Al Altomari April 2705

"Value creation in the evolving pharmaceutical industry: an industry in flux" Drexel University's LeBow College of Business and the Global Interdependence Center: "THE PHARMACEUTICAL INDUSTRY: STRATEGIC INTERDEPENDENCE IN GLOBAL MARKETS.“

Al Altomari Chief Commercial Officer Barrier Therapeutics, Inc.

1979 to 2005: A personal retrospective Significant events impacting overall valuation • Surprises (foreseeable?): – Pharmacovigilance (Why is the FDA preempting the industry?)

– Manufacturing issues – Health care compliance & regulatory issues

• Macro issues: – World wide transparency of price – Industry is truly a global business (M&A has accelerated) – Shift in the drug development model • • • • •

Biological (Pharmacological based) Medicinal Chemistry Genomics Biologics Device/Pharmaceutical (example: stents, nanotechnology)

"Value creation in the evolving pharmaceutical

Al Altomari, Barrier Therapeutics, Inc.

PhRMA Companies continue to invest heavily in R&D; the rate of investment abroad is decelerating $30

US Dollars in Billions

$25 $20 $15 $10

R&D (US)

"Value creation in the evolving pharmaceutical

E 03

02

20

20

00

01 20

20

99 19

98 19

97 19

95

96 19

19

94 19

93 19

92 19

90

91 19

19

89 19

88 19

87 19

85

86 19

19

84 19

83 19

82 19

80

81 19

19

19

$0

79

$5

R&D (Abroad) Al Altomari, Barrier Therapeutics, Inc.

Industry productivity continues to lag in the US. New Medicines, Vaccines and Biologics Approved by the FDA 60

User Fee Impact

50 40 30 20 10 0

1994

1995

1996

1997

1998

1999

"Value creation in the evolving pharmaceutical

2000

2001

2002

2003

Al Altomari, Barrier Therapeutics, Inc.

Current landscape is changing: Biotechnology has attracted capital and has made an impact in the market place

JN J

PF I

250

ZE R

Market Cap (4/22/2005) - US $ Billions

200 TE C EN EN G

B

M S

A

M E

100

M G

RC

EN

K

H

150

50 0

"Value creation in the evolving pharmaceutical

Al Altomari, Barrier Therapeutics, Inc.

Going forward: Creating value in the future in an industry in flux?

1.

Competing in a global environment: – – – – –

2.

Mounting pressure on price from payers Investment/ROI in the emerging markets: China, Eastern Europe Complexity registration process IP protection Currency risk

Emerging regulatory trends: – – –

Registration process focus on “safety” Accounting/Auditing: Sarbanes-Oxley Generic Industry: • Biologics • Impact outside of US

"Value creation in the evolving pharmaceutical

Al Altomari, Barrier Therapeutics, Inc.

Going forward: Creating value in the future in an industry in flux?

3.

Role of start-ups, small/emerging and specialty Pharma: – – –

4.

Continued consolidation and rationalization: – – –

5.

Augment “Big Pharma” Source of technology and innovation Models of efficiency

Less “Mega Mergers” Targeted technology acquisitions Increase in spin-offs and divestures of non-strategic assets

More pressure on margins: Sales forces, manufacturing and R&D spending.

"Value creation in the evolving pharmaceutical

Al Altomari, Barrier Therapeutics, Inc.

There is continued opportunity and responsibility for the Pharmaceutical Industry.

Percent of Americans NOT Receiving Recommended Care E. A. McGlynn et al., New England Journal of Medicine 2003

60% 50% 40% 30% 20% 10% 0%

Diabetes

Coronary Artery Disease

Heart Attack Patients

"Value creation in the evolving pharmaceutical

Colorectal Cancer

High Blood Pressure

Al Altomari, Barrier Therapeutics, Inc.

“Never discourage anyone...who continually makes progress, no matter how slow.�

Plato Greek author & philosopher in Athens (427 BC - 347 BC)