Let's look at some of the key issues I just mentioned. Some of them, some of the controversy on the commercial side. In 2015, also there has been a lot of patents that expired. What has been happening also is that the patents and the product lifecycle so, when the drug was launched to the time that the patent expires has been shortened. There's been a lot of formulary challenges as I mentioned earlier. The Internet has been really impacting how commercial practices are happening. And also one of the things that we are talking about is the pharmaceutical cost per capita. As you can see here, it is over twice as much in the US as in the OCDE countries. So primarily European and developing countries and Asia, in Japan, in particular. And that is a really big issue, because basically at the end of the day, the US consumer is paying the price for most of the pharmaceutical development. Now some people will take issue with that, but that's my perspective. Again, you know, throughout this course when I provide lectures, I give you my opinion of what I think and of course this is only an opinion. So if I am asked to reassess the strategy, we configure the business model. Think about all of these different issues that are going on in terms of research productivity, health reform and so on. So, let's now take a quicker look at 2016. One of the expectation was that in 2016 it was going to be year of merger mania as I told you in the previous slide. Pfizer and Allergan thinking of merging, we'll see if that happened or not. Of course, you might already know that if you have read the news. Search was on a drug for a pricing formula that is just right, that is really a big issue for pharma. You don't want to underprice because then you leave money on the table, but if you overprice you have major issues. The other thing is care in the palm of your hand, we'll talk about this. There's a number of other issues, the consumer are paying higher deductible, care is moving more to the community, patients are becoming a lot more informed with the Internet. Biosimilar which already has been launched in Europe and in other countries, in India and China and other places first were launched in the US actually at the end of 2015. So we expect that this is going to have a major impact. And another thing that was kind of interesting is the medical cost mystery and I will illustrate what I mean by that. 2016 a year of merger mania, one of the mergers that everybody was expecting at the end of last year was the $160 billion Pfizer deal to buy Allergan. Well, unfortunately that did not happen or fortunately depending which side you sit on. April 2016 the deal was terminated after new rules on tax inversion happened here in the US. So now Pfizer and Allergan are two separate entities as they were before and that deal did not go through. So it will be interesting to see what happens during this year in term mega mergers. The other thing that's also interesting is that in 2014, there were 68 biotechnology deals totalling about 49 billion, 46% increase over 2013, I apologize I don't have the numbers for last year. And the other thing was that a number of pharmaceutical and biotechnology funding deals total of about $449.5 million last year in terms on the private sector. Care in the palm of your hands, more mobile, more accessible, and more connected. Very high percentage of people are willing to have now a visit through video conference with their physician, this is something quite unheard of. A number of people are experiencing and are very satisfied with retail clinics. So, walk in clinic, for example, in some of the major pharmacy chains. Clinicians are extremely connected in terms of getting access to medical information, in terms of being able to coordinate patient care. Many of them start to use email a lot more for chronic disease patients and really are able to use a virtual perspective. So again, the access to the Internet has really changed the way healthcare is being practiced. Drug and healthcare pricing, this is a very interesting study that was done. By the way, all of the charts I showed you, I will give you references for all of these and more. So you can get the PDF of these reports and articles that I use in my slides. But what's interesting, you can see, is the percentage of consumer who have never had conversation with their physician or nurses. So, for example, price of a visit, most of the time and this is again for the US, patients don't know how much it's going to cost them, price of a prescription, it's until they go to the pharmacy. And depending on the co-pay that they have or even price of a procedure for surgical, unless they have to talk to their insurance to get pre-approval. And even then sometime they don't know the entire bill and that is a big issue. It's a big issue because patients sometimes are left with really large medical bills, even though they have insurance. I mentioned earlier, pricing was a big thing, I want to talk a little bit more about this. For example, in 2014, in 2015 Gilead had transfer to Congress up to placing a $1,000 a day price tag on Solvadi which is a pill for hepatitis C. And then Harvoni treatment cost of about $189,000 per year, that was as of 2014. Again, their treatment for hepatitis was actually a cure. So one could argue, well, if you're going to cure the disease, is that really too high of a price? But I'll let you be your own judge from that perspective. Vertex as well for cystic fibrosis patients, about $259,000 per year wholesale cost. Again, if you think about it, the insurance bear the cost of that. But if you have a high deductible, you might be spending a lot of money, and not everybody can afford these drugs, which is a very big issue. 2015, the five most expensive drugs in the world. I'm not going to read each one of them, but you can see one of them was 1.1 million Euro price tag, that is extremely high. My big question to you is, is this sustainable? Is this a sustainable business model? How many, for how long are the payers, the insurance companies, the patients and the medical community is going to be willing to go and pay for these types of treatment which sometime you know if they are curious it's one thing. But if all they do is basically are preventing the disease for a few more months or just treat symptoms one could argue that the prices are not justified. 2016, the US Senate declares war on drug prices. The USA Committee on Aging held hearing on drug prices in December 2015. And both Senators from both party denounced the unconscionable price increases on decades-old drugs, which again the pharmaceutical can do. I mean it's free pricing so you can raise the price however you want. And really from that perspective It has really created bad press for the entire pharmaceutical industry. Even when they have been releasing really very good drugs and been able to make substantial advances in the field of cancer, and HIV, and other diseases as well. Many, many countries are increasing pricing restrictions, here is a graph, I'm not going to read it for you. But as you can see in 2014, a lot of the countries around the world have continued to put pressure on the pharmaceutical industry to control the prices. And had been pushing also on the biosimilar side, to get biologics, which now are probably the drugs that cost the most amount of money. To also reduce the prices, and also expand the healthcare access of biologics through the biosimilar avenue. One of the things that has happened over the past few years is that Pharma has shifted from what is called blockbuster, one pill for all, to specialty drugs. And have been developing effective therapy to prevent, I mean, they have done in the past, high cholesterinia, heart disease, diabetes and have shifted to rare diseases. Where first of all cost developing drugs is much lower because you have smaller clinical trials. You are dealing with hundreds of patients versus thousands. The timeframe to get a drug to the market instead of being 10 years or 12 years can be broken down to maybe three, four years. It has been happening in some cases and you will hear that throughout the course. There has been tax breaks on the cost developing these drugs. There has been a number of expedited reviews, and I'll talk about this a bit more later on, such as drugs designated as breakthrough therapies. And so that has really helped Pharma from that perspective to get a number of drugs approved much faster. Now, the number of indications are much smaller, and the number of patients are much smaller, which is why Pharma is also saying well, that's why we need to charge $500,000 for the course of treatment, anyone could argue with that. Number of breakthrough designation again which is going to be interesting these gives you an idea of the is that you the carriers, where there has been through designation. Cancer, infectious disease rare inherited disorders and others, again, you have links to these slides later on in terms of looking at the reports. But sometime, even when you get evidence, you can get moving into phase one clinical trial very quickly, and the FDA is going to work with you, especially for serious life threatening diseases for which there is no treatment. Here's another graph that's kind of interesting, this is for the US market as of March 2015, that's first published by IMS Health. And this gives you an idea of all the biologics where a number of companies are now working to develop biosimilar candidates for all of these drugs. Which some of them are multi-billion dollar drugs, in order to basically launch biosimilars, which is quite different from the typical generic. And again, there will be a lecture on biosimilars, so I don't want to spend too much time on that, so that way you will understand it much better. But this is very important for the US. I know Europe had had biosimilars for many, many years already and I'm very familiar with that. But for the US this is a big change in terms of the market perspective or what's going to happen and the impact it will have on drug discovery and development.
