GlaxoSmithKline vs Pfizer

1. GlaxoSmithKline vs Pfizer UBI Business & Competitive Intelligence Presentation by : Aksenov Yuri Pascal Andrea Hendricx Chris Brussels, December 15th 2006

2. Key Intelligence Topic The future of pharma: Prevent or Cure ?

3. Analysis of key factors • Industry Figures • Players, market shares, evolution • Who are Pfizer and GSK • Performances, products, policies • Investors outlook • In depth analysis • Risks, Opportunities, Capabilities • Implications • Recommendations • Strategies, positioning • Conclusions • Sources

4. Analysis of key factors Top 10 Pharmaceuticals companies in the world *both companies are at the top

5. Analysis of key factors Top 10 markets evolution

6. Analysis of key factors Market segmentation

7. Corporate views and values Company fact sheet Mission - become the world's most valued company to patients, customers, colleagues, investors, business partners. Purpose– dedicated to better health and greater access to healthcare. Growth through innovation Research based pharmaceutical company Mission - to improve the quality of human life Purpose – dedicated to better health and greater access to healthcare. Research based pharmaceutical company Shape a flexible R&D organisation that can respond to the challenges and the opportunities

8. Corporate views and values Company fact sheet • Customer deeply committed to meeting the needs of our customers, and we constantly focus on customer satisfaction • Customer understanding and responding to their often changing needs. • Stakeholders • We work with stakeholders to share knowledge, skills and goals on how to prevent or manage diseases, how to get medicine to the people who need it, and how to promote good health. • Stakeholders • we must provide the right information in a timely and effective way. • Personnel policy Pfizer employs 122,000 people in 60 countries and has sales in more than 150 countries. People are the cornerstone of Pfizer's success, we value our diversity as a source of strength, and we are proud of Pfizer's history of treating people with respect and dignity • Personnel policy GSK business employs over 100,000 people in 116 countries Over 15,000 people work in research teams to discover new medicines For employees, we create an environment that allows them to do their best work by being themselves

9. Analysis of key factors Segment portfolio

10. Analysis of key factors 31% 22%

11. Analysis of key factors Industry Supplements internal R&D with BD&L/M&A Activity Source: Evaluate, Internal Analysis

12. Analysis of key factors Investor outlook

13. Analysis of key factors Performance analysis, outlook • US continued to remain the largest market for pharmaceuticals in the world • Pfizer, Sanofi-Aventis and GSK remained as the top three companies in terms of pharma sales • Three relatively smaller players namely Amgen, Abbott Labs and AstraZeneca, however, reported a double digit growth during 2005 with Amgen recording the highest growth rate of 20.5 per cent. • Pfizer's own sale in the US market fell by 11.8 per cent to 23.44 billion dollars in 2005 from 26.58 billion. • GSK’s US sales fell by 3.5 per cent during 2005. • Eli Lilly stood out as the largest spender of R&D in 2005 with its spending of 20.7 per cent of gross turnover. Amgen, another relatively smaller player among the 15, has spent 18.6 per cent of its turnover on R&D. On the other hand, Pfizer's R&D expenditure declined by 3.1 per cent to 7.44 billion dollars in 2005 from 7.68 billion. • The pharma companies are taking this threat from the generic players quite seriously by spending more on R&D.

14. Analysis of key factors Price pressures drive consolidations to maintain earning levels Sales Price Pressures limits Industry ability to use price for growth Price Sales Price Units Units M&S Industry continues to consolidate in order to cut infrastructure costs: • Reduce sales reps • Eliminate TA areas in Research • Reduce duplication in support functions M&S R&D R&D G&A G&A EBIT EBIT Consolidations protects Earnings growth & Capital value

15. Future Business Impact Assessment Overview • Methodology • Risks • Opportunities • Implications

16. Future Business Impact Assessment The PHA® Model • Exclusively developed to study the two companies in their competitive environment, understanding the impact of future events for their future business strategy. • Each risk and opportunity assessed in its magnitude, considering two additional company dimensions:

17. Future Business Impact Assessment Events (risks) • Product Recall & Litigations • Patent Expiration • BRIC Competition & Generics • Free Access & Price Dumping • Public opinion pressure

18. Future Business Impact Assessment Risk assessment “Safe Zone” Bubble size denotes event likelihood “Danger Zone”

19. Future Business Impact Assessment Risk assessment “Safe Zone” Bubble size denotes event likelihood “Danger Zone”

20. Future Business Impact Assessment Markets (opportunities) • Cancer Treatment • Pandemic & Bioterrorism • Healthcare & Animal • Online Pharmacy • Developing World

21. Future Business Impact Assessment Opportunity assessment “Addressable” Bubble size denotes market likelihood “Missed”

22. Future Business Impact Assessment Opportunity assessment “Addressable” Bubble size denotes market likelihood “Missed”

23. Future Business Impact Assessment Implications • Exposed to animal rights activists and public opinion pressure. • Betting on pandemic flu vaccine as next large pharma opportunity. • Reliant on blockbusters and over-the-counter medicaments. • Heavily exposed to product recall and BRIC competition on generics.

24. Future Business Impact Assessment Summary • In the near future, risks for pharma seem higher than the opportunities. • The best equiped to face the new challenges will win.

25. Recommendations Pfizer : 1st Recommendation • Pfizer • Big company • Loose pieces • No course of action Align the business • Be clear : • Vision • Mission • Strategy • Be manageable Get smaller and align the business

26. Recommendations Pfizer : 2nd recommendation Co-marketing with generic drug manufacturers

27. Recommendations Pfizer : 3rd recommendation Go on-line e-business Pharmacy Wholesaler

28. Recommendations Pfizer : 4th recommendation Promotion : Brand or efficacy of product

29. Recommendations Pfizer : 5th recommendation Research & Development : Better focus • Improve OTC portfolio • Avoid entering areas where excellence is reached

30. Recommendations Glaxosmithkline : 1st Recommendation Research & Development : CONTINUE

31. Recommendations Glaxosmithkline : 2nd recommendation Vaccination Continu efforts

32. Recommendations Glaxosmithkline : 3rd recommendation Go for prevention Less sofisticated drugs needed. Competition ?

33. Recommendations Glaxosmithkline : 4th recommendation • Focus on neglected diseases • HIV/AIDS • Tuberculosis • Malaria • Obesitas – Cholesterol • etc … • Enhance participation in community programmes • Animal testing • Human testing • Image building • PR

34. Recommendations Glaxosmithkline : 5th recommendation Acquisition OTC Candidate good prospect for product diversification

35. Opportunities General for the pharmaceutical market • Entering new markets : China, East-Europe, Latin-America, Vietnam • Alliance with BioTech companies : Technology, innovation

36. Conclusion Distinguishing markets “Cure” market “Prevent” market Future Key Players: Pharma innovators Future key players: Generics manufacturers

37. Conclusion Distinguishing markets R&D Focus Prevent Cure Sales Focus past present future

38. Questions

39. Secondary sources • Annual report Pfizer 2005 • Annual report GSK 2006 • IMS Health Global Pharma forecast Feb. 2006 • NYSE, sept.2006 • MIDAS, new market segmentation Feature Dec. 2005 • Neil Mahoney - Global Business Management Concepts,presentation • PharmaBiz, "Struggle of the giants",  May. 2006 • Wood McKenzie • www.imshealth.com • www.pharmaexec.com • www.chartsbank.com • BCG e-Health Reports • Wall Street Journal