Wyeth (Pharmaceuticals Company) Respected Madam/Sir

Wyeth (Pharmaceuticals Company)

Respected Madam/Sir

As you are aware, we are the globe's biggest pharmaceutical and healthcare company driven by research, being the leader in the discovery, development, manufacturing and marketing of pharmaceuticals, vaccines, biotechnology products as also non-prescription medicines which enhance the quality of life for the people across the globe. It is a pleasure that our company Wyeth holds the premier position among the 35 pharmaceutical companies present globally for patent based intellectual property, as calculated by various pointers inclusive of patents approved, quality of patents; Science Strength, or the extent to which a company's patent portfolio is connected to core science; Research intensity, a company's calculation of the extent of the fundamental research: and Innovation Cycle Time or the pace at which research outcomes in patent assets. Our company's score on the Science Strength component was a remarkable 9801.08 as against 7334 obtained for our closest rival. It is a matter of great pride Sir, that Wyeth outperformed the industry average by more than two times in the measure of Research Intensity. (Wyeth Rated Best in Pharmaceutical industry on the Wall Street Journal Patent Scorecard)

Our company has made consistent endeavor to augment its scientific strength through consistent investment in our human resources, technology and resources, with an eventual objective of providing to patients and doctors two new medicines annually. During the last year Sir, our company made investments of $3.1 billion on R&D, with programs concentrated on small molecules, vaccines and biotechnology. We are investigating in excess of 60 new therapies for medical conditions like diabetes, breast cancer, multiple sclerosis, HIV and schizophrenia. Besides, our company holds the unique distinction of being the only major company examining three technical platforms for Alzheimer's disease therapeutics viz small molecules, biotechnology proteins and vaccines. As you are aware Sir, our company has adopted enhanced R & D. productivity model during 2001. From that time, we have advanced 75 new molecular entities from discovery research into development inclusive of 15 in 2006 only. We have booked over 60 investigational new drug applications, inclusive of 12 in 2006, and also filed four leading New Drug Applications in 2006. (Wyeth Rated Best in Pharmaceutical industry on the Wall Street Journal Patent Scorecard)

Financial outcomes:

On a year to year basis all our performance indicators have risen. The details of which is stated in Financial Highlights in Exhibit -I. The financial data for the last four years i.e. from 2003 to 2006 has been shown in Exhibit -II. There has been a rising investment by our company in the sphere of R&D. For the year 2003 the investment was $2.09 billion which rose to $2.46 billion during 2004. The year 2005 saw the investment rise to $2.75 billion and for the year 2006 is touched $3.11 billion. The number of projects also saw a rise from 49 in 2001 to 77 in 2006. A unique endeavor to which Wyeth is dedicated presently is finding new and better medications for Alzheimer's disease which is affecting millions of people across the world. With the drug discovery Wyeth remains hopeful in controlling the symptoms of the disease, and possibly arrest or even reverses its development. (Leading the way to a healthier world: Wyeth Annual Review 2006) Being a successful company we continually change and acclimatize in the wake of an intricate global healthcare environment; putting innovation at the core of the though process and strategies, maintaining a strong sense of values and a continuous and motivating mission. Out performance in 2006 prove that our company understands the needs to maintain success and to continue to spearhead the path to a healthier world. (Wyeth: 2006 Financial Report)

The global pharmaceutical scenario and state of competition:

Globally the pharmaceutical industry consists of mainly four types of players. These are ethical, Over the Counter -- OTC, generic and biotech. Each one needs extremely varied strategic potential. Manufacturers of branded prescription drugs need powerful R&D and worldwide sales and marketing infrastructure. OTC drugs from the branded genre need direct-to-consumer marketing potential whereas companies from the generic stable target on supply chain marketing and manufacturing cost leadership. On the other hand, biotech companies manufacture and defend intellectual property in specific research spheres. Due to the varied attributes and involvement of cost structure, MNCs those who are the owners of OTC products and generics business must run them as separate entities, often making use of another company name. Likewise, the companies which have taken over biotech companies usually leave them to run more or less independently. On a global scale the leading international pharmaceutical sales start in U.S., the European Union and Japan with ten vital nations contributing to more than 80% of the international market. The U.S. has till date the biggest pharmaceutical market in terms of volume as well as value. It is fact that the bible of the pharmaceutical R&D is the 'blockbluster'. (the global pharmaceutical industry)

Similar to breakthrough applications in the software market, blockbuster drugs are real developments that attain quick and deep market penetration. Due to the exceedingly high market demand, it is the blockbusters that frequently rule the profits of individual companies. For instance, one of our rivals Glaxo SmithKlineBecham paced ahead from being a small company during the early 1980s to occupy the top spot having a presence in as many as 50 nations solely on the strength of a single drug - Zantac for stomach ulcers. The infrastructure needed in terms of organization to deliver a new drug application had come to be huge and intricate. A lot of companies sensed that sustaining a high fixed-cost clinical development capability was not going to be feasible in the long-term. Hence, as you know, outsourcing some clinical development to Contract Research Organizations -- CROs has been the current norm. The advantages are that, although it will cost more to conduct a trial through a CRO, the capacity can be increased, lowered, opened or stopped altogether according to the need. (the global pharmaceutical industry)

Wyeth's product strengths:

At Wyeth we have Sir, some of the highest-quality prescription drugs ranging from vaccines to women's health medications to cardiovascular treatments. Besides, there are new treatments for psychological and physiological health needs. Some of our best products are Antivenin for infectious diseases, BeneFIX for Hematology, Cordarone for cardiovascular, Effexor for neuroscience, Lo_Ovral for women's health, Mylotarq for oncology etc. (Prescription Drugs) as regards our Biopharma division, our company is committed to the successful development and production of recombinant protein biopharmaceuticals which are a fast growing constituent at Wyeth. Because of the results of a lot of new products such as Enbrel, ReFacto, Antihemophilic Factor and Benefix our company lies at the vanguard of the biopharmaceutical revolution which is set to radically alter the disease treatment across the globe. (Wyeth BioPharma)

In the sphere of consumer healthcare products, our company is a leader in research, development, production, and marketing of wide range of consumer healthcare products running in more than 65 nations. Our sales figures for the year 2006 have touched $2.5 billion, and Wyeth Consumer Healthcare is among the biggest OTC healthcare product in the entire world with workforce strength of 3200. The commitment of our company in improving the healthcare across the world has transformed Wyeth Consumer Healthcare a top ranked competitor in excess of a dozen vital product categories inclusive of analgesic, cough cold allergy and vitamin / nutritional supplements. (Wyeth Consumer Healthcare)

Unique R&D - our core strength:

One of the corporate strengths at Wyeth has been the potential in R&D. The company's R&D strategy is to carry on the investment into new products that are necessary in the long-term achievement of healthcare companies fulfilling the needs of the patients and doctors served. During 2006, our company made an investment of $3.1 billion on R&D stressing on pharmaceutical, vaccine, and biopharmaceutical methodologies to testing and checking diseases. It is an acknowledged fact that our investment level puts Wyeth among the world's top pharmaceutical companies. Our research departments include pharmaceutical Research & Development - R&D and biopharma R&D in vaccines, consumer health global scientific affairs and Fort Dodge animal health research & development. (Research and Clinical Trials)

Learn & Confirm - a new paradigm:

Of late, Wyeth has taken a transforming initiative to foster the best clinical development model for the 21st century which will place Wyeth for the success in this new setting. This new endeavor at Wyeth has been termed as Wyeth Clinical Development Model for the Future. Our team took up the challenge in terms of radically rethinking business in anticipation of the speedily changing marketplace and recognizing industry-leading concepts instead of gradual improvements. With this effort in view, Wyeth perceived that a 'Learn and confirm' approach must be initiated as the exemplar of the Clinical Development Model of the Future. The purpose of learning is to concentrate on the manner in which to apply a drug in representative patients to render a suitable benefit of risk profile possible while the objective of confirming is to establish, in a large and representative patient group, that an acceptable benefit/risk profile is obtained. (Drug Creation Process: Learn and Confirm, a new Paradigm for Clinical Development at Wyeth)

Pharmaceuticals - a knowledge driven industry:

Pharmaceuticals happen to be one of the most extremely 'Knowledge Driven' industries that is always in a state of change. Human, animal, and environmental health remains the topmost interest of the society. Diversities in life form and infections render grave challenges to the formulation of particular and targeted solutions. Drug discovery is an elaborate process needing almost a decade at a cost of 300 million U.S. dollars to get a new drug to the market. Hence the long waiting period in between 'learning', knowledge generation' and its changeover to 'value added knowledge' requires the building of Proprietary Knowledge' that is of immense value in setting up and maintaining a worldwide creative gesture. One of our major competitors Merck and Co holds expertise in medicinal preparations & chemistry of N-Heterocyclics liquid crystalline materials having saturated or unsaturated non-aromatic rings. Novartis, our next competitor is a global leader in chemistry of N-based hetrocyclics, carbohydrates, proteins, peptides, and other diverse condensed ring systems. Besides, they have leadership position in fermentation as also enzyme-based processes for preparation of organic compounds, tissue culture and a minor business in recombinant DNA technology (Global Pharmaceutical Industry: Intellectual Wealth and Asset Protection)

Product Life Cycle Management -- a sunrise business process for pharmaceutical industry:

The global pharma industry is seeing speedy progression in processes and technology and computerization is coming to hold a vital constituent part in majority of the manufacturing processes. Due to rigid regulatory standards and rising costs, pharma companies prefer to hand over their manufacturing processes to Contract Manufacturing Organization -- CMOs as a part of outsourcing so as to enhance productivity. (Global Pharmaceutical Contract Manufacturing Markets) a new domain that is arrived on the shores of pharmaceutical, and I am sure that Wyeth will immensely benefit from this which is Product Life Cycle Management -- PLM which aligns with the pharma industry's business processes. PLM deals with the challenges of managing a group of hundreds of drug candidates, from a collection of different R&D facilities and manufacturing plants across the world. Augmenting to the business drivers for investing in PLM is the mounting pressure by the regulatory agencies that stresses on adherence to ensure drug safety. (Pharma product lifecycle management gains momentum)