Contents:

Medical Affairs Excellence: Structuring, Aligning and Funding for Global Success EXECUTIVE SUMMARY 1 Project Background 1 Study Methodology and Benchmark Class 3 Figure S.1-Benchmark Class 3 Key Lessons Learned 4 Path Forward 8 Figure S.2-Next Steps 9 ORGANIZATIONAL STRUCTURE AND PROCESSES 10 Figure 1.1-Medical Affairs Capabilities 11 Figure 1.2-Influences on Medical Affairs Structure 12 Figure 1.3-Idealized Skills Profile: Global Medical Affairs Leadership 13 Medical Affairs Function: Mission, Roles and Responsibilities 13 Figure 1.4-Advantages of Dedicated Medical Affairs Function 14 Figure 1.5-Distribution of US Medical Affairs Capabilities 15 Figure 1.6-Medical Affairs Reporting Relationships 16 Figure 1.7-Medical Affairs Capabilities Movement 17 Figure 1.8-Medical Affairs Capabilities Most Frequently Residing in R&D 18 Figure 1.9-Medical Affairs Capabilities Most Frequently Residing in S&M 19 Geographic Span of Medical Affairs Responsibility 20 Figure 1.10-Multinational Medical Affairs Model 22 Figure 1.11-Global Medical Affairs Model 23 Figure 1.12-Transnational Medical Affairs Model 24 Product Lifecycle Span of Medical Affairs Responsibility 25 Figure 1.14-Medical Affairs Responsibility by Clinical Trial Phase 26 Medical Affairs Functional Components and Structure 27 Cross-Functional Interfaces through Teams and Processes 27 Figure 1.15-Organizational Structure of US Medical Affairs Department 28 Figure 1.16-Medical-Commercial Alignment 28 Figure 1.17-Regional Strategic Operations Team Processes 29 STAFFING AND SPEND: MAXIMIZING VALUE, DECREASING COSTS 31 Figure 2.1-Oversights of Compounds and Therapy Areas 32 Overall Medical Affairs Staffing Levels 33 Figure 2.2-Total Medical Affairs FTEs 33 Segmentation of Medical Affairs Staffing by Capabilities 34 Figure 2.3-Medical Affairs FTEs by Capability 34 Imputed FTEs per Dedicated Medical Affairs Capability 35 Figure 2.4-Imputed FTEs per Dedicated Medical Affairs Capability 35 Medical Affairs Staffing Ratios: FTEs to Number of Compounds 36 Figure 2.5-Medical Affairs FTEs per Compound 36 Medical Affairs Staffing Ratios: FTEs to Number of Therapy Areas 37 Figure 2.6-Medical Affairs FTEs per Therapy Area 37 Medical Affairs Staffing Ratios: FTEs to US Sales 38 Figure 2.7-Medical Affairs FTEs per $100 Million in US Sales 38 Planned Medical Affairs Staffing Change and Drivers 39 Figure 2.8-Planned Medical Affairs Staffing Trend 39 Levels of Medical Affairs Outsourcing: by Company 40 Figure 2.9-Total Medical Affairs Outsourcing by Company 40 Levels of Medical Affairs Outsourcing: by Capability 41 Figure 2.10-Medical Affairs Outsourcing by Capability 41 Medical Affairs External Spend: Average and Range 43 Figure 2.11-Medical Affairs External Spend 43 Medical Affairs External Spend: Average by Capability 45 Figure 2.12-Medical Affairs External Spend by Capability 45 Medical Affairs External Spend: Amount per Compound 46 Figure 2.13-Medical Affairs External Spend per Compound 46 Source and Distribution of Medical Affairs External Spend 47 Figure 2.14-Funding Source by Capability 47 Factors Driving High Resource Consumption 49 Figure 2.15-Factors Driving High Resource Consumption 49 MEDICAL AFFAIRS PERFORMANCE MEASUREMENT: BEYOND ROI 50 Figure 3.1-Sample Medical Affairs Performance Measures 52 Figure 3.2-Medical Affairs Effectiveness Rating 53 MEDICAL AFFAIRS CAPABILITIES DEFINITIONS 55

Summary:

PROJECT BACKGROUND The medical affairs function has always been an important support function at pharmaceutical companies. With major responsibilities to provide customers with medical and scientific information and education, the medical affairs function enhances the efforts of sales and marketing to accelerate product and business growth. Furthermore, medical affairs complements the work of research and development to maximize products’ total value through continued clinical studies, outcomes research and disease management programs. In today’s challenging healthcare environment, medical affairs’ role has become even more crucial to pharmaceutical companies’ success. Confronted with declining R&D productivity, escalating development costs, increasing competition, growing price pressures and intensified regulatory and public scrutiny, pharmaceutical companies seek to maintain double-digit revenue and earnings growth demanded by investors. In addition, companies are reallocating resources in response to new Office of Inspector General (OIG) guidelines. The typical growth strategies employed today include: - Launching new products to the marketplace with rapid sales uptake - Maximizing the full potential of currently marketed products - Building customer loyalty by delivering superior clinical and economic value On all these strategic growth fronts, medical affairs departments are increasingly playing an active role. In fact, at many pharmaceutical companies, medical affairs departments have already come to the forefront of value generation by: - Forging strong partnerships with key opinion leaders to support new product development and launches - Managing ongoing research programs to support products’ market penetration and expansion - Generating and disseminating new clinical and scientific data to inform and educate healthcare professionals - Securing access and reimbursement for products through health outcomes studies To fulfill growing strategic roles, the medical affairs function needs to continuously re-invent itself by optimizing its overall capabilities. Consequently, it needs to benchmark both inside and outside its organization to identify key strengths and improvement opportunities and to develop a roadmap for world-class excellence. Numerous industry-wide studies have examined the key components of a company’s medical affairs capabilities (e.g. medical science liaisons, clinical operations, etc.). However, no study has approached medical affairs in its totality. We undertook this study with two major objectives: 1) To benchmark and assess a full spectrum of medical affairs capabilities deployed at leading pharmaceutical and biotechnology companies. 2) To identify winning practices for building best-in-class medical affairs capabilities The study focused primarily on companies’ medical affairs capabilities that support the US market. It covered three key management areas, all of which are critical to the operational efficiency and effectiveness of medical affairs functions in driving business value: - Organizational Structures and Processes: How do companies define, structure, govern and coordinate medical affairs activities? - Staffing, Outsourcing and Spending: What level of human and financial resources do companies provide to medical affairs functions? At what level are medical affairs capabilities outsourced? - Performance Measurement: How do companies measure and manage the efficiency and effectiveness of the medical affairs function?

Companies Mentioned

-Amgen -Eli Lilly -AstraZeneca -Solvay America -Schering-Plough -Biogen-Idec -Janssen; Abbott -Aventis -Roche -Merck -GlaxoSmithKline -Pfizer -Novartis -Bristol-Myers Squibb -Bayer and Genentech