1. Sales Force of the Future The Pharma, Biotech & Device Colloquium June 7, 2004 Presented to:

2. Sales Force of the Future Coverage Points  Future Truths We Hold to be Self-evident  Future Sales Force: “3F” Principles of Design –Fusion –Flexibility –Fit  Getting There  Barriers to Design Principles  Summary

3. Sales Force of the Future Future Truths We Hold to be Self-evident 1.Physicians prescribing behavior will match product to patient subject to patient then payer influence 2.Success in satisfying unmet clinical needs first will drive therapeutic market dominance 3.Blockbusters will derive from bold investments in research, development 4.Blockbusters will be built to reach all healthcare professionals, payers and patients 5.The meaning of critical mass will forever be reinvented 6.Drugs will remain political and by extension high margins are a privilege, not a right 7.Exclusivity periods for drugs will be continually challenged by fast followers, IP attacks and other “unfriendly threats” 8.Healthcare technology’s ability to change behavior will elude our ability to predict the timing, pace and implications of change

4. Sales Force of the Future Notable Implications  A much more fluid, dynamic environment is predicted  Capacity for and ability to change will be critical  Operational capabilities will need to reflect this environment This provides the context for sales force futuring  draws a set of conditions upon which we have viewed the sales force of the future

5. Sales Force of the Future Future Sales Force: “3F” Principles of Design 1st Principle: Fusion  Representatives will act as “Integrated Content Delivery Systems,” fusing a variety of mediums and channels to connect healthcare professionals to product content experiences Corollaries:  The sales representative will be the centralized conduit, personally connecting healthcare professionals to product content  The sales representative will deliver content in two fundamental mediums: –Personally via 1:1 interactions –Digitally via interactions customized to mediums of choice by healthcare professionals  The sales representative will have the ability to distribute content at two levels, 1:1 and 1:(1+X)

6. Sales Force of the Future Future Sales Force: “3F” Principles of Design 2nd Principle: The Flexibility Formula  Manufacturers will be able to increase/decrease total sales force size by X% on 12 –24 weeks notice, for periods of up to 18 months, with 0% increase in permanent overhead Corollaries:  A core sales team will exist  The total sales force is a flexible resource, surging and shrinking with periods of growth or attack and periods of market reduction or defense

7. Sales Force of the Future Future Sales Force: “3F” Principles of Design 3rd Principle: Fit, for Purpose  Sales Force will be tiered, with tiers tied to product lifecycle stage to maximize product margin Corollaries:  There are 4 phases of product lifecycle (Periods are subject to market conditions and brand lifecycle mgmt, strategies) –Launch Period (-18 months to +18 months) –Growth (+19 months to 36 months) –Maturity (+37months to 60 months) –Decline (+60 months  expiration)  One sales force cannot support all phases of a product’s life cycle to maximize margin opportunity  The points of change in a product life cycle must be clearly marked

8. Sales Force of the Future Pharma Field Force of the Future Core Sales Force Supplemental Core Harvest & Support Team Permanent Semi-Permanent Highly Flexible Market Development Product Launch KOL relationship Relationship-Driven Drivers Growth Defends Competitive Threats Raises Barriers to Entry Trained & equipped for brand maintenance Reminding/ Harvesting Investing/ Establishing Profiles of Teams hired, engineered and supported for specific purpose Leveraging/ Reinforcing

9. Sales Force of the Future Getting There  Fusion Principle –Increased investment in enabling technologies  Broadband Infrastructure  CRM Capability  Internet-driven content & communications systems  Cultural: Representative as center point for all product content –Flexibility Principle –“Plug & Play” Partnerships with fully integrated systems architecture –Cultural: Sales force is a flexible asset  Fit Principle –Brand scorecards clearly underscoring points of change in lifecycle –Cultural: Sales Force is ubiquitous, but tailored and tiered

10. Sales Force of the Future Barriers to 3F Principles We’ve Heard  Can’t Disarm, Big Sales Force is Still Working –Not calling for disarmament, suggesting redeployment that can still provide current SOV and higher return on sales, which has declined 25% last 4 years  Current Sales Force critical bridge to Pipeline –Current forces, on an industry basis, spend 35% of time on mature and declining products; inefficient  Flexibility requirements are daunting –Principles of Just in Time inventory management have revolutionized the business cycle; the idea here is the same  Fusion is happening now, not new –Rep role is tough; engineered for dynamic interpersonal contacts with physicians but increasingly pushed to drive promotional events as real content delivery medium; small meeting market has a ___% CAGR last 5 years

11. Sales Force of the Future Success in future will recognize:  Shifts in representative role from primary agent for driving treatment change to hub for Integrated Content Delivery System  Emerging trends in IT enable return to content-rich selling and improved customer experience  Inflection points connecting Launch-Growth-Maturity-Decline can and must be clearly marked  Traditional allocation strategy of “one size fits all sales force” is inefficient and can be replaced by tiered sales force structure “fit to purpose”  Greater flexibility is critical to cope with faster market forces