1.
Driving Sourcing Initiatives
through Shared Savings Goals
Presented by
Matthew Weinberg, C.P.M.
Senior Manager, Strategic Sourcing
Cubist Pharmaceuticals
Mary Kachinsky, CPSM, C.P.M.
Senior Director, Strategic Sourcing
Cubist Pharmaceuticals

2.
Disclaimer
This presentation contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 and other federal securities laws. Any statements
contained herein which do not describe historical facts, including but not limited to, statements
regarding our plans to execute against our Building Blocks of Growth five-year goals through
2017, are forward-looking statements which involve risks and uncertainties that could cause
actual results to differ materially from those discussed in such forward-looking statements. Such
risks and uncertainties include: our ability to continue to grow revenues from the sale of
CUBICIN® and ENTEREG®; the ability of our third-party suppliers to produce and deliver
adequate amounts of our products and product candidates; the strength of, and our ability to
successfully enforce, our intellectual property portfolio protecting our products and product
candidates; competition from generic drug companies such as Teva, Hospira and Strides; our
ability to successfully develop, gain marketing approval for and commercially launch
ceftolozane/tazobactam and our other product candidates for their planned indications and on the
timelines that we expect; our ability to discover, in-license or acquire new products and product
candidates; our ability to achieve and manage our growth in our business; and those additional
factors discussed in our most recent Annual Report on Form 10-K and Quarterly Report on Form
10-Q filed with the Securities and Exchange Commission. We caution investors not to place
considerable reliance on the forward-looking statements contained in this presentation. These
forward-looking statements speak only as of the date of this document and we undertake no
obligation to update or revise any of these statements.

3.
Session Objectives
1. Provide a brief overview of Cubist
2. Introduce the Strategic Sourcing process used to
generate annual savings target by functional
department
3. Present
methodology of how cost savings is
tracked and reported
4. Share results of our cost savings program
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4.
Cubist Overview
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5.
About Cubist



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
Cubist Pharmaceuticals is a public, biopharmaceutical
company (NASDAQ: CBST) focused on the research,
development and commercialization of products that
address significant unmet medical needs in the acute
care environment
Founded in 1992, company headquartered in
Lexington, MA, currently employs ~ 900 people
Recognized as a top-performing company: The Boston
Globe’s Top Places To Work, Fortune’s 100 Fastest
Growing Companies and Deloitte Technology Fast 500
Philanthropic efforts focused on supporting STEM
education
Cubist announced two strategic acquisitions that will
bolster global leadership in the acute care/hospital
environment, support the Building Blocks of Growth
goals, and bring significant value to patients,
shareholders and customers – Trius and Optimer
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6

6.
Building Blocks of Growth
5 Year Goals
4 Product
$2 Billion in
Global
Candidates in
Late-Stage
Revenue
Clinical Trials
$700 Million in NonGAAP Adjusted
Operating Income
A Highly Differentiated Culture
A Highly Differentiated Culture
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7.
Process Used to Generate Savings Target
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8.
Cubist Strategic Sourcing Tracks And
Measures Four Different Types Of Savings
Savings Definition
Examples
Purchase price reduction with historical price.
1
Cost Reduction
Last Price Paid/New Price
Purchase price reduction without historic price. Category
specific. Savings generated by taking difference from bid
averages, first bid/final negotiated price, comparable
reference units, or industry benchmarks
2
• FedEx shipments
• Rate card for Digital Agency
Demand Management
3
Reduction in the consumption of a good or service through a
Procurement-led initiative.
• Restrict ability of employees to
download smart phone
applications that incur charges
Process
Improvement
Savings from buying or managing goods and services more
effectively.
For Overhead impact: requires headcount reduction, not
partial FTEs
• Eliminating chemical waste
through better management of
chemicals inventory
Cost Avoidance
Avoiding price increases through negotiations or eliminating
fees or charges that would have been incurred otherwise.
Inflation management
• Elimination of rate increase for
certain CRO service providers
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9.
Annual savings targets are based on budgeted
initiatives creating credibility with leadership
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Sourcing participates in the annual budget planning process with Finance Planning & Analysis
(FP&A)
Sourcing colleagues, in collaboration with their functional leaders and FP&A representative, review
high dollar, budget line items to identify savings opportunities
Business Functional Leaders and Sourcing have joint ownership of the savings target
The savings target is a performance goal shared by Strategic Sourcing and the Functional Leader
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10.
Tracking and Reporting
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11.
Quarterly reporting allows functional leaders to
review savings progress throughout the year

On a quarterly basis, savings numbers are exported from iSave and rolled up at the
business functional level
Raw savings
report extracted
from iSave
Quarter
End

Day +3
Reports prepared
and validated with
Sourcing Team
Day +7
“Thermometer
Slides” prepared
Day +15
Sourcing Leads
share reports with
Functional
Leaders
Day +30
Savings figures are socialized with business functional leaders prior to sharing the
aggregate results at the Quarterly Business Review Meeting with Senior Executives
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12.
Sample Q2 Savings Report: Commercial
Savings
Progress
Sourcing Initiatives Currently In Process
Forecast
Savings
100%
$XXX
Est. ‘13
Savings
Comments
Sales Training
$XXX
RFP due back mid august
Marketing Agency – new product
$XXX
Direct negotiations focused on reduced
rates and/or rebate
Copay Assistance
$XXX
Reviewing vendor capabilities
Initiative
75%
50%
25%
0%
TOTAL
$XXX
$0
Realized Savings
$XXX
Top 3 Initiatives Contributing To The 2013 Savings Target
Open Issues Related To Achieving 2013 Savings
2013 Realized
Savings
2013 Forecast
Savings
Commercial exhibit booth staffing
$XXX
$XXX
National Sales Meeting
$XXX
$XXX
All Others (n=8)
$XXX
$XXX
$XXX
$XXX
Initiative
TOTAL
Issue
Recommendation
Team is seeking a 4th supplier for
printed materials RFP
No action needed
Key stakeholder on printed
materials project has gone out on
leave, delaying decision
Escalate with Commercial
management

13.
Results
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14.
Successful achievement of savings targets has accelerated
Cubist’s ability to deliver savings in complex categories
Prioritization And Execution Of Identified Opportunities
Fast
Wave 1
Digital Agency
Wave 2
Contract Labor
Ease/Speed of Implementation
Collaborations
Market Research
PMEs
Meetings
Lab Supplies &
Maintenance
Telecommunications
Lab Services
Relocation
Creative Agencies
IT Services
Benefits
Non-Clinical
Studies
International
Wave 3
Legal
Slow
Low
Scientific
Agencies
IT Software &
Hardware
Shipping
Clinical
Studies
Business Impact/Potential Savings
High

15.
2-Year Program has yielded significant results
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Year-over-year savings increased 117% from 2012 to 2013
Number of Strategic Sourcing programs grew from 136 in 2012
to 200+ in 2013
Expanded Scope to include functional areas that were previously
out of scope
Strategic Sourcing is now called upon to deliver value beyond
savings; e.g. sustainable supply chain, supplier performance
management, risk and compliance

16.
Takeaways
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17.
Takeaways
1.
Develop a sustainable cost savings program that includes
■
Savings targets built on actual projects/budgets
■
Savings definition that are understood and accepted by the organization
■
User-friendly tool for tracking and reporting that can be easily audited
2.
Socialize your savings program across all levels of the organization
and get buy in
3.
Communicate progress against savings targets regularly to functional
business leaders and senior executives
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18.
Thank You
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