Innovation that Fits HBS Health Industry Alumni Association Online Roundtable June 1, 2005

1 Innovation That Fits - Panelists u Jeff Wager, M.D., M.B.A Managing Director of CPP Advisors LLC, a boutique life science investment bank Practice in life science corporate spin-outs u Don deBethizy, Ph.D. President and CEO of Targacept, Inc., a leading central nervous system disease-focused biopharmaceutical company Leading example of successful life science spin-out u Michael Lord, Ph.D. Professor of strategy and international business at Wake Forest University u Co-Authors of Innovation that Fits : Moving Beyond the Fads to Choose the RIGHT Innovation Strategy for Your Business (2005) Includes results of systematic study of over 250 corporate innovation initiatives from 1995 to 2000 that relied on 6 major new models of innovation

2 Seeking New Innovation Solutions (1) The Old (Obsolete?) Model The Core Firm Concept  Research  Development  Commercialization

3 Seeking New Innovation Solutions (2) The Proposed New Models: Innovation Alternatives? The Core Firm Concept? Research? Development? Commercialization? Corporate Venturing Skunkworks Incubators New Ventures Corporate Venture Capital ‘Asset-lite’ Innovation Intellectual Property Out-licensing In-licensing Innovation-by-Alliance Joint Ventures Consortia Open (Network) Alliances Innovation -by- Acquisition R&D by M&A Later-Stage Deals ‘Spinnovation’ Spinouts Spin-ins

4 Themes u What is behind the more difficult innovation environment in the life sciences today? u Why is the old model of innovation in trouble? What will take the place of the traditional integrated pharmaceutical company? u What have we learned from the ‘innovation frenzy’ of and the aftermath in the economy in general and in the health industries in particular? u What are the best innovation models for the health industry now? u How do you fit an innovation model to a specific business situation? How do you make sense of the alternative strategies?