Contents:

Introduction The Cost of Developing a New Drug The Drug Development Process Regulatory Changes ..the situation in the US Post-regulation .. the Role of Watchdogs Generics The Way Forward Notes & Definitions Company Notes DATA TABLES Exchange Rates (against US$) Country and Region of Domicile, Reporting Year-End, Currency and Revenues from Pharmaceutical Products Total Revenues by Company 1997-2011 (Local Currency) R&D Expenditure by Company 1997-2011 (Local Currency) Five Year Change in R&D Expenditure Ranked by Value 2002-2006 (US$ million, at Constant 2002 Exchange Rates; Mean Change=72.5; SD=73.87) Five Year Change in R&D Expenditure Ranked by Percentage Change 2002-2006 (US$ million, at Constant 2002 Exchange Rates; Mean Change=72.5; SD=73.87) Ten Year Change in R&D Expenditure 1997-2006 (US$ million, at Constant 1997 Exchange Rates; Mean Change=205.6; SD=226.9) Predicted Change in R&D Expenditure Ranked by Value 2006-2011 (US$ million, at Constant 2006 Exchange Rates) Predicted Change in R&D Expenditure Ranked by Percentage Change 2006-2011 (US$ million, at Constant 2006 Exchange Rates) US Companies by R&D Expenditure by Company 2002-2006 (US$ million) R&D Expenditure for Top Ten US Companies European Companies by R&D Expenditure 2002-2006 (US$ million) R&D Expenditure for Top Ten European Companies Japanese Companies by R&D Expenditure 2002-2006 (US$ million) R&D Expenditure for Top Ten Japanese Companies Total R&D Expenditure for Featured Companies Research Ratio (%) by Company 1997-2011 Five Year Change in R&D Ratio (%) Ranked by Value 2002-2006 (Mean Change=2.5; SD=5.84) Five Year Change in R&D Ratio (%) Ranked by Point Change 2002-2006 (Mean Change=2.5; SD=5.84) Ten Year Change in R&D Ratio (%) by Point Change 1997-2006 (Mean Change=1.4; SD=5.87) Predicted Change in R&D Ratio (%) by Value 2006-2011 (Mean Change=0.0) Predicted Change in R&D Ratio (%) by Point Change 2006-2011 (Mean Change=0.90) US Companies by Five Year Change in R&D Ratio (%) by Point Change 2002-2006 (Mean Change=2.2 SD=7.92) Research Ratios for Top Ten US Companies European Companies by Five Year Change in R&D Ratio (%) by Point Change 2002- 2006 (Mean Change=0.9; SD=2.49) Research Ratios for Top European Companies Japanese Companies by Five Year Change in R&D Ratio (%) by Point Change 2002-2006 (Mean Change=4.8; SD=2.54) Research Ratios for Top Ten Japanese Companies R&D Pipeline Summary Table 2007 - Products by Trial Phase Abbott R&D PIPELINE INFLAMMATION ANTI-INFECTIVES NEUROSCIENCE VIROLOGY CARDIOVASCULAR ONCOLOGY GASTROINTESTINAL OTHERS Alcon R&D PIPELINE OPHTHALMOLOGY OTIC Allergan R&D PIPELINE NEUROSCIENCES OPTHTHALMOLOGY MEDICAL DERMATOLOGY OTHER Amgen R&D PIPELINE HAEMATOLOGY IMMUNOLOGY INFLAMMATION ONCOLOGY OTHER Astelas Pharma R&D PIPELINE CARDIOVASCULAR UROLOGY INFLAMMATION & IMMUNOLOGY GASTROINTESTINAL INFECTIOUS DISEASE CENTRAL NERVOUS SYSTEM. METABOLIC BONE DISORDERS ONCOLOGY AstraZeneca R&D PIPELINE GASTROINTESTINAL CARDIOVASCULAR NEUROSCIENCE CANCER RESPIRATORY AND INFLAMMATION INFECTION Bayer R&D PIPELINE WOMEN'S HEALTHCARE HEMATOLOGY/CARDIOLOGY DIAGNOSTIC IMAGING SPECIALIZED THERAPEUTICS ONCOLOGY Boehringer Ingelheim R&D PIPELINE RESPIRATORY CARDIOVASCULAR UROLOGY CENTRAL NERVOUS SYSTEM IMMUNOLOGY AND INFLAMMATION VIROLOGY ONCOLOGY METABOLIC Bristol-Myers Squibb R&D PIPELINE CARDIOVASCULAR AND METABOLIC DISEASES VIROLOGY NEUROSCIENCE ONCOLOGY IMMUNOLOGY OTHERS Chugai Pharmaceutical R&D PIPLINE ONCOLOGY RENAL DISEASES TRANSPLANT, IMMUNOLOGY AND INFECTIOUS DISEASES BONE AND JOINT CARDIO/CEREBRO-VASCULAR OTHER Daichi Sankyo R&D PIPELINE CARDIOVASCULAR METABOLISM INFECTION. IMMUNITY AND ALLERGY BONE AND JOINTS CANCER OTHERS Dainipp on Sumitomo Pharma R&D PIPELINE CARDIOVASCULAR ONCOLOGY/INFECTION INFLAMMATION/ALLERGY CENTRAL NERVOUS SYSTEM DIABETES OTHER Eisai R&D PIPELINE NEUROLOGY GASTROENTEROLOGY CARDIOVASCULAR AND RESPIRATORY METABOLIC DIAGNOSTICS ANTI-INFECTIVES ONCOLOGY OTHER Eli Lily R&D PIPELINE NEUROSCIENCE ENDOCRINE DISEASES ONCOLOGY CARDIOVASCULAR ANTI-INFECTIVES OTHERS Forest Laboratories R&D PIPELINE CENTRAL NERVOUS SYSTEM CARDIOVASCULAR OTHER Gilead R&D PIPELINE ANTI-VIRAL OTHERS Gla xoSmithKline R&D PIPELINE RESPIRATORY NEUROSCIENCES ANTIVIRALS ANTIBACTERIALS/ANTIMALARIALS METABOLIC VACCINES. CARDIOVASCULAR UROGENITAL ONCOLOGY AND EMESIS GASTROINTESTINAL MUSCULOSKELETAL & INFLAMMATION JOHNSON & JOHNSON R&D PIPELINE CENTRAL NERVOUS SYSTEM HAEMATOLOGY IMMUNOLOGY ANTI-INFECTIVE GASTROINTESTINAL REPRODUCTIVE HEALTH ONCOLOGY CARDIOVASCULAR OTHER KYOWA HAKKO R&D PIPELINE ANTI-ALLERGY CENTRAL NERVOUS SYSTEM ANTICANCER GASTROINTESTINAL OTHERS LUNDBECK R&D PIPELINE CENTRAL NERVOUS SYSTEM MERCK KGAA R&D PIPELINE NEUROLOGY CARDIOMETABOLIC CARE METABOLISM REPRODUCTIVE HEALTH ONCOLOGY AUTOIMMUNE / INFLAMMATORY OTHER MERCK & CO R&D PIPELINE CARDIOVASCULAR RESPIRATORY ANTI-INFLAMMATORY VACCINES & BIOLOGICALS ANTIBACTERIALS/ANTIFUNGALS OPHTHALMOLOGICAL UROLOGY NEUROLOGY METABOLIC ONCOLOGY HIV OTHERS MITSUBISHI PHARMA R&D PIPELINE CIRCULATORY SYSTEM AND METABOLISM NEUROPSYCHIATRY RESPIRATORY SYSTEM AND IMMUNOLOGY ONCOLOGY AND HEPATOLOGY OTHER NOVARTIS R&D PIPELINE CARDIOVASCULAR AND METABOLISM ONCOLOGY/HAEMATOLOGY NEUROSCIENCE ARTHRITIS/BONE GASTROINTESTINAL RESPIRATORY/DERMATOLOGY TRANSPLANTATION/IMMUNOLOGY INFECTIOUS DISEASES OPHTHALMICS NOVO NORDISK R&D PIPELINE DIABETES CARE BIOPHARMACEUTICALS NYCOMED R&D PIPELINE PAIN RESPIRATORY OTHERS OTSUKA R&D PIPELINE CARDIOVASCULAR GASTROINTESTINAL CENTRAL NERVOUS SYSTEM ANTICANCER ANTI-INFECTIVE RESPIRATORY OTHERS PFIZER R&D PIPELINE CARDIOVASCULAR / METABOLISM CENTRAL NERVOUS SYSTEM INFECTIOUS AND RESPIRATORY UROLOGY ARTHRITIS AND PAIN ONCOLOGY OPHTHALMOLOGY ENDOCRINE DISORDERS WOMEN’S HEALTHCARE OTHER PROCTER & GAMBLE R&D PIPELINE MUSCUOLOSKELETAL GASTROINTESTINAL CARDIOVASCULAR RECORDATI R&D PIPELINE CARDIOVASCULAR CENTRAL NERVOUS SYSTEM GASTROENTEROLOGY/UROLOGY2 RESPIRATORY ANTI-INFECTIVES OTHERS ROCHE R&D PIPELINE ONCOLOGY VIROLOGY/INFECTIOUS DISEASES INFLAMMATORY, AUTOIMMUNE AND TRANSPLANTATION. METABOLISM & BONE ANAEMIA CARDIOVASCULAR CENTRAL NERVOUS SYSTEM RESPIRATORY OPHTHALMOLOGY OTHERS SANOFI-AVENTIS R&D PIPELINE CARDIOVASCULAR / THROMBOSIS ONCOLOGY CENTRAL NERVOUS SYSTEM METABOLISM / DIABETES VACCINES RESPIRATORY / ALLERGY ARTHRITIS / OSTEOPOROSIS GENITO-URINARY ANTI-INFECTIVE OTHER SCHERING-PLOUGH R&D PIPELINE ALLERGY & RESPIRATORY ANTIVIRAL ANTI-INFLAMMATORY ONCOLOGY ANTI-INFECTIVES CARDIOVASCULAR OTHERS SHIONOGI R&D PIPELINE INFECTIOUS DISEASES METABOLIC SYNDROME ANTICANCER NEUROLOGY ALLERGY CIRCULATORY SYSTEM OTHER SOLVAY R&D PIPELINE CARDIOMETABOLICS WOMEN'S AND MEN'S HEALTH NEUROSCIENCE. PANCREATIC ENZYMES INFLUENZA VACCINES OTHERS TAKEDA R&D PIPELINE METABOLIC CARDIOVASCULAR GASTROINTESTINAL ANTICANCER MUSCULOSKELETAL CENTRAL NERVOUS SYSTEM OTHERS TANABE R&D PIPELINE CARDIOVASCULAR AND RESPIRATORY SYSTEM CENTRAL AND PERIPHERAL NERVOUS SYSTEM IMMUNOLOGY AND INFLAMMATION OTHERS UCB R&D PIPELINE CENTRAL NERVOUS SYSTEM IMMUNO-ALLERGOLOGY ONCOLOGY OTHERS WYETH R&D PIPELINE NEUROSCIENCE GASTROENTEROLOGY VACCINES MUSCULOSKELETAL WOMEN’S HEALTHCARE / CONTRACEPTION ANTI-INFECTIVES IMMUNOLOGY ONCOLOGY CARDIOVASCULAR & METABOLIC DISORDERS OTHERS

Companies Mentioned

-Abbott -Alcon -Allergan -Amgen -Astellas Pharma -AstraZeneca -Bayer -Boehringer Ingelheim -Bristol-Myer-Squibb -Chugai -Daiichi Sankyo -Dainippon Sumitomo Pharma -Eisai Eli Lilly -Forest Labs -Gilead -GlaxoSmithKline -Johnson & Johnson -Kyowa Hakko -Lundbeck -Merck & Co -Merck KGaA -Mitsubishi Pharma -Novartis -Novo Nordisk -Nycomed Otsuka -Pfizer -Procter & Gamble -Recordati -Roche -sanofi-aventis -Schering-Ploug -Shionogi -Solvay -Takeda -Tanabe Seiyaku -UCB -Wyeth