1 Portfolio Simulation / Forecasting: Selecting improvement initiatives to maximize “points of leverage“ May 1, 2006 Alan Poirier Director, Analysis Metrics & Performance Group Pfizer Global Research & Development 2006 ProModel Solutions Conference

2 The Context Using Portfolio Simulator - to assess Initiatives to Improve Productivity. "Assessing the Impact of Clinical Study Speed Targets on Portfolio Yield - where does performance improvement matter most ?" Every Pharmaceutical company must deliver clinical trials to standards of quality, speed & cost. This analysis looks at the performance of individual segments of clinical studies, and asks - if you have an understanding of the range of potential improvement that is possible, where would you focus your process improvement initiatives? The analysis uses industry benchmarks to assess what's possible, develop several performance scenarios which are applied to the entire Pharmaceutical portfolio, looking at the scenario impact on several Key Performance Indicators (KPIs).

3 Make the discussion Objective Performance improvement initiatives can originate anywhere – inside or outside your business. Some may have strong department advocacy. Selecting the best strategies for performance improvement must be an objective exercise. –Validate (or dilute) the advocacy with objective analysis ! Use Simulation technology as an objective prototyping workspace, where process improvement proposals can be evaluated.

4 1: Document (and agree) on your process. Enrollment Treatment Data Cleanup Analysis & Reporting Study Setup Decision Protocol Development LP ENROLLEDLPLV FINAL REPORT DRAFT REPORT PROTOCOL APPROVED Decision If you have a portfolio of projects, and they all go through the same process – where should improvement efforts be focused ? High Attrition and timeline variability can complicate the mathematics. Decision 2A Decision 2B Decision 3 Process Details Project A 75% attrition 25% attrition

5 2: How much can we improve ? External benchmarks suggest potential opportunities Enrollment Treatment Data Cleanup Analysis & Reporting Study Setup Decision Study Segment (KPIs) Hypothetical Baseline Performance * External Benchmarks (Potential Performance) Protocol Development90 days60 days Study Setup120 days80 days Enrollment280 days200 days TreatmentPer Design Data Cleanup45 days15 days Analysis & Reporting120 days80 days Protocol Development LP ENROLLEDLPLV FINAL REPORT DRAFT REPORT PROTOCOL APPROVED DB Lock * Hypothetical Data – not representative of Pfizer clinical study performance

6 3: Collect Proposals Proposed Improvement Initiatives After internal discussion – assume that three initiatives are proposed to deliver the potential performance improvements. We probably can’t do them all – so we must have a means to assess their relative merit. Feeder Sites Protocol Outsource New Technology Enrollment Treatment Data Cleanup Analysis & Reporting Study Setup Decision Protocol Development LP ENROLLED LPLV FINAL REPORT DRAFT REPORT PROTOCOL APPROVED Decision DB Lock

7 Details about the Proposed Initiatives (Initiatives become Scenarios in Portfolio Simulator) 1.Protocol Outsource: –For a $20m annual cost, an external vendor will handle the entire protocol development step, and protocol approvals will be delivered 20 days faster. As an initiative, the cost can’t easily be shared to each project, and must be carried as an annual burden. 2.“Feeder” Site Enrollment: –Add “feeder-sites” per study [ $1m extra cost per study] – but this delivers the FPFV 15 days faster. 3.New Technology: –New technology can save 20 days from LSLV to DBLock in each study, but will cost $5m / study to deploy. The Major Challenge – is being able to comfortably translate Initiative Proposals into conservative performance improvement estimates.

8 4: Agree on the evaluation criteria Agree which Key Performance Indicators we will use to decide the relative merit of initiatives. Before discussion of which Improvement Initiative to pursue, we must agree how we will assess the success of any initiative on our process for delivering the project portfolio. Example of potential Key Performance Indicators (KPIs): –Time to the final Decision (Decision3) –Cost to deliver the decisions for 5 projects –The Productivity (as measured by NPV)

9 Portfolio Simulator Setup Each Proposed Initiative is translated into a Scenario in Portfolio Simulator. Setup scenarios to deliver the agreed Key Performance Indicators we will use to decide the relative merit of initiatives. Scenarios run against a sample Portfolio of 5 projects – all starting Phase 2A in the next 2 years.

10 KPI : Time to Decision3 Gantt Chart shows Timeline Differences The Gantt shows the progressive time advantage of the New Technology Proposal, followed closely by Protocol Outsource

11 KPI : Cost to Decision3 The Protocol Outsource appears to be the highest cost option – but it does get to the decision point faster.

12 KPI : Productivity (NPV) The NPV favors the New Technology proposal.

13 Conclusion Use simulation technology to make the discussion more objective. 1.Agree on the process you are evaluating 2.Use external benchmarks to decide how much improvement is possible 3.Collect improvement proposals 4.Choose your evaluation criteria (KPIs) 5.Evaluate & discuss Thank You