Masters of the Universe Presentation "The R&D Conundrum: Grow via Internal Investment or External Development" Presented at OIS@AAO 2015

1. Masters of the Universe
Moderated By: Panel Participants:

2. Masters of the Universe The R&D Conundrum:
Grow via Internal Investment or
External Development?
Jim Mazzo
Chairman & CEO AcuFocus
Executive Chairman, Neurotech

3. Pathways to Innovation
M & A
Licensing/
Partnerships
Internal R&D

4. Total R&D Spending 2014: Panel
0
5000
10000
15000
20000
25000
R&D ($USD in
millions)
Zeiss
Santen
Allergan
J&J
Novartis
NEARLY
$20
INVESTED IN R&D
BILLION

5. Average R&D Cost per New Medical Device
Venture capital firms invested $2.7 Billion
in U.S. med tech (device) companies in 2014
$50-90
PER PMA
MILLION
$3-5
PER 510k
MILLION

6. Median R&D Cost per New Drug
By # of new drugs the company has brought to market in 10 years
$351 M
$4.2 B
$5.3 B
1 Drug >3 drugs >4 drugs

7. Pharma: % of Pipeline Compounds Originated
Externally
34
40 3838
47
62
Phase I Phase II Phase III
2002
2010
Source: EvaluatePharma database, February 2010 and May 2002; McKinsey analysis.
EXHIBIT 1: OUTSIDE IN
% of reported compounds originated externally

8. R&D Intensity (% of Sales)
Leading Medical Products Companies
Lin J, Horn H, Henry J. In Vivo: The Business & Medicine Report. Elsevier, March 2010.
3
5
8
10
Bottom quartile
3rd quartile
2nd quartile
Top quartile
MEDICAL PRODUCTS
Average: 7.0% 21.3%
Median: 5.8% 20.1%
15
20
22
30
Bottom quartile
3rd quartile
2nd quartile
Top quartile
PHARMA PRODUCTS

9. 2014 R&D Intensity (% of Sales)
Ophthalmic Companies
45%
19%
17%
17%
14%
11%
11%
11%
8%
7%
3%
Regeneron
Roche/Genentech
Novartis/Alcon
Allergan
Shire
J & J
Carl Zeiss Med
Santen
Actavis (pre-Allergn)
Abbott/AMO
Valeant/B+L

10. Accelerating the Innovation Cycle?
or Cutting Off Resources?
Companies
commercializing
medical products
Companies developing new drug
molecules and device innovations

11. R&D Is an Easy Target
“Spending more on R&D won’t
drive results. The most crucial
factors are strategic alignment
and a culture that supports
innovation.”
─ Strategy& (formerly Booz & Co)
The Global Innovation 1000 ─
“The trouble is that it’s hard to measure
strategic alignment & culture, let alone link
them to profitability or market value.”
─ Harvard Business Review ─