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Jeff D. Davis Global New Business Development P&G Pharmaceuticals Mason, Ohio “Inside P&G’s Innovation Machine”

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Presentation on theme: "Jeff D. Davis Global New Business Development P&G Pharmaceuticals Mason, Ohio “Inside P&G’s Innovation Machine”"— Presentation transcript:

1 Jeff D. Davis Global New Business Development P&G Pharmaceuticals Mason, Ohio “Inside P&G’s Innovation Machine”

2 P&G…the world’s largest consumer packaged goods companyP&G…the world’s largest consumer packaged goods company Inside P&G’s innovation journeyInside P&G’s innovation journey Inside P&G Pharmaceuticals’ new innovation strategyInside P&G Pharmaceuticals’ new innovation strategy Agenda

3 Who are we? Over $68 billion in global salesOver $68 billion in global sales 300 brands in over 160 countries300 brands in over 160 countries #1 or #2 in 80% of our categories#1 or #2 in 80% of our categories 140,000 employees140,000 employees

4 billion P&G’s 22 Billion-Dollar Brands

5 99 % of US households purchased a P&G product in 2005.

6 Three Global Business Units Household & Family Care $33.5 Billion Baby Care Baby Care Family Care Family Care Fabric Care Fabric Care Home Care Home Care Pet Health & Nutrition Pet Health & Nutrition Snacks & Coffee Snacks & Coffee Beauty & Health Care $29 Billion $29 Billion CosmeticsCosmetics Deodorants Deodorants Feminine Care Feminine Care Hair Care Hair Care Personal Cleansing Personal Cleansing Skin Care Skin Care Oral Care Oral Care Personal Health Care Personal Health Care Pharmaceuticals Pharmaceuticals Gillette $6.4 Billion Razors & BladesRazors & Blades Duracell Duracell Braun Braun

7 P&G Growth Strategies Core business: leading brands, biggest countries, winning customers Portfolio shift toward faster growing, higher margin, asset efficient categories Developing markets and lower income consumers

8 Innovation Go-to- Market Scale Consumer Understanding Branding 8 Leveraging P&G’s Core Strengths

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10 10,000 market research studies each year

11 Understanding Consumers

12 P&G…the world’s largest consumer packaged goods companyP&G…the world’s largest consumer packaged goods company Inside P&G’s innovation journeyInside P&G’s innovation journey Inside P&G Pharmaceuticals’ new innovation strategyInside P&G Pharmaceuticals’ new innovation strategy Agenda

13 Historically P&G has Grown Through Internal Innovation

14 What Happens if You Don’t Grow? Year 2000 wake up call Year 2000 wake up call >50% drop in stock price >50% drop in stock price

15 Organic Target thru FY % to +6% Organic (excludes foreign exchange, acquisition & divestiture impacts) Acquisitions & Divestitures Sustainable Sales Growth

16 innovat e how we innovate

17 A Call to Action... “We will acquire 50% of our innovations from outside P&G” President and Chief Executive The Procter & Gamble Company A.G.Lafley

18 & develop research connect C&D vs R&D…

19 50% our labs from

20 50% our labs through

21 US Industrial R&D by Size of Enterprise Company Size <1000 employees 1,000 – 4,999 5,000 – 9,999 10,000 – 24,999 25, %9.2%22.5%24.7% 6.1%7.6%13.6%13.5% 5.8%5.5%9.0%8.8% 13.1%10.0%13.6%13.6% 70.7%67.7%41.3%39.4% Source: Open Business Models: How to Thrive in the New Innovation Landscape by Henry Chesbrough (Harvard Business School Press, 2006), page 22.

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23 Just a few examples of C&D... Olay Vitamins Crest New Tubes Tide Stainbrush Clairol In-Store Shade Selector Kandoo Wipes Pantene Sonic Comb Mr. Clean Magic Eraser Glad Press N Seal Charmin Fresh Mates Swiffer Duster Mr. Clean Autodry Olay Daily Facial Pillows Old Spice Shave Gel Visia Beauty Imaging Olay Regenerist Olay White Radiance Facial Mask SK-II Facial Mask SK-II Airtouch Foundation Prilosec OTC Crest Scratch N Sniff Pkg. Crest Liquid Dentifrice PuR / Whirlpool Refrigerator Filters OTC Drug Registrations Metamucil Capsules Pringles Dips Pantene Hair Styling Products

24 “Connect & Develop” Inside P&G’s Innovation Model +35% of new products have elements that originated from outside P&G+35% of new products have elements that originated from outside P&G  Up from 15% in 2000 R&D productivity has increased by nearly 60%R&D productivity has increased by nearly 60% Since 2000 stock collapseSince 2000 stock collapse  Share price has doubled  Our portfolio has grown to 22 billion-dollar brands

25 P&G…the world’s largest consumer packaged goods companyP&G…the world’s largest consumer packaged goods company Inside P&G’s innovation journeyInside P&G’s innovation journey Inside P&G Pharmaceuticals’ new innovation strategyInside P&G Pharmaceuticals’ new innovation strategy Agenda

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29 1887 Vicks VapoRub launched by Richardson-Vicks1901Pepto-Bismol Norwich Over 100 years old...

30 P&G Pharma’s Strategic Model Acquire, Develop & Market…(Connect & Develop) Strategic choice to exclusively partner, license or acquire all of our new drug candidatesStrategic choice to exclusively partner, license or acquire all of our new drug candidates How? Our new drugs will come from a network of academia, biotech and pharmaceutical industry relationshipsHow? Our new drugs will come from a network of academia, biotech and pharmaceutical industry relationships Restructured our R&D and commercial organizations to excel at identifying, evaluating, negotiating and managing long-term, mutually beneficial partnerships.Restructured our R&D and commercial organizations to excel at identifying, evaluating, negotiating and managing long-term, mutually beneficial partnerships.

31 P&G Pharma’s Strategic Model The Best of Both Worlds… You & P&G…Think of the possibilities Marketing Expertise and Unique Insights of the world’s largest consumer companyMarketing Expertise and Unique Insights of the world’s largest consumer company Personal Touch of a small pharmaceutical company with deep experience and proven capabilities in our focus areasPersonal Touch of a small pharmaceutical company with deep experience and proven capabilities in our focus areas

32 P&G Pharma’s Strategic Model Acquire, Develop & Market We eliminated our Discovery organization (300 people) and most of their laboratoriesWe eliminated our Discovery organization (300 people) and most of their laboratories We retained our complete Development organization (650 people).We retained our complete Development organization (650 people). We established a Search & Evaluate organization (35 scientists) who have responsibility for helping find and screen licensing opportunitiesWe established a Search & Evaluate organization (35 scientists) who have responsibility for helping find and screen licensing opportunities Our New R&D Structure (July 2006)

33 musculoskeletalgastrointestinal women’s health focus areas

34 Strategically focused on 3 therapeutic areas where the patient plays an active role in managing their health Strategically focused on 3 therapeutic areas where the patient plays an active role in managing their health MusculoskeletalMusculoskeletal  Osteoporosis, Rheumatoid Arthritis and Osteoarthritis GastrointestinalGastrointestinal  Ulcerative Colitis, Crohn’s disease, IBS and GERD Women’s HealthWomen’s Health  Overactive Bladder, Incontinence, Menopausal symptoms P&G Pharma’s Strategic Model Why will it work? * Corporate interest: hair growth and skin aging

35 Our Pharma Partnering Experience

36 Recent deals…P&G and Nastech Feb 2006 Nastech Enters Into Supply Agreement with Procter & Gamble for Parathyroid Hormone (PTH1-34) Nasal Spray BOTHELL, Wash., June 6 /PRNewswire-FirstCall/ -- Nastech Pharmaceutical Company Inc. (Nasdaq: NSTK) announced today an agreement with Procter & Gamble Pharmaceuticals, Inc., a division of The Procter & Gamble Company (NYSE: PG), to manufacture and supply PTH1-34 nasal spray for the potential commercialization of this investigational product for the treatment of osteoporosis. This agreement further strengthens the collaboration between the companies that began with the development and commercialization agreement for PTH1-34 nasal spray that was announced on February 1, 2006.

37 Recent deals…P&G and Ablynx April 2006

38 Recent deals…P&G & ARYx July 2006

39 P&G Pharma Partnering Philosophy The real test of a successful alliance negotiation is not a signed contract with all desired terms agreed in full… …it is whether the companies share a common vision, feel like the deal is fair, are contractually motivated to do what’s right, and can work together over the long term! “Negotiate for Implementation”

40 the of both worlds best

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