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Executive Summary

Genentech's Activase TPA is currently being used on about 2,000 patients per week. If that rate were annualized, the drug would be used on more than 100,000 patients in 1988, representing about $230 mil. of revenue to Genentech. The company's marketing VP, James Gower, reported the current usage rate for Activase during a March 7 presentation to securities analysts. Pointing out that by the first part of January, after a little more than one month on the market, Genentech was "treating about 1,000 patients a week," Gower told the analysts that the rate of treatment is "now almost double that rate in terms of patients treated per week." He added that Genentech is "rapidly accelerating that pace as the education and comfort levels increase." Gower estimates the size of the U.S. patient population for thrombolytic therapy at "approximately 600,000 individuals per year." That figure excludes patients who do not qualify for drug treatment either because of age or a delay in treatment between the onset of the infarct and thrombolysis. The 600,000 figure, Gower observed, "represents a great deal of upside for Activase in the coming months." At its current weekly treatment rate, the product would be reaching about one-sixth of that potential myocardial infarction market in 1988. Cowen & Company, the investment firm that sponsored the March 7 meeting, is estimating a thrombolytic patient population in 1988 of about 265,000 patients, which would generate about $315 mil. in sales for Genentech. Cowen bases its estimates of the market size and Genentech's share on preliminary information on product preferences and treatment criteria from a survey of 1,200 cardiologists and 1,200 emergency room physicians. The breadth of Genentech's market reach has been notable: Gower reported that as of Feb. 9 the firm had achieved formulary approval in 97% of the hospitals with 300 or more beds -- a level he described as "about as high as you are ever going to get." In the smaller hospital segment, Gower added, "we are now up to about half of the under 300 bed institutions around this country." At the beginning of January, the comparable figure for that segment was about 37%. Genentech's marketing force, Gower said, has grown to 150 representatives, which puts the company "in the top five in the industry in terms of the number of hospital specialist representatives." The average pharmaceutical sales experience of Genentech's "new" sales representatives is eight years with "the Lillys and Mercks of the world." The sales force is being supplemented by 200 consultant nurses. Acknowledging that the hiring and training of critical care nurses to help in the education and promotion of Activase is "a little unusual," Gower said: "we think it is useful to this marketplace." Gower explained that the nurses "go out and help our 150 representatives to do the education necessary" on who should get the product and how it should be used. "To get maximum usage," Gower noted, "you have to have all three shifts in a hospital, not just the cardiologist, but the ER [emergency room] physicians, the house staff (residents) and, importantly, the CCU and ER nurses up to speed on the therapy." In addition to helping on the education, the nurse consultants "become excellent professional advocates" for TPA. "They really do believe in the drug," Gower told the analysts. The nurse program, Gower said, "has turned out to be a really important program to us." However, the hiring of nurses as advocates has in the past developed into a thorny public relations problem for some companies. In a somewhat analogous situation in the late 1970s, several infant formula companies brought on a political/public relations problem by using nurses -- Mothers' Helpers -- to teach the appropriate use of infant formulas and to promote use of the products. The Genentech program is different because it is hospital-based for professionals, but some of the same issues of regarding the ethical balance between training and promotion could be raised. Using a metaphor appropriate to a biotech company, Gower said: "This year, we expect these 200 nurses to, in essence, clone themselves. We are targeting for training 1,500 nurses around the country for all these centers so that each of the really heavy volume MI centers will have in-place someone who is well-trained in Activase and can give them services inside the institutions on a routine basis." 600,000 POTENTIAL PATIENT POPULATION FOR THROMBOLYTIC THERAPY The following analysis of the market size for thrombolytic therapy is a distillation of information taken from comments by Genentech marketing VP James Gower at a health care investment seminar on March 7. Total number of myocardial infarctions in U.S. each year -- 1.5 mil. (source: American Heart Association statistics). MI patients that make it to the hospital -- 1.1 mil. (source: AHA). Patients that make it to the hospital in time (within six hours) to receive thrombolytic care -- 800,000 (source: a 1987 Genentech survey of 1,000 emergency room physicians and hospital cardiologists). Patients that are too old (over 75) or do not meet criteria for TPA treatment -- 200,000 Thromboytic total market figure -- 600,000

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