BioFunding Conference 2010

Kuala Lumpur, Malaysia

Lilly Asian Ventures

Yi Shi, Ph.D.
Managing Director

7/27/2010
Agenda

• Industry background

• Lilly Asian Ventures

• Our portfolio companies

7/27/2010 1
Global Pharmaceutical Landscape
Global: IMS Regional Pharmaceutical Outlook in 2012 (US$ Billions)
Central & East Europe

North America Size: US$ 54-71bn

Growth: 8-11 %
Size: US$ 274-346bn Western Europe

Growth: -1-2% Size: US$ 177-219bn Japan

Growth: 2-5% Size: US$82-100bn

Middle East & Africa Growth: 1-4 %

Global market
Size: US$ 16-20bn
Asia Pacific
Size: $766-962bn Growth: 5-8%
Size: US$98-122bn
3-6% CAGR
Latin America Growth: 13-16 %
Size: US$ 54-70bn

Growth: 10-13 %
Source: IMS
 Pharmaceutical R&D Value Chain
Hypothesis Candidate Development Commer cialization
Gener ation

Tar get
Identification
and
Validation

Lead Fir st Phase Phase

Opt imizat ion Human IA Phase Submit Global Global
IB/ II
Assay Dose III Launch Opt imizat ion G
Development

1 compound
Lead
Gener ation 10 compounds

10,000 compounds
• Average cost of developing a new drug > $1B
• Average time: 10-15 years

7/27/2010
3
Pharma R&D Productivity Challenge

7/27/2010 4
Company Confidential
Copyright© 2008 Eli Lilly and Company
Big Pharma Shifting R&D to Asia
Novartis
To invest $1.25B to build the 4th global R&D center in China (14-buildings complex with headcounts
growing from 300 to 1400 in 3 yrs)
Merck Serono
4Q09 To invest $223M in R&D center in Beijing
Novo Nordisk
To double investment in China R&D in 3 years, making it the 2nd largest global R&D site
Last year, announced a $400M expansion of manufacturing facility in Tianjin.

3Q09
GSK
Formed two JVs with Chinese companies for local production of vaccines
Shanghai R&D Center consolidated as the sole global neuroscience R&D site
BI
To invest $240M in R&D and manufacturing in China
2Q09 AstraZeneca
Laid foundation for the $100M China headquarter in Shanghai
To move most of API production to Asia, mainly China

Baxter
1Q09 To invest $150M in China to ramp up production capacity in China

Bayer
To invest $130M in R&D center in Beijing

7/27/2010 5
Asian Biotech Companies

• Led by experienced returnees, fueled with substantial

local talents

• Significant cost advantage (~25% of US) and high

capital-efficiency

• Large government incentives including non-dilutive

funding

7/27/2010 6
Healthcare VC Markets

Yr: 2008

US China

$8.2B invested in 623 Healthcare Cos $300M invested in 47Healthcare Cos

Healthcare ~30% of total VC dollars Healthcare < 5% of total VC dollars

Dozens of healthcare domain VC firms <10 healthcare domain VC firms

Source: Venture One, LAV Analysis

7/27/2010 7
Deal Stage Analysis (China healthcare 2008)

Stage Deals (%)

• Pre-Revenue 8 (17%)
• Early Revenue 10 (21%)
• Growth Capital 25 (53%)
• Pre-IPO 4 (9%)
Total = 47 deals

7/27/2010 8
Agenda

• Industry background

• Lilly Asian Ventures

• Our portfolio companies

Company Confidential
7/27/2010 Copyright© 2009 Eli Lilly and Company
9
Eli Lilly and Company
• Founded in 1876 in US

• $21.8B sales in 2009

• ~40,000 employees worldwide

• Operations in 87 countries and

sales in 138 countries

7/27/2010 10
 Lilly Global Presence
Canada: Bioproduct
Analytical R&D China: Drug
San Diego: Discovery R&D
Bioproduct
R&D

Indianapolis:
Global R&D HQ

Spain: Medicinal
Chemistry

Singapore: Drug
Discovery and
Biomarker R&D

7/27/2010 11
Innovation-Driven Corporate Strategy and Culture

25%
R&D As a Percent of Sales
20% 19%
17%
15% 15% 15%
15%

10%

5%

0%
$10M spent on R&D each day
Lilly Historical Firsts
• 1920‘s: First Insulin product (Iletin)
• 1950‘s: First macrolide antibiotic (Erythromycin)
• 1960‘s: First cephalosporin antibiotic (Cephalothin)
• 1970’s: First vinca alkaloid oncolytic (Oncovin, Velban)
• 1980‘s: First rDNA product (Humulin)
First SSRI (Prozac)
1990‘s: First to widely market a therapeutic mab (ReoPro)
First insulin analog (Humalog)
First SERM (Evista)
• 2000‘s: First drug for sepsis (Xigris)
First anabolic peptide for building bone (Forteo/Forsteo)
First non-stimulant drug for ADHD (Strattera)
First incretin mimetic (Byetta)

7/27/2010 13
Lilly Asian Ventures: Overview

History
• Established in 2007
• First corporate venture fund to focus on Asia healthcare investment

Scope
• Focus on Pharmaceutical
• Also consider Medical Device, Diagnostics, and Healthcare Service

Size
• $100M under management
• $5-10M per investment

7/27/2010 14
Investment Focus

Growth Capital
• Emerging leader in an attractive market segment
• Typically over 50% sales growth
• Little technology risk

Advanced R&D
• New drugs in clinical phase III
• < 2 years from market
• > 70% probability of technical success

Early-stage R&D
• Extraordinary team, revolutionary technology/product
• High risk, potentially high return

7/27/2010 15
Investment Philosophy

Active investor
• Typically take board seat
• Work closely with management in business development and
strategic decision-making

Value-Adds
• Share R&D expertise with portfolio companies
• Leverage sales & marketing capability in over 100 countries

7/27/2010 16
Agenda

• Industry background

• Lilly Asian Ventures

• Our portfolio companies

Company Confidential
7/27/2010 Copyright© 2009 Eli Lilly and Company
17
LAV Portfolio Company:
Citic Pharmaceuticals

• Top 3 privately-owned drug

distributors in China, ~$700M annual
sales, majority business from MNC
customers

• Fastest growing, >30% CAGR

• State-of-art infrastructure, cold-chain

capability

7/27/2010 18
LAV Portfolio Company: Novast

• First and only Chinese

company with FDA-audited
drug product manufacturing
facility

• Proprietary formulation
technologies, low-cost

• Multiple generic product

launches in US market in 2010

7/27/2010 19
LAV Portfolio Company: HD Biosciences

• Leading biology CRO specialized in

biological screening services
•
• Clients including 8 out of the top 10
big pharma

• Well positioned to capitalized on

global R&D outsourcing trend

7/27/2010 20
LAV Portfolio Company:
Chipscreen Biosciences

• Innovative, capital-efficient biotech with

oncology and diabetes focus

• “Best-in-class” HDAC inhibitor in Phase

II/III for NHL; first orphan drug status
ever granted by SFDA

7/27/2010 21
LAV Portfolio Company: Beta Pharma

• Integrated biotech with oncology focus

• Icotinib, a novel, oral target therapy for

NSCLC, currently in Phase III

• Promising early stage pipeline

7/27/2010 22
 Lilly Asian Ventures

THANK YOU

Yi Shi, Ph.D.
Shi_yi@lilly.com

7/27/2010