1. Integration of Tippecanoe Laboratories The right Resources, Competencies, Skills -- A post Acquisition Integration starts prior to signing Thomas Ayres – VP Integration & Change Management Krannert Executive Conference for HR Professionals Purdue University - September 23, 2011

2. 2 The nature of the transaction determines the integration approach Evonik’s Scope and Imperatives on Tippecanoe’s Integration

3. 3 Tippecanoe Laboratories Integration Imperatives Utilize  Assets  Skills  Knowledge Sustain  Site Core Values  Quality, Safety and Environmental Principles  Supply to ELI LILLY Develop  Demanding Customers  Flexible Workforce and plant  Competitiveness Involve  All Employees on Site  Regional and Global Services  Business Unit/Line Implement  Management Systems  Business Processes Change  Personal Commitment  Business Model  Cultural Mindset

4. 4 Eight-Step Process for Leading Successful Change (John P. Kotter) 1 – Increase Change Process Engagement 2 – Build Guiding Teams 3 – Get the Vision Right 4 – Communicate for Buy-In 5 – Enable Action 6 – Create Short Term Wins 7 – Don’t Let Up 8 – Institutionalize Implement & sustain change Engage and enable the organization Create a climate for change

5. 5 Understanding the Challenge of Change for the People who joined Evonik. The Tippecanoe Perspective.

6. 6 Tippecanoe Laboratories is embedded into a Matrix Organization … ELI LILLY CORPORATE Joint Steering Team (contractual obligation) Integration Project Team Integration Project Tippecanoe (temporary support to line functions ) Business Unit Business Line Business Line and Functional Responsibility  Controlling & Finance  Sales & Marketing  Production & Technology  Supply Chain  Research & Development  Quality Assurance  Human Resources EVONIK Degussa Corporation Compliance and Audit ESH and Permits Product Regulatory Taxes Legal Responsibility Service Units Shared Services  Procurement  Communication  IT  Legal / Insurances  Financial Services  HR / payroll  IP / patents  Process Technology & Engineering LILLY Tippe- canoe Site Tippecanoe Laboratories Lafayette Site

7. 7 Understand the New Business Model @Tippecanoe Laboratories From cost center view to entrepreneurial acting. Not longer competitive with ELI LILLY’s sites in Ireland or Puerto Rico, but with Lonza, Siegfried, Hovione, BASF et al Measured by customers on cost, speed, flexibility, quality, reliability. From pharma production for captive use to Contract Manufacturing for various customers Self Image Focus and Mindset Competitiveness Success Factors

8. 8 The Acquisition Process of Tippecanoe Laboratories Key Learning Points.

9. 9 Key Learning Points  A Solid HR Integrations of Payroll, Benefits and Policies is the Foundation to a effective overall Integration Process. The lack of HR related problems allow the rest of the Integration process to progress without these issues getting in the way.  Do not underestimate the amount of resources that are needed for Integration (Management Capacity)  Expect that you will need to replace some key managers, do not develop Key Manager Contracts that are longer then 6 months. They can always be renewed.  Have a solid communications plan. A Plan that covers not only Day One, but has planned and required Communications activities over the first 9 to 12 months of the integration.  Build in the opportunity to assess the progress of the Integration Plan.

10. 10 Key Learning Points – Change is more than a Phrase Remember that Change is always with us, but it is not natural. Change is always good when it happens to the other guy!

11. 11 Post Merger Integration has two Components: 1Business System Integration (Project Management) 2Business Management Integration

12. 12 Business Systems Integration Examples  HR Pre-Closing Activities  IT Integration  Alignment with Corporate, Business Unit/Line and Region on Financial and ESH Reporting Requirements

13. 13 Business Management Integration  Business Management Integration is about organizational leadership.  Moving the mindset of the Tippecanoe Leadership from being a cost center of a large Pharma Organization to a Profit Center of a Custom Manufacturing Organization (CMO).  Changing the behavior of the leadership to allow for open disagreement and the delegation of authority.  Guiding leadership though effective utilization of networking in Evonik’s Matrix Organizational Structure.

14. 14 Business Management Integration versus Business Systems Integration  Can someone who is effective at Business Management Integration also manage Business Systems Integration?  Probably yes but not always.  Can someone who is effective at Business Systems Integration also manage Business Management Integration?  Probably no but not always.

15. 15 Competencies Business System Integration  What are the Competencies of a good Business Systems Integration Manager?  Management Excellent Organization and Project Management skills. There are many individual projects within the overall integration and all have to be managed effectively.  Culture Good understanding and sensitivity to the organizational and regional cultures of the groups who’s Business Systems are being integrated. The Business Systems Integration process is extremely stressful, people involved in completing this process are doing it on top of their regular jobs and they must be managed with “firm sensitivity”.  Network Good networking skills and a good understanding of Evonik’s Matrix organizational structure.

16. 16  What are the Competencies of a good Business Management Integration Manager?  Entrepreneurship Excellent understanding of the business goals and objectives and an understanding of the BL’s industry and competition.  Communication Must be able to “speak to” and teach the new leadership about the business and how the acquisition fits into the business strategy of the acquiring company.  Intercultural Skills Must have a good understanding of both the “business/organizational” and “regional” cultures of the acquired organization and the culture of the organization that made the acquisition.  Adaptability Must be able to “coach” both the acquired leadership and the acquiring leadership to ensure that the synergies anticipated by the acquisition are realized. Competencies relevant for Business Management Integration

17. 17 Conclusion  The Business Unit must lead the Business Management Integration process.  The Business Management Integration Manager must be a good Business Manager!  Business Management Integration is a long term activity, 3 to 5 years.  Business Systems Integration should last 6 to 15 months. Thank you for your attention!

18. 18 Questions and Discussion?