McGill University

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McGill University
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• May, 2006

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A Closer Look at Draxis Pharma
A 247,000 sq. ft purpose built facility
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Agenda
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• Industry Overview

• Trends in Emerging Markets

• Draxis Overview

• Key strengths

• Challenges and Opportunities

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Agenda
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• Industry Overview

• Trends in Emerging Markets

• Draxis Overview

• Key strengths

• Challenges and Opportunities

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INDUSTRY OVERVIEW
Costs Pressure
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INDUSTRY OVERVIEW
Total Market US14.9 Billion
10 yr CAGR Sec. Market 12
US4.0 Billion
Source "Pharmaceutical Outsourcing Opportunities
Post Launch", Kalorama, July 2004
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INDUSTRY OVERVIEW
Secondary Manufacturing
Today US4 Billion

• Sterile segment will drive future growth
• Biologics
• 370 biotech products in clinical trials
• 300 new parenterals products approvals expected
  (2004-2012)
• 25 of these units will be lyophilized

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INDUSTRY OVERVIEW
Global Secondary Manufacturing Market Share
Source "Pharmaceutical Outsourcing Opportunities
Post Launch", Kalorama, July 2004
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INDUSTRY OVERVIEW
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INDUSTRY OVERVIEW
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INDUSTRY OVERVIEW
The Competitive Landscape

• The current trend from big Pharma in outsourcing
  secondary manufacturing, combined with the
  emergence of biotech and specialty Pharma
  products is creating a strong demand for contract
  manufacturing.
• This is especially true for the sterile segment.
• Contract manufacturers are responding with large
  investments in sterile capacity.

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INDUSTRY OVERVIEW CMO Segment Analysis
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INDUSTRY OVERVIEW
TRENDS IN CONTRACT MANUFACTURING

• According to a Investor Relations report in
  2003, the prerequisites to success in the
  secondary custom manufacturing market are
• cGMP production facilities
• Competitive cost position
• Excellent customer relations
• Strong technology position

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INDUSTRY OVERVIEW
TRENDS IN DEMAND CUSTOMERS NEEDS of CM

• Big Pharma customers most need and value
• Process and production innovation
• Low cost manufacturing
• Consistent quality
• On-time delivery
• Transfer efficiency

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INDUSTRY OVERVIEW
TRENDS IN DEMAND CUSTOMERS NEEDS of CM

• Small to mid-size Pharma/biotech customers most
  need and value
• Production Flexibility (small batches)
• Technical support
• Regulatory compliance
• Business partnership
• Capacity to grow

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INDUSTRY OVERVIEW
TRENDS IN DEMAND - PRODUCT

• Newly approved products represent 70 of
• CM business opportunity
• FDA expected to approve an average of 24 38
  products/year

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INDUSTRY OVERVIEW
CONCLUSIONS

• Competitive Landscape is Changing
• Big Pharma is reorganizing in light of patent
  expirations and capacity is being liberated for
  contract manufacturing
• Alliances and joint ventures are forming
  internationally to cover product development from
  early stages through to commercialization
• Most products to be approved in the near future
  will be of a biopharmaceutical nature, dosage
  form and will come from companies with no
  manufacturing capacity
• Increasing pressures on Pharma pricing,
  especially in the US, will drive the development
  of the generic industry favoring manufacturing in
  FDA approved sites

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Agenda
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• Industry Overview

• Trends in Emerging Markets

• Draxis Overview

• Key strengths

• Challenges and Opportunities

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TRENDS IN EMERGING MARKETS

• PRE-FILLED SYRINGES
• THERAPEUTIC VACCINES
• CYTOTOXIC DRUGS

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TRENDS IN EMERGING MARKETS

• 1. PRE-FILLED SYRINGES
• Demand is often a 2-step process vials
  pre-filled syringes after 3-5 years
• Demand is likely to be from large-volume products
  and sponsors may fill their own demand
• As of 2003, the market for pre-filled syringes
  was estimated to be growing at a rate of 20
  annually
• Today the market is estimated at 200 million in
  the US and 1 billion in Europe.
• Home use vaccines are seen as an emerging market
  for this product

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TRENDS IN EMERGING MARKETS

• 2. THERAPEUTIC VACCINES
• Worldwide market today is 8.1 million
• Today, only 2 therapeutic vaccines are approved
  outside of the US, and only 1 is FDA approved
• Today, therapeutic vaccines are only available
  for the treatment of cancer
• By 2010, the total market is expected to reach
  4.2 billion
• Between 2005 and 2010, 20 products are expected
  to be approved for cancer and addiction
  treatments (nicotine cocaine)
• Given the current price and ineffectiveness of
  conventional addiction treatment programs, it is
  expected that these new addiction vaccines will
  be a market success

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TRENDS IN EMERGING MARKETS

• 3. CYTOTOXIC PRODUCTS
• Increasing generic presence (patents ending)
  therefore prices are decreasing
• Most cytotoxic drugs are parenteral
• 5 out of 7 products waiting for approval come
  from small to mid-size pharma and biopharma
  companies who need contract manufacturing
• 22 new drugs are expected to be approved by 2008
  (65 expected to outsource manufacturing)

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Agenda
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• Industry Overview

• Trends in Emerging Markets

• Draxis Overview

• Key strengths

• Challenges and Opportunities

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Draxis Health
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Plant Built Specifically for Pharma Manufacturing

• Built by a Big Pharma company
• originally Canadian manufacturing arm of
  Burroughs Wellcome in 1983
• acquired by Draxis Health in 1998

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Wide Range of Manufacturing Capabilities
Sterile/Lyophilized
Non-Sterile
1. Liquids
4. Sterile products

• 600 L to 18,000 L
• Syrups, cleansers andsuspensions

• 10 L to 200 L
• Ampoules, vials, topicals, and ointments

2. Ointments and creams
5. Lyophilization

• 80 kg to 700 kg
• Dermatological creams, antibiotic ointments

• 120 sq. ft lyophilizer
• 254 sq. ft lyophilizer

3. Solid dose

• 80 kg to 1,000 kg
• Capsules, tablets andpowder blends

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Our Mission

• To provide to our global pharmaceutical and
  biotech customers
• cGMP compliant product development
• contract manufacturing services
• supply chain management solutions

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Agenda
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• Industry Overview

• Trends in Emerging Markets

• Draxis Overview

• Key strengths

• Challenges and Opportunities

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Expertise in Lyophilization

• Requires specialized equipment and know-how
• One of few in the world with FDA approved
  facility

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Excellent Service Capabilities
Product and technology transfer skills core
competency
Manufacturing process optimization and validation
Analytical method development and validation
Cleaning and packaging validation
Regulatory affairs support services
Laboratory support services
Stability programs
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Strong Commitment to Quality

• Quality control
• Inspection testing of materials and products
• Stability studies, analytical method validation
  and environmental monitoring
• Quality assurance / quality system
• Batch record review, standard operating
  procedures, material and product specifications
  and releases, audit management, training and
  change control administration
• Validation
• Qualification (IQ/OQ/PQ) of equipment
  computerized systems
• Cleaning and process validation
• Regulatory affairs
• Preparation and submission of files to
  regulatory agencies

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Impressive Audit and Approval Record

• HPB cGMP
• MCA-Govt. of United Kingdom
• FDA (Tablet Manufacturing)
• FDA (Sterile LYO)

• HPB (BGTD)
• FDA (Pre-Approval)
• Brazilian Health Agency
• Saudi Arabia Ministry of Health

• HPB Annual cGMP
• FDA PAI (Sterile Ointment)
• Federal Govt. of Germany

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A Whos Who of Pharma Customers

• Over 25 customers
• 3 of top 5 Big Pharma in North America
• Serving over 120 countries worldwide

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GSK Background

• GSK approached Draxis 3 years ago
• Needed reliable, high quality partner to
  manufacture, package and ship
• Highly complex logistics

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GSK Results Today

• Draxis Pharma manufactures, packages and ships
  seamlessly to 140 countries
• Products include
• Neosporin
• Zovirax

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A Leader in Custom Manufacturing

• Wide range of services
• special expertise in lyophilization
• Strong quality and customer service record
• over 50 audits last 5 years
• Satisfied Big Pharma client list
• over 25 repeat customers

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Agenda
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• Industry Overview

• Trends in Emerging Markets

• Draxis Overview

• Key strengths

• Challenges Opportunities

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Challenges Opportunities- Doing it right the
first time -

• Decrease incidents investigations
• Human errors
• Documentation errors
• Decrease Reworks
• Cost of Non Quality
• Customer service
• New Product Introduction

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Our Focus Needs to Be on Efficiency

• Improved Quality
• Improved Equipment Availability
• Optimize Speed
• Business Practices and Procedures
• Improved Purchasing Practices

Reduced Costs Improved Competitiveness Improved
Profitability
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Whats In It For Us?

• Increased Reliability
• Reduced Frustration
• Reduced Stress
• Job Security
• Pride in a World Class Operation

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General Concepts
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Capacity Utilization
A measure of the amount of hours utilized over
the total design capacity
Throughput (Hours)

Capacity Utilization

Design Capacity (Hours)
Throughput

Actual Time to Process a Unit
Design Capacity 46 weeks 7 days 24 hours

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Overall Equipment Effectiveness (OEE)

• It is a method to find out overall effectiveness
  of equipment. It is obtained by multiplication of
  three ratios
• Availability ratio ()- Time for which equipment
  was available for operation divided by total
  calendar period for which O.E.E. is being
  calculated.
• Quality Ratio ()- Quantity of good units
  produced divided by total production (Yield)
• Performance Ratio ()- Rate of production divided
  by Capacity of machine to produced

OEE () Availability Quality Performance
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Capacity Diagram
Draxis Capacity
OEE
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Mobilization Team
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Draxis Evolution Program

• Proposed Accepted Vision
• Draxis Pharma, a contract manufacturing
  organisation, recognised by its pharmaceutical
  and biotechnology industry partners as a world
  class leader of specialized and innovative
  products through its commitment to Quality,
  Compliance, Customer Service and Cost
  Competitiveness.
• We distinguish ourselves by our operational
  excellence culture, our expertise in managing the
  development and manufacturing of new products
  with innovative processes meeting the most
  demanding markets requirements and exceeding the
  industry needs.
• We rely on an experienced, competent and
  committed team, working in a safe and respectful
  environment favouring the wellbeing, development
  and contribution of individuals.

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Draxis Evolution Program

• Our Drivers
• Client satifaction
• Complaints
• On-time delivery
• Quality
• IR/FI
• losses
• Supplier minimum
• Productivity
• Cycle Time
• OEE - Pkg
• OEE - Mfg

• New Product Introduction
• Cycle-time
• Pipeline
• Implication
• Moral
• personnel
• Health Safety
• Absenteeism
• Accidents
• Environment
• Profitability
• net Profit

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QUESTIONS