The Pharma 1000 Top Global Pharmaceutical Company Report September 2020 © 2020. All rights reserved. Securities offered in the United States are offered through Torreya Capital LLC, Member FINRA/SIPC. In Europe such services are offered through Torreya Partners (Europe) LLP, which is authorized and regulated by the UK Financial Conduct Authority. 1 Table of Contents The Evolving Global Pharmaceutical Sector 5 The Biotechnology Sector 16 The Branded Pharma Sector 24 The Generic Drug Sector 34 Financial Players in Pharma: Private Equity and Royalty Firms 38 Top Players by Country and Segment 44 The Pharma 1000 List 55 About Torreya and Acknowledgements 96 2 Torreya’s Pharma 1000 Report . Torreya is a globally active investment bank focused on the pharmaceutical sector. We began to track assets, people and companies in the industry with our own database in 2012. In “The Pharma 1000” report, we leverage our database to identify the top 1000 companies by value today. This presentation provides a summary of the key findings of the report. We hope to give you a greater sense of the global scale of the pharmaceutical industry and its extraordinary growth. We also wish to recognize the companies that appear on the Pharma 1000 list for the accomplishment of becoming a top company in one of the world’s most important and challenging Download the Full Report industries. 3 Torreya Pharma 1000 Study Approach . We identified approximately 30,000 pharmaceutical companies in 2012. Our team studied these companies and pulled out the active operating companies in ethical pharmaceuticals which had a tangible basis for valuation. We have tracked this group and added to it ever since. To be included in the dataset, a company had to be primarily focused on the production and marketing of ethical pharmaceutical products or be directly involved in the marketing of such products, to derive revenue from such marketing activities or to be doing research with the intention of developing marketed pharmaceutical products. We excluded OTC companies, pharmaceutical distributors, pure play manufacturers and API players from the ranking. Because over half the companies are not listed on a stock market, we developed an approach to impute value for private companies (based on financial metrics where available). Our approach is to use publicly-traded company multiples to impute private company value. We value publicly-traded companies using their enterprise value as this reflects the capital market’s valuation of core operations. This is computed using the market close price of a company’s common shares on September 15, 2020 multiplied by the number of common shares outstanding as of the last reported financing period. We then subtracted cash and liquid securities and added back debt to arrive at enterprise value. 4 The Evolving Global Pharmaceutical Sector 5 Sector Size Industry is quite large Torreya’s Torreya’s Estimate of Industry Size: Torreya’s Estimate of Total $1.24 Trillion in revenue Estimate of Total Global Revenues Global Value of of the Ethical Our estimate higher than what has been derived by EvaluatePharma and the Ethical Pharmaceutical IQVIA.* Pharmaceutical Sector in 2020: Sector in 2020: This estimate is the sum of net sales of the largest 1,600 companies in the pharmaceutical sector. $1.24 The value of the commercial side of the drug sector is approximately $6.65 $6.65 trillion. Of this, $5.65 trillion is associated with publicly-traded companies. Trillion Trillion Putting it in Perspective: Pharma is a large and complex growing part of the global economy. If the pharma sector were a country, it would be ranked #15 in the world. Ahead of the GDP of Mexico, Indonesia, Sweden or Poland. * See EvaluatePharma®, World Preview 2019, Outlook to 2024, June 2019 and Global Medicine Usage Trends and Outlook to 2024, IQVIA Institute, March 2020. 6 Pharma is the World’s Third Largest Industry (comparison of the aggregate value of the publicly-traded components of all major industries) Public Market Value Rank Sector ($Trillions) 1 Banks, Insurance and Finance $18.5 2 E-commerce + Internet Services $6.0 3 Pharmaceuticals (public companies only) $5.65 4 Software $4.2 5 Integrated Oil and Gas $3.6 6 Technology Hardware $2.9 7 Semiconductors $2.4 8 Electric Utilities $2.4 9 Integrated Telecom Providers $2.2 10 Automobile Manufacturers $2.0 Note: this table shows the aggregate market value of all publicly-traded global companies by S&P market group in the world’s top 20,000 traded companies by market as of September 6, 2020. Source: S&P CapitalIQ, Torreya analysis. 7 Value of Industry Has Tripled Since 2003 Aggregate value of the global pharmaceutical industry 2003 to 2020 ($trillions) $6.65 $5.35 $5.16 $5.28 $5.02 $4.31 $3.76 $1.99 2003 2014 2015 2016 2017 2018 2019 2020 Source: Torreya analysis of data from Bloomberg, CapitalIQ and a number of private companies. 8 Value Evolution of the Top Pharmas Over Time Market cap of the 35 highest valued pharmas has more than doubled in 9 years Forest Labs $9 Servier $22 Seattle Genetics $26 Mitsubishi Tanabe $9 Mylan $20 Astellas $28 2020 Vertex $9 2011 Yangtze River $24 2015 Hansoh Pharma $29 Baxalta Menarini Chugai $9 ($billions) $23 ($billions) $30 ($billions) Alexion $10 Perrigo $24 Zhifei Bio $30 Yangtze River Pharma $11 CSL $26 CSPC Pharma $33 Sun Pharma $11 Value of Top 35: Astellas $28 Value of Top 35: Celltrion $34 Value of Top 35: Eisai $12 $1.6 trillion Sun Pharma $30 $3.0 trillion Servier $36 $3.6 trillion Valeant $13 Vertex $30 Yangtze River $44 Daiichi-Sankyo $14 Takeda $31 Biogen $44 Otsuka $14 Alexion $37 Takeda $57 CSL $15 Merck KGAA $38 Daiichi Sankyo $60 Astellas $17 Shire $40 Regeneron $61 Shire $18 Regeneron $43 Merck KGaA $63 Merck KGAA $19 Teva $52 Bayer $66 Biogen Idec $22 Boehringer $64 Vertex Pharma $70 Allergan $24 Biogen $71 Hengrui $71 Celgene $27 Valeant $78 Chugai $74 Gilead $30 AstraZeneca $80 Zoetis $77 Boehringer $33 Eli Lilly $84 Gilead $83 Teva $36 Celgene $92 CSL $95 Takeda $38 GSK $94 GSK $98 Eli Lilly $40 BMS $95 Sanofi $132 BMS $49 AbbVie $98 BMS $134 Amgen $50 Bayer $108 Eli Lilly $136 Bayer $50 Amgen $111 AstraZeneca $145 Novo Nordisk $58 Allergan $115 Amgen $145 AstraZeneca $61 Sanofi $128 Boehringer $148 Sanofi $95 Novo Nordisk $139 Novo Nordisk $159 Merck $100 Merck $145 AbbVie $160 GSK $105 Gilead $149 Novartis $201 Novartis $140 Pfizer $193 Pfizer $205 Pfizer $144 Roche $226 Merck $213 Roche $151 Novartis $228 Roche $315 J&J $175 J&J $252 J&J $392 Market Cap ($ billions) Market Cap ($ billions) Market Cap ($ billions) Source: CapitalIQ and Torreya analysis, Sep 15, 2020 9 Global Value Champions There are hundreds of impressive value creation stories in pharma. Five leading examples of extraordinary value creation are: Big Pharma China Branded Pharma Generics Niche Created $240+ billion in Hengrui’s market cap in Was worth $780 million in Up 500 times since its IPO Has an enterprise value value since 2003. This is 2003 was $279 million. 2003. Today is worth $69 in 1995. Sun has navigated of $29 billion after its equivalent to a whole new Today, it is worth $71 billion. billion (up 88-fold). Spent a an extremely challenging recent IPO. This large pharma and accounts Up over 250 times. The number of years in small environment for INN company buys royalties for more than five percent company has brought molecule chemistry, then generics well and maintains from inventors, of all value created in the oncology drugs to China virology, then introduced a $16.5bn market cap. Sun universities and industry in this time. when they were needed. No CFTR modulators for cystic is the #1 marketer of biotechs. Started with a Introduction of numerous M&A. Pure internal fibrosis, effectively curing pharmaceuticals in India very small financing in new high-value biologics. innovation and strong part of the disease. Today, and the world’s 4th largest the early 2000s and No giant mergers but marketing across China. focused on a wide range of INN generic player. Serves today generates over $2 company has diversified Today, Hengrui is actively severe, niche diseases such over 100 markets with over billion in free cash flow and stayed decentralized. diversifying into NCEs and as sickle cell anemia, kidney 2000 products. Moving with less than 50 Benefited greatly from other therapeutic disease, Alpha-1 Antitrypsin into innovation products employees. Has kept Centocor acquisition. Has categories where there is an Deficiency and Type 1 and recently did an focus on royalties a stronger credit rating unmet need among the diabetes. impressive antibody deal involving drugs for than U.S. government. Chinese people. with Merck. serious disease. 10 Pharmaceutical Value by Subsector, 2003 vs. 2020 VALUE SHARE OF PHARMACEUTICAL VALUE SHARE OF PHARMACEUTICAL SUBSECTORS, SEPTEMBER, 2003 SUBSECTORS, SEPTEMBER, 2020 The pharmaceutical Royalty Royalty sector has INN Generics Company INN Generics Animal Company 2% democratized since 0% 3% Health 1% 2% 2003. While large China Pharma Animal Health Biotechnology 1% 0% 6% pharma has grown, other parts of the Branded Branded Generics Pharma industry have grown 1% 14% even faster. The fastest Biotechnology China Pharma 5% 11% growth areas include Branded Big Pharma China Pharma, branded Generics ex- 48% China pharma, animal health 7% and biotechnology Big Pharma 77% Branded Pharma 22% Source: Torreya analysis, Sep 15, 2020 * We know the biotech sector seems smaller than some might have expected. This is because we classify a company with no approved product as a “biotechnology company” and a company with a marketed product that is not a big pharma, not a Japan pharma nor a China pharma as a specialty pharma company.