Actually Doing (Technology & Product) Strategy. Outline: Why do I need an innovation strategy? Why do I need an innovation strategy? How will we create

Actually Doing Actually Doing (Technology & Product) (Technology & Product)

StrategyStrategy

Outline:Outline:

Why do I need an innovation strategy?Why do I need an innovation strategy? How will we create value?How will we create value? How will we capture value?How will we capture value? How will we deliver value?How will we deliver value? Doing strategy in practiceDoing strategy in practice

AgendaAgenda

Why making choices is so importantWhy making choices is so important• (and so hard)(and so hard)

What can be doneWhat can be done

Is This Your Project Pipeline?

Why is it so hard to kill Why is it so hard to kill project #26?project #26? It’s a “good” project!It’s a “good” project!

– It meets NPV, ROI goalsIt meets NPV, ROI goals

– An important customer wants itAn important customer wants it

– The CEO/my boss wants itThe CEO/my boss wants it

– It’s Frank’s projectIt’s Frank’s project

– It might be the project that saves my baconIt might be the project that saves my bacon

Good managers can meet stretch goals Good managers can meet stretch goals (and I’m a good manager)(and I’m a good manager)

Making difficult decisions takes time Making difficult decisions takes time

and eats energyand eats energy

What can be done?What can be done?

Measure capacity, track resourcesMeasure capacity, track resources Make real decisions with real dataMake real decisions with real data Use decision tools that allow you to view Use decision tools that allow you to view

initiatives in comparison to each other and initiatives in comparison to each other and within the context of your strategic objectiveswithin the context of your strategic objectives

Measure capacity,Measure capacity,track resourcestrack resources

Function

Total FTE Effort(1 Year Period)

0

20

40

60

80

100

120

140

160

180

200

220

240

260

280

EE

- T

echn

icia

n

ME

- D

raft

er/D

esig

n

EE

-Com

bine

PL

/ E

ng

EE

- P

roje

ct L

eade

r

EE

- D

esig

n

ME

-Com

bine

PL

/ E

ng

ME

- P

roje

ct L

eade

r

ME

- S

uppo

rt E

ng

ME

- T

echn

icia

n

SE

-Com

bine

PL

/ E

ng

SE

- P

roje

ct L

eade

r

SE

- E

ngin

eer

SE

- T

echn

icia

n

MF

G -

Ele

ctric

al (

AT

E)

MF

G -

Mec

hani

cal

Pur

ch -

Mec

h

Tes

ting

Doc

. -

Illus

trat

e

MK

TG

- P

rod.

Mgr

.

Project A

Project B

Project C

Project D

Project E

Project F

Project G

Project H

Project I

Current Prod & Proc Support

Applied Research

Vacation, Holiday, Sick Time

Total demand all projects by function (1 Year)

Total capacityby function (1 Year)

Projects

Measure resourcesMeasure resources

Track Resources Over TimeTrack Resources Over Time

0

1500

3000

4500

6000

11

-Sep

1-J

an

23

-Apr

13

-Aug

3-D

ec

24

-Mar

14

-Jul

3-N

ov

HOURS PER MONTH

Exploratory projects

Innovation projects

Product Support

Administration

CAPACITY

Build an understanding of the Build an understanding of the “typical” project“typical” project

Planned Resource Allocation:Project X

FTEs

Actual ResourceConsumption:Project X

FTEs

Jan Feb Mar Apr May Jun

Process EngineeringR&DSupply ChainMarketing

Process Engineering

Supply ChainMarketing

R&D

Making real decisionsMaking real decisionswith real datawith real data

Technology Strategy in PracticeTechnology Strategy in Practice

Strategies are worthless unless they are linked Strategies are worthless unless they are linked to real resource allocation decisionsto real resource allocation decisions

DecideDecide– Who will make the decisionsWho will make the decisions

– How oftenHow often

– By what criteriaBy what criteria

An Assignment Given to Small An Assignment Given to Small Groups of Managers at XYZ Co.Groups of Managers at XYZ Co.

1.1. Identify the salient characteristics of your Identify the salient characteristics of your organization’s “innovation funnel”organization’s “innovation funnel”

1.1. Where do new ideas come fromWhere do new ideas come from

2.2. When are decisions made?When are decisions made?

3.3. Who is involved in these decisions?Who is involved in these decisions?

2. Draw a diagram of the innovation funnel that 2. Draw a diagram of the innovation funnel that captures these characteristicscaptures these characteristics

Group AGroup AQualityQualityControlControl

ResearchResearch

CustomerCustomer

MarketingMarketing

StrategicStrategicPlanningPlanning

OEMOEM

Group BGroup B

Screen 1

Marketing Inputs

SeniorManagementInjector

Screen 2

Department Changes

Final Evaluation

10-minute exercise: Funnels You 10-minute exercise: Funnels You Have KnownHave Known

What does the innovation funnel What does the innovation funnel

at at youryour company look like? company look like?

The innovation funnelThe innovation funnel

Phase I Phase II Phase III Launch

The Innovation Funnel:The Innovation Funnel:

Defined separation between stages: Clearly defined Defined separation between stages: Clearly defined criteria: a way to kill “living dead” projectscriteria: a way to kill “living dead” projects

Senior managers engaged Senior managers engaged at the right timeat the right time Capture ideas from everywhere, manage ideas in an Capture ideas from everywhere, manage ideas in an

organized way so that they turn into productsorganized way so that they turn into products A continuous process: A continuous process: Does this fit with our strategy?Does this fit with our strategy? A picture of the business: an overview of the shape of A picture of the business: an overview of the shape of

the pipelinethe pipeline Give teams the freedom they need between gatesGive teams the freedom they need between gates

An Innovation Funnel Example An Innovation Funnel Example

Initial marketing and technical

concepts

Idea

Generation

CharterContract

Launch Proposal

Post Launch Review

GatekeeperGatekeeper

Gatekeeper

Gatekeeper

Feasibility

Concept refinement and

prototype creation

Product optimization

Commercialization Production & Distribution

CapabilityLaunch &

Rollout

One page description of proposed project including objective, rationale and development routes. Early Commercial Assessment

Cross-functional development plan including project plan as contract between team and Gatekeeper.

Launch Plan including CEP approval request.

Tracks success of and key learnings from launched products

KEY

= GATE

= DOCUMENT

Gates:Gates: are major milestonesare major milestones are intended to allow passage of the projects are intended to allow passage of the projects more likely more likely

to succeed to succeed by sacrificing projects by sacrificing projects more likely to fail more likely to fail as as early as possibleearly as possible

focus decision-making. At a gate, a decision is made to focus decision-making. At a gate, a decision is made to either:either:– Continue working on the project, moving it along to Continue working on the project, moving it along to

the next stage in the funnel; orthe next stage in the funnel; or– Stop working on the project, shelving it or canceling Stop working on the project, shelving it or canceling

it; orit; or– Get additional information and reconsider the project Get additional information and reconsider the project

for passage through the same gate once that for passage through the same gate once that information becomes availableinformation becomes available

Example: The Key Questions Example: The Key Questions Answered By Each PhaseAnswered By Each Phase

PhaseReview 1 Phase

Review 2 PhaseReview 3

PortfolioReview

Phase 1:Concept

Investigation

Phase 2:Feasibility

Phase 3:Development

Phase 4:Post

Release

CurrentProductSupport

ENTER

EXIT

•Does the product make sense from marketing, technical & financial perspectives?

If yes, thenconcept

approved& full teamallocated

•What is the product spec?

•Can we develop it within budget and schedule?

•Can we produce it at the required cost & volume?

If yes, thenprototypeapproved

& full teamallocated

•Has the product been fully verified and validated?

•Have production objectives been met?

If yes, thenfull manufacturing

approved& sub-team

allocated

•Does the idea fit roughly with our strategy and resource availability?

If yes, thenconcept documentapproved

& sub-team allocated

•Is the product meeting safety, efficacy and business targets in the market?

If yes, thencloseoutapproved

& handoff toproduct support

PhaseReview 4

IdeaGeneration

Post-launch review

Business Case DevelopmentConcept

DevelopmentGate 3

Gate I

Concept Exploration

Less than $xM

Peak-Year Project GSV:Between $xM and $xM

Between $xM and $xM

Greater than $xM

Launch

Note: Cross hatching indicates non-resourced concept exploration projects

Gate 2

Pre-Segment Review, But Resourced

Recurrent activities

Non-Resourced

Example: Pipeline View by Stage and Project Focus

Execution

Of course, effective pipelines must be Of course, effective pipelines must be embedded in a broader strategic embedded in a broader strategic context context

Phase I Phase II Phase III Launch

Innovation strategy & planning systems

Innovation support systems

The Reality?The Reality?

Making a funnel work:Making a funnel work:

Formally:Formally:– Pacing the funnel to the needs of the business, not the Pacing the funnel to the needs of the business, not the

other way aroundother way around

– Involving key decision makers earlyInvolving key decision makers early

Informally:Informally:– Leadership: tolerating “high respect, high conflict” Leadership: tolerating “high respect, high conflict”

debatedebate

– Trust: “but this would only work if we told the truth…”Trust: “but this would only work if we told the truth…”

– ConsistencyConsistency

BUT….BUT….

By what criteria do we make decisions at the By what criteria do we make decisions at the gates?gates?

Using decision tools that Using decision tools that allow you to compare allow you to compare

initiatives against each otherinitiatives against each other

(and the degree to which (and the degree to which

they fit your strategy)they fit your strategy)

Analytical (?) Tools Analytical (?) Tools for Making Choicesfor Making Choices

Financial Tools:Financial Tools:– IRR & NPVIRR & NPV

– Risk vs ReturnRisk vs Return

– OptionsOptions

Portfolio Concepts: Portfolio Concepts: – The Aggregate Project PlanThe Aggregate Project Plan

Scenario AnalysisScenario Analysis

IRR and NPV:IRR and NPV:

StrengthsStrengths A focus on the A focus on the

quantifiable costs and quantifiable costs and benefits of the projectbenefits of the project

Allows for easy ranking Allows for easy ranking and comparisonand comparison

WeaknessesWeaknesses Forces a focus on “the Forces a focus on “the

numbers” numbers” Neglects the role of Neglects the role of

uncertaintyuncertainty Neglects strategic Neglects strategic

considerationsconsiderations Ignores Ignores

interdependency interdependency between projectsbetween projects

A great place to begin but a terrible place to finish?

The Risk vs. Return MatrixThe Risk vs. Return Matrix

Return (IRR)

Ag

gre

gat

e P

roje

ct R

isk

MOD

HI

LO

0% 100% 250%150%50% 200% 300% >500%

Forecast Project

Expense

<$1Mi

$1-5Mi

>$5Mi

N Latex Ferritin Liquid

N Latex lgE

N latex SSA

SW V 2

CRP mono

Bence Jones OEM

Procalcitonin

Homocystein

N Latex B2m neu

lgG SubklassenCDT

TTS Cystatin C

SRT 8,9,10

ISD Group

VivaLiquid conversion program

DAT Improvement

6-Acetyl Morphine

BCT/Software 2.0

Cuvette rotor

Software 3.0Liquid PT

ImprovementFibrinogen standards

Heparin

Controls for Lupus test

Protein S

Tick Borne Ezyphalitis

Pro C

aPTT reagent

HTLV/I/IIHIV p24 Ag

FAST

Pharma

CAQ*/Update

rev. C reactive Pro

DOAs

DM Cyclosporin

Glyc HB

rev cTNI

PP (4)

Lithium

SCS Digoxin

Carbonate Sensor

Homocysteine

Cystatin-C (PP)

-Direct LDL

Tacrolimus

DM CEA

IMS

Chemilum

TLA Interface

ex-Lock-Out

US Update

Decision Tree analysisDecision Tree analysis

-1,000

-500

-500

3,000

3,0003,000

0

-2,000

25,000

50/50

50/50

50/50

50/50

Why is an option valuable?Why is an option valuable?

Thinking of investments as options values Thinking of investments as options values uncertainty more appropriatelyuncertainty more appropriately

Delaying investment until there is more Delaying investment until there is more information can be very valuableinformation can be very valuable

C0

C1

C2V2

V1

p

1-p

When is thinking of a project as an When is thinking of a project as an “option” likely to be fruitful?“option” likely to be fruitful? When the future is very uncertainWhen the future is very uncertain When investing now will create unique When investing now will create unique

opportunities for the firmopportunities for the firm When failing to invest now means that it will be When failing to invest now means that it will be

very expensive to invest latervery expensive to invest later

How much is an option worth?How much is an option worth?

See “Investment Opportunities as Real See “Investment Opportunities as Real Options: Getting Started on the Numbers”Options: Getting Started on the Numbers”

(and references therein)(and references therein)– by Timothy Luerhrmanby Timothy Luerhrman

In the back of your bindersIn the back of your binders

Risk adjusted NPV Decision TreesSimulations

e.g. Monte CarloClosed Formulas e.g. Black-Scholes

Differential Equations

Pros• Established

methodology widely accepted and understood

• Relatively easy and quick to implement

• A building block for more complicated valuation methods

• Incorporates decision making and uncertainty

• Determines optimal decisions

• Transparent and easy to understand.

• Building block for other more complicated valuation methods.

• Allows for complicated and multiple uncertainties spanning both discrete and continuous outcomes.

• Easier to model non-standard uncertainties

• Elegant, easy to implement with formula in hand

• A numerical solution incorporating optimal decisions and (possibly) both continuous and discrete uncertainties.

Cons• Does not allow for

contingent decisions

• Collapses many decisions and outcomes down to a single scenario

• Does not account for managerial ability to react to information.

• Trees can become complicated with many decisions and uncertainties.

• Essentially limited to discrete decisions and discrete characterization of uncertainties.

• Methods do not determine optimal policies.

• Programming becomes complicated with many decisions and uncertainties.

• Less transparent than trees

• Limited to relatively simple decisions and uncertainties.

• Many simplifying assumptions usually have to be made to obtain closed form solutions.

• Extremely difficult, if not impossible, to implement in realistic situations.

• Time Consuming• Does not allow for

many different uncertainties.

A Range of ToolsA Range of Tools

Portfolio Concepts:Portfolio Concepts:Aggregate Planning ToolsAggregate Planning Tools

The Aggregate Project Plan (1) The Aggregate Project Plan (1)

Radical

Off the shelf

Technology Reach

Breakthrough

Platform

Derivative

ProductSupport

Entirely newbenefit Improvement No change

Marketing Impact

Platform projects lay the groundwork Platform projects lay the groundwork for later extensionsfor later extensions

An ExampleAn ExampleLowResource

HighResource

ModerateResourceConsumer Value Perception

EnablingTechnology

New CoreProduct

NewBenefits

Radical

Incremental

Base

NextGeneration

Derivative

Platform

Breakthrough

No ChangeImprovement Variant

Product Support


HighResource


EnablingTechnology

New CoreProduct

NewBenefits

Radical

Incremental

Base

NextGeneration

Derivative

Platform

Breakthrough


Product Support


HighResource


EnablingTechnology

New CoreProduct

NewBenefits

Radical

Incremental

Base

NextGeneration

Derivative

Platform

Breakthrough


Product Support


HighResource


EnablingTechnology

New CoreProduct

NewBenefits

Radical

Incremental

Base

NextGeneration

Derivative

Platform

Breakthrough


Brand Support

BxxxxExtension

CxxxxLxxx

VxxxxxImprovement

Sxxxx

Fruit

LxxxxExport

Natural

Fxxxx Face

Cxxxx 2000

SuperCxxxx

Txxxx

RxxxxFruit

CxxxxFruit

The Aggregate Project Plan (2)The Aggregate Project Plan (2)

Radical

Off the shelf

Product Reach

Breakthrough

Platform

Derivative

ProductSupport

Entirely newprocess Improvement No change

Process Impact

New Core

Product

Next generation

of Core Product

Addition to

Product Family

Add-Ons and

Enhancements

No Change

Process Changes

New Core Next Single Tuning and NoProcess Generation Dept. Incremental Change

Process Upgrade Improvement

ProductChanges

DERIVATIVE / CPS

ALPHA

FINCH

CLEO

SIGMA

ROLAND

B-THROUGH / PLATFORM

HAWK

CROW

DELTA OLEO

ROME V ROME I

OAK

ROME III

ROME IV

CEDAR

PINE

EARTH

WATER

FIRE

CALIFORNIA

NEW YORK

ROME VI

SOLSTACE

KENYA

SPRING

WINTER

FALL

SUMMER

DALLAS

AUSTIN

SANTA FE

SPARROW

OWL ROME II

FLAGSTAFF

GEMINI 1-10 (10 PROJECTS)

Before: Medical Products Co. Before: Medical Products Co.

After: Medical Products Co. After: Medical Products Co.

New CoreProduct

Next generationof Core Product

Addition toProduct Family

Add-Ons andEnhancements

No Change

Process Changes

New Core Next Single Tuning and NoProcess Generation Dept. Incremental Change

Process Upgrade Improvement

ADVANCED DEVELOPMENT

ProductChanges

DERIVATIVE / CPS

ALPHA

VENUS

DELTA I

MARS

ZEUS

CLEO

SIGMA

ROLAND

B-THROUGH / PLATFORM

ATLANTIS

DELPHI

GAMMA

BETA

DELTA IILEO

ROME V

ROME I

OAKROME II

ROME III

ROME IV

CEDAR

PINE

DELTA

Less Is More: Less Is More: Medical Products Co.Medical Products Co.

Before After Before After

# of Projects in Portfolio

# of Projects Launched /Year

36

21

5

8

Project Reach Across Growth Areas

Growth Area

Core

Growth

Target 4Target l Target 3

Pro

ject

Rea

ch

Platform

LineExtension

Maintenance/Enhancement

Less than $xM


Between $xM and $xM

Greater than $xM

High risk

Low risk

Medium risk


Target 2

Degree of internal difficultyDegree of internal difficulty

Tec

hn

ical

/Op

erat

ion

al C

hal

len

ge

Marketing/Sales Capability Challenge

Significant

Generally accessible

Resident capabilities

Builds on existing skills Requires entirely New skills

Stretch

Significant Challenge

Support

Degree of Internal DifficultyT

ech

nic

al/O

per

atio

nal

Ch

alle

ng

e

Marketing/Sales Capability Challenge

Significant

Generally accessible

Resident capabilities

Existing Brand AND No New Capabilities Required

Existing Brand ANDNew Capabilities Required

New Brand AND No New Capabilities Required

New Brand ANDNew Capabilities Required

Less than $xM


Between $xM and $xM

Greater than $xM

High risk

Low risk

Medium risk

Stretch

Significant Challenge

Support


External impact & internal skillsExternal impact & internal skills

Leverages Current Advantage

StrengthOf EntrenchedCompetition

Low

High

Low High

Co

mp

etit

ive

Insu

lati

on

Consumer Value Perception

Only We Can Do It

HighBarrier

Some Barrier

No Barrier

Improvement

New Usage Occasion New Benefit

Advance

Leapfrog

Me-Too

Jump

Less than $xM


Between $xM and $xM

Greater than $xM

High risk

Low risk

Medium risk


Degree of External Impact

Somewhat Important Very Important Critical

Benefits of an Aggregate Project Benefits of an Aggregate Project Plan:Plan: Explicit choice of projects balances the long Explicit choice of projects balances the long

and short term, allows for the explicit and short term, allows for the explicit discussion of the match to strategydiscussion of the match to strategy

Match between project type and organizational Match between project type and organizational form allows for a focus on the generation of form allows for a focus on the generation of competencecompetence

Focus builds speed and productivity for the Focus builds speed and productivity for the individual and the organizationindividual and the organization

Strategy and Scenario Strategy and Scenario AnalysisAnalysis

Strategy and Scenario AnalysisStrategy and Scenario Analysis

Formulating a strategy requires judgment Formulating a strategy requires judgment about the futureabout the future

But the future is complex & hard to predictBut the future is complex & hard to predict Scenarios provide a way to manage this Scenarios provide a way to manage this

complexitycomplexity

Why use scenario analysis?Why use scenario analysis?

OilPrice

Time

Basics of Scenario AnalysisBasics of Scenario Analysis

What it is:What it is:– A way of mapping the future, of focusing attention on A way of mapping the future, of focusing attention on

critical uncertaintiescritical uncertainties

– A way of building “robust” strategiesA way of building “robust” strategies

– A means of generating a common languageA means of generating a common language

How it is done:How it is done:– Generate a list of critical uncertaintiesGenerate a list of critical uncertainties

– Choose the two most criticalChoose the two most critical

– Draw a “map”Draw a “map”

– Iterate and exploreIterate and explore

Predicting the future of Predicting the future of the Pharmaceutical the Pharmaceutical

IndustryIndustry

The Roots of TurmoilThe Roots of Turmoil

Dramatically declining research productivityDramatically declining research productivity Major technological shiftsMajor technological shifts Fundamental environmental challenges Fundamental environmental challenges Significant new entrySignificant new entry

The Productivity CrisisThe Productivity Crisis

Time Lines (Tufts data, months)Time Lines (Tufts data, months)

?Discovery

21.6

25.7

30.5

Phase I

Phase II

Phase III

~6.5 years

Cumulative probability of becoming a successful drug contingent on success in the previous stages

0 20 40 60 80

Discovery

Phase I

Phase II

Phase III

Ind

Tufts

Cumulative Probabilities

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

Phase IIIPhase IIPhase IDiscovery

Tufts

Ind

Costs by phase ($m)

0

20

40

60

80

100

120

140

Disc Phase I Phase II Phase III

Tuft

Ind (1)

Ind (2)

Trends in Pharmaceutical Productivity

0

5000

10000

15000

20000

25000

30000

35000

1965 1970 1975 1980 1985 1990 1995 2000 2005

Time

R&

D S

pend

ing,

$bn

0

10

20

30

40

50

60

ND

As

appr

oved

Big Pharma’s ProblemBig Pharma’s Problem

Revenues/Company (avg.)Revenues/Company (avg.) $10 billion$10 billion

Required GrowthRequired Growth 10%/year 10%/year (> (> $1B/year)$1B/year)

Average pharma productAverage pharma product $300-400M/year$300-400M/year

Product needsProduct needs ~ 3 to 4 per year~ 3 to 4 per year

Average Product Launches/yearAverage Product Launches/year .5 .5

With thanks to Tony Sinsky

Major Technological ShiftsMajor Technological Shifts

From “rational” drug discovery From “rational” drug discovery – Small molecules, hypothesis driven researchSmall molecules, hypothesis driven research

To the “omics” and “systems biology”To the “omics” and “systems biology”– Understanding the “deep structure” of disease and the Understanding the “deep structure” of disease and the

functioning of the genome and the cellfunctioning of the genome and the cell

Pharmacogenetics/genomicsPharmacogenetics/genomics• Establishing the link between an individual’s Establishing the link between an individual’s

drug response and their genetic (specific drug response and their genetic (specific genes) or genomic (all genes) profilegenes) or genomic (all genes) profile

• Tools may include:Tools may include:• Sequence analysisSequence analysis• Expression analysisExpression analysis• Genome mappingGenome mapping• Family studies or Population studiesFamily studies or Population studies

• Personalized medicine - involves treating Personalized medicine - involves treating specific patient subpopulations based on specific patient subpopulations based on diagnostic tests that differentiate them as likely diagnostic tests that differentiate them as likely responders to a treatment.responders to a treatment. With thanks to Tony Sinskey

The Biology PerspectiveThe Biology Perspective



Environmental Environmental ChallengesChallenges

Heightened visibility

Drug Expend as % H.Care, US

0

200

400

600

800

1000

1200

1400

1600

1800

1970 1975 1980 1985 1990 1995 2000 2005

Year

Ex

pe

nd

itu

res

, $b

n

0.0

2.0

4.0

6.0

8.0

10.0

12.0

Series1

Series2

Series3

A broad erosion in social/cultural A broad erosion in social/cultural supportsupport

The pharmaceutical industry claims to be innovative, but only a small The pharmaceutical industry claims to be innovative, but only a small fraction of its drugs are truly new: most are simply variations on older drugsfraction of its drugs are truly new: most are simply variations on older drugs

Contrary to popular belief, big drug companies spend far less on research Contrary to popular belief, big drug companies spend far less on research and development than on marketingand development than on marketing

The pharmaceutical industry has an iron grip on Congress and the White The pharmaceutical industry has an iron grip on Congress and the White House. It has the largest lobby in Washington … and contributes heavily to House. It has the largest lobby in Washington … and contributes heavily to political campaignspolitical campaigns

Drug companies promote diseases to match their drugs. Millions of normal Drug companies promote diseases to match their drugs. Millions of normal Americans have to come to believe that they have dubious or exaggerated Americans have to come to believe that they have dubious or exaggerated ailments like “generalized anxiety disorder”ailments like “generalized anxiety disorder”

Drug companies have enormous influence over what doctors are taught Drug companies have enormous influence over what doctors are taught about drugs and what they prescribeabout drugs and what they prescribe

Drug companies have substantial control over clinical trials of their drugs. Drug companies have substantial control over clinical trials of their drugs. There is good reason to believe that much of the company supported There is good reason to believe that much of the company supported research on prescription drugs is biased as a resultresearch on prescription drugs is biased as a result

From The Truth about Drug Companies, Marcia Angell, former editor in chief of The New England Journal of Medicine

Very significant pressure on pricesVery significant pressure on prices

If Sam's Club can negotiate for lower pharmaceutical prices, why can't If Sam's Club can negotiate for lower pharmaceutical prices, why can't Uncle Sam? Because the approval by the Congress of a new Uncle Sam? Because the approval by the Congress of a new pharmaceutical benefit for Medicare was saddled with a legal provision pharmaceutical benefit for Medicare was saddled with a legal provision that prohibits the U.S. government from using its considerable consumer that prohibits the U.S. government from using its considerable consumer market power to negotiate for lower prices on medicines. market power to negotiate for lower prices on medicines.

Our country already is spending more than 2 percent of GDP on Our country already is spending more than 2 percent of GDP on pharmaceutical purchases, and these outlays skyrocketed, long before pharmaceutical purchases, and these outlays skyrocketed, long before the Medicare bill was passed. Because the U.S. government is obligated the Medicare bill was passed. Because the U.S. government is obligated to provide some coverage for pharmaceutical drugs under the new bill, to provide some coverage for pharmaceutical drugs under the new bill, one would think it would seek to at least have the flexibility to restrain one would think it would seek to at least have the flexibility to restrain corporate patent owners from charging excessive prices for their corporate patent owners from charging excessive prices for their medicines. In the absence of even the possibility to negotiate lower medicines. In the absence of even the possibility to negotiate lower prices, there will be no price restraints and therefore less money for prices, there will be no price restraints and therefore less money for medicine. medicine.

From “The Nader Page” http://www.nader.org/interest/112803.html

Significant new entrySignificant new entry

Indian Pharmaceutical IndustryIndian Pharmaceutical Industry

Companies Mentioned in this report include: Companies Mentioned in this report include: - Aarti Drugs - Abbott India - Ajanta Pharma - Alembic - Astrazeneca - Aarti Drugs - Abbott India - Ajanta Pharma - Alembic - Astrazeneca

Pharma - Aurobindo Pharma - Aventis Pharma - Cadila Health - Cipla Dr. Pharma - Aurobindo Pharma - Aventis Pharma - Cadila Health - Cipla Dr. Reddy - Elder Pharma - German Remedies - Glaxo Smithkline - Ind Swift Lab - Reddy - Elder Pharma - German Remedies - Glaxo Smithkline - Ind Swift Lab - Ipca Laboratories J B Chemical Jagson Pharma K D L Biotech Kopran - Krebs Ipca Laboratories J B Chemical Jagson Pharma K D L Biotech Kopran - Krebs Biochem - Lupin - Lyka Labs - Medicorp Tech - Merck - Natco Pharma - Biochem - Lupin - Lyka Labs - Medicorp Tech - Merck - Natco Pharma - Nicholas Piramal - Novartis - Orchid Chemicals - Organon - Panacea Bio - Nicholas Piramal - Novartis - Orchid Chemicals - Organon - Panacea Bio - Pfizer - Pharmacia - Ranbaxy - R P G Life Sciences - Shasun Chemicals - Siris Pfizer - Pharmacia - Ranbaxy - R P G Life Sciences - Shasun Chemicals - Siris Limited - Sterling Biotech - Strides Arcolab - Sun Pharma - Suven Life Sciences Limited - Sterling Biotech - Strides Arcolab - Sun Pharma - Suven Life Sciences - Torrent Pharma - Unichem Lab - Wockhardt - Wyeth Ltd - Zandu Pharma - Torrent Pharma - Unichem Lab - Wockhardt - Wyeth Ltd - Zandu Pharma

CHINESE PHARMACEUTICAL INDUSTRY ESTIMATED AT U.S. $19.4 BILLION IN CHINESE PHARMACEUTICAL INDUSTRY ESTIMATED AT U.S. $19.4 BILLION IN 2002 2002

http://www.researchandmarkets.com/feats/download_pdf.asp?report_id=35229.

BUSINESS COMMUNICATIONS COMPANY, INC. 25 Van Zant Street, Norwalk, CT 06855

http://www.researchandmarkets.com/feats/download_pdf.asp?report_id=35229

Exercise:Exercise:

Generate a list of the Generate a list of the majormajor uncertainties facing the uncertainties facing the pharmaceutical and/or the medical device industry pharmaceutical and/or the medical device industry todaytoday

Choose two, and draw a “map”Choose two, and draw a “map” What kinds of worlds have you defined?What kinds of worlds have you defined? Can you name them?Can you name them? Iterate until you’re comfortable you have found four Iterate until you’re comfortable you have found four

worlds that are both plausible and strategically worlds that are both plausible and strategically importantimportant

Be prepared to present your results to the groupBe prepared to present your results to the group

Why may scenario analysis be Why may scenario analysis be useful?useful? It focuses attention away from “the official It focuses attention away from “the official

future” and allows the robustness of a strategy future” and allows the robustness of a strategy to be evaluatedto be evaluated

It focuses attention on critical uncertainties, It focuses attention on critical uncertainties, allowing the organization to track them over allowing the organization to track them over timetime

It may spark creativity, imagination and a It may spark creativity, imagination and a rethinking of core strategyrethinking of core strategy

Making choices using analytical Making choices using analytical tools: Summarytools: Summary Financial tools are critically important, but Financial tools are critically important, but

should not substitute for strategic thinkingshould not substitute for strategic thinking Choices must be made as a portfolio, so that Choices must be made as a portfolio, so that

different projects are explicitly traded off different projects are explicitly traded off against each otheragainst each other

It may be important to consider the robustness It may be important to consider the robustness of a strategy: what will happen if the world of a strategy: what will happen if the world looks very, very different?looks very, very different?

SummarySummary

Effective strategies answer three key Effective strategies answer three key questions:questions:

How will we Create value?

How will weCapture value?

How will weDeliver value?

Understanding the life cycle is Understanding the life cycle is critical :critical :

Ferment

Takeoff

Maturity

TechnologyMarkets

CompetitionOrganization

Technology strategy on one slide:Technology strategy on one slide:

Create

CaptureDeliver

?

What happens on What happens on Monday morning?Monday morning?

Or: Getting there from hereOr: Getting there from here

Acting as a strategic catalyst requires Acting as a strategic catalyst requires mastering many rolesmastering many roles

Information gathererInformation gatherer– What are the problems and opportunities?What are the problems and opportunities?

AnalystAnalyst– What are the key choices? What should we do?What are the key choices? What should we do?

Advocate and teacherAdvocate and teacher– Presentation of information and analysis in ways that Presentation of information and analysis in ways that

stimulate debate about the key issuesstimulate debate about the key issues

LeaderLeader– Modeling the use of time and attentionModeling the use of time and attention

– Supporting the team in making real decisionsSupporting the team in making real decisions

Two case studiesTwo case studies

MedtronicsMedtronics Kirkham InstrumentsKirkham Instruments

Successful Implementation: Successful Implementation: Common LessonsCommon Lessons Senior management commitment & Senior management commitment &

involvementinvolvement– Senior steering committee Senior steering committee – Empowered championEmpowered champion

Diagnostic phaseDiagnostic phase– Aligned with the marketAligned with the market– As well as with the existing culture and organization As well as with the existing culture and organization

A designed implementation planA designed implementation plan– Up frontUp front– With appropriate expectationsWith appropriate expectations

Allocating resources to match the design. Allocating resources to match the design.

Typical Execution TimesTypical Execution Times

DiagnosisDesign

and Pilot

OrganizationWide Roll-out & Implementation

Phase Duration

Who’s Involved

0.5-3 months

• Key stakeholders

• Senior management sponsor

4-6 months 6-12 months

• Dedicated project team

• Access to pilot teams



Key Activities• Interviews w/key

stakeholders• Process mapping• Assessment of key

issues• Create steering team

• Customize and create process and tools

• Pilot and test tools/ process in “real time”

• Refine and enhance tools• On-going review and

assessment with senior management

• Training of new tools / processes

• Documentation of process

• Automation of process

• Organizational change and cultural alignment

Core Project Team (FTEs)

2-6 4-8 4-8

• Dedicated project team shifts members

• Whole organization



Good Luck!Good Luck!

Documents

Actually Doing (Technology & Product) Strategy. Outline: Why do I need an innovation strategy? Why do I need an innovation strategy? How will we create