1. CASE STUDY
Value Creation: Challenging
R&D

2. Synopsis
Initial evaluation for an early development
opportunity, getting the product funded
Finding the potential – from mechanism of action to
indication, identifying unmet medical need &
positioning relative to the market
Balancing technical feasibility (R&D clinical planning)
with commercial opportunity – focusing R&D on
achievable value creation
Where good forecasting & tools can help - creating
buy-in/aligning the organisation

3. The Opportunity……
Product option to license in from 3rd party
Good strategic fit with portfolio
Cross business potential

4. The Challenge…….
Co-ordination across multiple teams
Reaching end-point with buy-in from key
departments
Focusing business departments on creating
value

5. Cross-Business Involvement
Commercial / Marketing
R&D
Business Development/Licensing
Business Analysis
Senior management

6. Opposing Views
R&D vs Commercial!!!
Tensions within one company – align to
collaborate not compete

7. Focusing on Creating Value……
Number of tools to support the process
• Medical advisory board
• Transparent evaluation tool
Balancing commercial potential with R&D
feasibility – generating options & healthy
debate

8. Tools & Six Sigma
Six Sigma methodology ‘borrowed’ to create
robust ranking tools, aligned with internal
processes & embedded methods
• QFD tools/house of quality
• Excel-based with Powerpoint portability

9. QFD Example:
Relationships
H Strong 9
M Medium 3
L Weak 1
Relationships
H Strong 9
M Medium 3
L Weak 1
H
H
H
H
L
M
M
M
MM
M L
L L
L
L
Importance RatingsImportance Ratings
WHAT'S
What does the
customer
want?
Voice of the
Customer
WHAT'S
What does the
customer
want?
Voice of the
Customer
HOW'S
How do you satisfy the wants ?
HOW'S
How do you satisfy the wants ?
Customer
Importance
How important
are the customer
wants to the
customer?
Customer
Importance
How important
are the customer
wants to the
customer?
Correlation
Conflict
Resolution
Correlation
Conflict
Resolution
Target
Direction
Target
Direction

10. Adapted to (e.g.)…….
Availability
ofPatients
Costof
Trials
Lengthof
programme
Likelihoodof
success
Technical
feasibility
Sum
Weighted
Score
Indication #1 H
Indication #2 L
Indication #3 M
Indication #4
etc L M

11. The Clinical Position….
7 potential indications outlined
Each one evaluated by R&D on a number of
feasibility factors
– Patient numbers required for trials
– Ease of recruitment
– Gold standard / end point
R&D ranking produced based on CTSs

12. The Commercial Situation…..
Preliminary forecasts generated for each
indication identified by clinical, using standard
template
Each indication ranked according to
commercial parameters:
– Reimbursement & pricing options
– Patient population available
– Unmet need within indication
– Value of indication (driven by forecast output)

13. Standardised Forecast Model Template
Structured to use same data & set of
assumptions for each indication:
– Patient population
– Uptake curve/market share
– Frequency of product use
– Price per use/dose
Fairly top-line for the initial valuation, short-
listed indications to be worked up into more
complete strategic models
Key sensitivities & challenges identified, along
with data/knowledge gaps

14. Using External Experts to Guide & Focus
Challenge: strong in-house opinions
Medical advisory board
– Used to clarify disparity of opinion between
Clinical & Commercial
– Fill gaps in knowledge for both Clinical &
Commercial
– Early indicator of unmet need in the market, as
perceived by specialists
– Provide additional input into indication selection
– Enhance rankings for both Commercial & R&D

15. Process Map:
R&D List of
indications &
preliminary/refined
Ranking
Commercial work-
up of forecasts for
each indication,
preliminary/refined
commercial
ranking
•Final ranking of indications
•Subsequent work-up of
agreed development plans
•Sign-off with Senior
management
Medical
Advisory Board

16. Reconciling the Views…..
Tool developed with input from both parties to rank & integrate
differing views
Initial mapping of all 7 indications by value & feasibility to
balance creation of value with probability of success
Results from Medical advisory board fed into mapping
Indications stripped down from 7 to 2 (3)
Rankings re-evaluated in light of new findings
Final road map for R&D developed
Work-up of full R&D costs, timelines & PoS generated & fed
into portfolio evaluation for the whole project
Sign-off from Senior management on final plans & investment,
agreement of deal structure with 3rd party

17. Indication Mapping Example:
Balancing value with feasibility (all indications)
#1
#3
#5
#7
#2
#4
#6
-20.00
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
0.0 2.0 4.0 6.0 8.0 10.0 12.0
Ranking (arbitrary scale)
PeakyrRevenue($M)
Technical feasibility HighLow

18. Feedback from Med Ad Board:
Selection of top 3 viable indications
#1
#3
#5
#7
#2
#4
#6
-20.00
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
0.0 2.0 4.0 6.0 8.0 10.0 12.0
Ranking (arbitrary scale)
PeakyrRevenue($M)
Two previous
indications selected,
one split into two
distinct target
indications
Technical feasibility HighLow

19. Final re-Ranking of Selected Indications*
#1
#2
#3
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
0.0 2.0 4.0 6.0 8.0 10.0 12.0
Ranking (arbitrary scale)
PeakyrRevenue($M)
*Indications listed in order of prioritisation

20. Longer term
Establishing a process & toolset for evaluating
project potential in it’s entirety
Education of R&D and Commercial on
balancing value creation with technical
difficulty
Introducing robustness & quality using external
focus (Medical advisory board)
Providing harmonised internal view point for
product development strategy