Alliance Benchmarking in the Pharmaceutical SectorA service description from Alliance Best Practice Ltd

Mike NevinManaging Directorwww.alliancebestpractice.com

Service Overview

Why is it useful to benchmark alliances? Why should we benchmark in the Pharma sector

specifically? Why should we use the Alliance Best Practice approach? How is the benchmarking conducted? What is the cost of the exercise? What is the value of the exercise? Pharma companies already in the database Target companies for the benchmarking exercise About Alliance Best Practice Ltd Further Details

Why is it useful to benchmark alliances? Repeated cross sector research over a considerable period of

time has proved conclusively that benchmarking one’s alliances regularly improves performance significantly.– Ard-Pieter de Man and Geert Duysters study June – Dec 2006

(over 180 organisations researched)– Eli Lilly internal research Andrew S Eibling and Rob Schmidt

2001 – 2004 (over 80 internal alliances surveyed)– Accenture alliance success research (Nick Palmer 1996 – 2005)– IBM internal research (Cynthia Eardman 1995 -2000)– Capgemini research (Patrick Nicolet June – December 2005)– BT survey conducted with 13 partners (Lucy Dimes and Pierre

Danon 2004)– Booz Allen and Hamilton examination of over 3,500 partnering

organisations (Peter Pekar Jnr. and John Harbison 1996 – 2002)– Microsoft internal research (Mark Rice 2004)

What would be the value of a sector specific benchmarking exercise? Contributors would benefit from being able to benchmark their own partnering

results against their industry competitors The relevance of the results of the benchmarking (particularly the challenges

and solutions) would be significantly increased All contributors would see their own results in full but would see all other results

anonymised Contributing companies would benefit from seeing a larger sample size in the

comparator database than they could develop themselves Contributing companies would immediately benefit by seeing the processes and

practices of more experienced partnering companies By using a standard benchmarking set of questions companies would be able to

compare their performance to external as well as internal relationships From the benchmarks companies would be able to understand the degree of

improvement possible Companies would be able to easily communicate and transfer internal best

practices Organisations would be able to track progress over time to a critical and

objective measure

Why the ABP approach specifically?

– Alliance Best Practice (ABP) is the only research consultancy to have systematically examined and collated over 97,000 instances of alliance critical success factors.

– Utilising the ABP approach allows clients to benchmark themselves against this significant database of other entries.

– Many organisations will have their own partner satisfaction survey/s, however using this survey might make it difficult to identify specific actions that can be taken quickly after the benchmarking also it is by nature an internal process that doesn’t compare organisational performance with that of your competitors.

– Using the ABP benchmarking system allows clients to; Understand whether the relationship/s in question are underperforming

and if so to what degree. Immediately generate short and long term improvement action plans

to address the underperforming areas. Learn from external best practices generated by leading edge

partnering organisations Develop easily comparable scores for internal best practice

programmes

How would the benchmarking be conducted?

– Participants would agree the number of relationships that they wanted to benchmark (minimum 1 maximum 3)

– Both partners would then answer an online questionnaire containing an agreed combination of questions relating to alliance best practice.

– Those answers are captured using a web tool provided by ABP (typical time to capture the data is (45 – 60 minutes).

– The results are 52 ‘scores’ of between 0 and 100– ABP then provides a benchmarking report identifying;

What is the current efficiency of the relationship measured as a % score out of 100?

Which areas could be substantially improved quickly? What would the commercial impact be of improvement? What results have other organisations achieved in a similar situation? What improvement actions should be taken in which order?

– The result is a report which tells organisations what degree of value is ‘locked up’ in their collaborative relationships and also (more importantly) how to release it most efficiently.

What is the cost of the exercise? Each contributing company would be asked to pay £500

per relationship. This fee is not intended to be a commercial rate but

rather a contribution from the ‘early adopting’ founding organisations.

Each relationship diagnostic would produce a report identifying;– How do we compare with our competitors?– What is the current level of maturity of the relationship?– What are the current issues that the relationship faces?– What have other leading edge organisations in our sector done

to address these challenges at the same level of maturity?– What is the commercial impact of not taking action?– What is a suggested action plan?– Which areas should be addressed and in what order?– How do our results compare to a) our business sector and b)

World class

What is the value of the exercise?

The following quotes come from senior individuals who have used the ABP benchmarking exercise.

– “We have accelerated our understanding of the gaps in our knowledge and processes through the initial diagnostic. This has enabled us to remedy those gaps much more quickly than would otherwise have been possible. We estimate that this has saved us 3 man years of effort.”

– “We have been able to assess accurately our capabilities as matched against a world class database. This has allowed us to be realistic in our growth ambitions and also to avoid making the common mistakes made by others in our situation, thus saving a considerable amount of time and money (estimate €650,000).”

– “The coaching that has been provided has been immensely valuable in improving the day to day performance of all team members in executing the agreed strategies. As an example one relationship has increased from $4,012,000 to $9,282,000.”

– “It has been established that ABP has saved us over 5 man year’s effort by giving us already developed templates, tools and methodologies on which to build our thinking.”

– “Early signs are that the incremental revenue generated as a result of this assignment will far outweigh any cost involved to a factor of over 100 to 1 (i.e. over £9m).”

– “In the quarter following the workshop we produced three times more revenue than in the previous three quarters combined!”

Pharma companies in the database

AstraZeneca BASF Dupont Bayer Schering Battelle Novartis GSK (Healthcare) Rifcon

EBRC Eli Lilley Exponent Cardinal Health Bristol-Myers Squibb Pfizer Astellas

Target Companies

Pfizer, GSK, Sanofi-Aventis, Roche, AstraZeneca, J&J, Novartis, Merck, Wyeth, Lilly, Bristol-Myers Squibb, Boehringer Ingelheim, Amgen, Abbott , P&G

Bayer Schering Plough, Novo Nordisk, Baxter, Merck KGaA, Servier, Solvay and UCB.

Why is ABP different?

Alliance Best Practice is different because;– It owns a unique database of over 97,000 entries which

identifies what approaches leading organisations are employing to ensure alliance success.

– It only ever uses tried and tested best practice activities which have already been developed by other successful organisations. This ensures a better quality of solution in less time.

– The ABP people are internationally recognised teachers and presenters on the subject of strategic relationships.

– ABP uses a ‘client best solution’ approach this means that it will actively recommend other consultants and advisers from its extensive global network if it is in the best interests of the client.

Further Details

For further details please contact;Mike NevinManaging PartnerAlliance Best Practice LtdWeb: www.alliancebestpractice.com Office: +44 (0)1675 442490Mobile: +44 (0)7766 752350E Mail: mike.nevin@alliancebestpractice.com