The Successful Merger of Multinational Research Departments

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The Successful Merger of Multinational Research
Departments
The RD Society London, 16th April 2002

• Dr Claes WilhelmssonExecutive Director Research
  Development AstraZeneca

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Todays presentation

• Introduction
• Integration design and success factors
• Increased productivity?
• Conclusion

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Todays presentation

• Introduction
• Integration design and success factors
• Increased productivity?
• Conclusion

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Drivers for industry consolidation
The challenge of improving creative performance
in an increasingly competitive environment

• Effectiveness
• Increasing number of patients /NDA
• Increasing RD spending and expenditure as a
  percentage of sales
• No increase in RD productivity in terms of NCEs
  
• Market access/Sales force
• The War for talent

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Mergers and RD productivity

• Some evidence emerging that mergers reduce RD
  productivity (CenterWatch, Decision Resources)
• The thinking
• More scientists more management layers
  more bureaucracy less freedom to innovate
  lowered research output
• Portfolio prioritization in merged companies can
  be problematic
• Cut too many / too few projects

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The industry response

• Focus on megabrands
• 500 Million ? 1 billion or more?
• Will this too narrowly focus industrys RD?

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Mergers and megabrands - a self-reinforcing
cycle?
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Mergers and megabrands - a self-reinforcing
cycle?
Create a positive spiral!
Greatopportunity forbusiness
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Todays presentation

• Introduction
• Integration design and success factors
• Increased productivity?
• Conclusion

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Fundamental integration principles

• Clear focus and speed
• Strategy before synergy
• Establish Integration Office early
• Problem solving by task forces
• Up-front operating model decisions
• Communication
• Delivery of Synergies

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Design thoughts

• Therapy Area leadership
• Business orientation
• Customer focus
• Build on medical expertise

• RD output and efficiency
• Performance driven
• Excellent science
• Best clinical practise

Project focus - deliver the drivers of the
business
Integrate as fast as possible- 8020 rule
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Clear focus - agree ambition level
Ambition level
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Overall merger timeline
Now!
Everyone knows their position!
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Guiding principles for RD organisation design

• Therapy Area led
• Project driven
• One RD organisation managed globally
• Critical mass to be leading in our chosen areas
• Strong portfolio management
• Team oriented culture
• Build and continuously improve Discovery

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Organisation structure
Head of RD
TherapyAreas
Cardiovascular Oncology Respiratory
Inflammation
Gastrointestinal CNS Pain Infection
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Up-front operating model decisions

• Complex balance between projects, functions, and
  sites

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AstraZeneca Global Discovery
IntegrativePharmacology
Mölndal Södertälje
State of the art informatics and enabling
sciences
Chemistry
Charnwood Alderley Lund
Montreal Boston Wilmington
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Making the machinery work!

• To allow efficient global working
• Framework for empowerment

TA Development
Discovery
Submission
Product Maintenance and Life Cycle Support
HitIdentifica-tion
LeadIdentifica-tion
LeadOptimisa-tion
CDPrenomi-nation
Target Identification
ConceptTesting
Development for launch
LaunchPhase
Launch
Main Decision Points
MS1
MS2
MS3/TG1
MS4
MS5/TG2
MS6/TG3
MS7/TG4
MS8
MS9
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Two models for RD
Target Lead Identification
Lead optimisation
Concept testing
Development for launch
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Todays presentation

• Introduction
• Integration design and success factors
• Increased productivity?
• Conclusion

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Increased RD productivity?

• What do we do differently?

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Create an excellent scientific environment
internal capacity external collaborations

• Talent
• Technology
• Facilities
• Strength in all parts of the Discovery and
  Development process
• Combining the best of Chemistry driven and
  Biology driven drug-hunting

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RD productivityCD delivery/year
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RD effectiveness - Clinical

• No of patients in initiated clinical trials

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RD productivity - Process RD
180
Weighted average no. stages per site Pre-CD x1,
CT x2, DFL x3
120
60
0
M18 months
Pre-merger
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Benefits of merger - some other examples

• Width of pipeline

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AZ way to external collaborations

• gt 300 collaborations with leading universities
  and biotechs
• Clever use and timely adoption of breaking
  science technology
• Internal expertise to identify and closely
  monitor opportunities
• Full integration into drug-hunting

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Delivering RD synergies - opportunity and threat

• RD cost synergies are significant and important
• Build external credibility
• Reshape organisation and portfolio
• Rejuvenate RD skill base
• Achieving them can cause loss of scarce talent
  which may have a disastrous impact on pipeline
  value

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Perception of changes - employee survey
RD Positive
RD Challenges

• Pride, commitment
• Clear objectives, targets values
• Empowerment
• Merger added business value

• Monitor bureaucracy
• Reward recognition
• Work pressure
• Clear visibility of management

International Survey Research, RD N5.339
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Retention in RD during merger phase

• Annual personnel turnover in 2000 apart from the
  positions delivered as synergies

lt5
All of RD
Key RD management positions
lt3
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Conclusion
A mergercan lead to

• With the right companies
• Based on mutual respect for People and Science
• Complementary portfolios

• Increased
• Global presence
• Pipeline width
• Attraction as employer and collaboration partner
• Productivity

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