Growth and Success through Partnering & Outsourcing

11.2014 Growth and Success through Partnering & Outsourcing

Teva Salt Lake City- Contract Manufacturing Capability: Purpose: The Teva Salt Lake City (SLC) facility is considered a specialty manufacturing facility that partners with a variety of pharmaceutical companies who utilize the organization as a contract manufacturing organization (CMO). Background: SLC manufactures products as Prescription(Rx), Generic(GRx), and Over the Counter(OTC). Many of the top 10 pharmaceutical companies utilize Teva Salt Lake City to manufacture their products. Contract / partner manufacturing can build relationships between competing pharma companies in order to: • Decrease COGs • Increasing FTM opportunities • Reduce risk

Agenda • Overview • Benefits • Manufacturing for the Competition • Risks • Regulations

Overview • Why do companies use contract manufacturing organizations • Big Pharma companies are consolidating • End of blockbuster drugs • Personalized medicine • Plant closings • Elimination of R&D • The FDA seems to be overwhelmed and is now becoming more risk averse • PDUFA V 2012: • Communication availability between applicants and the FDA review team • Additional review time for the agency to meet with applicants • Assessments will evaluate parameters that have an have not achieved the product goals • GDUFA I 2014: • Complete response letters to be provided to the applicant • Division level deficiency review • Prompt communication of easily correctable deficiencies • First cycle post complete response meetings • Expedited PIV (day 1 submissions)

Overview • The more risk averse the big pharma companies become the more they need good partners. • Reduces the risk of a failing product with their name on it • Technical resources (such as: quality, regulatory, etc) are more available and specialized • Pharma companies can do more with less • The Blockbuster Drug Pipeline is coming to an end • Companies are looking for ways to extend patents, brand recognition, and new indications for existing products • Small / Specialty pharma companies do not want to invest in production capability • High risk / high reward models • Focus to create a unique drug / drug delivery IP

Benefits • Advantages of Contract Manufacturing • Partners have no capital expenditure for plant or equipment • Flexibility. Products are based on current business trends. • Diversification. Big pharma companies tend to work with multiple CMOs which provides flexibility • The CMOs perform the “mundane” operations whereas the management team from the partner can focus on alternate activities. • Specialization of the CMO and resources / equipment • CMOs help minimize risks and uncertainty with partners who they trust that can bring something novel to market. • CMOs have expertise in the technical arena which can assist in product / manufacturing navigation • CMOs have ~60% less reduced risk of RTRs from worldwide agencies • The collective understanding / learning of CMOs involve how to coordinate diverse production skills and integration of multiple technologies. • Teva SLC takes these new technologies to a new level for our partners. • The products manufactured in SLC are new markets / delivery systems for 90%+ of our partners

Manufacturing for the Competition Improving Value Reduction of COGs Product Knowledge Base Manufacturing Capabilities

Manufacturing for the Competition • Provides a stable revenue • No need to control critical market fluctuations • Unpredictable volumes / markets are not considered during manufacturing forecast • Activities are contractually agreed upon prior to execution • Innovation and CMO capabilities are enhanced in key areas and not focused on a broader scope / market • The solid dosage market is expected to expand over the next five years at an annual rate of 12.5% and as much as $55 billion will be spent by 2017 on CMO-based solid dosage manufacturing.1 1 The Benefits of Contract Manufacturing. Pharmaceutical Online 25 Oct 2012.

Risks • Lack of control • CMOs are dependent on the customers and their marketing campaigns in order to impact volume • Project successes are difficult to predict • CMOs can meet all project demands and a pharma company can cancel the product • Being reactive rather than proactive • You must react to customer requests • Timing • Delivery schedules • International markets • Audits • CMOs must manage multiple organizational demands from the partners. Sometimes the quality group doesn’t communicate with their own technical team, etc… • Protection of our technology • Our facility has highly technical equipment to manufacture our specialty products. • Cost efficient processes to ensure profitability to the company • Potential competition for Teva brand product • Utilization of skilled resources for the competitor market • Sustaining skilled employees and keeping them

Regulations • The FDA created a draft guidance: • Guidance for Industry: Contract Manufacturing Arrangements for Drugs: Quality Agreements • The guidance applies to the commercial manufacturing of APIs, intermediates, finished drug products, combination products, and biological drug products. • It defines the who and what of contract manufacturing • Establishes quality agreement requirements • A comprehensive written agreement that defines and establishes the obligations and responsibilities of the Quality Units for each party involved. • Identifies roles and responsibilities

Regulations • The CMO is responsible for maintaining compliance at all necessary markets & regulatory authorities. • Example: if the product is to be marketed in Korea, the KFDA will audit the CMO not the partner • The CMO will be audited by the partners in order to ensure compliance as well. • Most pharma companies have internal quality audit teams that visit CMOs to identify critical / major / minor issues prior to the regulatory agency arriving on site. • CMOs standards and criteria with regulatory agencies are heightened due to the varying products and potential impact if there is a compliance issue.

Future • The future for the Teva SLC site is bright! • The SLC facility has on-going development activities with partners as addressed throughout the presentation as well as Teva brand products. • The SLC facility is also engaged with the Teva Specialty products • The SLC facility is also getting ready with the manufacturing of First to file PIV GRx products • The SLC facility is also engaged in bringing new unique technologies to the site for Teva future products • The site is currently engaged with the long term master plan

Contact Information Habib Nasirullah- Site General Manager SLC: Habib.Nasirullah@TevaPharm.com

Growth and Success through Partnering & Outsourcing