IDA Ireland / PharmaChemical Ireland Symposium Jim McKiernan McKiernan Associates Benchmarking

1. IDA Ireland / PharmaChemical Ireland Symposium Jim McKiernan McKiernan Associates Benchmarking the Pharma Industry in Ireland September 23rd 2009

2. Contents • Background • Study approach • Key findings • Conclusions

3. Background Key Drivers in Pharma Technical Operations Global over-capacity Need to reduce CoGS Leading pharmaceutical production sites have programmes in place to respond to these drivers From traditional to more diverse portfolios Pharma Production Increasing regulatory requirements Process oriented and demand-driven From large to smaller, agile plants Impact of novel delivery routes and new molecules

4. Background Historical Position: • COGS 20 - 30% • Total inventory >12 months • Passive role on corporate strategy Future Leaders: • Optimal COGS • Fast and flexible to market • Proactive contributor to corporate strategy

5. Study Approach • Built on successful benchmarking study conducted in 2006/07 • Questionnaire refined with input from PCI OPEX Working Group • Baseline year 2008 for all participants • Data collection started March 2009 • Initial report July 2009

6. Study Approach API 39 units Formulation 37 units Packaging 50 units

7. Key Findings  Sites are responding pro-actively to external events  Limited use of site effectiveness KPIs and IT productivity tools General • Service and GMP compliance remain at world class levels • Most sites are positioning themselves for a more strategic role within their corporations • Most sites engaged in active Operational Excellence activities Performance management • Use of diverse KPIs but without integrated performance management • New KPIs such as OEE, PEE and CpKincreasingly used • Measures for overall site effectiveness missing (e.g. velocity) • Limited performance measurement in QC/QA, SCM, Engineering Operationalpain points • Low OEE/PEE levels • Long changeover times • Unclear effects of operational improvement programs • Continued low usage of IT applications such as MES/DMS Trends • Ongoing Manufacturing network consolidation • Reducing API volumes due to new molecular/delivery characteristics • Increasing involvement of sites in development & launch activities • Increasing average educational levels (e.g. more 3rd level)

8. Key Findings How the sites have evolved 2006 to 2008 • All sites have at the least consolidated their strategic positioning with several showing clear strengthening • 9 have improved across both dimensions • Several sites are still slow to adopt operational excellence with some showing no movement High Operational Excellence Medium Historical Position Low API Low High Medium F&P Strategic Relevance

9. Conclusions • Leading sites creating strong strategic role and embrace operational excellence • A number of sites at high risk as global consolidation continues • Compliance is excellent and IMB continues to exercise strong regulatory oversight • Mixed messages about effectiveness of R&D collaborations with academia – needs follow-up • Adoption of OpEx KPIs gathering momentum • Inventory, cycle times and changeovers need further work

10. Thank You • Questions?