SPBD Leadership - Learning Review, 21 February Denise Goode / Olof Ljungstrand

1. Project BrilliantA deal securing access to two late-stage diabetes products from Bristol-Myers Squibb, signed 11 January 2007 SPBD Leadership - Learning Review, 21 February Denise Goode / Olof Ljungstrand on behalf of the “Brilliant” team

2. PRESS RELEASE Stock Exchange Announcement For Business and Financial Media AstraZeneca and Bristol-Myers Squibb Announce Worldwide Collaboration To Develop and Commercialise Diabetes Compounds “Deal A Significant Step In Strengthening AstraZeneca’s Late Stage Pipeline” “Partnership Aligned with Bristol-Myers Squibb Company Strategy”

3. Deal Overview – The Basic Premise… • AZ’s rights & obligations under the agreement are to co-develop and co-commercialise • BMS-477118/Saxagliptin and BMS-512148/SGLT2 - Two separate stand alone agreements • in solid orally administered form • the sole indication is the prevention, treatment or control of diabetes • under agreed & costed development & commercialisation plans appended to the contracts • Territory = Worldwide, except Japan • Effective Date: January 1, 2007 (signed 11 Jan but no anti-trust waiting period) • A 50 / 50 global ‘profit / cost share’ collaboration • AZ is BMS’s exclusive co-development and co-promotion partner in the Territory

4. “A Deal Designed to Strengthen its Thin Late-Stage Pipeline…” Fri.12th Jan 07

5. “An unusual deal” Monday 15 Jan 07

6. “An Elegant Match” Monday 15 January “Terms look relatively conservative for a late-stage deal, further payments are heavily conditional on success”

7. SPBD made a difference : Announcement added US $2 billion onto AZ Market Capitalisation AZ Market Cap Impact AstraZeneca January 2007 share price movement AZ BMS Collaboration announced Analyst Comments : Impact of collaboration on AZ stock Merrill Lynch "Something definitely better than nothing - Deal is a net positive for stock, addresses the lack of pipeline in the short to mid term, it targets a significant market and AZ is long on cash, short on products. Deal does not look cheap.” Bear Stearns “AZ late stage pipeline got a boost yesterday with the announcement of the collaboration. Whilst the deal is rich the long term prospects of AZ look significantly improved. Upgrade to outperform.” UBS “Deal is a boost to AZ pipeline but is costly in the near term. AZ has sensibly tried to boost pipeline but the economics up front significantly favour BMS.”

8. Interestingly, impact on AZ Share Price performance was positive relative to FTSE 100 and BMS Deal is the driver as AZ outperforms the market Impact on BMS also positive but less significant AZ BMS Collaboration announced AZ BMS Collaboration announced

9. SPBD Learning ReviewToday’s Objective Share Learning and Best Practice across SPBD

10. SPBD Learning ReviewToday’s Agenda • Learning Review Process • Our Learning – a Summary of Findings • Keys to our Success? • A Wish List Not time today for … • The Strategic Backdrop to the Deal • High Level Summary of Agreements

11. Learning Review Process • Deal signed 11 Jan • Template requesting specific feedback sent to deal team members & their reports 1 Feb • Feedback received collated & shared • Feedback debrief session 14 Feb.as part of “Deal Handover” • Deal team plus GPTs • Project Manager captured the more detailed aspects • Feedback summarised & shared with HR 20 Feb. • Recommendations developed • Summary findings to be shared with key stakeholders • Learning Review with SPBD Leadership 21 Feb. • Next Steps • Learning Review with SET • Learning Review with CVGI TAPT • Learning Review at DMG • Learning review at CVGI Evaluation Directors meeting

12. The AZ Transaction Team

13. The deal was strongly championed by the CVGI TAPT & well supported by the SET Deal Sponsors • SET represented by Martin Nicklasson, EVP (initially John Patterson) • CVGI TAPT represented by Gunnar Olsson, Head of CVGI TA SPBD involvement • Transaction leadership – Denise Goode (ETD CVGI) • Transaction Support – Ian Kirk (TD CVGI) • Evaluation leadership – Peter Morsing (ED CVGI) • Project Manager – Matt Grove • Due Diligence leadership – Steve Emery • CVGI VP Strategy – Nigel Ratcliffe • SHG support – John Goddard / Shaun Grady (see overleaf) Business recipients • GPD saxagliptin – Tomas Odergren, Sodertalje • GPD dapaglifozin – Bill Mezzanotte, Wilmington

14. … and delivered by a truly global cross-functional core transaction team (functional leads in bold) • David Baxter Finance • John Brazzo Finance, US • Nigel Finch COMMERCIAL LEAD • Denise Goode DEAL LEAD • Matt Grove Project Manager • Howard Hutchinson (CVGI TAPT) DEVELOPMENT LEAD • Philippe Jacquot Commercial, ISMO • Ian Kirk SPBD • Olof Ljungstrand LEGAL LEAD • Frank McNamara Legal, US • Meg Melville Regulatory • Tom Miller IP • Ivor Nathan OPERATIONS LEAD • Tomas Odergren Global Product Director (saxagliptin) • Mike Tilton Commercial, US • Orysia Tresznewsky Development • Judith Wright ` FINANCE LEAD • Ed Dixon Covington & Burling, External Legal • Sarah Hoagland Covington & Burling, External Legal

15. …and with critical support from : • EVPs • Tony Zook • CVGI TAPT • Gunnar Olsson • John O’Brien • ISMO • Catharina Gustafsson • Commercial • Sarah McMahon, Susy Hassall, Klaus Christensen • Development • Mike Wayne, Anders Bergbrant … and many others behind the scenes

16. The AZ Transaction Team What worked well • Clarity of objective • Shared commitment • Individual team members worked well together & the team became a powerful unit of collective performance (sum greater than parts) • The right people in the right place at the right time (most of the time!) with clear roles and responsibilities Recommendations: • Having a small, focused & motivated cross-functional core team delivers success • Team selection a key success factor for negotiations and Deal Lead needs scope to influence this • Deal teams must be led with clarity, energy and a focus on delivery – a strong drive for success motivates, lifts & carries the whole team forward “An inspiring sense of energy carried us through”

17. The AZ Transaction Team What didn’t work so well • Transaction Director & Lawyers were largely isolated over Christmas • Almost impossible to re-engage others after – we exchanged around 8 drafts over that period • “Try not to do deals over holiday periods” (!!??!!) • Certain Functions (eg Finance) were stretched by the level of activity required of them with 3 meeting rooms in operation • BMS had an experienced dedicated Alliance Manager reaching out for a match in AZ • No matter how strongly the companies have agreed on the “letter of the deal” the success of the alliance will hinge on both companies abilities to manage the day to day relationship • “Christmas holidays or the lack of them” Recommendations • The teamwork must continue right up to the close of the deal • We should ensure we align enough individuals to support the functions (eg a finance person with each of eg development, marketing, manufacturing) • Engage an Alliance Manager early on large complex deals

18. SPBD Learning Review Project Management / Transaction Planning

19. Transaction process took around 6 months ... 20 Nov AZ/BMS Meeting of minds meeting 23/24 Nov THANKSGIVING 5 Nov AZ Final Bid submitted 11Jan Contract Signed 15 Dec “Black Friday” 4 Aug AZ Indicative Term Sheet submitted 19 Oct Capabilities Presentation Through Nov/Dec Global Commercial & Development Plans created Sept AZ full team “Kick Off” meeting 10 Nov AZ Final Bid accepted, Contract Negotiations commenced 1 Jan 07 50/50 Cost Sharing commenced CHRISTMAS (Deferred) 5/6 Oct Commercial/ Development workshop 25 Nov onwards Negotiations recommenced 8 Aug Term Sheet accepted, Cap Present. shopping list received 18 Dec Planning for Post Deal Handover commenced Mid-Sept Due Diligence performed 20/22 Nov Further Due Diligence AUG SEPT OCT NOV DEC JAN

20. Deal Status update to SET 14 December 2006An optimistic plan ! • All major ‘business issues’ agreed   • Final legal drafting in progress • Aim to sign by Christmas However, the next day…..

21. The Reality…Dealmaking is never “paint by numbers” • All major ‘business issues’ agreed by 14 December • Final legal drafting in progress • Aim to sign by Christmas • 15th December: “Black Friday” • BMS Alliance Management highlighted the “Merck Sante issue” • Termination & ”Liquidated Damages” • The special Christmas & New Year ’light entertainment’

22. Project Management / Transaction Planning What worked well • A dedicated full-time Project Manager (…once he arrived in October!) • Ensured a well organised and co-ordinated multi-workstream approach • 13 streams of activity in parallel • Commitment of Functions was strong (until Christmas) • “Aligning all the functions and capturing their individual feedback such as we did in the Alderley & Airport events was good. The involvement and organisational buy-in was very positive” • Functional leads had the right back-up behind the scenes Recommendations • Early appointment & briefing of Project Manager • Assign clear Functional Leads & a cascade approach rather than have 30 people on team calls

23. Project Management / Transaction Planning What didn’t work so well • The dealmaking timeline is not something we can easily control • Realistically, timelines cannot be planned with any accuracy • With two separate late stage product deals negotiated in parallel, each in separate agreements, we needed to give time to both products • In August 4 weeks of preparation time for the Capabilities Presentation were lost due to a combination of certain of the extended team not fully understanding importance / scope of task and team holidays Recommendation • Deal Lead to ensure a good understanding of the timeline/scope of critical significant work products to manage pressure on team • PM to keep team focused on immediate actions, whilst ensuring a longer term activities vision is regularly communicated

24. SPBD Learning Review Internal Communication

25. Internal Communication What worked well • “The Kick Off meeting for the full team in September was effective in bringing all the functions together, ensuring clarity of objectives/direction and enabling brainstorming as a team” Recommendation • The Deal Lead working with the Functional Leads needs to be able to visualise and paint a picture of AZ’s success, even at the Indicative bid stage, motivating the team to deliver their very best and as a springboard for creativity required to deliver a quality Capabilities Presentation, influential bids and during negotiations

26. Internal Communication What didn’t work so well • Frustration from those people who weren’t involved but were on the periphery of the deal. • A wish for wider US involvement caused confusion • “What was going on between 22 Dec to 11 Jan? – those of us who returned to work around 6th/7th/8th January had no clue” • Jointly agreed timeline was challenging – On occasion there was not enough time to fully debate all issues together internally before discussing with BMS.

27. Internal Communication What didn’t work so well Recommendations • Use kick off meeting to set expectations re roles and US coordination • “A wider communication would perhaps be useful for the wider audience” (Confidentiality?) • Project Manager or 2nd Transaction Director could proactively aim to pick this up. • An alternative would be to ensure functional leads proactively run communication sessions for their own teams • For a business critical deal, team members need to be clear that they are either 100% in (holidays or not), or they are out and need to find substitutes • Ensure no false deadlines forced by other side – give the team enough time

28. SPBD Learning Review Stakeholder Management

29. Stakeholder Management What worked well • Internal alignment on strategic direction and business importance secured early from from CVGI TAPT & EVPs early on & through negotiations • Deal Lead trusted and thus EVPs were easily accessible • The “Risk Log” (example attached) was a key enabler to manage stakeholders effectively Recommendations • Ensure clear instructions, goals and a negotiating “delta” for Deal Team obtained direct from PST/EVPs • Direct input and guidance through from EVPs is an AZ “critical success factor” • the associated empowerment can increase the professionalism of our approach and can assist AZ secure the upper hand

30. Key Risks & Mitigation Strategy addressed with SET via a live “Risk Log” – example (extract)

31. SPBD Learning Review Due Diligence

32. Due Diligence What worked well • Well planned and organised • The commercial due diligence worked well – perhaps down to the diplomacy of the commercial person involved What didn’t work so well • DD under workload pressure made it challenging to deliver alongside other priorities • Sense that there was not necessarily a true understanding of all stakeholder needs – inputs & best use of timely outputs • Seen by some members of transaction team as a rigid & autocratic process with no scope to influence – absence of trust of evaluation/deal team • A senior development team wanting to flex a rigid process caused frustration to DD Lead Recommendations • Ensure DD Lead attends deal kick off meeting to best understand the deal being formulated & associated needs • Whilst respecting the “independence” of the DD, request for DD planning to be , quote: “somewhat more inclusive of members of Deal Team to ensure we get all information required for deal under consideration (rather than just technical/IP science side)”

33. SPBD Learning Review Capabilities Presentation

34. Capabilities Presentation What worked well • September workshops between Commercial and Development were an excellent initiative • The output set the “foundation” for major parts of the Capabilities Presentation • Preparation of the presentation focused on BMS problems, BMS goals & BMS perceptions and how we could contribute to optimising their assets together • The right people attended the Workshops, the rehearsals and the Capabilities meeting – different populations • The AZ team maintained a self belief which came across in the presentation – the whole team radiated positive vibes and delivered as if success had been achieved • Strong positive respect & relationships which developed between companies at this session were critical to further interactions

35. Why AstraZeneca ? Feedback from BMS after Capabilities Presentation… • “Genuinely liked the AZ people they met, seen to be culturally similar” • “BMS partner with people not companies” • “Impressed by your Marketing Insight work” • seen as unique and at the forefront with our physician/patient perspective • Impressed by our ability to execute: “if you can make $4bn from Nexium you must be doing something right” • “Innovation, creativity & out of the box thinking obvious in every section of the presentation – illustrates well thought through joined up thinking” • “Sensed trust and openness in AZ in sharing ideas so freely – indicator of confidence in own abilities to see AZ’s advantage through execution as well as ideas creation” • “Valued approach of treating in-licensed brands as in-house brands” • “Liked thinking of potential combinations as creating new brands not just as LCM” • “Interested in the US multi-cultural marketing approach – said a lot about people in the AZ organisation”

36. Capabilities Presentation Recommendation • The AZ/BMS Capabilities Presentation document itself is a useful resource but the thinking behind it is the most important aspect behind its success. • The creative ideas proposed came from a real understanding of the likely common ground of both both parties • The value is in the thinking • Strongly encourage others to build the core of this from scratch to deliver the “wow” factor

37. SPBD Learning Review Negotiations

38. Negotiations What worked well • AZ acted collaboratively with BMS throughout • Functional involvement throughout • From the first meeting getting the functions “owning” their issues was very positive • “This is very different to the US model” • The “Business Functions” put deal together, the lawyers documented (not vice versa) • The integrated commercial and development approach worked well eg the need for outcome studies, how to approach differentiating saxagliptin from other DPPIVs, etc • The future GPD’s involvement in the negotiations gave him insight into how BMS structure themselves and allowed him to build knowledge & relationships and to take the philosophy behind the agreement into the collaboration

39. Negotiations Recommendations • Encourage external lawyers time 100% dedicated to an AZ business critical deal • Secure a GPD to work as part of deal team as early as possible • Ensure that the relationship between AZ & the partner is equally important as the “details” of the deal • Resolve all matters in the joint deal team where possible (we avoided any matters being escalated out of the deal team for debate between more senior Execs) to facilitate positive relationships • The early days where AZ has high level “face to face” meetings with a potential partner are critical to test the meeting of minds and to build early strategic alignment between both companies • No meeting where a partnering of assets is under contemplation are ever 100% ‘just science’ & Transaction Lead should be engaged in these early

40. Negotiations What didn’t work so well • BMS introducing “surprises” – expect matters to evolve (no roadmap without diversions!) • Merck Sante issue • Not being on top of Prosidian • Liquidated damages matter • BMS Lead Negotiator was not always available • This was not helpful to continuity - Crafty negotiation ploy? • BMS Functional people (eg development) not being on top of their game • Led to them reneging on agreed points • AZ/BMS Functional Teams off-line agreements were not always accepted in the Deal Room • “The 24*7 concept worked well in getting this important job completed, but is this now the expectation for future deals?” Recommendation • Ensure Deal Team members getting AZ support internally and at home

41. SPBD Learning Review Relationship with BMS

42. Relationship with BMS What worked well • A trusting relationship built with BMS • Open & professional • A strategic partnership was forged and sustained throughout • Assisted them negotiate their Freedom to Operate licence with Prosidian • Provided input to Merck Sante metformin combination cross licence • AZ team remained calm, patient and diplomatic throughout August – January • The relationship built between the two commercial teams was good and joined up thinking early in process • Tougher with their development people who had not really got their act together • Indicative and Final Bids were well positioned, well framed for success and – although hard negotiated by BMS – were well received What didn’t work so well • Critical IP issues were sprung on us by BMS with little planning ahead • Required rapid reaction & not much time for consideration/review • These arose through the limitations of BMS internal communication • This is not optimal, they are a very “siloed” company • The FDA & BMS auditors seem to have a straitjacket on them

43. SPBD Learning Review Securing the deal: Keys to our success?

44. Securing the deal : Keys to our success? Strategic, creative and tactical thinking throughout Direct support, guidance and trust from EVPs Small empowered and motivated team Passionate leadership Strategic clarity of direction Excellent but flexible planning & organisation High team drive, focus & commitment to deliver “WOW factor” Capabilities Presentation Flexibility, diplomacy and a great deal of patience Fun through team cohesion One global team, one lead, one set of messages = minimal confusion

45. The SPBD Deal Journey ……. “If you know exactly what you are going to do, what is the point of doing it?” Pablo Picasso

46. A Wish List • Appropriate recognition for the Brilliant deal team for pulling this deal off and delivering 2 strategically important late stage products to the AZ portfolio • Deal Lead to be able to influence the selection of suitable team members • Not all our people flourish in a deal room • Learning is shared and visibly embedded across SPBD • Ensure we learn from & capitalise on our strengths • Ensure we learn from “mistakes” and only make them across the SPBD team once • Develop and introduce a “Standard Process” for Learning Reviews • Laura Earnshaw, Denise Goode, Matt Grove & Chris Higgins volunteer to take this on and act as advocates