Managed Markets Account Management Report Summary

Table of Contents Page Project Overview 2 Participants and Experience 4-5 Participant Overview 6 Key Insights 10 Detailed Study Findings 14 Organizational Fit/Structure/Reporting Relationships 15 Acct Management Changes Trends Next 3 Years 23 Staffing Benchmarks & Program Trends, 25 Time Allocations 33 Activities & Measurements 35 Pitfalls and Challenges 45 Appendix 46 Additional Quotes About Best Practices 51Copyright © Best Practices®, LLC 1 BEST PRACTICES, ® LLC

Project Methodology and Study Objectives Thirty-two participants made up the Total Benchmark Class (TBC), sixteen of which represented companies in the Large Pharma Segment (LPS). Research was conducted through survey and interviews Key study objectives Identify common practices in measuring Managed Markets account executive performance Gain insight into the principles of effective measurement of this function Determine what specific measures are used to drive successful activity in Managed Markets account managementCopyright © Best Practices®, LLC 2 BEST PRACTICES, ® LLC

List of Participating Companies Large Pharma Other Participants Abbott Laboratories Abraxis Allergan Apria Healthcare AstraZeneca Bausch and Lomb Bayer AG Celgene Boehringer Ingelheim EMD Serono Eli Lilly and Co. Honeywell Genentech IDS Johnson & Johnson King Pharmaceuticals Merck & Co. Laboratorios Deramtologicos Darier Novo Nordisk Lundbeck Pfizer Q-Med Scandinavia Roche Sciele Pharma Sanofi-Aventis Skila Schering-Plough Smith & Nephew Wyeth Ther-Rx Corporation ValeantCopyright © Best Practices®, LLC 3 BEST PRACTICES, ® LLC

Participants’ Experience with Managed Markets Accounts More than 75 percent of participants reported having more than six years of experience dealing directly with Managed Markets accounts. Total Benchmark Class Large Pharma Segment 22% 25% 38% 41% 0-5 Years 6-10 Years Over 10 Years 38% 38%n=32 n=16 Q. How many years of experience do you have in dealing directly with managed markets accounts?Copyright © Best Practices®, LLC 4 BEST PRACTICES, ® LLC

Products with which Managed Markets Account Executives Are Involved Most respondents reported having six or more products in the market, plus three or more in the pipeline, with which Managed Markets account executives are currently involved. LPS companies tended to have slightly more of these products, especially in the market. Number in the Market- Total Benchmark Class Number in the Pipeline- Total Benchmark Class 7% 26% 35% 1-5 Products 1-2 Products 6-10 Products 47% 3-4 Products More than 10 Products More than 4 47% Products n=30 n=31 39% Number in the Market- Large Pharma Segment Number in the Pipeline- Large Pharma Segment 6% 19% 38% 44% 56% n=16 38% n=16 Q. How many products, in the market or in the pipeline, are your Managed Markets account executives involved with?Copyright © Best Practices®, LLC 5 BEST PRACTICES, ® LLC

Structure and Organizational Alignment Separating Managed Markets from Sales provides a clearer focus on objectives and easier measurement of results Coordination and cooperation between these separate groups can be harder The rationale for having national and regional account executives report to the same individual (in either organization) is similar: coordination “When groups have separate reporting structures for national and regional accounts, they dont get the level of collaboration, and our customer base is more intertwined than ever before in terms of the relationships between customer segments.” – Executive Vice President, Top 50 Pharma Maintaining separate groups with responsibility for Managed Markets strategy and/or marketing often brings to bear the perspectives of the brands and therapeutic areasCopyright © Best Practices®, LLC 6 BEST PRACTICES,® LLC

Optimal Methods and Measures for Assessing theValue of Managed Markets Account Management Open-ended data revealed four main categories of optimal methods/measures for assessing Managed Markets account management (some respondents made multiple comments). Formulary status, sales, and share (50%):Formulary status, Share movement sales, and share 50% Penetration of products Formulary access Formulary penetration Sales pull-through Unit demand Profitability and 55% Profitability and financial results (55%): financial results Profit goals Profitable growth Profitable access Financial performance Performance Contract performance and profitabilityagainst objectives 27% ROI of contracts achieved Performance against objectives (27%): Clear MBOs Business plan execution Appraisal every quarter for agreed parameters Other 32% Strategic objective accomplishments Other (32%): Competency measures # of effective quality/health initiatives led n=22 0% 20% 40% 60% Customer input Markets comparisons Q. What do you think are the optimal methods and measures for assessing the value of Managed Markets account management? Copyright © Best Practices®, LLC 7 BEST PRACTICES, ® LLC

Managed Markets Account Management Organizational Alignment The majority of respondents reported that Managed Markets account management is centralized in another department or function rather than integrated into a sales department. Total Benchmark Class Large Pharma Segment 9% 0% 34% 38% Part of an integrated sales department Centralized in 63% another department or function 56% All Othern=32 n=16Q. Which of the following statements best describes how Managed Markets account management is organized in your company? [All Other = “distributed among various product/brand managers” and “central function for all customer segments”]Copyright © Best Practices®, LLC 8 BEST PRACTICES, ® LLC

Challenges and Pitfalls in Measuring and ManagingManaged Markets Account Executive PerformanceOpen-ended data revealed three main categories of challenges and pitfalls in managingManaged Markets account executive performance (some respondents made multiplecomments). Measurement and compensation (46%): Aligning comp to attainment and sales Decreased profits not always measured Measurement and Ensuring that IC plan is seen as fair compensation 46% No direct control of sales force activity Indirect impact on product performance Lag time/long time frame for results Measuring access without understanding impact Organization and Ability to get quality data alignment 31% Organization and alignment (31%): Activity takes precedence over results Certain geographies more conducive Lack of ownership of accountability Integration with global marketing plans Other 27% Interaction between sales and MM Other (27%): State mandates/restrictions Economic environment volatility 0% 20% 40% Calling beyond pharmacy/focusing on quality n=26 Training and convincing sales channels Q. What are the biggest challenges and pitfalls in measuring and motivating Managed Markets account executive performance?Copyright © Best Practices®, LLC 9 BEST PRACTICES ® , LLC

About Best Practices, LLC Best Practices, LLC is a research and consulting firm that conducts work based on the simple yet profound principle that organizations can chart a course to superior economic performance by studying the best business practices, operating tactics and winning strategies of world-class companies. Best Practices, LLC 6350 Quadrangle Drive, Suite 200, Chapel Hill, NC 27517 919-403-0251 best@best-in-class.com www.best-in-class.comCopyright © Best Practices®, LLC 10 BEST PRACTICES, ® LLC

Managed Markets Account Management Report Summary

by Best Practices, LLC on Dec 02, 2011

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