Clinical R&D: Challenges & Opportunity

1. 2nd Annual State of Clinical
Development Cost Conference
Clinical R&D: Challenges & Opportunities
Amarnath Sharma MPharm PhD
Sharma, MPharm,
Vice President, Clinical Research & Precision Medicine
Worldwide Development Operations
January 10, 2012
This document provides an outline of a presentation and is incomplete without the accompanying oral commentary and discussion. Conclusions and/ or potential strategies
contained herein are NOT necessarily endorsed by Pfizer management. Any implied strategy herein would be subject to management, regulatory and legal review and approval
before implementation.

2. Outline
Challenges
Low R&D Productivity
Loss of product exclusivity
Opportunities
Build strategic partnership
Globalization of clinical trials
Transformation of Dev Ops at Pfizer
Key elements of the new model
For External Presentation Purposes; Not for Distribution. 1

3. Current R&D Model is Not Sustainable
Low R&D Productivity & Increasing Costs
What will the future be?
R & D Costs to Bring a NME to Market
$1,500
$1,200
Cost ($ Million)
$900
$600
$300
$0
1970 1980 1990 2000 2010
For External Presentation Purposes; Not for Distribution. 2

4. Individual R&D Productivity:
A Snapshot
Successful Launches vs. R&D Spend
5
Successful NMEs launched
4
02-2008
3
s
between 200
2
1 Each dot represents
a biopharma company
0
0 10 20 30 40 50
R&D spend in $B 1998-2004
Note: "Successful" NMEs are those that achieve >$600M/yr WW peak sales Source: EvaluatePharma, BCG analysis
For External Presentation Purposes; Not for Distribution. 3

5. Potential Loss of Significant Revenue
Loss of Exclusivity for Major Products & Patent Erosion
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6. Multiple Reasons For Low R&D
Productivity
Compound and / or target related issues
Inadequate therapeutic index
The drug target is not well understood
The target is valid only in sub-group of patients
Clinical trial design issues
Efficacy observed in the early clinical trials (phase II) have been
relatively poor predictors of phase III success
Appropriate patient population is not well defined
Clinical trial operations issues
Cost
Quality
Speed
Qualified investigators and sites
For External Presentation Purposes; Not for Distribution. 5

7. Current Industry Trends
• More outsourcing to reduce fixed development costs
• Increased globalization of clinical trials
Continued advancement in execute studies with quality and cost-effectiveness in emerging
markets and around the world
• Intensified regulatory focus on GCP compliance & quality
“Quality by Design” in every step of the clinical trial process, from study concept, through
protocol development, execution, and reporting
• Amplified clinical trial complexity & “Precision Medicine” approach
Increased complexity of clinical trial design, partnerships and reliance on third parties for
trial conduct is likely to result in an increasing shift for sponsors to prove the integrity of
their clinical trial data
Need to prospectively identify patient cohorts of potential “responders” will require the use
of biomarkers and alternate trial designs
For External Presentation Purposes; Not for Distribution.

8. What is Driving the Globalization of
Clinical Trials?
Cost
• The cost of clinical trials continues to increase by more than 20% per
year in developed markets
• Conducting trials in developing countries can reduce costs by > 50%
Speed
• Patient recruitment in developing markets can more than 100% faster
compared to the U.S. and Western Europe
Availability of large, treatment naïve patient populations
Potential new biopharmaceutical markets for growth
For External Presentation Purposes; Not for Distribution. 7

9. Increased Globalization of Clinical Trials
A Shift to the East
R&D centers are looking for opportunities in the emerging markets.
Sources: http://www.clinicaltrials.gov/ct2/search/map, date accessed: 16 January 2011.
Karlberg JPE. Responding to Emerging Queries on the Legitimacy and Validity of Globalization of Clinical Trials. Clinical Trial Magnifier. March 2009.
Tufts Center for the Study of Drug Development, Outlook 2008.
For External Presentation Purposes; Not for Distribution. 8

10. Providers: Quality by Region Results
from 2011 Avoca CRO Oversight Survey
Overall level of comfort with the quality of deliverables/services provided by clinical
service providers (including your own company) in each regions. N
North America 82% 15% 3% 102
Western/Central Europe 77% 21% 2% 103
Australia/New Zealand 54% 43% 2% 81
Eastern Europe 43% 52% 5% 99
Japan 34% 48% 19% 80
Latin/South America 27% 54% 19% 89
India 15% 51% 34% 94
Asia, other than India/China/Japan 12% 50% 38% 78
Africa 11% 36% 53% 73
China 8% 43% 48% 83
0% 20% 40% 60% 80% 100%
Very comfortable Somewhat comfortable Not very comfortable
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11. Need for Qualified Investigators
A Supply and Demand Imbalance
More Investigators, Lots More
Studies Non-US Investigators
New Studies New Investigators
12,000 11,914
11,223
10,735
10,000
8,373
8,000
8 000 7,641
6,226 6,324
6,000
5,157 4,941
4,461 4,477 4,482
4,000 3,526
4,069
2,859 3,063 3,038
2,676
2,000 1,697 1,518
0
97
98
99
00
01
02
03
04
05
06
19
19
19
20
20
20
20
20
20
20
Source: CenterWatch Analysis, FDA, 2008. Published in “State of the Clinical Trials Industry” CenterWatch, 2008
For External Presentation Purposes; Not for Distribution.

12. Perceptions & Misperceptions Abound
Misperceptions regarding the
globalization of clinical trials
include:
• Exploitation of vulnerable
clinical subjects
• Purposefully seeking loose
regulatory frameworks in which
to conduct trials
• Ignoring safety concerns
• Exploiting loophole in FDA regs:
if studies in U.S. suggest a drug
has no benefit, trials from
abroad may be used in lieu to
secure FDA approval
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13. Increasing Oversight & Regulation
“FDA should expand its
oversight of foreign
clinical trials.”
FDA increased its number of inspections
from 2007-2009, but still conducts relatively
fewer foreign inspections than domestic
inspections - 11% of foreign establishments
inspected in 2009
For External Presentation Purposes; Not for Distribution.
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14. Recent Trends in
Regulatory Inspections
• Both FDA and PMDA
have increased the
number of inspectors and
inspections
• Findings at the site level
are increasing and
resulting in more findings
of GCP Violations and
Warning Letters
The CenterWatch Monthly, Vol 18, Issue 8, August 2010
For External Presentation Purposes; Not for Distribution. 13

15. GCP Warning Letter Breakdown
(FDA WLs Issued in 2009-10)
Requirement of IRB
Inadequate IRB Review
Inadequate IC Process
Protocol Violations
Deviation
Inadequate Documentation
Annual IRB Approval Missed
Inadequate PI Oversight
Inadequate Monitoring
0 1 2 3 4 5 6 7 8 9 10
IRB Deviations(5) PI Deviations (18) M onitor Deviations(3)
http://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/EnforcementActivitiesbyFDA/WarningLettersandNo
iceofViolationLetterstoPharmaceuticalCompanies/default.htm
For External Presentation Purposes; Not for Distribution. 14

16. How Does Industry Approach
these Issues?
• Ensure compliance with the applicable laws and regulations
Need to consider all relevant laws in addition to specific medicines laws
concerning the conduct of trials, e.g., Privacy laws
• Comply with internationally recognized guidelines and ethical
principles
Examples: ICH, GCP, CIOMS and Declaration of Helsinki
• Require a universal position to be adopted for all clinical research
activities -- this is ideal
Example: Pfizer’s “Global Clinical Trials Standards” Policy
• Support global programs designed to enhance infrastructure for
study conduct and oversight
Ethics committees, qualified investigators & investigator training
• Seek certification of Research Programs
e.g., AAHRPP
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17. Site Training & Certification
AAHRPP certification Goal
• All Pfizer CRUs certified (a first for Industry)
• Core Research Sites in progress:
Canada,
USA,
India,
India
Hong Kong
• Additional sites progressing towards
certification in:
China
Russia
Brazil
• Global Health Fellows worked with AAHRPP to
improve ethical research standards in China
For External Presentation Purposes; Not for Distribution.

18. Collaborative Training Workshops:
E.g., Clinical R&D in Korea
• 5 Training Sessions on R&D with 550 University
Graduate Students; Certificates Issued
Co-hosted with a local CRO (DreamCIS) and co-sponsored with KoNECT (Korea
National Enterprise for Clinical Trial), Catholic University of Daegu, Korea University
Anam Hospital Clinical Trial Center, Catholic Medical Center Clinical Research
Coordinating Center, Inje University Pusan Paik Hospital Clinical Trial Center
• R&D Workshop for 200 physicians
Sponsored with Hospitals in Daegu, Severance Hospital. Catholic Medical Center,
Korea University Medical Center, Asan Medical Center, Seoul National University
Hospital, B
H it l Busan P ik H
Paik Hospital.
it l
• Research Operations Training for 40 Coordinators
from CRS consortium
(Asian Medical Center, Samsung Medical Center, Yeonsei University Severance
Hospital, Seoul National University Hospital).
• Pfizer KOREA KoNECT: Expert Course for Clinical
Research Coordinators
Sponsored by the Ministry of Health, Welfare, Family Affairs, KONECT, Daejeon City.
Hosted with Chungnam National University Hospital CTC, Kyunghee University
School of Nursing.
For External Presentation Purposes; Not for Distribution.
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19. Focus on Quality, Compliance and
Performance
% Non Performing Sites
25 23
20
15 13
10
5
0 –213% –82%
Emerging Markets Developed Markets
FDA Inspection results Sep-08 to Apr-10 –100% –100%
100%
80%
60% Official Actions
40% Voluntary Actions
20% No actions
0%
Emerging Developed
Markets Markets (ex US)
For External Presentation Purposes; Not for Distribution.

20. Summary
• Significant trend towards more outsourcing to reduce fixed
development costs
• Globalization of the clinical trials is creating “supply/demand”
pressures on regulators, sponsors and clinical investigators in
emerging markets
• The industry m st in est reso rces to ens re q alit and
ind str must invest resources ensure quality
compliance in the conduct of global clinical trials including a risk
based approaches to quality management
• GCP training of investigators and clinical staff is essential
• Ultimately, well conducted global clinical trials will improve the
R&D productivity and also increase patient access to medicines
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21. Transformation of the Dev Ops Model
at Pfizer
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22. Simple with Clear Accountability
17+ FSPs ICON & Parexel
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23. Key Elements of New Dev Ops Model
From Pfizer's previous ...to innovative, value-creating
sourcing model... strategic partnerships
17+ Functional Service Providers Full service model with alliance partners supporting entire
for individual studies resulting in assets with increased visibility and accountability
diffuse accountability & limited
transparency
Quality = imposed Pfizer Quality = AP responsibility for robust process with Pfizer
processes accountable for oversight
Selection of best indi id al
individual Collaboration for best overall clinical development quality &
o erall de elopment q alit
functional expertise performance
Incentives towards innovative approaches from APs
Prescriptive specifications on
In the clinical development plan, on resourcing, site selection
clinical studies
and timeline
Partners' competition on overall performance and joint value
Suppliers' competition on unit creation
costs With focus on speed & quality
Impact on NPV of assets
Trusting environment / platforms in which innovative ideas can
Transactional relationships
flourish
This is an industry-leading change
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24. Extensive Due Diligence:
Evaluation of Leading1 Global Clinical CROs
Quality was a primary driver of selection of the partners:
Overall quality approaches/philosophy, quality quantification, learnings from past experience
Technical capability to execute on plan, including IT support of tracking of quality
Willingness to be transparent and to work with us collaboratively on addressing challenges
Evidence-based process was followed
Discussions with senior management of each company
Deep technical discussions between Pfizer subject matter experts (SMEs) and partner SMEs
on process and culture
On-site audits by team of internal and external experts covering following areas:
Regulatory Inspection Management Clinical trial related activities Key document development (e.g.
Corrective action and remedial plans Investigator recruitment and training protocol, ICF)
QC and QA activity Study start up and close out Information Technology
SOP development and management Project management Validation of computerized
Records management Monitoring systems
Staff training Trial Master File Clinical data management/clinical
Subcontracting and vendor oversight Safety management and programming
Facilities reconciliation Data retention, security and
Medical writing recovery
1. Top 4 of 5 by revenue in the clinical development space
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25. Overarching Quality & Risk
Mitigation Strategies
Quality & risk mitigation built into the agreement & operating plans
Balanced Scorecard with metrics used as indicators of performance, includes
specific quality metrics
Metrics are used to assess performance and determine rewards/penalties
Service Agreements contain requirements on specific quality/compliance
Standards
Support for voluntary certification of Pfizer research programs
Proposal to seek full certification by AAHRPP which is considered “Gold
Standard” for independent accreditation of research programs
Regulatory agency consideration
Position of regulatory agencies (FDA, MHRA, EMA) was considered in
advance of executing
Organizational model was “built for purpose” over the last 24 months
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26. Key Features of the New Model
• Partners input in operational plan and investigator selection to optimize
quality, cost and execution timelines
• Partners commit to maintain/develop capabilities in all TAs where Pfizer
needs support
• Post-PoC asset allocation to one AP with expectation that they will follow
p y
through the entire development / life cycle
• Expectation that all studies will be managed by one of the two APs
• Unconstraining the APs by having them use their systems and
procedures to deliver value to Pfizer
With overall quality standards defining the “what” set by and actively monitored by
Pfizer
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