T. Gottwald, ovesco

From Blue Skies to Pots of Gold:
"Picking the Winners - Risk Analysis and Product
Development in the Pharmaceutical Industry”
Brussels, November 3rd, 2009
Thomas Gottwald
Thomas Gottwald Ovesco Endoscopy AG
From Blue Skies to Pots of Gold Brussels Nov 2009

Numerous obstacles and risks alongside the value chain
Disease
selection
Target
family
selection
Decision
Points
Source: in part GSK
Genefunctiontarget
association
Commit
to product
type
Target to
tractable
hit
Commit to
target
Thomas Gottwald Ovesco Endoscopy AG
From Blue Skies to Pots of Gold Brussels Nov 2009
Phases of product development
Tractable
hit to
candidate
Tractable
hit
• Numerous players:
Pre-clinical
Candidate
selection
1st in
man
to
PoC
PoC to
commit to
Phase III
Phase III
1st in man PoC Commit
to
Phase III
File and
launch
Commit to
launch/
NDA filing
academia, clinicians, financial world, foundations and
grants, governments, industry, insurers, media, mother
nature, patients, regulatory bodies...
• Each player pursuing their own agenda!
Life cycle
management
Marketing
approval &
launch

Do the right thing !
Strategic Focus and Portfoliomanagement define the „What“?
Define strategic
focus in R&D
Thomas Gottwald Ovesco Endoscopy AG
From Blue Skies to Pots of Gold Brussels Nov 2009
Do we do the right thing?
Portfoliomanagement
in R&D

Portfolio-management: business specific evaluation criteria
Portfolio-management: Criteria for assessing competitive business specific intensity evaluation (2) (1)
criteria
Criteria Criteriato to assess assesstechnical economicrisk risk
Portfolio-management: Criteria to assess strategic „fit“ business High specific Industry Attractiveness evaluation criteria
Low
Criteria / Rating 1 2 3 4 5 Percentage
Criteria / Rating 1 2 High 3 Industry4 Attractiveness 5 Percentage Low
Low Competitive Intensity High
Criteria Criteria / Ratingto assess 1economic 2 attractiveness
Low 3 Competitive 4 Intensity 5 High Percentage
Criteria Criteria/Rating / Rating 1 2 3 4 5 Percentage Criteria/Rating 1 2 3 4 5 Percentage
Uncertainty 1. 3. Threat Power regarding of buyers new entrants (entry barriers)
Weighted result
Weighted result
Weighted Competitive result
Weighted Intensity result
Weighted result Intensity
Summary
sales by units high medium low
Probability - Economies Importance of success of sale single buying not important large small very
(< 40%) (> 90%)
Fit
Criteria
for-to realization the business
/ Product Industry Rating
of the differentiation as strategy a customernone
1
< 20%
2
20-40% medium
3
40-60% high 4
60-80% high
5
80-100% low Percentage
Criteria objective Uncertainty / Rating as described regarding in 1 high 2 3 medium 4 5 low Percentage
- Capital Concentration requirements of buyers large (> $1B) low small not important ($ 1MM)
the cost project estimate plan
(< 40%) (> 90%)
Potential - for Cost Importance market/ disadvantages of Industry`s lowproduct to buyer medium many very high few not important
Sales
technology
potential
Third Market position leadership weak tenable favourable strong dominant
(mio € - party
p.a.) (independent Threat patent of backward of size) < Integration broad based/
20 to buyers 20-50 50-100 not limited, likely none
100-500 > 500credible
threat
situation strong possible to
Type - of Technology Access Threat of of forward distribution Integration Base- channels by Industry credible
bypass Emerging- difficult threat Key- easy not likely
Return
Advantage - on investment*
compared Government Buyer´s cost topolicy of switching < 5
techn. low
% supplier 5-10 % 10-15 antagonistic medium techn.
% high 15-20 % >20
techn.
%
high supportive low
exist. products/technologies
(patent Platform Match - of
situation, of available Past Industry`s further behaviour share in
economic
of of incumbents total none house cost of not buyers`s in possible house fights low not in yes house acquiescens
high
factors) expansion resources and project available, available, available
- Maturity materials
aging embryonic/growth
Maturity requirements business segm. Age difficult to Mature Embryonic can be foundGrowth
early Growth
- Profitability of buyers find outside outside high low
Synergies 2. Power to otherof suppliersnone
medium high
projects
Development -4. Importance Threat cycle of substitution of single supplier
no known
not
potential
important very
currently losing volume
Market Own -Market growth patent with rate situation low(xGDP**) < 1 none - 1 - 1,5 >10 1,5 - 2,0 limited, 5-10 2,0 - 3,0 3-4 > broad 3.0
Sum
20 5-10 bypass
slightly few/large 3-5 low - high10 Threat Capacity of increment forward integration size3-10 - small not

R & D portfolio – selection process
Portfolios can be tailored to reflect the situation. Specific decision to be made with
regard to...
Attractivity
Economical attractivity
Economical risk
Know-how position
Annual budget
Annual budget
Thomas Gottwald Ovesco Endoscopy AG
From Blue Skies to Pots of Gold Brussels Nov 2009
Risk
Strategic fit
Technical risk
Attractivity
Type of technology
Time frame

Pick the right thing and decide !
Thomas Gottwald Ovesco Endoscopy AG
From Blue Skies to Pots of Gold Brussels Nov 2009

Prioritize !
Thomas Gottwald Ovesco Endoscopy AG
From Blue Skies to Pots of Gold Brussels Nov 2009

Partner !
Thomas Gottwald Ovesco Endoscopy AG
From Blue Skies to Pots of Gold Brussels Nov 2009

...with partners of these qualities
• Solid drug discovery engine/pipeline
• Capability of developing compounds to proof of concept
• A growing asset portfolio, ideally close to or in the
clinical phase (phase II ?!)
• Leader in a specific technology or therapeutic area
based on solid science
• A strong management team
• Solid financial situation
Thomas Gottwald Ovesco Endoscopy AG
From Blue Skies to Pots of Gold Brussels Nov 2009

You have to take risks…
Risk ?
Thomas Gottwald Ovesco Endoscopy AG
From Blue Skies to Pots of Gold Brussels Nov 2009
Yes
No

…but wisely!
The triangle of constraints
Thomas Gottwald Ovesco Endoscopy AG
From Blue Skies to Pots of Gold Brussels Nov 2009
Time
Scope
Resources

All players got to learn their lesson !
Thomas Gottwald Ovesco Endoscopy AG
From Blue Skies to Pots of Gold Brussels Nov 2009
Pitfalls and problems at a glance
– Lack of Communication: pyramid versus permeability
– Lack of sense for innovation
– Risk aversion versus vision
– Resistance to change
– Partnering as a paralyzing process
– Founder syndrome
– Overregulation
– Shyness of competition in almost all segments
– Eminence versus evidence
– Lack of entrepreneurship
– Chasing the “3 month target” versus strategy
– Stubbornness
– Producing the compound
– Structure and organization
Size

…and the winner is ?!
Academia
Industry
„Environment“
Thomas Gottwald Ovesco Endoscopy AG
From Blue Skies to Pots of Gold Brussels Nov 2009
Prerequisites for success
“Ivory tower”
Solid IP-strategy
Business plan competitions, grant applications
Open-minded founders and universities
Partnering conferences
Coached scientists (finance, QM & structure, focus, production)
Visionary CEOs and CSOs
Strategy
Solid IP and contracts
Entrepreneurship
Facilitating governments and regulatory bodies
Grants and programs
Human factor
Communication, communication, communication
Success

You have to take risks…
Thomas Gottwald Ovesco Endoscopy AG
From Blue Skies to Pots of Gold Brussels Nov 2009
…Pots of Gold !