Medical Affairs Resources, Structures, and Trends Report Summary

Research Objective Study Objective Key Topic Areas Organizational Structure Objective: This survey was developed Reporting Relationship to identify benchmarks for resources, Job Level of Group Leader structures and activities of Medical Geographic Span Budget and Staff Resource Levels Affairs organizations within leading Budget Allocation by Medical Affairs pharmaceutical, medical device and Function biotech companies. Percent of Budget Allocated for Outsourcing Metrics and insights developed from Recent and Anticipated Changes in Resource Levels survey data may be used to evaluate and Impact of Medical Affairs Functions on Company Success improve Medical Affairs organizations Key Success Factors for Medical Affairs throughout the industry. Key Challenges for Medical Affairs2 Copyright © Best Practices®, LLC BEST PRACTICES, ® LLC

Definitions Used in This Report The following definitions are used in this study. Medical Affairs: Functions dedicated to building and maintaining relationships with physicians and the medical community, including, but not limited to, the following: Medical Education: Responsible for CME & educational grants Medical Communications & Publications: Develops or reviews scientific/medical content-- including medical journal articles--for communications to health care professionals, patients, consumers and payers. Develops/ manages publication plan. Includes Medical Info Call Center. Medical/Clinical Research Operations: Creates and guides strategy for clinical development programs. Develops and executes investigator and company-initiated clinical studies, including cost-marketing/ Phase IV studies. Includes Medical Directors. Medical/Scientific Liaisons (MSLs): Non-sales field force responsible for medical relations & training. Outcomes Research: Collection and analysis of Health Outcomes/ Economics data. Phamacovigilance/Safety: The collection and analysis of information on adverse drug reactions. Thought Leader Management: The identification, recruitment and development of physicians who can influence the medical perspective and practice of their peers.3 Copyright © Best Practices®, LLC BEST PRACTICES, ® LLC

Selected Key Findings The following key findings and insights are among those that emerged from the field surveys and executive interviews. Structure: The Medical Affairs organization is most often a centralized, dedicated group with a global geographic span that includes the U.S. Typically, Medical Affairs organizations report to the Executive Team (42 percent) rather than to Marketing or R&D. The head of Medical Affairs holds the job level of vice president or above at a majority of companies (54 percent.) Spending: On average, 37 percent of Medical Affairs spending is allocated for medical/clinical research operations, with the top quartile spending more than 60% for the clinical function. Medical Educations takes up about 18% of Medical Affairs allocations.4 Copyright © Best Practices®, LLC BEST PRACTICES, ® LLC

Research Participants Twenty-six Medical Affairs leaders at 25 pharmaceutical companies participated in this benchmarking study. Participants in Survey Werrick Pharmaceuticals Participating Companies: Amgen, ApoPharma, Astellas, AstraZeneca, Auxilium, Bayer Healthcare, Bayer Schering Pharma, Becton Dickinson, Bristol-Myers Squibb, Cubist, Esteve, Genentech, Johnson & Johnson, Myriad, Novartis, Novo Nordisk, OctoPlus, Pfizer, ProCaps, Savient, Schering-Plough, SK&F, Solvay, Vertex, Werrick Pharmaceuticals.5 Copyright © Best Practices®, LLC BEST PRACTICES, ® LLC

Medical Affairs Departments Have High-Level Leadership Executives at the vice president level or above lead Medical Affairs departments at 54% of the participating companies. Q. What is the job level of the person who currently heads Medical Affairs? Job Level of Medical Affairs Head * Other, 8% Director, 19% 23% Chief Medical Officer 4% Senior/Executive VP 27% Vice President Senior/Executive Director, 19% * Other= Head of Medical Affairs; Manager of Medical Affairs n=266 Copyright © Best Practices®, LLC BEST PRACTICES, ® LLC

Half the Medical Affairs Organizations Have Global Span Survey respondents most often represented groups with span covering the globe, including responsibility for the United States. Q. What is the geographic span of responsibility of Medical Affairs at your company? Geographic Span of Medical Affairs Head 50% % Responses 31% * Other=Global (excluding 19% US), North America, Hybrid, No reporting line between Global Medical Affairs & Regional/local Medical Affairs; Country Global U.S. Only * Other Only (4 responses) n=26 (including U.S.)7 Copyright © Best Practices®, LLC BEST PRACTICES, ® LLC

Few Companies Decreasing Medical Affairs Resources Cite Varied ReasonsFewer than 20% of companies experienced or projected any decreases in Medical AffairsStaff or budget resources. Key reasons given were the state of the economy, loss ofpatents, acquisitions, shift of clinical operations, and corporate cost-saving initiatives. Q. Please describe the key reasons for an decreases in spending or headcount that you indicated occurred in the past year or that you anticipate next year. Representative Quotes:“Economy.”“Products are going off patent.” $ $“Acquisition of another company.” Medical Medical Affairs Affairs“The company has initiativesto do more with less.” 18% of companies either expect or have experienced decreases in budget resources for Medical Affairs.“Laboratory operations functionsare being moved out of Medical About 20% have seen or expect staff reductions.Affairs next year.”8 Copyright © Best Practices®, LLC 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 www3.best-in-class.com9 Copyright © Best Practices®, LLC BEST PRACTICES, ® LLC

Medical Affairs Resources, Structures, and Trends Report Summary

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