1. INTRODUCTION TO ICH Q8 & Q9 GUIDELINES
K. S. BABU
Head - Corporate Regulatory Affairs
Watson Pharma., India
November 29, 2007

2. Interpretation of guidance documents
FOREWORD
EMPHASIS
Interpretation of guidance documents
Regulatory relevance & applications
Bonus: Q10 guideline, due to its relevance
I’d like to remind you that, during the course of this presentation, management will make projections or other forward-looking remarks regarding future events or the future financial performance of the company. It’s important to note that such statements about Watson’s estimated or anticipated future results, prospects or other non-historical facts are forward-looking statements, and reflect Watson’s current perspective of existing trends and information as of today’s date. Watson disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Actual results may differ materially from Watson’s current expectations and projections, depending on a number of factors effecting Watson’s business. These factors are detailed in Watson’s periodic public filings with the Securities and Exchange Commission, including, but not limited to, Watson’s Form 10-K for the year-ended December 31, 2005 and Form 10-Q for the quarter ended Stpember 30, 2006.

3. WHAT ARE THESE GUIDELINES ABOUT?
Q8: - “Pharmaceutical Development” (“Implemented”)
- Contents of 3.2.P.2 Section of Module 3, CTD
Q8 – Annexure (“Draft stage”)
- Provides further clarification to Q8 concepts
- Links ‘’QbD’’ & “PAT” (FDA), & ‘’QRM’’ (EU), “FEMA”
Q9: - “Quality Risk Management” (“Implemented”)
Q10: - “Pharmaceutical Quality System” (“Draft stage”)
I’d like to remind you that, during the course of this presentation, management will make projections or other forward-looking remarks regarding future events or the future financial performance of the company. It’s important to note that such statements about Watson’s estimated or anticipated future results, prospects or other non-historical facts are forward-looking statements, and reflect Watson’s current perspective of existing trends and information as of today’s date. Watson disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Actual results may differ materially from Watson’s current expectations and projections, depending on a number of factors effecting Watson’s business. These factors are detailed in Watson’s periodic public filings with the Securities and Exchange Commission, including, but not limited to, Watson’s Form 10-K for the year-ended December 31, 2005 and Form 10-Q for the quarter ended Stpember 30, 2006.

4. REGULATORY STATUS OF ICH Q 8
Reached Step 5 – Regulatory Implementation
EU:
Transmission to CHMP and to Interested Parties in December Issued as EMEA/CHMP/167068/2004-ICH. Deadline for comments : June Final approval by CHMP: November Date for coming into operation: May 2006.
MHLW:
Adopted on September 1, 2006, PFSB/ELD Notification N°
FDA:
Published in the Federal Register, Vol. 71, No 98, May 22, 2006
I’d like to remind you that, during the course of this presentation, management will make projections or other forward-looking remarks regarding future events or the future financial performance of the company. It’s important to note that such statements about Watson’s estimated or anticipated future results, prospects or other non-historical facts are forward-looking statements, and reflect Watson’s current perspective of existing trends and information as of today’s date. Watson disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Actual results may differ materially from Watson’s current expectations and projections, depending on a number of factors effecting Watson’s business. These factors are detailed in Watson’s periodic public filings with the Securities and Exchange Commission, including, but not limited to, Watson’s Form 10-K for the year-ended December 31, 2005 and Form 10-Q for the quarter ended Stpember 30, 2006.

5. REGULATORY STATUS OF ICH Q 8 - Annexure
Reached Step 3 in Nov. 2007:
Regulatory Consultation & Discussion
Draft Guideline
EU / MHLW / FDA: TO BE NOTIFIED
I’d like to remind you that, during the course of this presentation, management will make projections or other forward-looking remarks regarding future events or the future financial performance of the company. It’s important to note that such statements about Watson’s estimated or anticipated future results, prospects or other non-historical facts are forward-looking statements, and reflect Watson’s current perspective of existing trends and information as of today’s date. Watson disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Actual results may differ materially from Watson’s current expectations and projections, depending on a number of factors effecting Watson’s business. These factors are detailed in Watson’s periodic public filings with the Securities and Exchange Commission, including, but not limited to, Watson’s Form 10-K for the year-ended December 31, 2005 and Form 10-Q for the quarter ended Stpember 30, 2006.

6. REGULATORY STATUS OF ICH Q 9
Reached Step 5 – Regulatory Implementation
EU:
Published on the EMEA website
MHLW:
Adopted on September 1, 2006, PFSB/ELD Notification n°
FDA:
Published in the Federal Register, Vol. 71, No 106, pages , June 2, 2006
I’d like to remind you that, during the course of this presentation, management will make projections or other forward-looking remarks regarding future events or the future financial performance of the company. It’s important to note that such statements about Watson’s estimated or anticipated future results, prospects or other non-historical facts are forward-looking statements, and reflect Watson’s current perspective of existing trends and information as of today’s date. Watson disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Actual results may differ materially from Watson’s current expectations and projections, depending on a number of factors effecting Watson’s business. These factors are detailed in Watson’s periodic public filings with the Securities and Exchange Commission, including, but not limited to, Watson’s Form 10-K for the year-ended December 31, 2005 and Form 10-Q for the quarter ended Stpember 30, 2006.

7. REGULATORY STATUS OF ICH Q 10
Reached Step 3 in May 2007:
- Regulatory Consultation & Discussion
- Draft Guideline
EU:
Transmission to CHMP and to Interested Parties May Issued as EMEA/CHMP/ICH/214732/2007. Deadline for comments: November 2007.
MHLW:
Released for consultation 13th July 2007, PFSB/ELD, deadline for comments 1st October 2007
FDA:
Published in the Federal Register July 13, 2007, Volume 72, No. 134, pages Deadline for comments October 11, 2007.
I’d like to remind you that, during the course of this presentation, management will make projections or other forward-looking remarks regarding future events or the future financial performance of the company. It’s important to note that such statements about Watson’s estimated or anticipated future results, prospects or other non-historical facts are forward-looking statements, and reflect Watson’s current perspective of existing trends and information as of today’s date. Watson disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Actual results may differ materially from Watson’s current expectations and projections, depending on a number of factors effecting Watson’s business. These factors are detailed in Watson’s periodic public filings with the Securities and Exchange Commission, including, but not limited to, Watson’s Form 10-K for the year-ended December 31, 2005 and Form 10-Q for the quarter ended Stpember 30, 2006.

8. BRIEF NOTE ON ICH Q10 : P.Q.S. Based on ISO concepts
Includes applicable GMP regulations
Compliments ICH Q8 and ICH Q9
Acts as a model for a pharmaceutical quality system that can be implemented throughout the different stages of a product lifecycle.
Content is currently specified by regional GMP requirements
Not intended to create any new expectations beyond current regulatory requirements
Consequently, the content of ICH Q10 that is additional to current GMP requirements is optional

9. Q8: OVERVIEW
Talks about Pharmaceutical Dev. section in regulatory submissions
Suggested Contents for 3.2.P.2 of CTD Quality Module 3:
3.2.P.2.1 Components of drug product (drug substance/ excipients)
3.2.P.2.2 Formulation Dev.
3.2.P.2.3 Manufacturing Process Development
3.2.P.2.4 Container Closure System
3.2.P.2.5 Microbiological Attributes
3.2.P.2.6 Compatibility
There is “much more” than
meeting the filing requirements or CTD check-list
I’d like to remind you that, during the course of this presentation, management will make projections or other forward-looking remarks regarding future events or the future financial performance of the company. It’s important to note that such statements about Watson’s estimated or anticipated future results, prospects or other non-historical facts are forward-looking statements, and reflect Watson’s current perspective of existing trends and information as of today’s date. Watson disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Actual results may differ materially from Watson’s current expectations and projections, depending on a number of factors effecting Watson’s business. These factors are detailed in Watson’s periodic public filings with the Securities and Exchange Commission, including, but not limited to, Watson’s Form 10-K for the year-ended December 31, 2005 and Form 10-Q for the quarter ended Stpember 30, 2006.

10. Q8: OVERVIEW (contd.)
Greater understanding of the product / process & variables
Science- and risk-based submissions
Wider regulatory “flexibility”
Q8 Annexure & “Q R M” (ICH Q9)
I’d like to remind you that, during the course of this presentation, management will make projections or other forward-looking remarks regarding future events or the future financial performance of the company. It’s important to note that such statements about Watson’s estimated or anticipated future results, prospects or other non-historical facts are forward-looking statements, and reflect Watson’s current perspective of existing trends and information as of today’s date. Watson disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Actual results may differ materially from Watson’s current expectations and projections, depending on a number of factors effecting Watson’s business. These factors are detailed in Watson’s periodic public filings with the Securities and Exchange Commission, including, but not limited to, Watson’s Form 10-K for the year-ended December 31, 2005 and Form 10-Q for the quarter ended Stpember 30, 2006.

11. Q8: Related EU Directives and Guidelines
2003/63/EC, Annex I, – Pharmaceutical Development
CPMP/QWP/155/96 Guideline on Development Pharmaceutics
NTA Volume 2B - Common Technical Document
Note for guidance on development pharmaceutics (EMEA/CHMP/167068/2004)
Link to EU Directives:
I’d like to remind you that, during the course of this presentation, management will make projections or other forward-looking remarks regarding future events or the future financial performance of the company. It’s important to note that such statements about Watson’s estimated or anticipated future results, prospects or other non-historical facts are forward-looking statements, and reflect Watson’s current perspective of existing trends and information as of today’s date. Watson disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Actual results may differ materially from Watson’s current expectations and projections, depending on a number of factors effecting Watson’s business. These factors are detailed in Watson’s periodic public filings with the Securities and Exchange Commission, including, but not limited to, Watson’s Form 10-K for the year-ended December 31, 2005 and Form 10-Q for the quarter ended Stpember 30, 2006.

12. Q8: Objectives of Pharmaceutical Dev. Section
UNDERSTANDING: Provide a comprehensive understating of the product and manufacturing process for reviewers and inspectors
EVIDENCE: Establish evidence that the dosage form, the formulation, manufacturing process, container closure system, microbiological attributes and usage instructions are appropriate for the intended use
ASSURANCE: Provide scientific discussion to support that –
the design / process will consistently deliver a quality product
SYSTEMATIC ASSESSMENT:
Testing during developmental stage – Extensive & Different from routine
Critical parameters of the formulation and process which can influence batch reproducibility, medicinal product performance and medicinal product quality shall be identified and described.
I’d like to remind you that, during the course of this presentation, management will make projections or other forward-looking remarks regarding future events or the future financial performance of the company. It’s important to note that such statements about Watson’s estimated or anticipated future results, prospects or other non-historical facts are forward-looking statements, and reflect Watson’s current perspective of existing trends and information as of today’s date. Watson disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Actual results may differ materially from Watson’s current expectations and projections, depending on a number of factors effecting Watson’s business. These factors are detailed in Watson’s periodic public filings with the Securities and Exchange Commission, including, but not limited to, Watson’s Form 10-K for the year-ended December 31, 2005 and Form 10-Q for the quarter ended Stpember 30, 2006.

13. Q8: IMPORTANT CONSIDERATIONS
3.2.P Drug Substance:
Key physicochemical characteristics of the drug substance (e.g. solubility, water content, particle size distribution), which are variable and critical for the quality of the product and which can influence the performance of the drug product
Compatibility of drug substance with the excipients
For combination products, the compatibility of the drug substances with each other
Polymorphism issues
I’d like to remind you that, during the course of this presentation, management will make projections or other forward-looking remarks regarding future events or the future financial performance of the company. It’s important to note that such statements about Watson’s estimated or anticipated future results, prospects or other non-historical facts are forward-looking statements, and reflect Watson’s current perspective of existing trends and information as of today’s date. Watson disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Actual results may differ materially from Watson’s current expectations and projections, depending on a number of factors effecting Watson’s business. These factors are detailed in Watson’s periodic public filings with the Securities and Exchange Commission, including, but not limited to, Watson’s Form 10-K for the year-ended December 31, 2005 and Form 10-Q for the quarter ended Stpember 30, 2006.

14. Q8: IMPORTANT CONSIDERATIONS (contd.)
3.2.P Excipients:
Choice of excipients (in particular relative to their respective functions) & their concentration (with justification)
Their characteristics that may influence the drug product performance
Compatibility of excipients with other excipients, where relevant
Justification for their inclusion, in some cases (e.g. preservatives, anti-oxidants) accompanied by experimental data
Safety of the excipients, where relevant
I’d like to remind you that, during the course of this presentation, management will make projections or other forward-looking remarks regarding future events or the future financial performance of the company. It’s important to note that such statements about Watson’s estimated or anticipated future results, prospects or other non-historical facts are forward-looking statements, and reflect Watson’s current perspective of existing trends and information as of today’s date. Watson disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Actual results may differ materially from Watson’s current expectations and projections, depending on a number of factors effecting Watson’s business. These factors are detailed in Watson’s periodic public filings with the Securities and Exchange Commission, including, but not limited to, Watson’s Form 10-K for the year-ended December 31, 2005 and Form 10-Q for the quarter ended Stpember 30, 2006.

15. Q8: IMPORTANT CONSIDERATIONS (contd.)
3.2.P Formulation Development:
Differences between clinical formulations and current formulation
Summary describing the development of the formulation including identification of critical attributes to the quality of the drug product
The choice of drug product components (drug substance, excipients, container closure system etc.,) and the manufacturing process
Results of comparative in vitro studies (dissolution) and in vivo studies (bio-equivalence), when appropriate
Any special design features of the drug product (tablet score line,over fill etc.,)
I’d like to remind you that, during the course of this presentation, management will make projections or other forward-looking remarks regarding future events or the future financial performance of the company. It’s important to note that such statements about Watson’s estimated or anticipated future results, prospects or other non-historical facts are forward-looking statements, and reflect Watson’s current perspective of existing trends and information as of today’s date. Watson disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Actual results may differ materially from Watson’s current expectations and projections, depending on a number of factors effecting Watson’s business. These factors are detailed in Watson’s periodic public filings with the Securities and Exchange Commission, including, but not limited to, Watson’s Form 10-K for the year-ended December 31, 2005 and Form 10-Q for the quarter ended Stpember 30, 2006.

16. Q8: IMPORTANT CONSIDERATIONS (contd.)
3.2.P Overages:
Use of an overage of a drug substance to compensate for degradation during manufacture or a product’s shelf life, or to extend shelf life, is discouraged
A justification of any overage on grounds of safety and efficacy
Information on amount of overage, reason for the overage and the justification for the amount of overage.
I’d like to remind you that, during the course of this presentation, management will make projections or other forward-looking remarks regarding future events or the future financial performance of the company. It’s important to note that such statements about Watson’s estimated or anticipated future results, prospects or other non-historical facts are forward-looking statements, and reflect Watson’s current perspective of existing trends and information as of today’s date. Watson disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Actual results may differ materially from Watson’s current expectations and projections, depending on a number of factors effecting Watson’s business. These factors are detailed in Watson’s periodic public filings with the Securities and Exchange Commission, including, but not limited to, Watson’s Form 10-K for the year-ended December 31, 2005 and Form 10-Q for the quarter ended Stpember 30, 2006.

17. Q8: IMPORTANT CONSIDERATIONS (contd.)
3.2.P Physicochemical and Biological parameters:
The physicochemical and biological properties relevant to the safety, performance or manufacturability of the drug product should be identified and discussed
The selection of dissolution testing should be discussed.
I’d like to remind you that, during the course of this presentation, management will make projections or other forward-looking remarks regarding future events or the future financial performance of the company. It’s important to note that such statements about Watson’s estimated or anticipated future results, prospects or other non-historical facts are forward-looking statements, and reflect Watson’s current perspective of existing trends and information as of today’s date. Watson disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Actual results may differ materially from Watson’s current expectations and projections, depending on a number of factors effecting Watson’s business. These factors are detailed in Watson’s periodic public filings with the Securities and Exchange Commission, including, but not limited to, Watson’s Form 10-K for the year-ended December 31, 2005 and Form 10-Q for the quarter ended Stpember 30, 2006.

18. Q8: IMPORTANT CONSIDERATIONS (contd.)
3.2.P.2.3 – Manufacturing Process Development
Basis for process improvement, process validation, continuous process verification and process control requirements.
The selection, the control, and any improvement of the manufacturing process.
Appropriateness of the equipment used for the intended product.
For the sterile products, appropriate method of sterilization and the primary packaging material selection should be discussed.
I’d like to remind you that, during the course of this presentation, management will make projections or other forward-looking remarks regarding future events or the future financial performance of the company. It’s important to note that such statements about Watson’s estimated or anticipated future results, prospects or other non-historical facts are forward-looking statements, and reflect Watson’s current perspective of existing trends and information as of today’s date. Watson disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Actual results may differ materially from Watson’s current expectations and projections, depending on a number of factors effecting Watson’s business. These factors are detailed in Watson’s periodic public filings with the Securities and Exchange Commission, including, but not limited to, Watson’s Form 10-K for the year-ended December 31, 2005 and Form 10-Q for the quarter ended Stpember 30, 2006.

19. Q8: IMPORTANT CONSIDERATIONS (contd.)
3.2.P.2.3 – Manufacturing Process Development (contd.)
Significant difference between the manufacturing process of pivotal batches and intended commercial batches.
If differences are there, the influence of the difference on product performance, manufacturability and quality to be discussed.
Experiments of laboratory scale batches should be described.
Information from scaling up from laboratory through pilot to production scale to justify that scale-up can be achieved without a consequent loss in quality.
I’d like to remind you that, during the course of this presentation, management will make projections or other forward-looking remarks regarding future events or the future financial performance of the company. It’s important to note that such statements about Watson’s estimated or anticipated future results, prospects or other non-historical facts are forward-looking statements, and reflect Watson’s current perspective of existing trends and information as of today’s date. Watson disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Actual results may differ materially from Watson’s current expectations and projections, depending on a number of factors effecting Watson’s business. These factors are detailed in Watson’s periodic public filings with the Securities and Exchange Commission, including, but not limited to, Watson’s Form 10-K for the year-ended December 31, 2005 and Form 10-Q for the quarter ended Stpember 30, 2006.

20. Q8: IMPORTANT CONSIDERATIONS (contd.)
3.2.P.2.4 – Container Closure System
Discussion on the suitability of the container closure system used for storage, transportation and use of the product
This discussion should consider
choice of the materials for primary packaging
protection from moisture and light
compatibility of the materials with the dosage form
performance of the dose delivery from the device if dosing device is used
Food grade certification
I’d like to remind you that, during the course of this presentation, management will make projections or other forward-looking remarks regarding future events or the future financial performance of the company. It’s important to note that such statements about Watson’s estimated or anticipated future results, prospects or other non-historical facts are forward-looking statements, and reflect Watson’s current perspective of existing trends and information as of today’s date. Watson disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Actual results may differ materially from Watson’s current expectations and projections, depending on a number of factors effecting Watson’s business. These factors are detailed in Watson’s periodic public filings with the Securities and Exchange Commission, including, but not limited to, Watson’s Form 10-K for the year-ended December 31, 2005 and Form 10-Q for the quarter ended Stpember 30, 2006.

21. Q8: IMPORTANT CONSIDERATIONS (contd.)
3.2.P.2.5 – Microbiological Attributes
Where appropriate the microbiological attributes of the dosage form should be addressed (according to Ph.Eur.). The discussion should include for example:
The rationale for performing or not performing microbial limits testing for non-sterile products.
The selection and effectiveness of preservative systems in products containing antimicrobial preservatives.
For sterile products, the integrity of the container closure system as it relates to preventing microbial contamination.
The lowest concentration of antimicrobial preservative should be demonstrated to be effective in controlling microorganisms.
I’d like to remind you that, during the course of this presentation, management will make projections or other forward-looking remarks regarding future events or the future financial performance of the company. It’s important to note that such statements about Watson’s estimated or anticipated future results, prospects or other non-historical facts are forward-looking statements, and reflect Watson’s current perspective of existing trends and information as of today’s date. Watson disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Actual results may differ materially from Watson’s current expectations and projections, depending on a number of factors effecting Watson’s business. These factors are detailed in Watson’s periodic public filings with the Securities and Exchange Commission, including, but not limited to, Watson’s Form 10-K for the year-ended December 31, 2005 and Form 10-Q for the quarter ended Stpember 30, 2006.

22. Q8: IMPORTANT CONSIDERATIONS (contd.)
3.2.P.2.6 – Compatibility
The compatibility of the drug product with reconstitution diluent(s) should be addressed to provide appropriate labelling information.
This information should cover the recommended in-use shelf life at the recommended storage temperature.
I’d like to remind you that, during the course of this presentation, management will make projections or other forward-looking remarks regarding future events or the future financial performance of the company. It’s important to note that such statements about Watson’s estimated or anticipated future results, prospects or other non-historical facts are forward-looking statements, and reflect Watson’s current perspective of existing trends and information as of today’s date. Watson disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Actual results may differ materially from Watson’s current expectations and projections, depending on a number of factors effecting Watson’s business. These factors are detailed in Watson’s periodic public filings with the Securities and Exchange Commission, including, but not limited to, Watson’s Form 10-K for the year-ended December 31, 2005 and Form 10-Q for the quarter ended Stpember 30, 2006.

23. Q8: OVERVIEW (contd.)
Greater understanding of the product / process & variables
Science- and risk-based submissions
Wider regulatory “flexibility”
Q8 Annexure & “Q R M” (ICH Q9)
I’d like to remind you that, during the course of this presentation, management will make projections or other forward-looking remarks regarding future events or the future financial performance of the company. It’s important to note that such statements about Watson’s estimated or anticipated future results, prospects or other non-historical facts are forward-looking statements, and reflect Watson’s current perspective of existing trends and information as of today’s date. Watson disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Actual results may differ materially from Watson’s current expectations and projections, depending on a number of factors effecting Watson’s business. These factors are detailed in Watson’s periodic public filings with the Securities and Exchange Commission, including, but not limited to, Watson’s Form 10-K for the year-ended December 31, 2005 and Form 10-Q for the quarter ended Stpember 30, 2006.

24. Specific Cases
Use of one lot of API for Exhibit batches : PSD Profile Optimization
Impact of age of API used in Exhibit batches
Blend time optimization
Switching to alternate sources for Excipients (E.g., Mg.Stearate– Animal grade to Veg. grade)

25. Focus of Q8 Annexure Define Target Product Profile
Identify ‘CQAs’ – Critical Quality Attributes of Product
Determine QAs of inputs – materials/parameters etc.
Select appropriate process
Determine functional relationships between material attributes & process parameters to Product CQAs
Identify a control strategy
Propose a “design space”
Define and describe design space in regulatory submission

26. Focus of Q8 Annexure (contd.)
Defining DESIGN SPACE: Options -
Ranges of input variables or parameters
Analysis of historical data can be basis
Scaling factors
Multivariate operations
Operation within the design space results in a product that meets the defined quality attributes
Periodic reassessment throughout life-cycle

27. ICH Q 9 (QRM) as part of development
To design a quality product and its manufacturing process
to consistently deliver the intended performance of the product
To enhance knowledge of product performance over a wide range of
material attributes (e.g. particle size distribution, moisture content, flow properties)
processing options
process parameters

28. QRM as part of development (contd.)
To assess the critical attributes of
Raw materials
Solvents
Active Pharmaceutical Ingredient (API)
Starting materials
Excipients
Packaging materials
To establish appropriate specifications, identify critical process parameters and establish manufacturing controls

29. QRM as part of development (contd.)
To decrease variability of quality attributes:
reduce product and material defects
reduce manufacturing defects
To assess the need for additional studies (e.g., bioequivalence, stability) relating to scale up and technology transfer
To make use of the “design space” concept (annexure to ICH Q8)

30. Q9 : QUALITY RISK MANAGEMENT
What is “risk”?
Combination of the probability of occurrence of harm, and the severity of that harm.
“Fact: No process is risk-free”

31. MANAGING RISKS IN A COMPANY …
Strategic risks
Operational risks
Financial risks
Compliance risks
Environmental
Quality / GMP
Regulatory filing
Safety & Efficacy
Competitor
advantage
viability
Shareholder
harm
Patient
ICH Q9

32. EMEA NOTE ON Q9
I’d like to remind you that, during the course of this presentation, management will make projections or other forward-looking remarks regarding future events or the future financial performance of the company. It’s important to note that such statements about Watson’s estimated or anticipated future results, prospects or other non-historical facts are forward-looking statements, and reflect Watson’s current perspective of existing trends and information as of today’s date. Watson disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Actual results may differ materially from Watson’s current expectations and projections, depending on a number of factors effecting Watson’s business. These factors are detailed in Watson’s periodic public filings with the Securities and Exchange Commission, including, but not limited to, Watson’s Form 10-K for the year-ended December 31, 2005 and Form 10-Q for the quarter ended Stpember 30, 2006.

33. Q9: Dangers from Absence of Risk Management
Pharmaceutical products may not be available to patients when needed, e.g. when a product is recalled from a market or where different risk decisions contribute to inefficient manufacturing processes and consequent delays
May increase the potential for the release of unacceptable product to the market
Delays may occur during implementation of changes and improvements to processes
Safe and effective drugs may be discarded or recalled from the market
Manufacturers may be reluctant to implement new technologies or continuous improvements to products or processes
Scarce resources may not be optimally allocated
Lack of appropriate date to evaluate risk most effectively

34. Q9: Purpose & Objectives
No national guidance documents in this area in any region
No common understanding of terms, principles and application of risk management
Development of a harmonised pharmaceutical quality system applicable across the life cycle of the product emphasising an integrated approach to risk management and science
Deriving common terminology, including a definition of quality, risk, risk management etc
Defining the principles for how risk management can be effectively applied and consistently integrated into decisions regarding product quality
Rationalization & Operationalization of the integration of risk management into the decision making process

35. Q9: Purpose & Objectives (contd.)
Defining criteria on how to apply the risk management process
Identification of circumstances, if any, when applying risk management principles is not feasible or appropriate
Defining what principles of risk management apply to industry, regulators or both across the life-cycle of the product
Establish - how, what & when information is exchanged between & within industry, to the regulators, and to both, throughout the product life cycle
Emphasize synergies with the pharmaceutical development project
Defining roles and responsibilities of regulators and industry
Discuss how risk can be incorporated into resource allocation decisions

36. Q9: Benefits of Quality Risk Management Approach
Enhancement of patient confidence worldwide in decision making on the quality of pharmaceuticals
Promotion of more effective use of regulatory and industry resources
Establishment of a systematic, well-informed and thorough method of decision making which leads to greater transparency and predictability
Increased knowledge of exposure to risk
A greater assurance to regulators of a company’s ability to deal with potential risks
Fostering continuous improvement and quality by design generally leading to enhanced product quality
Enables right “decision making”

37. Quality Risk Management Process
I’d like to remind you that, during the course of this presentation, management will make projections or other forward-looking remarks regarding future events or the future financial performance of the company. It’s important to note that such statements about Watson’s estimated or anticipated future results, prospects or other non-historical facts are forward-looking statements, and reflect Watson’s current perspective of existing trends and information as of today’s date. Watson disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Actual results may differ materially from Watson’s current expectations and projections, depending on a number of factors effecting Watson’s business. These factors are detailed in Watson’s periodic public filings with the Securities and Exchange Commission, including, but not limited to, Watson’s Form 10-K for the year-ended December 31, 2005 and Form 10-Q for the quarter ended Stpember 30, 2006.

38. 3 fundamental questions:
Risk Assessment
3 Stages:
Risk identification: what are the hazards?
Risk analysis: risk associated with identified hazards
Risk evaluation: comparison of identified and analyzed risk against a given risk criteria
3 fundamental questions:
What might go wrong?
What is the likelihood it will go wrong?: Probability
What are the consequences? : Severity
I’d like to remind you that, during the course of this presentation, management will make projections or other forward-looking remarks regarding future events or the future financial performance of the company. It’s important to note that such statements about Watson’s estimated or anticipated future results, prospects or other non-historical facts are forward-looking statements, and reflect Watson’s current perspective of existing trends and information as of today’s date. Watson disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Actual results may differ materially from Watson’s current expectations and projections, depending on a number of factors effecting Watson’s business. These factors are detailed in Watson’s periodic public filings with the Securities and Exchange Commission, including, but not limited to, Watson’s Form 10-K for the year-ended December 31, 2005 and Form 10-Q for the quarter ended Stpember 30, 2006.

39. Risk Control Decision making: Basis for Judgment: Risk reduction? Or
Risk acceptance?
Basis for Judgment:
Is the risk above an acceptable level?
What can done to reduce or eliminate risks?
What is the appropriate balance among benefits, risks and resources?
Are new risks introduced as a result of the identified risks being controlled?
I’d like to remind you that, during the course of this presentation, management will make projections or other forward-looking remarks regarding future events or the future financial performance of the company. It’s important to note that such statements about Watson’s estimated or anticipated future results, prospects or other non-historical facts are forward-looking statements, and reflect Watson’s current perspective of existing trends and information as of today’s date. Watson disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Actual results may differ materially from Watson’s current expectations and projections, depending on a number of factors effecting Watson’s business. These factors are detailed in Watson’s periodic public filings with the Securities and Exchange Commission, including, but not limited to, Watson’s Form 10-K for the year-ended December 31, 2005 and Form 10-Q for the quarter ended Stpember 30, 2006.

40. Risk Management methodology
Recognized risk management tools:
Basic risk management facilitation methods (Flow charts, check sheets etc.).
Failure Mode Effects Analysis (FMEA).
Failure Mode, Effects and Criticality Analysis (FMECA).
Fault Tree Analysis (FTA).
Hazard Analysis and Critical Control Points (HACCP).
Hazard Operability Analysis (HAZOP).
Preliminary Hazard Analysis (PHA).
Risk Ranking and Filtering.
Supporting Statistical Tools.
I’d like to remind you that, during the course of this presentation, management will make projections or other forward-looking remarks regarding future events or the future financial performance of the company. It’s important to note that such statements about Watson’s estimated or anticipated future results, prospects or other non-historical facts are forward-looking statements, and reflect Watson’s current perspective of existing trends and information as of today’s date. Watson disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Actual results may differ materially from Watson’s current expectations and projections, depending on a number of factors effecting Watson’s business. These factors are detailed in Watson’s periodic public filings with the Securities and Exchange Commission, including, but not limited to, Watson’s Form 10-K for the year-ended December 31, 2005 and Form 10-Q for the quarter ended Stpember 30, 2006.

41. Importance of Communication in QRM
Communication facilitates trust and understanding
Regulators operation - Reviews
- Inspections
Industry operation - Submissions
- Manufacturing

42. Using ICH Q9 will… Facilitate Communication and transparency
More informed, scientifically based decision making
Patient focused actions on quality risks
Realistic and appropriate solutions
Use of existing solutions (Share best practice/prior knowledge)
Manage critical to quality aspects
Through systems, organisations, processes & products
Maintain responsibility & accountability for QRM
Focus activity towards patient protection
It should never be used as a “hobby horse” / preconceived idea

43. Opportunity for the Industry & Competent Authorities
Using the same guideline apply QRM to industry (Development & Manufacture) and regulators (Reviewer & Inspectorate)
Provides for establishing a defined program for what we already do every day in our jobs
Supports science-based decision making
Optimisation of resources
Prevention from overly restrictive and unnecessary requirements
Facilitates communication and transparency

44. Challenges for Industry & Competent Authorities
Interpreting and adopting the concepts of quality risk management into specific areas
Embed this behavior into quality aspects of business, technology and regulation
Adopt in existing structures, organizations and Quality System
Balance the documented use of “informal” and “formal” quality risk management

45. QRM Integration into Industry & Reg Operations
QRM is a process that supports science-based and practical decisions when integrated into quality systems.
Effective QRM can facilitate better and more informed decisions.
Effective QRM can provide regulators with greater assurance of a company’s ability to deal with potential risks.
QRM can facilitate better use of resources by all parties.
Training of both industry and regulatory personnel in QRM processes provides for greater understanding of decision-making processes & builds confidence in QRM outcomes.
I’d like to remind you that, during the course of this presentation, management will make projections or other forward-looking remarks regarding future events or the future financial performance of the company. It’s important to note that such statements about Watson’s estimated or anticipated future results, prospects or other non-historical facts are forward-looking statements, and reflect Watson’s current perspective of existing trends and information as of today’s date. Watson disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Actual results may differ materially from Watson’s current expectations and projections, depending on a number of factors effecting Watson’s business. These factors are detailed in Watson’s periodic public filings with the Securities and Exchange Commission, including, but not limited to, Watson’s Form 10-K for the year-ended December 31, 2005 and Form 10-Q for the quarter ended Stpember 30, 2006.

46. concepts and principles
The new paradigm
“risk-based”
concepts and principles Q8 Q9
Q10

47. Incremental steps Changed Paradigm Q8 Q10 Q9
Pharmaceutical Development (Q8) Past: Data transfer / Variable output
Present: Knowledge transfer / Science based / Consistent output
Changed Paradigm
Quality Risk Management (Q9)
Past: Used, however poorly defined
Present: Opportunity to use structured process thinking
Pharmaceutical Quality Systems (Q10) Past: GMP checklist
Future: Quality Systems across product life cycle Q8
Q10 Q9

48. How Q9 interacts with Q8 and Q10
Risk from Manufacturing site
High
Using Q9 Quality Risk Management principles
Q10 Pharm. Quality Systems
Low
Q8 Pharmaceutical Development
Low
High
Product / Process Risk

49. ICH Q9 Link back to patient risk
Opportunities to impact risk using quality risk management Q8
Design Q9
Q10
Process
Materials
Manufacturing
Facilities
Distribution
Patient

50. A Vision of the Future Old Approach New Approach Remarks Broad Concept
Old Approach
New Approach
Remarks
Broad Concept
Quality decisions divorced from science and risk evaluation. Adherence to filing commitments.
Quality decisions and filing committments based on Process Understanding and Risk Management. Quality by Design.
Design Space concept introduced to integrate process knowledge with regulatory evaluation.
Quality
Post-factum sampling and quality testing. Process Validation.
Management of variability Process control focused on critical attributes. Continuous Quality Verification.
Quality by design definition applied. Measure critical process parameters to control output product quality.
Systems
Systems designed to inhibit changes & minimize business risks. Discourages improvement & innovation.
Changes managed within company's quality system. Real time batch release feasible.
Regulators and industry place higher reliance / trust / understanding on systems. Multidisciplinary evaluation and decision making.
Regulatory
Compliance focus. Changes require prior approval.
Regulatory scrutiny adjusted to level of Process Understanding. Continuous improvement allowed within Design Space.
Requires mechanisms to communicate Process Understanding data ("inspectable rather than reviewable").

51. Regulatory Guidelines Read… Repeat… Ruminate…
“raison d'être” (French; underlying principle)
THANK YOU !