The EPP Life Sciences Executive Briefing is an ‘invitation-only’ executive meeting that aims to build a dialogue between CxO’s and industry pricing experts on emerging pricing and commercial topics in their industry. The European Pricing Platform - together with its partner Alliance Life Sciences - focus on bringing together a very exclusive and high level group of professionals from the Life Sciences Industry. EPP provides a discussion platform for no more than 30 of these top professionals in the business, creating a one-of-a-kind learning and networking experience. In short, some hours of thought provoking debate and global best practice at your fingertips. We're sure you want to be part of this exclusive group.

1. The Evolution of
Market Access:
Strategic Pricing and
Profit Optimisation
in a Fast-Changing
Business Environment
Key Lessons from the
EPP Life Sciences
Executive Briefing 2016
MARCH 31, 2016
ZURICH, SWITZERLAND
In partnership with

2. Introduction
European Pricing Platform is the
leading knowledge community for
pricing & profit optimisation decisi-
on makers in Europe.
The Life Sciences Executive
Briefing brings together more than
30 leaders including VPs and
C-level executives from finance,
sales, marketing, pricing and HR to
drive thought leadership dialogue
between key decision makers and
Prof. Brian D. Smith
Professor at
Bocconi and Hertfordshire
University
This EPP Life Sciences Executive
Briefing brought together two very
different perspectives on the issue
of pricing in the Life Sciences sector,
but what was remarkable was how the
practical experience of Florian Turk
and my academic research comple-
mented each other to create some ge-
nuinely original and relevant insights
into the problem.
These can be summarised as follows:
the Life Science industry is uniquely
important to society in a way no other
industry is. As a result, we need the
permission of our societies – expres-
sed both directly and via the political
system – to operate.
What we learned from GSK was that
permission flows from trust, the belief
that the industry has a stake in the
healthcare system and is not exploi-
tative. The new academic research
presented at the meeting showed
that the ability to create and sustain
such trust is an essential capability
and source of competitive advantage.
Moreover, it is evolving faster in some
organisations than in others.
This means that those companies,
like GSK, who evolve the capabilities
to understand and maintain societal
trust, are likely to survive whilst those
that do not are likely to perish.
industry experts on emerging
pricing and commercial topics in
the global Life Sciences market.
The discussed topics drive the
agenda for the EPP Life Sciences
Forum 2016, the #1 market leading
annual industry event to be held
in September 2016. We are happy
to share the key lessons from this
year’s edition with you.
Life Sciences Executive Briefing | 2

3. | European Pricing Platform3
Rundown of the keynote
Why Is Effective Market Access More
Important Than Ever Before?
• Why is it now more crucial than ever for
life sciences companies to ensure that
their pricing and market access systems
are fit for purpose?
• How does an understanding of the
selection pressures facing the life scien-
ces industry help companies to adapt for
future success?
• How can the industry improve its
approach to strategic pricing and profit
optimisation by tackling capability gaps in
three critical areas?
These were among the questions addres-
sed at the EPP Life Sciences Executive
Briefing, held in Zurich on 31st March 2016.
The meeting began with an introductory
presentation by global market access
consultant Neil Grubert.
Pharmaceutical pricing has been the sub-
ject of unprecedented scrutiny on both
sides of the Atlantic in recent months,
prompting growing numbers of politicians
to call for increased regulation of drug
costs.
In this hostile climate, it is more critical
than ever for life sciences companies to
ensure that their pricing and market ac-
cess systems are fit for purpose.
A 2011 survey by Executive Insight found
that big pharma companies were general-
ly much more sophisticated than mid-si-
zed pharma or biotech companies with re-
gard to the organisation of market access,
but manufacturers of all sizes had scope
for improvement, especially with regard to
the timing of market access involvement
in the product life cycle.
The study defined three broad levels of
maturity for different aspects of mar-
ket access and found that big pharma
companies generally started work in
market access in Phase IIb or III, whereas
mid-sized pharma or biotech companies
typically did not involve market access
until Phase III, especially pre-launch and in
the commercialisation phase.
The participants in the executive briefing
expressed the view that little had changed
in the years since this survey with regard
to the timing and organisation of market
access in life sciences companies.
Participants also agreed with the results
of a more recent survey, sponsored by
Quintiles and conducted by the
Economist Intelligence Unit.
This study identified several actions that
life sciences companies could take to ad-
dress internal market access challenges,
including earlier implementation of their
market access strategy, better operati-
onal integration between departments,
improving internal skill sets and better
internal communications across business
functions.
by Neil Grubert
Global Market Access
Consultant
Status observed in biotech and mid-sized
•pharma companies
Status observed in big pharma
•companies
Source:
Have You Optimized Your Market Access Efforts?
Solution of Internal Market Access Challenges
Earlier implementation of your market access strategy
Clearer external guidelines by payers
Better operational integration between departments
Better sources of data
Improving internal skill sets
Better internal communication across business functions
Assistance with differing regional access needs
Assistance in dealing with payers
More support from senior management
Other
Based on a 2015 survey of 133 pharma, biotech, medtech and diagnostics executives in the US and Europe.
Source: Quintiles-sponsored survey conducted by the Economist Intelligence Unit
0 10 20 30 40 50
Percentage of respondents

4. Life Sciences Executive Briefing | 4
Transformation of the market access
process will require life sciences compa-
nies to embrace radical changes to their
business models.
In this context, Prof. Brian Smith of the
Bocconi and Hertfordshire Universities
delivered a thought-provoking presenta-
tion entitled “The Evolution of the Life
Sciences Industry and the Implications
for Market Access and Pricing Capabi-
lities.”
The central thesis was that the life scien-
ces industry is a complex adaptive system
that is subject to the same evolutionary
forces as the natural world.
What is happening in the industry is not
like evolution—it is evolution.
Companies need to understand the physi-
cal and social technology environments in
which they operate, as well as the fitness
of their business models. Their objective
is clearly to scale the peaks of their chosen
markets and certainly to avoid falling into
the troughs between these peaks.
Companies may be able to occupy several
different peaks at a time, but they are un-
likely to have equal success in all of these
areas. Thus, it is crucial for companies
to know the nature of their business and
where they can compete most effectively.
Current selection pressures require the
industry to adapt as never before.
Manufacturers have to respond to six si-
multaneous shifts in the business environ-
ment:
Rundown of the keynote
How Can The Industry Adapt In
Response To Selection Pressures?
Prof. Brian D. Smith
Professor at
Bocconi and Hertfordshire
University

5. | European Pricing Platform5
by Prof. Brian D. Smith
Shift Required Action
Value shift
Understand multi-dimensional, customer-perceived value and crea-
te context-specific value
Global shift
Understand market heterogeneity and deliver broad value to global
segments
Holobiont shift
Establish polycentric networks that aggregate capabilities and
manage risk
Systeomic shift
Translate systems knowledge into an improvement in returns or a
reduction in risk
Information
shift
Adopt or adapt information technology to improve returns and
reduce risks
Trimorphic
shift
Focus strongly on NPD, SCM or CRM
Shifts in the Life Sciences Business Environment
The value shift presents particular chal-
lenges for market access. Faced with
the need to balance steadily increasing
demand, rising costs and finite resour-
ces, healthcare systems are moving from
a relatively simple concept of value as
improved clinical outcome, as determined
by healthcare professionals, to a much
more complex, context-specific view of
value defined by a combination of health-
care professionals in terms of clinical,
economic and other factors.
In response to these changes, companies
need to develop business models that
The Evolutionary Origins of Market Access Capabilities
Phenotypic capacity
(e.g., speech)
Organisational capacity
(e.g., market access excellence)
Phenotypic traits
(e.g., brain development)
Business model traits
(e.g., strategies, processes, structures)
Proteins
(active and regulatory)
Capabilities
(operational and dynamic)
Genes
(coding and non-coding)
Organisational routines
(explicit and tacit)
Base Pairs
(shared and variant)
Microfoundations
(behaviours, relationships, skills, knowledge)
create context-specific value through a
combination of products, services and
pricing.
Achieving market access excellence in this
fast-changing environment will require
nothing less than “genetic engineering,”
from the microfoundations (behaviours,
relationships, skills and knowledge) to
organisational capacity. Without the right
structures in place, no amount of training
can create market access excellence
within a company.

6. Life Sciences Executive Briefing | 6
Many life sciences companies have yet to
embrace the challenge of transforming
their approach to pricing and market
access. In a presentation entitled “Sha-
ping Up for the Future: A Vision of the
Future of Strategic Pricing and Profit
Optimisation Capabilities,” Prof. Florian
Turk of GlaxoSmithKline suggested that
launch sequencing to mitigate the impact
of external reference pricing still appears
to be considered the “gold standard” for
price maximisation. However, this strate-
gy does not lead to profit optimisation,
successful customer engagement or a
sustainable business model.
To be successful at pricing, companies
must address capability gaps in three
critical areas:
• optimising the area under the curve,
• intelligent contracting and
• responsible and sustainable pricing.
Optimising the Area Under the Curve
All too often, companies become fixated
with the price of their new drugs, rather
than giving due attention to optimising
the area under the curve, which is a
function of time to access multiplied by
volume multiplied by margin. Any delay
in achieving access will reduce peak sales
and profit. Return mix is critical: compa-
nies may need to prioritise margin in some
cases, volume in others.
Intelligent Contracting
In commoditised drug categories, ten-
dering, competitive bidding and exclu-
sive contracting are becoming much
more common. Innovative contracting
agreements can be used to gain listing,
reimbursement, funding, utilisation and
preference over competitors. The chal-
lenge is not to secure reimbursement
through discounts, but to obtain volume
commitments and drive usage.
Contracts must look beyond pricing and
include term sheets. Key contract di-
mensions include volume, price, delivery
terms, supply terms and quality. Contracts
should also include provisions related to
managing risk—both known unknowns
and unknown unknowns.
Companies also need to develop robust
systems to manage pricing and con-
tracts, including effective internal and
customer-facing contracting analytics.
For a company such as GlaxoSmithKline,
which has approximately 80,000 net price
contracts globally, this task is by no means
easy.
Responsible and Sustainable Pricing
A fundamental challenge in bringing in-
novative medicines to market is how to be
fair to all stakeholders—payers, patients
and manufacturers. The pricing of these
products needs to ensure optimal use of
resources for healthcare systems, impro-
ve access to value-adding medicines for
patients and reward drug developers for
adding value.
Understandably, life sciences companies’
pricing strategies have often tended to
focus on the last of these objectives—en-
suring that they are generously rewarded
for innovation. Given the growth in recent
years of external reference pricing, manu-
facturers devote considerable time, effort
and resources to launch sequencing, with
a view to minimising the impact of interna-
tional price comparisons. However, launch
sequencing needs to be ethically res-
ponsible, not denying or unduly delaying
access to innovative drugs in low-priced
markets.
One approach that GlaxoSmithKline and
increasing numbers of other manufac-
turers have adopted is tiered pricing—
both inter-country (i.e., varying prices
by Prof. Florian Turk
Vice President, Head
Global Market Access &
Healthcare Solutions GSK
Rundown of the keynote
How Can The Industry Respond Positi-
vely To Pricing Selection Pressures?

7. | European Pricing Platform7
With healthcare payers more determined
than ever before to curb health techno-
logy costs, it may be in life sciences com-
panies’ interests to adopt pricing
strategies that pre-empt punitive action.
GlaxoSmithKline’s approach is to make
a public commitment to aim for a 14%
risk-adjusted return on capital across its
business as a whole.
The company has not yet achieved this
target, but it will continuously monitor
its performance and publish its progress
towards this goal in its annual reports.
Other life sciences companies will
undoubtedly follow the development and
impact of this radical departure from busi-
ness orthodoxy with keen interest.
Prof. Smith noted that successful life scien-
ces companies have done an excellent job
of applying scientific knowledge in fields
such as chemistry, physics, biology and
materials science. However, the commer-
cial functions within these companies
have been much less cognisant of the vital
lessons to be learned from advances in
management science.
In particular, life sciences companies need
to understand—and respond to—the evo-
lutionary pressures they face. The future
of the industry is speciation and extincti-
on. Adaptable companies will evolve suc-
cessful new business models and flourish.
On the other hand, organisations that are
unable to adapt to changing selection
pressures will struggle to maintain their
market and ultimately go out of business.
Social, economic and technological chan-
ge will transform the healthcare environ-
ment in the coming decades. Life sciences
companies collectively have an opportuni-
ty to influence the changing environment.
Individual companies need to take action
to ensure that they are organised not just
to survive—but to thrive.
So What Can You Do to Be Ready for
a More Challenging Future?
by Prof. Florian Turk in different countries) and intra-country
(i.e., varying prices in different market
segments within an individual country).
This strategy is based on some measure
of customers’ relative ability to pay for
medicines. However, implementation of
a coherent tiered pricing strategy can be
difficult.
According to Prof. Turk, the key challenge
is not to set prices low enough to be affor-
dable in low-income countries, but to be
willing to walk away from wealthy markets
that refuse to make a fair contribution to
R&D cost.
The overall pricing strategy must be not
only responsible to other stakeholders in
the healthcare system, but also sustaina-
ble for the company.
Tiered pricing is one of the measures in-
cluded in the Access to Medicines Index,
a biennial assessment of leading drug
manufacturers’ policies with regard to
ensuring globally equitable access to their
products.
Since the launch of this initiative in 2008,
GlaxoSmithKline has consistently held the
top ranking in the index, and all em-
ployees are charged with the responsibili-
ty of helping to maintain this position.
by Neil Grubert
Global Market Access
Consultant

8. Life Sciences Executive Briefing | 8
• Faced with unprecedented scrutiny
of pharmaceutical prices, life sciences
companies need to ensure that their
pricing and market access systems are fit
for purpose.
• The timing of market access involve-
ment in the product life cycle is a particu-
lar weakness for companies of all sizes.
• The life sciences industry is a complex
adaptive system that is subject to the
same evolutionary forces as the natural
world.
• Companies need to know the nature of
their business and where they can compe-
te most effectively to climb the peaks and
avoid the troughs.
• Current selection pressures require
the industry to adapt to six simultaneous
shifts in the business environment.
In a nutshell
The Key Lessons from the
Life Sciences Executive Briefing
• Companies need to develop business
models that create context-specific value
through a combination of products, servi-
ces and pricing.
• Achieving market access excellence in
a fast-changing environment will require
nothing less than “genetic engineering.”
• The current focus on launch sequencing
to mitigate the impact of external referen-
ce pricing does not lead to profit optimi-
sation, successful customer engagement
or a sustainable business model.
• Companies need to pay more attention
to optimising the area under the curve;
they may need to prioritise margin in
some cases, volume in others.
• The challenge of contracting is not to
secure reimbursement through discounts,
but to obtain volume commitments and
drive usage.
• Pricing needs to ensure optimal use of
resources for healthcare systems, impro-
ve access to value-adding medicines for
patients and reward drug developers for
adding value.
• Launch sequencing should be ethically
responsible, not denying or unduly delay-
ing access to innovative drugs in low-pri-
ced markets.
• Manufacturers must be willing to walk
away from wealthy markets that refuse to
make a fair contribution to R&D cost.
• GlaxoSmithKline has sought to tackle
criticism of drug pricing by making a pu-
blic commitment to aim for a 14% risk-ad-
justed return on capital across its business
as a whole.
• The future of the life sciences industry is
speciation and extinction.

9. | European Pricing Platform9
Times are changing and they’re
changing faster than ever. In particular
the Life Sciences companies have to
be innovative and respond quickly to
market changes. Price & margin ero-
sion, international reference pricing,
loss of exclusivity, new discount and
rebate structures ask for new skills,
a clear strategy and new insights to
ensure profit optimisation.
As a main profit driver, your pricing
strategy needs to meet your future
pricing organizational challenges.
And that is how the EPP Life Sciences
Pricing Forum can help you.
• Meet with your peers and discuss
the opportunities and challenges they
are facing.
• Learn from industry experts who
will share with all of us their know-how
and insights.
• Discover real business cases across
Pharma-Biotech and Medtech.
Reflection, discussion, learning and
networking are our main objectives.
So that you can return back and be
able to define your own action plan,
eliminate risk , optimize sales effecti-
veness and enhance revenue growth!
5 reasons
why you should attend
1 Agenda topics being
finetuned with key industry
influencers who take up res-
ponsibility in the EPP Steering
Committee.
2 Roundtables bringing
together the strategic de-
cision makers, a guarantee for
strong interaction.
3 Smart Exchange sessions
will help to learn and even
unlearn, but certainly brain-
storm and inspire.
4 Top keynote speakers with
relevant know-how and
lessons learned.
5 And of course our free
evening networking event:
dinner with a touch of learning
Join us at the
6th EPP Life Sciences Pricing Forum
in Montreux, Switzerland on September 20-21, 2016.
Register now and profit from
• Early Bird ticket (valid until June 12, 2016)
• Group Rate ticket
http://www.pricingevents.eu/events/6th-epp-life-sciences-forum-2015/#tickets
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PRICING FORUM
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10. Life Sciences Executive Briefing | 10
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