A “Process Driven” Hospira

1. A “Process Driven” Hospira Introduction to the Framework

2. Hospira at a glance The World’s Leading Provider of Injectable Drugs and Infusion Technologies • Market leadership positions in: • generic injectable pharmaceuticals globally • biosimilars in Europe and Australia • medication management systems globally • 70+ years experience; public independent companysince 2004 • 2011 annual revenues of $4.1B • 15,000 employees 1

3. Values Unwavering Commitment to ... • Integrity • Ownership/Accountability • Speed • Entrepreneurial Spirit • Our customers and patients, delivering on our promise by serving their needs with integrity, trust and innovation • Our employees, by embracing diversity of thought and cultural perspective, fostering an environment of empowerment, fairness and respect • Our shareholders, by safeguarding their investment and providing a fair return • Our communities, acknowledging our social responsibility through active citizenship and thoughtful giving Our philosophy Vision Advancing Wellness™… through the right peopleand the right products 2

4. Hospira addresses critical healthcare needs Key Products Customers Critical Needs Specialty Injectable Pharmaceuticals (SIP) • portfolio of ~200 products • many differentiated To reduce: • costs • medication errors • infections To improve: • patient safety • worker safety • productivity Hospitals and alternate site healthcare providers Medication Management Systems (MMS) • ~575,000 installed devices globally 3

5. Hospira product categories 2011 Net Sales$4.1B Specialty Injectable Pharmaceuticals (SIP) • Generic injectables • Proprietary drugs • Biosimilars OtherPharma 12% MedicationManagement Systems24% Medication Management Systems Specialty Injectable Pharmaceuticals (SIP) 63% • Infusion devices, dedicated administration sets, software and services • Gravity administration sets Other Pharma • Large volume solutions • One2One™ contract manufacturing services 4

6. Driving operational and quality excellence • We are reinforcing the foundation and preparing the organization for global expansion • We are making sustainable change in our process and quality procedures across our global manufacturing footprint • We are investing in the future with strategic capacity, best-in-class processes and people • Quality improvement and remediation efforts will position us favorably for long-term success 12

8. Driving Process Behavior - Background • Hospira has made a commitment to become a more “process driven” organization – desiring to increase integration and collaboration between functions and locations • This is a 5-7 year cultural journey which was started in 2011 • The Journey included • Laying foundations for process work to evolve in the overall enterprise • Enabling specific projects or initiatives to improve process • Creating language and tools for people to utilize in process efforts • Providing more clarity on process ownership and accountability

9. Process Charter – Vision/Mission • VISION: Hospira, will be known as a process-driven enterprise, that • supports, empowers and energizes employees, • encourages their initiative to work across silos, • enables and allows its people to perform process work to achieve desired corporate objectives. • Mission: The process platform will enable: • Hospira wide process understanding, • competency to manage, • frameworks to define, measure and sustain process focus in our company at the right levels at the right time for the defined outcome.

10. Why a Process Enterprise • Process enterprise enables people to do process work • A Process Enterprise defines and organization by behaviors and attitudes of all personnel • not purely defined by organization chart • A process-managed enterprise supports, empowers and energizes employees, encourages their initiative, enables and allows its people to perform process work. • Process work is • work that is focused on the customer, • directed toward achieving results rather than being an end in itself, • follows a disciplined and repeatable design. Michael Hammer, Agenda

11. In a process centric organization, all employees can answer… • What process or processes are you a part of? • How does the process create value for customers? How do you personally contribute to value? How do others? • What do people immediately before and after you in flow of process do? • By what measure does Hospira judge performance of your process? What is current level of that measure? • What other processes interface with yours? What do these processes need from yours? What does yours need from them? • What efforts to improve your process are now under way? Business Process Thinking Check ListBy Michael Hammer, the author of Agenda

12. What is a Business Process? • Designed group of related tasks that work together to create a result of value for a particular customer • Characteristics of a process • has defined triggers (initiating events) • has defined inputs • adds value • produces defined outcomes and deliverables • has customers (internal or external) • normally crosses existing organization or functional boundaries • Measurable A process is not a…. Methodology , standard operating procedure, training document, system, transaction

13. What isn’t crystal clear? Processes should follow the direction of an overall value stream. Value Stream People Report to Functions 4 People perform “activities” which should align to processes. Activity Process 3 2 Finance 1 We know how our functions are organized 1 AR AP FA It is not consistently clear what activities/hand offs are performed by each function 2 We have not used consistent terminology in our processes – making it difficult for decision making, ownership, etc. 3 Operations SC Procurement Quality Value Streams with Owners responsible for providing direction and clarity 4

14. Why a Framework?

15. Process is a Fundamental Component Process & Tools Continuous Improvement Techniques Process KPIs Measurement Communication & Education Process Frameworks • 1 • 2 • 3 • 4 • 5 Product and Commercialization Excellence LEAN in Operations Technology Enablement Process Driven Organization Business Results Process work and enabling Tools Primarily Process work

16. An Enterprise Framework? • Originated in IT • Large Transformation Programs • ARIS Modeling Tool • Previous GPO/Global Construct • Focused on Driving Common Language • Still in the Early Stages

17. Framework Objectives • Common Frame of reference/translation tool • Internally • Within a group • Across groups • Globally • Externally • Benchmarking Partners • Integrators Consultants • Outsourcers • Consistent Method of Organization • Integrated view of process (non-silo) • Supports standardization • Helps map processes to functions • Helps identify ownership

18. Components of a Framework • Vocabulary • Structure • Naming Conventions • Templates/Tools • Decomposition Rules • Modeling Rules/Guidelines • Repository Structure

19. Processes Should Be Grouped into a Framework (Sometimes also called “architecture”) • Common Frame of Reference • Consistent Method of Organization • Ease of Navigation Frameworks are increasingly being used as a translation tool with external partners.

20. Hospira’s framework should … • Define all business activities, organized by process • Allow processes grouped into end-to-end chains – Called “Value Streams” • Provide One global common business process framework • underlying procedures and work practices may vary by site or region • Drive process based performance metrics • Enterprise excellence vs. functional excellence • Common industry framework enables benchmarking Establish a common language across the enterprise

21. APQC (American Productivity and Quality Center) SAP SCOR (Supply Chain) etc Many frameworks to choose from Supplier processes Product Management Customer processes Product Design DCOR™ Sales & SupportCCOR™ Supply Chain SCOR™

22. Hospira Process Framework (The HPF) At Hospira we started with: APQC general industry + Pharmaceutical industry + Automotive Industry + Aerospace/Defense . = comprehensive base inventory list of 400 processes classified into 12 process categories

23. Can you visit me in Chicago??? This ??? Or This??

24. Framework Levels Drill down for more details

25. Base process inventory list sample category group Process

26. “Value Streams” Tie Core Processes Together to Achieve Desired Business Results & They Cross Organizational Silos Value Stream a.k.a. End-to-End Business Process, is a designed group of related core processes, tasks and systems, spanning functions and regions, that work together to create and deliver ultimate value to stakeholders; Value Streams are led by an internal leader across a matrix organization. Value Stream: e.g. Forecast to Plan Integrated KPIs Core Business Processes (global) Business Process, is a series of value-added activities and tasks, performed by both people and equipment, to purposefully achieve a common functional goal for one or more value streams; Core Processes are owned by Global Process Owners (GPO). 3.3.1 Develop Sales Forecast 8.1.1 Perform Planning/ Budgeting/ Forecasting 4.1.2 Manage Demand for Products/ Services 7.5.4 Create IT Services & Solutions The Collaborative Forecasting Tool Touches a Subset of the Forecast-to-Plan Value Stream

27. “Value Streams” Cross Organizational Silos • Value Stream Leader • Highly respected Hospira business leader • Owns the value stream KPI and identifies gaps requiring process work • Accountable for driving process improvements now and in the future • Collaborates and work closely with Global Process Owners associated with the Value Stream Value Stream: e.g. Forecast to Plan Integrated KPIs Business Processes (global) • Global Process Owner • Globally represents processes within specific value stream/s • Identifies ways to eliminate, streamline or simplify a process • Deliver global results across functions and regions • Design and manage business processes • Represent process enterprise-wide in decisions affecting processes • Participates in technology selection and deployment 3.3.1 Develop Sales Forecast 8.1.1 Perform Planning/ Budgeting/ Forecasting 4.1.2 Manage Demand for Products/ Services 7.5.4 Create IT Services & Solutions Note: process ownership doesn’t imply it needs to be the same from site to site or centrally managed.

28. Examples…. • What else can we do with a framework? • Show ownership • Show information about processes • Maps • Information • Metrics • Training

29. Framework key messages • As the world around us changes, so do business strategies and organizations, but framework remains intact and withstands the test of time • Transformation efforts focus on process groups, such as P2P. • Can’t manage transformation at the holistic framework level • Transformation must consider all impacted functions but process ownership must be with one organization with representation/advice from impacted functions • Process owners must collaborate and focus on complete end to end process, not just their portion

30. Success of a Framework • Centralized management/maintenance • While the processes and decisions are owned by the value stream and process owners, centralized maintenance is critical • “Adopt before Adapt” to maintain external benchmarking/reference links if at all possible • Adopt, Govern and provide oversight before locking in tools

31. Realize we are in a multi-year journey…

32. So now what?

33. Key Messages - Process/Value Streams • Common Process Language will be a critical component to us moving to a process driven organization • Process Names and the Process Framework Should stand the test of time • Centralized management/maintenance of process information is critical to success • Process owners must collaborate and focus on complete end to end process, not just their portion • Processes will need to be owned - typically by a function • While Process focus is Critical, transformation efforts typically target on groups of processes (value streams) • Transformation efforts must consider all impacted processes, value streams and functions • Function is still important – keeping skills relevant, providing structure and accountability within a discipline

34. What do we ask of you in general? • Understand the process framework – how it works and • What is an process • What is an activity • Understand the role of the Value Stream Leaders/GPOs – start using, supporting and spreading the new terminology • Stay connected – provide feedback, work with Value Stream leaders and help us collectively to get this right • What is challenging • How would you suggest next steps • What specific messages can we give • How do we get the right people identified

35. Next Steps

36. But the Process Framework only Tells us “the What” Our Value Streams and Strategic Direction/ Objectives Tell Us the How and What For….

37. Hospira Value Streams Insight to Strategy Risk to Mitigation Idea to Market* Market to Sell Forecast to Plan Plan to Finished Goods* Finished Goods to Customer Order to Cash Sell to Service Market to Retire Record to Report Source to Pay Acquire to Retire Recruit to Attrition Define to Implement Support to Retire Awareness to Implement Issue to Satisfaction Business Process Framework (Michelle Sheedy) • Pharma = Templeman & Schott • Device = DeWitt & Pelletier • Consumables = Schechter • Biologics = Hahn & Noffke

38. Hospira Value Streams and Processes GETTING STARTED WITH PROCESS THE HOSPIRA PROCESS FRAMEWORK VALUE STREAMS AND GLOBAL PROCESSES • Click here to understand: • What do we mean by process? • What is a value stream? • What are value stream leaders and global process owners • What is a framework • Click here to connect to: • The Framework Customized for Hospira • Key Attributes Of our Processes & Activities • Click here to connect to: • See the Hospira Value Streams and their leaders • Understand which processes are covered by which value streams • Additional content on Value Streams and Processes TOOLS AND TEMPLATES THE PROCESS PERSPECTIVE HOSPIRA 101 • Click Here to access helpful documents about Hospira’s • Processes • Data • Product Flows • Click here to connect to: • Example templates for various process mapping/modeling activities • The ARIS tool (Process Modeling Enterprise Wide) • Sources of good process tools/templates • Click here to read about/talk about: • Hospira specific process efforts • External process viewpoints, perspectives, best practices

39. Business Process Management Services • Alignment/Dependencies • Strategic KPIs • Driving performance culture • Eliminate KPI conflict • Establish VS KPIs • Enterprise wide program/ project management assistance Name 1 Name 2 Name 3 • Performance assessment techniques (standard work, KPI evaluation) • Skilled performance improvement resources (Lean, Six Sigma) • Capability/skill building (academy) • Advanced and accelerated improvement techniques • Diagnostics/Evaluations Name 4 • Overall knowledge management foundation • VSL/GPO ownership tracking • Process Modeling Tools • Benchmarking membership point • Process education series • Process data (policies, documents, data, etc.)h Technology/Tools Senior Leadership Support * Structure as of early 2013