CI Guidelines Summary

Competitive Intelligence Policies, Ethics and Data Collection: Navigating the Gray Zone Report Summary

Competitive Intelligence Policies, Ethics and Data Collection: Navigating the Gray Zone STUDY BACKGROUND In today’s fast-changing, high-pressure marketplace, Competitive Intelligence (CI) function helps companies anticipate external threats and opportunities in a timely manner so companies can respond strategically. World-class companies maximize CI success by providing sufficient human and information resources, encouraging innovation and creativity in data collection processes, and, perhaps most importantly, adopting a clear set of operating guidelines and policies.

Guidelines that establish ethical and legal boundaries, spell out standard operating procedures and detail codes of conduct for CI practitioners increasingly are necessary to protect companies from financial and corporate risk. CI guidelines also help practitioners to manage end-user expectations regarding what kind of information can be collected. However, rigorous guidelines and policies intended to mitigate risk sometimes can be too restrictive, preventing or hindering practitioners from doing their jobs. Effective organizations operate under balanced guidelines that are neither too limiting nor too loose. This benchmarking study was conducted to understand how U.S. pharmaceutical and biotechnology organizations can optimize their CI operations while working within defined guidelines. The research examined a number of areas, including CI information sources and what is being collected. In addition, the study looked at how CI groups work with legal groups to develop standard operating procedures for data collection that are in the best interests of the organization as a whole and to maximize the CI department’s ability to deliver results. Managers and executives in CI and CI-related groups can use this report to compare critical elements of their operations with those of leading firms.

Benchmarking Report at-a-Glance

Featured Study Participants Small Pharma Segment

• Alcon Labs • Biogden Idec • Centocor – Johnson & Johnson • ConjuChem Biotechnologies • EMD Serono • Ethicon – Johnson & Johnson • Human Genome Sciences • Indegene Lifesystems • King Pharmaceuticals • PDL BioPharma • Shire Pharmaceuticals • Stiefel Laboratories • Theratechnologies • Vertex

Large Pharma Segment • Amgen • Baxter Healthcare • Eli Lilly & Co. • Merck & Co. • Roche Labs • Sanofi-Aventis • Takeda Pharmaceuticals • Wyeth • Top Five Pharma

Copyright Best Practices, LLC (919) 403-0251 1


STUDY SUMMARY "Competitive Intelligence Policies, Ethics and Data Collection: Navigating the Gray Zone” provides a comprehensive look at how pharmaceutical and biotechnology companies optimize their CI operations while working within defined guidelines and corporate policies. This report provides benchmarks, insights and best practices in key areas such as:

Industry Analysis 24 benchmark companies, eight of which participated in in-depth, individual interviews.

Information Types • 28 Data Graphics • 115 Metrics • 2 Best Practices Spotlights • 44 Manager Narratives

Report Length 55 pages

• Processes for effective guidelines development

• Extent of employee training on guidelines

• Working relationships with legal departments

• Pros and cons of using third-party vendors to collect intelligence

• Critical sources of secondary and primary information

• Data collection practices

• Rapid response programs

• Attitudes about information collection practices that may be in an ethical “gray area”

• Best practices for managing stakeholder expectations

• Executive insights for building winning CI organizations

Vice presidents, directors and managers at 24 companies participated in this benchmarking research. In addition, selected respondents from eight of the companies participated in individual interviews. Interviewed companies that participated in interviews include Amgen, Biogen Idec, Centocor, Merck, PDL Biopharma, Sanofi-Aventis, Wyeth and a Top Five pharmaceutical company.

KEY FINDINGS The following are select key findings from the report executive summary. Additional findings are available in the full document. Multiple Sources are Vital to Effective CI

• Triangulate from multiple data sources to develop the most accurate projections.



• Critical types of secondary sources range from trade publications to investor feeds.

• Integrate primary data with these “existing” sources.

People, Processes and Use of Third Party Vendors are Keys to Optimizing Data Collection

• Hire the right people, utilize advanced Internet search techniques, collect and review data over time to distill relevant, actionable information.

• Talk with employees across functions inside your company to discover information gaps.

• Involve Legal to mitigate risk if internal employees gather external CI information.

• All large—and most small—pharma companies use vendors to minimize risk, to avoid the perception of wrongdoing, to improve the process, and to get better finished intelligence.

• Develop clear processes, practices and guidelines for all critical activities, such as collecting CI at trade shows.

Hold Vendors to Strict Standards

• Gain experience with and knowledge of third-party research vendors.

• Most companies using third-party research vendors indicate that vendors proactively identify self, company and purpose when conducting primary CI research.

• Ensure third-party research vendors know and understand your company’s code of ethics.

• Discontinue work with vendors who cross into gray areas when collecting information.

CI Guidelines Enable Success

• Work collaboratively with Legal to protect the company and to obtain Legal’s buy-in and support.

• Involve upper management to prove the value to the company of conducting CI.



• SCIP guidelines, the company's code of ethics, and relevant laws provide the foundation for CI guidelines.

• All large and many small pharma companies have formalized guidelines in place to govern CI operations; many explicitly define policies for primary data collection.

• Ensure employees understand the legal and ethical guidelines that govern CI collection.

Manage Internal Expectations Up Front

• CI must help educate the employees who make inappropriate or unobtainable requests for information.

• Management must stand behind CI to protect the company and ensure the long-term success of the CI function.

CI Executives Advise Emerging CI Functions to Evolve

• Link CI to the financial perspective to gain clout in the company.

• Establish an information strategy first, then an intelligence strategy.

• Concentrate on building a network of information sources rather than just answering requests to fetch data.

RESEARCH BENEFITS 1. Access scarce benchmark data that doesn’t exist elsewhere, including processes for developing and training employees on guidelines. 2. See examples of how CI tactics vary between Large and Small Pharma. 3. Learn what primary and secondary data sources are viewed as most effective by benchmark executives. 4. Understand the pros and cons of involving third-party vendors in collecting CI. 5. Discover how leading companies integrate data from multiple sources to increase accuracy and general quality of competitive analysis. 6. Discover effective training techniques in elicitation to make conversations with information sources more honest.



7. Find out how companies integrate the collaboration of Legal in order to minimize risk while gathering CI information. 8. See how leading companies utilize operating guidelines to balance the risks involved with CI. 9. Learn how top companies utilize resources and time to ensure that CI is done properly. 10. See individual program leader responses on their top lessons learned, best practices and structural organization in regards to CI.

REPORT STRUCTURE AND ORGANIZATION The project findings are organized into an executive summary, a series of five topical chapters, and appendices. Following is a description of each section:

Executive summary: Explains the survey methodology, identifies participating companies and reports key findings.

Topical chapters: These chapters provide, by subject, a depiction of survey responses, discussion of key trends identified from an analysis of the data and write-ups of best practices harvested from in-depth interviews.

o Essential Data Sources – Includes sections on Collecting Data from Multiple Sources, Preferred Primary Sources and Preferred Secondary Sources.

o Data Collection Processes and Practices – Discusses Innovative Primary and Secondary Resources, the Use of Third-Party Vendors, and Collecting Data Within Set Guidelines.

o Development and Examples of CI Guidelines – Investigates the Rationale for using CI, Legislation and Ethical Standards to be considered when collecting CI information, Collaboration with Legal and Time and Resource Management.

o Managing Expectations – Emphasis on the abilities to be Assertive, Credible and Manage Rapid Response Situations.

o Best Practices and Advice – Highlights lessons learned, examples of CI policies in practice and advice from benchmark participants pertaining to the development and utilization of CI guidelines in data collection.

Appendix: Contains copies of the SCIP Mission Statement and Code of Ethics for CI Professionals and the U.S. Code pertaining to economic espionage and theft of trade secrets.



SAMPLE PRACTICE

Build credibility with colleagues to ensure buy-in when difficult decisions must be made based on ethical and legal input.

0B1BOne factor is gaining the ability to push back against requests that fall into gray, or sometimes even blatantly inappropriate areas, is having established credibility within the field. Though one’s reputation is built over time, the best way to ensure that expectations are managed in an appropriate way is by sticking to the ethical and legal standards that are intended to govern CI. Once the credibility, based on sound decision-making and proven ethical standards, has been established with internal clients, the clients learn to trust the advice.

“…there are times when they come with stuff that’s totally out of bounds and I let them know, and it’s usually killed right then and there.”

-Interviewed Analyst

This leads to the client better understanding the ethical and legal constraints that must be factored in when deciding what information they should choose to pursue, and developing a mutual respect for the devoutness of CI to protect the corporate integrity. When this occurs, the clients develop more appropriate requests in the future. As one interviewed Analyst explains, “…at this juncture, I have the credibility where they’ll take my kind of advice on it…Moreso, I’m being the one that’s saying, ‘Actually, no, we can get that.’ But there are times when they come with stuff that’s totally out of bounds and I let them know, and it’s usually killed right then and there.”

Educating the requestor can go a long way in terms of protection of the company and long-term success of the CI function from within the organization. Several tactics used by a CI groups for denying a request have a proven impact in helping facilitate the learning process of the requestor. One such way is by simply explaining the reasons the requested information cannot be obtained. Explain to the requestor the risk to the company if attempts to collect the information illegally or unethically were to be made. This helps to reinforce the legal and ethical standards within the organization. CI can even direct the requestor to the company’s code of ethics policy for gathering confidential information to use as a reference when requesting future information. Another approach, as mentioned before, is to find out the internal client’s actual objective and redirecting the focus to other, obtainable, information. This aids CI in its ability to pursue an alternative strategy to get the internal client at least part of the way towards the answer. If necessary, seek legal counsel to provide an opinion concerning the legal and/or ethical standpoint of the request being made.



There are several other factors that contribute to being able to successfully manage factors up-front. In addition to having and maintaining executive access and support, assertiveness, and credibility, it is recommended that a strong bond between Legal and CI is created and developed, solid policies to govern CI are employed and enforced, and internal clients be educated on the role of CI, including its legal and ethical limitations.

BEST PRACTICES,®

LLCCopyright© Best Practices®, LLC

Manage Expectations Up Front

CI executives frequently receive requests for gathering or disseminating information. If the internal client’s expectations have not been managed up front, requests can be for low priority, for unavailable, or even for illegal information.

1. Be a part of a corporate culture that allows you to be assertive and push back on higher-ups.

2. Ensure CI is positioned high in the organization so you have executive access and support.

3. Create strong ties between CI and Legal.

4. Build credibility by making ethical and legal CI decisions.

5. Employ and enforce solid policies that govern CI.

6. Educate internal clients on the role of CI, including its legal and ethical limitations.

7. Inform internal clients of the time table for collecting primary data and the possibility of having no concrete answers.

““When I first started, I would say it was an When I first started, I would say it was an uphill battle. But I have built enough uphill battle. But I have built enough credibility that if somebody has a question credibility that if somebody has a question and I know itand I know it’’s obtainable, but it would s obtainable, but it would definitely cross into the gray zone, I definitely cross into the gray zone, I typically will advise them against it or guide typically will advise them against it or guide them through the decisionthem through the decision--making process making process before moving forward with the request.before moving forward with the request.””-- Interviewed AnalystInterviewed Analyst

Success Factors for Managing ExpectationsSuccess Factors for Managing Expectations



ABOUT BENCHMARKINGREPORTS.COM BenchmarkingReports.com is a service of Best Practices, LLC, world leader in benchmarking research and analysis. BenchmarkingReports.com provides vital insights and data from our primary research at a fraction of original project cost. Best Practices, LLC has conducted pioneering benchmarking research for top companies since 1991, providing clients with "Access and Intelligence for Achieving World-Class Excellence." To learn how we can help you find solutions to your current business issues, visit our site at www.best-in-class.com.



TABLE OF CONTENTS

Executive Summary .................................................................................................................................. 3 Executive Summary .................................................................................................................................. 3 Introduction...................................................................................................................... 3 Research Approach .......................................................................................................... 4 Participant Demographics................................................................................................ 4 Definitions and Abbreviations ......................................................................................... 6 Report Structure and Organization .................................................................................. 6 Key Findings.................................................................................................................... 6 Essential Data Sources .............................................................................................................................. 9 Data Collection Processes and Practices ............................................................................................... 14 Innovative Secondary Research..................................................................................... 15 Innovative Primary Research......................................................................................... 16 Use of Third-Party Research Vendors in Primary Research ......................................... 19 Collecting Data Within Set Guidelines.......................................................................... 25 Development and examples of CI Guidelines ....................................................................................... 28 Managing Expectations........................................................................................................................... 39 Best Practices and Advice For Building a Successful CI Function ..................................................... 44 Advice From the Field ................................................................................................... 46 SCIP Vision and Mission Statements ............................................................................ 49 SCIP Code of Ethics for CI Professionals 50



TABLES AND FIGURES Figure 1.1: Participating Companies....................................................................................................... 4 Figure 1.2: Participant Job Titles ............................................................................................................ 5 Figure 1.3: Scope of Benchmark Companies .......................................................................................... 5 Figure 2.1: Multiple Data Sources are Vital ......................................................................................... 10 Figure 2.2: Key Secondary Information Sources ................................................................................. 11 Figure 2.3: Most Effective Sources for Small Pharma......................................................................... 12 Figure 2.4: Most Effective Large Pharma Sources .............................................................................. 12 Figure 3.1: Key CI Employee Skills....................................................................................................... 14 Figure 3.2: Internal Information Resources ......................................................................................... 18 Figure 3.3: CI Vendor Involvement....................................................................................................... 19 Figure 3.4: Primary Data Sources, Large Pharma............................................................................... 20 Figure 3.5: Primary Data Sources, Small Pharma ............................................................................... 21 Figure 3.6:Holding Vendors to Strict Standards.................................................................................. 23 Figure 3.7: Eliciting Dos and Don’ts...................................................................................................... 26 Figure 4.1: Examples of Guidelines Content ........................................................................................ 31 Figure 4.2: CI Guidelines, Small Pharma ............................................................................................. 32 Figure 4.3: CI Guidelines, Large Pharma............................................................................................. 33 Figure 4.4: Legal creates Guidelines for Small Pharma ...................................................................... 34 Figure 4.5: Legal and CI in Large Pharma........................................................................................... 35 Figure 4.6: Process for Working Collaboratively with Legal.............................................................. 36 Figure 4.7: Limited Support for Risky CI Practices ............................................................................ 38 Figure 5.1: Manage Expectations Up Front.......................................................................................... 41 Figure 5.2: CI Plays Pivotal Role in Rapid Response Situations ........................................................ 42 Figure 5.3: Early Warning Process........................................................................................................ 43 Figure 6.1: Leaders Avoid Paying Honoraria for Intelligence ............................................................ 45 Figure 6.2: Developing an Intelligence Function Takes Time ............................................................. 47 Figure 6.3: Guidelines & Legal Relationship Reduce Squeeze on CI ................................................. 47 Figure 6.4: Balance Risks of Doing CI Against Risks of Not Doing It 48



Copyright Best Practices, LLC

Order Form I’d like to order the following Best Practice Benchmarking Report.®

(919) 403-0251 11

ID PUBLICATION TITLE QUANTITY PRICE SUBTOTAL

SM-179 Competitive Intelligence Policies, Ethics and Data Collection: Navigating the Gray Zone

3 or more reports Deduct 10%

Shipping and Handling: Add $26 ($48 international) per report

TOTAL

Ordering Options

ONLINE Hbenchmarkingreports.com

PHONE (919) 403-0251

FAX (919) 403-0144

EMAIL Hbestpractices@best-in-

class.com

MAIL Best Practices, LLC

6350 Quadrangle Drive Suite 200

Chapel Hill, NC 27517

SHIP TO: Name

Title

Company

Street Address

City/State/Country Zip

Phone Fax

Email

PAYMENT OPTIONS:

Check enclosed payable to “Best Practices, LLC”

Visa MasterCard American Express

Card Number Exp. Date

Authorized Signature

Documents

CI Guidelines Summary