Straight From the Top Steve Smith

Thank You

• The Morrisville Chamber for their community support and efforts to create a positive business environment

• For your leadership, community involvement and support

• Carlotta Ungaro for her outstanding leadership of the Chamber

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Agenda

• Catalent Overview & Lunch

• Straight from the Top

− Some Basic Background

− A Few “Experiences”

− Synthesis of Lessons Learned & Philosophies

• Tour

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Catalent Overview

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Catalyst + Talent. Our name combines these ideas.

From drug and biologic development to delivery technologies to

supply solutions, we are the catalyst for your success. Whether you

are looking for a single, tailored solution or multiple answers

throughout your product’s lifecycle, we can improve the total value

of your treatments—from discovery to market and beyond.

Catalent. More products. Better treatments. Reliably supplied.

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WHY CATALENT? Unrivaled experience, deepest expertise, and a track record of market success on a global scale.

We serve 49 of the top 50 pharmaceutical and 36 of the top 50 biotech companies as the world’s #1 delivery, development and supply partner*

We operate 20+ global sites across 100+ markets

We create expert solutions from over 1,000 scientists

We support 40% of recent new U.S. drug approvals

We manufacture or package 100 billion units annually

We are the industry leader in drug delivery technology

We use a multi-faceted approach to improve bioavailability, therapeutic profiles and patient adherence

We provide end-to-end biologics technologies, from gene expression to fill/finish

* source: United Nations World Investment Report, 2011

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Catalent’s market-leading offerings

ORAL TECHNOLOGIES

#1 in advanced technologies for oral delivery of drugs, biologics and consumer health

STERILE TECHNOLOGIES

#1 in blow-fill-seal for drugs and biologics, #2 in prefilled syringe fill/finish

DEVELOPMENT & CLINICAL SERVICES

#1 integrated provider, #2 in respiratory, Now #2 with acquisition

PACKAGING SERVICES

Leader in commercial packaging for oral and injectable drugs and biologics

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The World Has Changed… And Will KEEP Changing

Yesterday Today

Predictable economies Global Tilt

Financial stability Financial uncertainty

Emerging markets Growth markets

Increasing demand Healthcare austerity

Blockbuster drugs Unpredictable launches

R&D investment R&D as an expense

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Once A Ranger, Always a Ranger Or, any position other than first is a tie for last

Straight from the Top

Confessions

1. The “South” had the best generals

2. NC vs. KS barbecue – tie for 1st

3. Nearly every person at this site is smarter than I am

4. We assume our competitors are at least as good as we are

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I won’t even touch the basketball rivalry thing

Career Pathway “You don’t have to be the expert…and dumb luck doesn’t hurt”

U.S. Army

Corning

PPD INC

Catalent

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US Oncology

Combat officer Ranger

Engineer Manufacturing

Int’l JV Management Strategy

Strategy M&A CFO

Division VP

VPGM

Global BU head

From really big…to smaller organization From government to telecom to pharma Several sacrifices to get here Never turned down a job offer

Career Transitions

The more experience you acquire, the more you build decision expertise/acumen with context

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Background - Family

• Small Town Colorado – our priorities were “typically”…

Farming

Football

Church

School

• Brady Bunch (six children) – 2nd youngest

• First to go to college

• Work Hard, Play Hard

• Family emigrated from Germany at turn of century (relative was founder of KC stock yards)

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Smith Family – 5 kids living in Wake Forest – apple doesn’t fall far from the tree!

Background School Never Saw a Challenge I didn’t Like

Valedictorian – 4.0 GPA

International science fair – Houston

Sports letters

• Football – all conference

• Basketball

• Baseball

College course(s)

• Organic chemistry – top grade

Colorado outstanding student of the year – senior

Multiple scholarships

• Nominated to U.S. Military Academy, State of Colorado (1 of 10)

• Appointed early to U.S. Military Academy (1 or 2)

• B.S. Aerospace Engineering (dean’s list)

• Distinguished 4-class (plebe) cadet

• Company Commander (1 of 4)

• Cadet captain, regimental staff officer (1 of 4 in Corps of Cadets)

• Varsity Football

• Corps Runner-up – Basketball

• Freshman boxing

High School College

West Point – A Transformation Mental Toughness, Thinking on your feet, Accountability

• Never set foot on campus before “R-Day”

• Academics: 21-22 semester hours per term

• Well Rounded: Everyone is an engineer and an athlete

• Time: Every minute from 5AM to 11PM was planned and used

• Honor Code: If you got an “idea” from a roommate, you documented it with a footnote

• Discipline: Memorized front page of NYT every morning for a year

• Thrown into successive leadership roles from bottom up

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Rangers What Did I Get Myself Into?

• Ranger’s Lead the Way – shock troops of SOC

• Roughly 30% (or higher) fail rate

• Train and work in Mountain, desert, jungle conditions (no sleep, little food, intense missions)

• No Ranger Left Behind Ethos

• Fight back-to-back (Ranger Buddy)

• Rapid decision-making (OODA loop)

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You test the limits of physical, mental and emotional strength, and then must force yourself well past them.

Overcoming Challenges Too Naïve to Fail

• Cut off cast for broken ankle to attend Paratrooper School – Re-fractured during jump, duck taped, and graduated 1st in my class.

• Jumped into the desert in below freezing temperatures, 2 feet of snow, no shelter, no food, executed an assault after 25% of jumpers were hurt.

• Ran Marathon – no prior training/prep – finished 2nd in age group.

• Ran 1st Triathlon – no prior prep, finished 2nd.

• Took over ailing oncology division, no oncology experience, turned it into the most profitable and growing business unit.

• Lived in Russia to form and start an optical cabling JV.

Lessons Learned & Leader Philosophy

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Breakthrough Change

Current Performance

True Potential

Fear of Change

Perceived Entitlement

Dogmatism

Poor Two-Way Communication

Unclear Goals

Lack of Emotional Courage

Product Development

HR

Operations

Finance

Marketing/ Sales

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Bureaucracy…Politics

A Device For Turning Energy into Solid Waste

(anon)

Let’s Work Smarter…Not Just Harder

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THE MAXIMUM EFFECTIVE RANGE OF A COMPLAINT…WITHOUT A

SOLUTION…IS

Zero Meters!

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Culture of Execution

Symptoms

• Missed Delivery Dates

• Cost overruns

• Not candid with customers

• Blame others

• Won’t ask for help

• Silent in face of challenges

• Do not rise to the occasion

So…what do we do about it!

Assess competencies and Talent

Put right people (leaders) in right jobs, replace cynics

Improve poorly designed systems and processes

Remedy distrust and disbelief

Brutal honesty

Open communication

Causes

• Lack of perceived (real) consequences for missing commitments

• Influential employees play politics

• Contrary goals and objectives

• Disconnected from day-to-day operations

• Ineffective follow-through

Personal Rule Sets

• Do something first, then come tell me what you’ve done

• One pager – if you can’t fit it on one page, you haven’t thought it through

— Always include three options, recommendation, why

• A good decision fast is better than a great decision later

— If it is a bad decision, we will make a better one, just don’t let it be fatal

• Do your job as if you are already fired (dead) – no fear

• Use the OODA loop – Observe, Orient, Decide, Act

• Going up river with ten studs is better than 100 assh****

• Mission first, people always (it is a business)

• Be ready for the “Fork in the road”: Be or Do

• Be willing to bet your career on doing the right thing for someone or some important thing, not just yourself

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How Do We Win?

• Demonstrating leadership and taking accountability

• Hiring and developing the best people

• Linking strategy & tactics to execution

• Avoid time wasters through quality execution

• Innovating and continuous improvement of processes

• Disciplined financial management

• Thinking and acting like a world-class analytical business (not just a collection of buildings)

Not Just a Collection of Buildings

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CHANGE

Because That’s The Way We’ve Always Done It!

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Bring Forward The Good…Embrace the New

Bring Forward

• Excellence in science and compliance

• Take your work seriously, not yourself

• No work politics or hidden agendas

• Your name is on it

• Constant scanning and immediate action and resolution

• Desire for success

Culture of Execution – Getting Things Done

Embrace

• We are growing and we can’t afford to have complacent leaders and tolerate indifference

• No more “silos”

• We must have processes and systems that function, make our jobs easier and give us access to timely, accurate data.

• Reward the “doers”

• Candid, open communication

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Some Favorite Thoughts Read History

Do not repeat the tactics which have gained you one victory, but let your methods be regulated by the infinite variety of circumstances.

Sun Tzu c. 490 BC, Chinese military strategist

Doctrine, if left unchallenged, turns into dogma, and you can never change it.

Colonel John Boyd, USAF

Management is efficiency in building the ladder; leadership determines whether the ladder is leaning against the right wall.

Stephen Covey

Continuous Improvement

Challenge Conventional Wisdom

Leadership v. Management

Iron Laws of Strategy

1. Strategy is our theory of action to win combined with our plan to execute (people, process, technology investments)

2. All Growth Ends

3. Everyone gets it right in the long run

4. A+ execution with a B+ plan always wins

5. Competitors are at least as smart as we are

6. You can’t turn pixie dust (bad strategy) into gold dust (good strategy)

11/17/2014 CONFIDENTIAL: {OFFERING} FY14-18 Growth Plan

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People Development

• Before hire outside, hire inside

• Stretch peoples skills and learning

• Demand internal slate

• Take inside with 50% of skills versus outside with 100% skills

Have Hard Goals for People Development

How many internal

candidates did you

interview?

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Law of Conservation of Energy You have to Save Yourself

Energy Level +

-

+ Energy Quality

Performance Zone

Renewal

Survival

Burnout

Constant Demand

No renewal

Intermittent bursts of high quality energy,

sustained over time.

Sustained reaction to competing demands without renewal

Inability to feel success and get ahead of the game with no hope

for relief

Take time to renew physically, emotionally, mentally, spiritually

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We Are All Growth Leaders

• Intense curiosity searching for new insights every day

• Continuously explore new markets and ideas to find good business models

• Courage to take risk and endure failure

• Internal actions driven by external needs

• Get big people into big jobs

• Create alignment – performance metrics and targets

• “Lock it In” – G&Os

• Develop a list of jobs that create value

• Think big…move fast

People -> Ideas -> Process -> Technology

Thank You

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discover more. CATALENT PHARMA SOLUTIONS 160N Pharma Drive

Morrisville, NC 27560

www.catalent.com