The Pharmaceutical Industry Challenges and Opportunities

1. The Pharmaceutical Industry Challenges and Opportunities Dr Ajit Shetty Corporate Vice President Enterprise Supply Chain Johnson & Johnson (retired)Chairman Emeritus of the Board of Directors Janssen Pharmaceutica Indian Business Chamber of Luxembourg LuxembourgJune 18, 2012

2. CONTENTS J&J Janssen Health Care The Pharma Market Challenges Opportunities M&A Indian Pharma Conclusions

3. Johnson & Johnson: Global Presence Global Leader inHealth Care More than 250 Operating CompaniesIn 60 Countries Selling Products in More Than 175 Countries116,000 EmployeesWorldwide 3

4. Johnson & Johnson Family of Companies Sixth-largest consumerhealth care company The world’s largest and most diverse medical devices and diagnostics company The world’s fifth-largestbiologics company The world’s eighth-largestpharmaceuticals company Jesica Harrington Diagnostic test fueled hope in her fight against cancer

5. 2011 Sales by Segment $ U.S. Billions Consumer 23% $14.9B(0.7%*) $25.8B1.7%* MD&D 40% $24.4B6.2%* Pharmaceuticals 37% 2011 Sales: $65.1 Billion *Operational YOY change

6. Our Consumer Business Segment • 2011 sales of $14.9 billion • Broad portfolio of iconic CPG and OTC brands • Based on sound science and technology • Touching a billion lives every day

7. Our Pharmaceuticals Business Segment • 2011 sales of $24.4 billion • Now unified under the Janssen name • A well-positioned pipeline • Growing demand • Emerging markets • Unmet needs around the world • Recent product approvals

8. Our Medical Devices & Diagnostics Business Segment • 2011 sales of $25.8 billion • The world’s largest medical technology business • Focused on emerging markets and an aging population • Our most recent acquisition A premier manufacturer of orthopedic devices

9. Dr Paul Janssen (1926-2003) • Founder of Janssen Pharmaceutica • One of the most prolific researchers into new therapeutics for use in anesthesia, pain management, psychiatry, gastroenterology, mycology and many other therapeutic areas • Received 22 Honorary Doctorates and 5 Honorary Professorships • Holder of more than 100 patents • Over 850 scientific publications • In the survey Belgian of Belgians (Jan. 2004) Dr. Paul Janssen has reached the third place

10. Janssen Pharmaceutica Campus Olen Geel Beerse II Beerse I

11. Portfolio of Leading Pharmaceutical Brands • Psychiatry • Haldol ® • Risperdal ® • Neurology • Topamax® • Reminyl® • Gastroenterology • Imodium ® • Motilium® • .......... • .......... Pain Management • Fentanyl® / TTS • Rapifen® • Sufenta® Fungal Infections • Daktarin® • Nizoral® Shampoo • Sporanox® HIV • Intellence® • .......... • ...........

12. Health Care at $5.7 trillionis 7-8% of Global GDP

13. Total Healthcare Expenditure as a percentage of GNP at market prices US Germany France Belgium Italy Japan UK

14. DEU FRA CAN SUE AUS POR ISL AUT DEN BELGIUM FIN SP NLZ CZE JAP IRL GBR LUX GBC Ratio Healthcare Expenditure - Drug ExpenditureHealth Care as % of GNP USA 14 12 CHE 10 Healthcare expenditure as % of GNP NED 8 NOOR 6 0 5 10 15 20 25 30 Gradient: 0.13 Constant: 9.99 Share of drugs in healthcare Correlation coeff.:- 0.44

15. Global Pharmaceutical Market 15

16. Growth Projections for the Pharmaceutical Industry

17. The Pharmaceutical Research & Development Process Timeline / NPD Process 10 - 15 YEARS ~$1B to $1.5B Investment IND APPLICATION SUBMITTED EarlyExploration Discovery/Concept NDA/BLA SUBMITTED Early Development (PC, Ph1, Ph2a) Late Development (Ph 2b, Ph 3) RegulatoryReview Post-Launch Molecule First in Human Ph3 Ph2 Preclinical FDA Approved Drugs Clinical Trials

18. Pharma R&D spend and new drug approval

19. Global pharmaceutical market generics challenge

20. J&J Counterfeit Products Position http://www.jnj.com/connect/about-jnj/views-positions/product-safety/ Our Credo responsibility Patients should receive genuine products Taking tangible steps Monitor markets Work with regulators to strengthen laws

21. The global pharmaceutical market growth remains under pressureThe near term future belongs to the payers PHARMA INDUSTRY Changing sourcesof growth Intensifying competition • Increasing generic penetration in large therapy areas • Declining R&D productivity • Mature vs. emerging markets • Primary Care vs. Specialistdriven Shifting stakeholder power • Increasing payer power over treatment decisions • HTA controlling access • Increasing patient power • Changes in distribution patterns

22. Global expansion/emerging markets Demographics/aging population Unmet needs Advancing science and technology Positive Trends • 22

23. Drug Usage by Age Band 60% of drugs are used by people over 60 And this groupis growing

24. Unprecedented Potential Waiting for a more effective option for hepatitis C…Telaprevir(VX-950)Potential first-in-class protease inhibitor Waiting for a solution for prostate cancer… ZYTIGA® Abiraterone Acetate First-in-class, novel orally administered for treatment of prostate cancer Waiting for a better anticoagulant… Rivaroxaban First-in-class, once-daily oral anticoagulant Waiting for a more convenient way to treat HIV… TMC-278Oral once-daily single agent/fixed dose combination 24

25. OROS ® : Osmotic - Controlled - Release Oral Delivery System Laser - drilled delivery orifice Rate - controlling semi - permeable Drug membrane compartment 1 Water Drug Outer coat compartment 2 Push compartment Water Innovative delivery technologywith therapeutic added value • Oral controlled release • Once-monthly injection

26. Cross Sector SynergiesConvergent Technologies CYPHER EVRA

27. Our Vision:Comprehensive Healthcare • Prevention • Diagnosis • Treatment

28. Survival of the fittest: Takeovers, Mergers and JVs Pharmacia - UpjohnMarion Merrell Dow - Hoechst RousselRhône-Poulenc Rorer - Fisons Ciba - SandozSankyo - LuitpoldPharma Roche - Boehringer Mannheim Sanofi - Synthelabo Astra - Zeneca Hoechst-Marrion-Roussel - Rhone-Poulenc-Rorer (= Aventis) Warner-Lambert - Pfizer Monsanto - PharmaciaUpjohn GlaxoWellcome – Smithkline Novartis acquires 20% in Roche Intense M&A activity in biotech Alza – J&J Dupont- BMS 1990 1996 Smithkline RIT - BeechamRhône-Poulenc - Rorer Kabivitrum - PharmaciaNicholas - RocheVickxBlendax - Procter & Gamble Bristol-Myers - Squibb Synthélabo - Delagrange & DelalandeSanofi - Winthrop Kabi Pharmacia - FarmitaliaBrocades - YamanouchiWarner - Wellcome (OTC products) Cyanamid - AHPRoche - SyntexRoussel - HoechstGlaxo - WellcomeBoots - Knoll 1991 1997 1998 1992 1999 1993 2000 1994 2001 1995

29. Survival of the fittest: Takeovers, Mergers and JVs Schering – Bayer becomes Bayer Schering Wyeth - Pfizer 2002 2007 2009 Chugai Pharm- Hoffmann-La Roch e Hoffmann-La Roche – Novartis (Novartis owns 33% of Roche) Pharmacia- Pfizer Searle – Pfizer Roche Consumer Health – Bayer Aventis – Sanofi.Synthelabo: become Sanofi-Aventis APS/ Berk becomes TEVA Celltech – UCB Genentech – Hoffmann-La Roche(Roche becomes majority owner Genentech) Aventis Pasteur MSD becomes Sanofi Aventis MSD Boots – Alliance Unichem becomes Alliance Boots Altana – Nycomed IVAX – Teva Lifescan – becomes J&J subsidiary 2003 2004 2005 2006

30. The Indian Pharmaceutical IndustryAn Awakening Giant? • Improvement Areas • Lack of patent protection • Counterfeit • Low prices Positive • Excellent, highly skilled people • Language is no barrier • Cost effective • I/P Protection ?

31. To • A market that rewards innovation • A major factor in an integrated R&D / production global effort (partnership) • A safe and effective supply chain • From • A low priced generic market • An exporter of generic products • Large presence of counterfeit products India’s Potential Role as a Pharma Player

32. The future we can influence

33. Global Competition in the Pharmaceutical Industry Conclusion = Competition through Innovation