1 Table of Contents 1 Table of Contents 2 1.1 List of Tables 3 1.2 List of Figures 3 2 Introduction 5 2.1 Increasing Cost of Drug Development 7 2.2 Most Drugs Fail to Recuperate R&D Costs 8 2.3 Contracting Life Cycles for Approved Products 9 2.4 The Case for First-in-Class Pharmaceutical Innovation 10 2.5 Conclusion 13 3 Assessment of the Pharmaceutical Industry Pipeline 14 3.1 Pipeline and Clinical Trials Landscape by Therapy Area 14 3.2 Pipeline by Stage of Development 19 3.3 Pipeline by Molecule Type 22 3.4 Key Therapy Areas by Indication 26 3.4.1 Oncology 26 3.4.2 Infectious Diseases 27 3.4.3 Central Nervous System 29 3.4.4 Immunology 32 3.5 Conclusion 33 4 Assessment of Innovation in the Pharmaceutical Industry Pipeline 34 4.1 First-in-Class Innovation by Stage of Development 36 4.2 Key Therapy Areas by Indication 37 4.2.1 Oncology 37 4.2.2 Infectious Diseases 40 4.2.3 Central Nervous System 43 4.2.4 Immunology 46 4.3 Conclusion 48 5 Assessment of the Pharmaceutical Industry Clinical Trial Landscape 49 5.1 Clinical Trial Attrition Rates 49 5.1.1 Therapy area 50 5.1.2 Molecule Type 54 5.2 Clinical Trial Duration 57 5.2.1 Therapy Area 58 5.2.2 Molecule Type 61 5.3 Clinical Trial Size 62 5.3.1 Therapy Area 63 5.3.2 Molecule Type 65 5.4 Conclusion 67 6 Appendix 68 6.1 References 68 6.2 Abbreviations 69 6.3 Contact Us 69 6.4 Disclaimer 69

1.1 List of Tables Table 1: Trends in Clinical Trial Protocol Complexity, 2000–2011 8 Table 2: Pipeline Products by Therapy Area, 2015–Q1 2017 17 Table 3: Number of Clinical Trials Initiated by Therapy Area, 2006–2016 19 Table 4: Pipeline Products by Therapy Area and Stage of Development, Q1 2017 22 Table 5: Pipeline Products by Therapy Area and Molecule Type, Q1 2017 25 Table 6: First-in-Class Pipeline Products by Therapy Area, Q1 2015–Q1 2017 36 Table 7: First-in-Class Oncology Pipeline Products by Indication, Q1 2015–Q1 2017 39 Table 8: First-in-Class Infectious Diseases Pipeline Products by Indication, Q1 2015–Q1 2016 42 Table 9: First-in-Class Central Nervous System Disorder Pipeline Products by Indication, Q1 2015–Q1 2016 45 Table 10: First-in-Class Immunology Pipeline Products by Indication, Q1 2015–Q1 2016 48 Table 11: Pharmaceutical Industry, Clinical Trial Failure and Attrition Rates by Therapy Area, 2006–Q1 2017 53 Table 12: Pharmaceutical Industry, Clinical Trial Failure and Attrition Rates by Molecule Type, 2006–Q1 2017 56 Table 13: Pharmaceutical Industry, Median Clinical Trial Duration by Therapy Area (Months), 2006–Q1 2017 60 Table 14: Pharmaceutical Industry, Clinical Trial Duration by Molecule Type, 2006–Q1 2017 62 Table 15: Pharmaceutical Industry, Median Clinical Trial Size by Therapy Area (Participants), 2006–Q1 2017 65 Table 16: Pharmaceutical Industry, Clinical Trial Size by Molecule Type, 2006–Q1 2017 67 1.2 List of Figures Figure 1: US Life Expectancy by Sex, 1950–2015 5 Figure 2: FDA Approvals, 1987–2015 7 Figure 3: Average Cost of Developing a Novel Drug ($m), 1970–2015 8 Figure 4: Average Lifetime Sales after Tax by Decile ($m), 1990–1994 9 Figure 5: Drivers of Shortened Pharmaceutical Product Life Cycles, 1970–2003 10 Figure 6: FDA Approvals by Innovation Status, 1987–2015 11 Figure 7: Average Sales of First-in-Class and Non-First-in-Class Products After Launch ($m), 2006–2014 12 Figure 8: Average Projected Sales of First-in-Class and Non-First-in-Class Products Launched in 2015 ($m), 2016–2022 13 Figure 9: Pipeline Products by Stage and Molecule Type, Q1 2017 14 Figure 10: Pipeline Products by Therapy Area, Q1 2017 15 Figure 11: Overall Pipeline, Number of Products and Pipeline Growth by Therapy Area, Q1 2015–Q1 2017 16 Figure 12: Number of Clinical Trials Initiated, 2006–2016 17 Figure 13: Number of Clinical Trials Initiated by Therapy Area, 2006–2016 18 Figure 14: Pipeline Products by Therapy Area and Stage of Development (%), Q1 2017 20 Figure 15: Pipeline Products by Therapy Area and Stage of Development, Q1 2017 21 Figure 16: Pipeline Products by Therapy Area and Molecule Type, Q1 2017 23 Figure 17: Pipeline Products by Therapy Area and Molecule Type, Q1 2017 24 Figure 18: Oncology Pipeline Products by Indication, Q1 2017 26 Figure 19: Oncology Pipeline, Number of Products by Indication, Q1 2015–Q1 2016 27 Figure 20: Infectious Disease Pipeline, Number of Products by Indication, Q1 2017 28 Figure 21: Infectious Disease Pipeline, Number of Products and Pipeline Growth by Indication, Q1 2015–Q1 2016 29 Figure 22: Central Nervous System Pipeline, Number of Products by Indication, Q1 2017 30 Figure 23: Central Nervous System Pipeline, Number of Products and Pipeline Growth by Indication, Q1 2015–Q1 2017 31 Figure 24: Immunology Pipeline, Number of Products by Indication, Q1 2017 32 Figure 25: Immunology Pipeline, Number of Products and Pipeline Growth by Indication, Q1 2015–Q1 2017 33 Figure 26: Pipeline Products by Therapy Area and Proportion of Established and First-in-Class Products, Q1 2017 34 Figure 27: First-in-Class Pipeline, Number of Products and Pipeline Growth by Therapy Area, Q1 2015–Q1 2017 35 Figure 28: First-in-class Pipeline Products by Therapy Area and Stage of Development, Q1 2017 37 Figure 29: First-in-Class Oncology Pipeline Products by Indication, Q1 2017 37 Figure 30: First-in-Class Oncology Pipeline, Number of Products and Pipeline Growth by Indication, Q1 2015–Q1 2017 38 Figure 31: First-in-Class Infectious-Diseases Pipeline Products by Indication, Q1 2016 40 Figure 32: First-in-Class Infectious Disease Pipeline, Number of Products and Pipeline Growth by Indication, Q1 2015–Q1 2016 41 Figure 33: First-in-Class Central Nervous System Disorder Pipeline Products by Indication, Q1 2016 43 Figure 34: First-in-Class Central Nervous System Disorder Pipeline, Number of Products and Pipeline Growth by Indication, Q1 2015–Q1 2016 44 Figure 35: First-in-Class Immunology Disorder Pipeline, Number of Products by Indication, Q1 2016 46 Figure 36: First-in-Class Immunology Pipeline, Number of Products and Pipeline Growth by Indication, Q1 2015–Q1 2016 47 Figure 37: Pharmaceutical Industry, Clinical Trial Failure and Attrition Rates, 2006–Q1 2017 50 Figure 38: Pharmaceutical Industry, Clinical Trial Failure Rates in Phase I by Therapy Area, 2006–Q1 2017 50 Figure 39: Pharmaceutical Industry, Clinical Trial Failure Rates in Phase II by Therapy Area, 2006–Q1 2017 51 Figure 40: Pharmaceutical Industry, Clinical Trial Failure Rates in Phase III by Therapy Area, 2006–Q1 2017 51 Figure 41: Pharmaceutical Industry, Clinical Trial Attrition Rates Therapy Area, 2006–Q1 2017 52 Figure 42: Pharmaceutical Industry, Clinical Trial Failure Rates in Phase I by Molecule Type, 2006–Q1 2017 54 Figure 43: Pharmaceutical Industry, Clinical Trial Failure Rates in Phase II by Molecule Type, 2006–Q1 2017 54 Figure 44: Pharmaceutical Industry, Clinical Trial Failure Rates in Phase III by Molecule Type, 2006–Q1 2017 55 Figure 45: Pharmaceutical Industry, Clinical Trial Attrition Rates by Molecule Type, 2006–Q1 2017 56 Figure 46: Pharmaceutical Industry, Clinical Trial Duration by Stage of Development, 2006–Q1 2017 57 Figure 47: Pharmaceutical Industry, Clinical Trial Duration in Phase I by Therapy Area, 2006–Q1 2017 58 Figure 48: Pharmaceutical Industry, Clinical Trial Duration in Phase II by Therapy Area, 2006–Q1 2017 59 Figure 49: Pharmaceutical Industry, Clinical Trial Duration in Phase III by Therapy Area, 2006–Q1 2017 60 Figure 50: Pharmaceutical Industry, Clinical Trial Duration in Phase I by Molecule Type, 2006–Q1 2017 61 Figure 51: Pharmaceutical Industry, Clinical Trial Duration in Phase II by Molecule Type, 2006–Q1 2017 61 Figure 52: Pharmaceutical Industry, Clinical Trial Duration in Phase III by Molecule Type, 2006–Q1 2017 62 Figure 53: Pharmaceutical Industry, Clinical Trial Size by Stage of Development, 2006–Q1 2017 63 Figure 54: Pharmaceutical Industry, Clinical Trial Size in Phase I by Therapy Area, 2006–Q1 2017 63 Figure 55: Pharmaceutical Industry, Clinical Trial Size in Phase II by Therapy Area, 2006–Q1 2017 64 Figure 56: Pharmaceutical Industry, Clinical Trial Size in Phase III by Therapy Area, 2006–Q1 2017 64 Figure 57: Pharmaceutical Industry, Clinical Trial Size in Phase I by Molecule Type, 2006–Q1 2017 65 Figure 58: Pharmaceutical Industry, Clinical Trial Size in Phase II by Molecule Type, 2006–Q1 2017 66 Figure 59: Pharmaceutical Industry, Clinical Trial Size in Phase III by Molecule Type, 2006–Q1 2017 66