1. Figure 4.1 NEW PRODUCT DEVELOPMENT PROCESS Finance Corporate strategy and portfolio decisions Regulatory affairs Marketing and sales + market research Manufacturing Basic R&D Reimbursement / Health economics

2. In vitro studies with cells, proteins, nucleic acids; animal studies, product design and testing for safety and efficacy Clinical research in humans for evaluating safety and efficacy, statistical validity of results, regulatory approval for marketing Regulatory standards apply to these functions: Manufacturing to marketing, sales and distribution Reimbursement through a complex network of third party payers Figure 4.2

3. Define the product – market need and product characteristics Understand key issues and plan prototypes and path to final product; Prepare budget Get support for your project from senior management. Build team. Get started. Figure 4.3

4. Figure 4.4

5. Figure 4.5

6. Stages (activities) Gates 1 2 3 3 Go Kill / Hold / Recycle - inputs (deliverables) - evaluation criteria - output 1 2 3 Stage-Gate process Figure 4.6

7. FIGURE 4.7 Idea GATE 1 Initial Screen Preliminary assessment STAGE 1 GATE 2 Second Screen (e.g. feasibility) Detailed investigation Business case preparation STAGE 2 GATE 3 Decision on business case STAGE 3 Testing and validation GATE 4 Post- development review STAGE 4 Development GATE 5 Pre-commer- cialization business analysis Full production And market launch STAGE 5 $ Post implem- entation review

8. FIGURE 4.8a

9. Figure 4.8b

10. MANUFACTURE MARKETING SALES CLINICAL TRIALS DISCOVERY & PRECLINICAL $ Target BiologyLead drug candidate Disc- overy Identi- fication Valid- ation preclinical Validation, Toxicology Phase I Phase II Phase III Manufacturing, Marketing Phase IV study Distribution Channels, Regulatory Manufacturing Figure 4.9

11. Validated targets Target biology Biochemistry (high throughput screening) Compound library Lead Optimization Improved leads Hits Structural Biology Molecular Modeling Medicinal Chemistry Leads Pharmacology Pharmacokinetics (PK) & Metabolism (ADME) Selection of a drug candidate Preclinical development Clinical development Registration Launch Figure 4.10

12. Discovery Hit to Lead Lead to Drug Candidate Clinical studies Approval Launch and Phase IV studies Management Review Technical Review Formal Management review Formal Management Review Formal FDA Review Follow Up Figure 4.11

13. Biomarker identification and validation Internal R&D In-licensing Manufacturing requirements Clinical Test Development Product specifications Technical platform Performance criteria Analytical performance optimization/assessment Scale up and manufacturing Retrospective clinical validation Commercialization Research Use Only (RUO), ASR Performance, Utility Criteria Performance, Utility Criteria Prospective clinical validation Registration & Commercialization PMA, CE Mark test Registration & Commercialization CE Mark, 510(k) tests Figure 4.12

14. Figure 4.13 Basic Research Prototype Design or Discovery Preclinical Development Phase IPhase IIPhase III FDA Filing/ Approval & Launch Clinical Marker Assay Validation Analytical Validation Diagnostic Kit Clinical Validation Diagnostic Kit; Final Platform Platform Change

15. Product concept Animal testing Device Specs, design Production prototype Pilot trial Manufacturing production Physician Hospital Consumer Distribution Sales, Mktg MANUFACTURE MARKETING SALES CLINICAL TRIALS DISCOVERY & PRECLINICAL $ Pivotal trial Figure 4.14 A

16. Figure 4.14 B

17. Customer Needs (Voice of Customer) Product Design Inputs (functional requirements) Design Outputs (Product Specs) Product Development (Design Reviews) VALIDATION VERIFICATION QUALIFICATION Figure 4.15

18. Discovery Feasibility Optimization Demonstration Production Market Launch Management Review Informal Design Review Formal Design Review Follow Up Figure 4.16

19. Figure 4.17

20. NDA Target Biology Lead drug candidate Disc- overy Identi- fication Valid- ation Marketing Phase IV study FDA Optim- ization Early clinical studies Advanced studies Registration Marketing Sales Phase I II Phase III preclinical GLP studies R&D personnel Marketing personnel Regulatory personnel Figure 4.18

21. Figure 4.19 Sr. Management/ Board/ Steering Committee Project A Project B Project C Function-specific orders Project-specific orders Project managerTeam member Functional area 1 Functional area 2 Functional area 3

22. Figure 4.20

23. Marketing & Sales R&D FDA Process & Clinical Trials Manufacturing USInternational Do It Yourself Strategic Partners/ Licenses Figure 4.21

24. BUY/BUILD Outsource to well established contractor as collaborator BUILD BUY BUY/BUILD Selectively contract parts only as needed. Keep assembly and testing in house. HIGHLOW HIGH Trade secrets, IP concerns Technical Complexity Figure 4.22