1. © 2012, Genentech BIOTECH SUPPLY October 8-9, 2012 Crowne Plaza, Foster City, CA "Building the Biotech Supply Chain: Adolescence to Maturity: What Does it Take?" Susanne Somerville Vice President, Supply Chain, North America Genentech

2. © 2012, Genentech How can I give you something in 30 minutes that you will take and use? I wanted to give a talk about our industry, and what is holding us back from “maturity”, when I got an interesting answer from colleagues: “We are mature. Our processes are mostly industrialized.” “We have dialed it in. We are on the top of the curve.” My answer: “It doesn’t feel mature to me” “We don’t know what we haven’t achieved – so how can we be “mature” yet? Ever?”

3. © 2012, Genentech Maybe my definition of “mature” wasn’t the same… 2/26/2016 3 Immature Adolescence Mature “grow up”? Establish processes Platform development (copy instead of reinvent) Continuous Improvement (part 1) Continuous Improvement (Part 2) Breakthrough changes Innovation Step function improvement as a regular practice… Last DecadeNext Decade Problem Statement COGS reduction Capacity Limits Plant Flexibility / Design Cost / Speed of Development Biosimilar Impact Flexible Cost Structure Health Care Reform Emerging Markets Personalized Medicine … and maybe it has to do with the problem you are trying to solve… Make it up as you go Ad hoc reactive

4. © 2012, Genentech Adolescence to Mature 2/26/2016 4 Conclusion: To get to Mature, it is all about what you believe can happen: 1.Guides what you will actually accomplish 2.Guides what you will prepare for

5. © 2012, Genentech The quest for 1 gram/liter 2/26/2016 5 How many people here thought 1 g/L was Commercially possible? Did people change their mind when they started hearing people did it at small scale…

6. © 2012, Genentech Belief then drives innovation in other areas… Less need for capacity, smaller fermentation vessels – New problems: risk management, purification bottlenecks Less resources / time / changes needed for Phase II / III / commercial process design – New problem: stop developing! 2/26/2016 6 You have to believe the changes can happen to see the next few chess moves ahead – and that is where you will really deliver value to the company (but are the bets too scary to make…)

7. © 2012, Genentech Clinical Supplies 2/26/2016 7 Industry Practice Each trial is a new project – coordinated, not planned Constant packaging plan changes Patient supply misses Vision Can we eliminate patient stockouts AND deliver a stable packaging plan? Genentech’s Journey to implement Class A Started in 2006 Implemented measurement in 2008: Production Plan Performance (did I make and release the item # and quantity (+/- 10%) at the end of the month I said I would make at the beginning of the month) 2009 ISPE presentation: Clinical Pack PPP ~80% (and people did not believe me) 2010: multiple sequential months at 100%, 1 stockout

8. © 2012, Genentech Belief then drives innovation in other areas… Stable Pack operations – New problem: how do we change our identity from being the best fire fighters? How do we take advantage of predictable performance? No patients missed – New opportunity: Different relationship with study doctors? Improved ability to execute studies as planned – New opportunity: Can we spend the money we save on other programs? 2/26/2016 8

9. © 2012, Genentech So what “beliefs” should we have? Who is ready to make “bets”? Shorter Development Time – Transcelerate: http://www.distilnfo.com/pharma/2012/09/22/ten- pharmaceutical-companies-unite-to-accelerate-development-of- new-medicines/ http://www.distilnfo.com/pharma/2012/09/22/ten- pharmaceutical-companies-unite-to-accelerate-development-of- new-medicines/ – More Phase II results straight to market – Higher success rates in clinical programs More use of CMOs – Larger companies have more fixed cost pressure – More unique business areas not previously outsourced Shift in markets we serve – US / Western Europe continued price pressure (and it might go much further than we think) – Critical mass is starting to make a difference in emerging markets Changes in IT development cycles – How can your company take advantage of this industry shift? What will happen if you don’t? 2/26/2016 9 Faster technical development – no development? More money available to fund those next molecules? Better / more flexible contract terms? More “virtual” companies? More local Mfg? Volatility in Forecasting? How to manage transportation?

10. © 2012, Genentech Final Thoughts How can you break current beliefs? What stands in the way to get to “mature”? – Can you give opportunities to improve for people in areas they know nothing about? Think three chess moves ahead – What bets would you be willing to make? Follow the pack with caution… – Contrarian theory can put you ahead 2/26/2016 10

11. © 2012, Genentech Acknowledgements Brian Kelley Dana Andersen Matt Croughan Tim Moore Randy Schwemmin Charlie Cammarata Gwin Gamboa 2/26/2016 11