Life Sciences -Industry, Challenges, Opportunities Christine Fernandez and Mike Costas

1. Life Sciences -Industry, Challenges, Opportunities Christine Fernandez and Mike Costas October 2012

2. Disclaimer The material in this presentation has been prepared solely for informational purposes by Chubb Insurance Company of Canada. The material is compiled from external sources and from proprietary Chubb data. We do not represent as to its accuracy or completeness. The content of this presentation is intended to provide a general guide to the subject matter discussed. For specific circumstances, specialist advice should be sought.

3. Agenda • Global Market vs Canadian Market • Targeted life science segments • Property considerations • Liability considerations • Human clinical trials • Why choose Chubb?

4. Life Sciences Opportunity: Global Market – Dynamic Growth • Medical Devices - $350B+ Market • Biotechnology - $250B+ Market • Pharmaceuticals - $1.1 Trillion by 2014 • Dietary supplements- $74B+ Market • Emerging segments: • Drug Discovery • Proteomics • Bioinformatics • Genomics • Nanotechnology • Health Information Technology

5. Life Sciences Opportunity:Canadian Market • Medical Devices • Revenue of $3B + • Approx 1,000 development and manufacturing firms • Approx 600 firms engaged in wholesale distribution • Biotechnology/biopharmaceuticals • Biopharmaceutical market has 180 private and public firms, all in different phases of the development cycle • 500 new products currently in development • Focus: Toronto, Vancouver and Quebec • Pharmaceuticals and Biopharmaceuticals • Pharmaceutical market place is still dominated by US owned brand name drugs – 78% of sales.

6. Life Sciences Opportunity:Canadian Market Reasons for optimism: • Low-cost advantage • Favourable tax treatment for R&D • Scientific research and experimental development program • Supportive network of associations • BIOTECanada • Ontario Bioscience Industry Organization • MaRS

7. Chubb’s Targeted Life Science Industry Segments • Medical Devices • Biotechnology / Pharmaceuticals • Healthcare Product Service Organizations • Third party outsourcing • Dietary Supplements • Drug Discovery Technologies • Bioinformatics, genomics, proteomics, combinatorial chemistry, high throughput screening, computational sciences, etc.)

8. Medical Device Target Customers • Clinical Applications • Monitoring Equipment • Diagnostic Imaging Equipment • Surgical/Dental/Therapeutic Equipment & Instruments • Lab/Research Equipment & Instruments • Medical Software/Healthcare Information Technology • Optical/Ophthalmic Instruments & Lenses

9. Pharmaceuticals - Biotechnology Target Customers • Therapeutic Products • Diagnostic Test Kits (including reagents) • Biotech Equipment • Bioinformatics Software • Drug Delivery Systems • Veterinary Products • Healthcare Information Technology • Industrial and Agricultural biotechnology products are not targeted

10. Service Organizations • Companies performing drug and device development services for others: • Contract Research Organizations • Contract manufacturers • Contract sales organizations • $5.5 Billion industry with rapid growth

11. Important Property Considerations for Life Sciences Companies • Changing nature of operations over time, exposures evolve over a firm’s life cycle • Unique exposures - i.e. spoilage, change in temperature/humidity, radiation, contamination • Need for backup power, temperature alarms, disaster recovery planning • Complex supply chains

12. Important Property Considerations for Life Sciences Companies • High-valued lab equipment • Protection for Scientific Animals • Research & Development Income • Pollutants/contamination • Lengthy recovery due to delays in validation and regulatory approval

13. Important Liability Considerations for Life Sciences Companies • Off-label Study Information Dissemination • Invasion of Privacy • Faster Review Periods by Regulatory Bodies • Clinical Trial Controls • TV & Internet Advertising/Promotion/social media • Plaintiff lawyers monitoring of FDA information • Post Market Surveillance

14. Clinical Research Process • Pre-Clinical - animal testing, cell cultures, computer modeling • Phase 1 - Safety focus • Phase 2 - Safety & efficacy • Phase 3 - Safety & efficacy (large scale) • Approvals by health regulatory agencies • Phase 4 - Post-Market studies

15. Clinical Trials “Clinical trials are voluntary research studies, conducted in people, that are designed to answer specific questions about the safety and/or effectiveness of drugs, vaccines, other therapies, or new ways of using existing treatments.” • Over 50,000 trials conducted worldwide with 20MM+ people enrolled in those trials • Many countries require compulsory local insurance to protect their citizens – Germany, France, Spain, Columbia, Brazil, Australia.

16. Most Common HCT Claim Allegations • Failure to monitor study properly • Failure to select qualified/competent clinical investigators/staff • Failure to properly inform (therapeutic misconception, risk, rights) • Failure to perform per contract-CRO’s • Failure to adhere to research standards • Conflict of interest • Non-compliance • Privacy

17. Sample of Clinical Trial Cases • TeGenero/Paraxel – U.K. TGN1412 clinical trial case. • Fialuridine (FIAU) (NIH,Lilly, and others) • Jesse Gelzinger vs. UPenn • Ellen Roche vs. John Hopkins • Quinn vs. Abiomed • Nicole Wan vs. Rochester MIT • Suthers /Martin vs. Amgen Source: http://www.sskrplaw.com/gene/index.html

18. Sold Product Allegations • Failure to warn (labeling, advertising, safety surveillance, off-label, study results, etc,) • Product Defects • Product not doing what it was intended to do (design defect) • Fraud • Negligence

19. High Profile Cases • Vioxx - Cox 2 inhibitor • Hormone replacement therapies • Anti-depressants • Accutane • Drug Eluting Stents • Contact Lens solution • Metal-on metal hip implants • Surgical mesh

20. Coverages tailored to unique Life Sciences property exposures • Property enhancements • Spoilage / Change in Temperature Coverage • R&D Property (research animals, cell cultures, etc.) • R&D Business Income (contemplates grants, milestone payments, endowments, etc) • Ordinary payroll coverage included • Pollutants (radioactive contamination, microorganisms) • Radioactive Contamination (Typical PD / BI sublimit $250,000) • Physical vs. Operational Restoration of Property, Unlimited Extended Period of Indemnity • Contingent Business Interruption (Dependent Business Premises - worldwide)

21. Coverages tailored to unique Life Sciences Liability exposures • Premises Operations on Occurrence trigger, defence costs outside the limit • Product Liability - Claims Made, defence within limit • Human Clinical Trials • Ability to insure admitted foreign trials in many jurisdictions • Professional Liability Endorsements (clinical investigators, medical sales personnel) • Errors & Omissions –cyber liability and privacy remediation available • Product Withdraw Expenses - $25,000 included with higher limits available

22. WorldCert for Foreign Trial Placements • State-of-the-art, interactive clinical trial insurance and certificate management system. • Web based system features include: • Instant trial insurance quotes. • User-controlled – no waiting for an insurer to complete back-end processes for certificate issuance. • Instant issuance and modification of global clinical trial insurance certificates. • Database of country-specific insurance requirements. • Certificate issuance in the local language. • Capability to email certificates to anyone worldwide. • Customized insuring options

23. World-class claim service based on a no-hassle philosophy The strongest level of underwriting acumen The ability to grow with companies throughout their life cycle A willingness to engage on companies of all hazard groups Tongue depressors to pacemakers Vitamins to Vaccines Superior, well-diversified portfolio of broad language policies. One of the largest specialty Loss Control teams globally Global Network and Financial Strength Chubb Value Proposition

24. Chubb Life Sciences Thank you for your participation