patient Pool The large populations of China and
India provide the greatest potential for patient
recruitment
Overall Patient Pool Score3
Urban Population1 (millions)
Treatment Naïve Population Score2
Notes (1) Urban population is capped at 350
million due to limited benefit from extremely
large populations (2) Higher scores indicate
more treatment naïve populations (3) Higher
scores denote large available patient pools
urban population weighted 55, professional
deliveries weighted 20, treatment naïve
populations weighted 25 Source World Bank 2003
UNICEF WDI Database A.T. Kearney analysis
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Cost Russia has the lowest overall cost
structure followed by Argentina, China and India
Overall Indexed Costs3
Cost of Labor1 (Indexed to US1)
Facilities Rental and CRO Cost Perspective2
Notes (1) Clinical professional average includes
physicians weighted 47, nurses weighted 29, and
statistical mathematician weighted 24 (2)
Facilities rental and CRO cost perspective are
indexed to US 1.0 (3) Higher scores denote
higher cost labor index weighted 80, facilities
and travel index weighted 10, CRO cost
perspective weighted 10. This metric is
converted to a cost efficiency metric when
incorporating into the overall country
attractiveness index Source SalaryExpert.com
WDI Database Economist Intelligence Unit CBRE
Global Markets Rent 2005 A.T. Kearney analysis
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Regulatory Conditions Central/ Eastern European
countries are attractive for regulatory
conditions, while India and China are lagging
Overall Regulatory Conditions Score1,3
FDA Visibility1
Country Specific Laws1,2 and General IP
Protection1
Notes (1) Higher scores indicate higher
attractiveness (2) Country specific laws include
ease of shipping lab samples and regulatory
approval times (3) FDA visibility is
weighted 40, country specific laws are weighted
40, and General IP protection is weighted
20 Source FDA CDER WEF Global Competitiveness
Report A.T. Kearney analysis
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Relevant Expertise China and Russia scored
highest on relevant skilled labor
Overall Relevant Expertise Score2
Organizational Expertise and Experience1
Relevant Skilled Labor Pool
Notes (1) Based on the market presence of the 12
largest clinical research organizations (weighted
50) and amount of clinical trials conducted
(weighted 50) (2) Higher scores denote greater
availability of relevant expertise
organizational expertise and experience weighted
60, relevant skilled labor pool weighted
40 Source clinicaltrials.gov Physician Index
Annual WHO/EIP/HRH NSF A.T. Kearney analysis
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Infrastructure / Environment Ireland, UK,
Germany and Singapore provide the most attractive
environment driven by strong IP protection
Pharma IP Protection and Market Access
Overall Infrastructure / Environmental Score2
Infrastructure Index (Healthcare and Country)1
Notes (1) Healthcare criteria includes number of
beds per 1000 people. Country infrastructure
includes transportation, use of English and
personal contact rank (2) Higher scores denote
increased attractiveness IP weighted 30,
Country Infrastructure weighted 25 , country
risk weighted 25, healthcare infrastructure
weighted 20 Sources World Bank PhRMA and
Office of US Trade Representative Special 301
Report Economist Intelligence Unit CIA World
Factbook TOEFL A.T. Kearney analysis
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Agenda

• Current Situation
• Key Findings
• Overview of Top-Ranking Locations
• Offshoring Considerations
• Appendix

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China offers large patient pools, low costs and
sufficient qualified investigators, but a
challenging regulatory environment
Current Situation
Trials / Regulatory 24 trials conducted in China by Top 12 pharma in 2005 31 in 2006 1 FDA inspection 2000 2005 Patient Pool With the largest urban population in the world, China provides a large pool of treatment compliant patients from multiethnic and multiracial backgrounds Wide spectrum of disease types is represented Environmental Factors Chinas attractiveness is challenged by High country risk Lack of national infrastructure Limited enforcement of IP protection Bureaucracy and government regulations requiring trials to be approved by the SDA, drug import license required for every shipment
Country Attractiveness Scores China vs. Median
Expected Future Trends
Government initiatives have helped to improve GCP in China with the establishment of GCP centers to provide training to investigators and staff
Key Takeaways Key Takeaways
While patient pool and cost factors are attractive, cultural, regulatory, and infrastructure concerns must be adequately addressed for trials to be conducted successfully in China High enrollment rates can balance against the lengthy 9-12 month domestic trial approval process Language can be a hurdle data is often recorded in Chinese and must be translated before it can be used Chinas attractiveness as growing drug market is also a consideration in conducting clinical trials in China
Sources ClinicalTrials.gov (August 2005, March
2006) CenterWatch July 2002, FDA
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China Attractiveness for Clinical Trials -
Summary

• Strengths
• Large Patient Pools and Relatively Easy Access
• Patient treatment of major diseases centralized
  to major hospitals making patient access easier
• Large patient populations
• Availability of Relevant Expertise
• Availability of co-operative doctor networks
  throughout the country
• Chinese CRAs are physicians from the institutions
  with clinical trial experience and have attended
  some international clinical trial training
• Real understanding of the science tends to result
  in fewer queries per trial
• Most major pharmacos have already set up captive
  RD centers in China
• Expected to be 4th largest commercial market
  globally in the next 5 years
• Areas for development
• Regulatory environment
• Study startup tends to take 6-9 months, making
  early phase trials less attractive
• SDA committed to making regulatory changes
• Lack of national infrastructure
• Limited enforcement of IP protection
• Bureaucracy and government regulations requiring
  trials to be approved by the SDA, drug import
  license required for every shipment

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With large patient pools and a low cost
structure, Indias attractiveness is likely to
increase with expected regulatory improvements
Current Situation
26 trials conducted by Top 12 pharma in 2005 40 in 2006 No FDA inspections 2000 2005 Clinical research is considered high quality trial data has been accepted at major conferences and journals India has already been established as a popular manufacturing destination pharma executives are familiar with the business environment
Country Attractiveness Scores India vs. Median
Expected Future Trends
Recently adopted laws will increase IP protection Legislative changes in Q1 2005 now allow India to participate in simultaneous international Phase 2 and 3 trials. It is also probable that the government will allow Phase I tests in the near future (for drugs that did not originate in India) Strong overall economic growth will lead to improvements in general and healthcare infrastructure The CRO supply base is likely to increase as pharmas continue to increase manufacturing and testing in India
Key Takeaways Key Takeaways
While patient pool and cost factors are attractive, regulatory, IP, and infrastructure concerns must be adequately addressed IP protection of trial data is a concern that should be monitored for compliance with new laws Mandatory toxicology tests after Phase 2 completion requires 6 month delay before start of Phase 3 Coordination with local physicians and hospitals is mandatory The practical approach in India is to target large cities and conduct clinical trials in large hospitals Indias attractiveness as growing drug market with expanding private health insurance is also a consideration in conducting clinical trials in India
Source PharmaHandbook 2005
24
Russia achieved strong scores on multiple
criteria with the exception of environment
Current Situation
Trials / Regulatory 5 trials conducted by Top 12 pharma in 2005 80 in 2006 12 FDA inspections 2000 2005 Patient Pool Medical care is centralized patients with similar symptoms are treated in the same ward, allowing for ease of patient recruitment (i.e., 2,400 patients recruited in 2 weeks for phase 3 trial of hypertension drug) Russia has a large population that are treatment naïve and whose diseases are at advanced stages Lack of quality medical care has led to eagerness among patients to sign up for clinical trials and to comply with trial protocols Environment Russia imposes a clinical trials tax IP concerns have placed Russia on the USs priority watch list
Country Attractiveness Scores Russia vs. Median
Expected Future Trends
Drug companies are well established in Poland and the Czech Republic Russia and other eastern European countries are increasingly attractive due to patient pool, lower costs, relevant skill labor pool
Key Takeaways Key Takeaways
Russia is attractive for trials where recruitment of a large patient pool is required in a short time frame Ethics of recruitment requires careful attention physicians can make up to 10 times their salary through clinical trials potentially creating an incentive to neglect to inform patients of risk factors Clear procedures for and close monitoring of patient recruitment is necessary to ensure compliance with international ethical standards
Sources clinicaltrials.gov Fortune, July 26,
2005, Special 301 Report of the Office of the US
Trade Representative
25
Brazil has a large patient pool and significant
cost efficiencies, but lags in the areas of
regulatory and environment
Current Situation
94 trials conducted by Top 12 pharma in 2005, 73 in 2006 5 FDA inspections 2000 2005 Brazil is primarily attractive because of its large patient pool and low costs ICH GCP has been implemented A substantial portion of Brazils population is ethnically close to US and European population Clinical trial costs are about 70 of US costs Brazil is attractive for trials of drugs for the Japan market Japan is the second largest pharmaceutical market Brazil has the largest (1.1 million) ethnic Japanese population outside of Japan Foreign trial results on ethnic Japanese are now accepted by Japan authorities
Country Attractiveness Scores Brazil vs. Median
Expected Future Trends
Stem cell research has been legalized
Key Takeaways Key Takeaways
Brazil has had a long track record for clinical trials and remains attractive based on the scoring across the criteria Clinical trials approval is traditionally slow There are strong IP protection laws however, enforcement is generally weak
Source clinicaltrials.gov
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The Czech Republics attractiveness is based on
its low cost structure and favorable regulatory
environment
Country Attractiveness Scores Czech Republic
vs. Median
Current Situation
44 trials conducted by Top 12 pharma in 2005, 85 in 2006 2 FDA inspections 2000 2005 Pharmas are already well established in the Czech Republic for conducting clinical trials The Czech healthcare system operates at low cost Average Czech physicians monthly salary is 550 Investigator fees and CRO/monitoring fees are approximately 50-70 of U.S. amounts
Expected Future Trends
The Czech Republics accession to EU membership will likely lead to a narrowing of its cost advantage over time
Key Takeaways Key Takeaways
Although the available patient pool is not particularly high, the Czech Republic has strong IP protection, low operating costs, and a strong healthcare infrastructure The Czech Republic is ideal for companies beginning to offshore clinical trials based on proximity to western Europe, relative absence of cultural, regulatory, and environment barriers, and tested/ track record in clinical trials
Source clinicaltrials.gov, Pharma Handbook
2005, PhRMA Special 301 Report
27
Agenda

• Current Situation
• Key Findings
• Overview of Top-Ranking Locations
• Offshoring Considerations
• Appendix

28
Pharma companies must consider a variety of
factors in developing their clinical trial
offshoring strategy
Key Considerations

Consider the organizational, language-related and supply chain implications of off-shoring trials Develop relationships with 3rd parties with local experience (e.g. multinational/ local CROs) Develop detailed/ practical contingency plans
Assess Operational Implications
The Food and Drug Administration (FDA) has guidelines for clinical trials and relies on pharmaceutical companies to adhere to Good Clinical Practice (GCP) Keep a pulse on regulatory environment changes in attractive off-shoring locations
Ethnicity may affect trial results due to metabolic and genetic variations Reduce overall risk by diversifying trial locations over multiple countries
Understand Culture and Ethnic Differences
Know the Local Regulatory Environment
Development of Off-Shoring Criteria
Protect Intellectual Property
Most developing countries have Intellectual Property infringement issues, although the landscape is improving (e.g. India) Maintain a strong emphasis on due diligence and tight contracts
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Concerns often surface about offshoring clinical
trials
Pharma Concerns
Intellectual Property Protection Data exclusivity may not be protected Advance knowledge of a trials progress will give competitors unfair market advantage Regulatory Requirements Regulatory differences across countries may impact timing and cost of clinical trials E.g., drug import licenses required for each shipment, mandatory toxicology tests, language requirements for documents FDA Acceptability FDA statements on clinical trials offshoring are considered guidelines pharmas companies are cautious about entering new countries Cultural Differences Differences in the practice of medicine may impact trial results or affect trial execution Concurrent use of herbal medicines may potentially be unreported Use of physicians (but not nurses) in taking blood samples In countries where doctors are culturally authoritative, investigators avoid using consent forms, as patients misunderstand the reason for them Ethnicity Ethnicity may impact trial results due to different metabolic rates and other genetic effects FDA guidelines limit the percentage of a drugs trials conducted in developing countries Ethics Wide disparity between investigator fees and standard salaries could lead to unethical patient recruiting E.g., misleading patients about risk factors, enrolling patients that do not fit the trial parameters Investigators may under-report adverse reactions, believing they are doing sponsors a favor
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Many risk factors can be mitigated with careful
planning and execution
Selected Risk Mitigation Strategies
Knowledge/ Information Monitor IP legislation and enforcement do not rely on unsubstantiated information Leverage CROs to understand a target countrys customs, regulations, and medical practices before establishing trials Operational Structure to Manage Risk Start initially with a smaller trial(s) in entering a new country Work with multinational and/ or established local CROs with hands-on in-country experience Develop partnerships, while maintaining healthy competition among vendors Develop detailed/ practical contingency plans Ensure Adherence to Standards of Conduct and Trial Protocols Build Quality In Conduct rigorous training and monitoring of new investigators, to ensure compliance with ethical standards and to ensure quality of clinical trial Conduct audits to ensure compliance with standards (quality, ethical, etc.) Ensure incentive structure does not cause unanticipated behavior If using CROs, work with those that have strong IP policies and operating practices with investigators and patients Hold partners accountable for meeting appropriate FDA standards Diversify Diversify portfolio of clinical trail geographies to balance patient pool opportunities, cost efficiencies, expertise, and regulatory risk Design clinical trials to recognize ethnic diversity Ensure sufficient percentage of trials is conducted in other countries Set up trial parameters to include range of ethnicities consistent with FDA guidelines Ethnic diversity may be an asset if future plans involve sale within clinical trial country
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Agenda

• Current Situation
• Key Findings
• Overview of Top-Ranking Locations
• Offshoring Considerations
• Appendix

32
Weighting of criteria reflects the relative
importance in assessing location attractiveness
Weights Assigned to Areas of Evaluation
Area of Evaluation/ Criteria Weighting
Patient Base 30
Cost Efficiency 20
Regulatory Conditions 20
Relevant Expertise 15
Environment 15
Weights can be tailored to specific offshoring
needs
33
Available patient base is evaluated by the size
of the urban population and the propensity to
seek medical attention
Area of Evaluation Sub-Category Measurement Relevance
Patient Base Size of Available Patient Pool Urban Population Size Clinical trials conducted in urban areas to facilitate patient recruitment
Patient Base Size of Available Patient Pool Percent of Urban Childbirths Delivered by Physicians Proxy for propensity of urban population to seek medical attention
Patient Base Size of Available Patient Pool Treatment Naïve Population Many clinical trials require that patients have not had prior treatments
Note Measurements are converted into a score
(range 0-10), and their weighted average is used
to arrive at the composite score for the
evaluation area Sources 2003 World Bank Data
2003 WDI Database
34
Cost structure is assessed based on relevant
labor and infrastructure costs and investigator
grants
Area of Evaluation Sub-Category Measurement Relevance
Cost Efficiency Cost of Labor Average Physician Salary Investigator fees/grants represent a significant portion of the total costs of the trial
Cost Efficiency Cost of Labor Average Nurse Salary (proxy for clinical research assistant) Clinical research assistants (CRAs) monitor trial patients, collect data, etc and represent a significant cost of conducting clinical trials
Cost Efficiency Cost of Labor Average Statistical Mathematician Salary (proxy for data management personnel) Statisticians responsible for data management, data analysis, maintaining database, etc.
Cost Efficiency Cost of Labor Average Wages Average wages account for overhead labor costs and services, such as administrative
Cost Efficiency Infrastructure Costs Average Rental For Office Space (proxy for lab space or office space) Cost of space for labs, office space, etc.
Cost Efficiency Infrastructure Costs Round Trip Airfare from London and JFK to Largest City in Country (weighted average) Management of the trial will likely involve some travel to/ from country
Cost Efficiency CRO Cost Perspective Relative Grant Levels Compared to the US Estimate of country variation in total grant costs
Note Measurements converted to a score (0-10),
weighted average applied to determine composite
score for the evaluation area Sources Salaryexper
t.com WDI Database Economist Intelligence Unit
CBRE Global Markets Rent Expedia.com
35
Regulatory conditions considers FDA visibility,
in-country regulatory conditions and level of IP
protection
Area of Evaluation Sub-Category Measurement Relevance
Regulatory Conditions FDA Acceptability and Visibility Number of Trials On the CDER Clinical Investigator Inspection List Number of inspections reflects the FDA view of a countrys importance in clinical trials
Regulatory Conditions FDA Acceptability and Visibility Percent of Trials Where Inspection Resulted in Voluntary Action Indicated (VAI) Countries with higher success rates with FDA inspections are more attractive
Regulatory Conditions Country Specific Regulatory Conditions Ease of Approval for Shipping Laboratory Samples (Rating) Restrictions on biological shipments may extend lead time and delay initiation of trial
Regulatory Conditions Country Specific Regulatory Conditions Clinical Trials Regulatory Approval Time (Estimated) Regulatory approval time varies significantly across countries and is a potential bottleneck
Regulatory Conditions Intellectual Property Protection EIU IPR Protection Index Pharmas are concerned about potential reverse engineering of trial drugs
Note Measurements converted to a score (0-10),
weighted average applied to determine composite
score for the evaluation area Sources US FDA
CDER Clinical Investigator Inspection List
(1999-2004) US National Institutes of Health
Economist Intelligence Unit WEF Global
Competition Report A.T. Kearney Research
36
Relevant expertise is driven by CRO presence, the
countrys clinical trial experience and
availability of the relevant skilled
professionals
Area of Evaluation Sub-Category Measurement Relevance
Relevant Expertise CRO Presence and Clinical Trial Experience Percent of Top 12 CROs Present in Country Presence of top CROs indicates the availability of the local supply market
Relevant Expertise CRO Presence and Clinical Trial Experience Number of Clinical Trials Voluntarily Listed in ClinicalTrials.gov Number of clinical trials is an indicator for the level of experience
Relevant Expertise Availability of Relevant Skilled Professionals Number of Physicians Used as proxy for the availability of suitable physicians for clinical trials
Relevant Expertise Availability of Relevant Skilled Professionals Number of CRAs/Nurses Used as proxy for the availability of clinical research associates
Relevant Expertise Availability of Relevant Skilled Professionals Number of First Degrees in Math / Computer Science / Engineering Used as proxy for the availability of statisticians
Relevant Expertise Availability of Relevant Skilled Professionals Availability of Talent Pool Overall assessment of availability of talent needed for conducting clinical trials
Note Measurements converted to a score (0-10),
weighted average applied to determine composite
score for the evaluation area Sources ClinicalTr
ials.gov Annual Physician Index 2004 WHO / EIP
/ HRH NSF
37
Environment is evaluated based on IP protection,
healthcare and country infrastructure, and
country risk
Area of Evaluation Sub-Category Sub-Category Measurement Relevance
Environment Pharma Intellectual Property Protection and Market Access Pharma Intellectual Property Protection and Market Access Designation by USTR on Countries Adequacy and Effectiveness of IP Rights Protection Countries that have good IP protection are less likely to have theft or misuse of clinical trial data and materials
Environment Healthcare Infrastructure Healthcare Infrastructure Under 5 mortality rate and adult (15-60) mortality rate Mortality rate is proxy for the level of healthcare infrastructure
Environment Country Infra-structure Overall Overall Infrastructure Quality Measures ease of conducting clinical trials
Environment Country Infra-structure Transportation Quality and Density of Road and Rail System Measures ease of conducting clinical trials
Environment Country Infra-structure Language TOEFL Score Average Measures ease of conducting clinical trials
Environment Country Infra-structure Culture Adaptability "Personal Contact" Rank Measures ease of conducting clinical trials
Environment Country Risk           Business Environment Overall Business Environment Rating General risk and costs of conducting business in the country regardless of industry import duty metric is specific to pharmaceutical industry
Environment Country Risk           Business Environment FDI Confidence Index Rankings General risk and costs of conducting business in the country regardless of industry import duty metric is specific to pharmaceutical industry
Environment Country Risk           Political Environment Political Stability Rating General risk and costs of conducting business in the country regardless of industry import duty metric is specific to pharmaceutical industry
Environment Country Risk           Financial Environment Currency Fluctuations Relative to the US Dollar General risk and costs of conducting business in the country regardless of industry import duty metric is specific to pharmaceutical industry
Environment Country Risk           Tax Costs Percent Duty on Drug Importation General risk and costs of conducting business in the country regardless of industry import duty metric is specific to pharmaceutical industry
Environment Country Risk           Government Support Extent of Bureaucratic Red Tape General risk and costs of conducting business in the country regardless of industry import duty metric is specific to pharmaceutical industry
Note Measurements converted to a score (0-10),
weighted average applied to determine composite
score for the evaluation area Sources PhRMA
(http//www.phrma.org/international/) Special 301
Report Office of the US Trade Representative
Special 301 Annual Review (2005) World Bank
World Development Indicators (2004) Global
Competitiveness Report (2004-2005) CIA World
Factbook (2004) Economist Intelligence Unit
(2004), Dorlong Kindersley Atlas Educational
Testing Service TOEFL Scores (2001-2002) A.T.
Kearney Globalization Index (2005), USDA Trade
Information Center (1-800-USA-TRADE)