LSS and Commercialisation in MSD Daniel J. Hoey Merck Sharp & Dohme (Ireland) Ltd. 16 th October, 2009

Agenda About Merck & Co., Inc. Lean Six Sigma and Commercialisation Merck Sharp & Dohme in Ireland Lean Commercialisation of ISENTRESS TM

Merck & Co., Inc. Founded: 1891 Number of employees: ~55,000 Global reach: Does business in 140 countries 2008 revenue: $23.9 billion Merck is a global research-driven pharmaceutical company dedicated to putting patients first.

Lean Six Sigma Align and Integrate Achieve “DNA” in the Business Build Foundation Maturity Levels Key Focus Key Metrics Project Success, Infrastructure, Capabilities Early Wins Training # BB, GB Savings/Revenue Process Metrics Cycle Time Industry Leadership Lean Six Sigma embedded in Key Processes Sponsorship Business Benefits Deploy broadly across Merck Alignment to Scorecard Depth of penetration “Pull”“Push” “The Way We Work” Owned by the Business Level 1Level 2Level 3 Current MaturityGoal

Commercialisation Focus on Through Put Focus on Cost & Reliability Focus on Speed & Cost Supply Research Commercialisation PCC I IIA IIB III LaunchLong-term Supply POC

MSD in Ireland    Carlow Ballydine Dublin

Ballydine Plant… facts Established API manufacturing plant in 1976 Significantly expanded in 1999 to add Fac03 Named API Commercialisation site in 2005 Implemented MPS and Commercialisation organisational changes in December, 2006 Formulation facility project started in 2007; operational end 2009 Global API supplier for ~40% of Merck sales (excl. vaccines) ~400 Employees 25 international customers ~30 shipments/month

Ballydine Plant… mission PHARM SUPPLY PHARM PROCESS DEVELOPMENT API PROCESS DEVELOPMENT API SUPPLY

PGM ROA ACCESS MPS-Lean Six Sigma + Commercialisation Lean Processes Ready for Supply -Minimal/No Capital for launch -Technical issues resolved -Variability removed -Standardised work developed -Electronic instructions developed -PAT needs determined -Raw materials qualified -In-process tests removed Ballydine Plant… mission

Lean Commercialisation ISENTRESS TM 1.Quality (better) 2.Don’t short the market (more reliable) 3.Rapid Launch and ability to react (faster) 4.Cost to enable developing country access (cheaper) First in a new class of treatments for HIV Changes paradigm in HIV management Impact 40 million people worldwide

ISENTRESS TM reducing cost Business Need Reduce Product Cost Minimise at-risk Capital Enable Access Latin America 1.7 million East Asia 750,000 Eastern Europe & Central Asia 1.7 million Sub-Saharan Africa 24.7 million Caribbean 250,000 North America 1.4 million North Africa & Middle East 460,000 Western Europe 740,000 South & South-East Asia 7.8 million Oceania 81,000 Total number living with HIV - 40 million Source: WHO, 3 by 5 Progress Report: December 2005 Achievements 18% reduction in API standard cost 40% reduction in Cycle Time 22% improvement in Capacity < $50K Capital for initial campaign Transitioning from Internal to External Supply

ISENTRESS TM creating a robust process Challenges Supplier/Input: –Raw material quality Process: –Reject rate ~13% Output/Customer: –Market threat Resolution Stabilize Supplier process DMAIC to improve Merck Process –Identify KPIV’s –DOE to optimize charge ratio –Modified the process Cpk 0.34 to 5.08 Lean Processes Ready for Supply  Minimal/No Capital for launch  Technical issues resolved  Variability removed  Standardised work developed  Electronic instructions developed  PAT needs determined  Raw materials qualified  In-process tests removed

Summary Capability development is a powerful motivator of employees Operational Excellence can help expand the mandate for the Irish subsidiary Lean Six Sigma is an enabler for process development and new product introduction Irish plants can establish a mission that enables them to compete on value, in ways other than low cost.