Inside P&G’s Innovation Machine - P&G Pharmaceuticals

crunchkingofprussiaBiotechnology

Dec 6, 2012 (4 years and 10 months ago)

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Jeff D. Davis

Global New Business Development

P&G Pharmaceuticals

Mason, Ohio

“Inside P&G’s Innovation Machine”


P&G…the world’s largest consumer
packaged goods company



Inside P&G’s innovation journey



Inside P&G Pharmaceuticals’ new
innovation strategy

Agenda

Who are we?


Over $68 billion in global sales


300 brands in over 160 countries


#1 or #2 in 80% of our
categories


140,000 employees



P&G’s 22 Billion
-
Dollar Brands

99
%



of US households

purchased a

P&G product

in 2005.

Three Global Business Units

Household &
Family Care

$33.5 Billion



Baby Care



Family Care



Fabric Care



Home Care



Pet Health & Nutrition



Snacks & Coffee


Beauty &
Health Care


$29 Billion


Cosmetics



Deodorants



Feminine Care



Hair Care



Personal Cleansing



Skin Care



Oral Care



Personal Health Care



Pharmaceuticals

Gillette

$6.4 Billion


Razors & Blades



Duracell



Braun


P&G Growth Strategies

1

2

3

Core business: leading brands,
biggest countries, winning customers

Portfolio shift toward faster
growing, higher margin,
asset efficient categories

Developing markets and

lower income consumers

Innovation

Go
-
to
-


Market

Scale

Consumer

Understanding

Branding

8

Leveraging P&G’s Core Strengths

10,000

market research studies
each year


Understanding
Consumers



P&G…the world’s largest consumer
packaged goods company



Inside P&G’s innovation journey



Inside P&G Pharmaceuticals’ new
innovation strategy

Agenda

Historically P&G has Grown Through
Internal Innovation

What Happens if You Don’t Grow?



Year 2000 wake up call



>50% drop in stock price

Organic

Target

thru

FY 2010

+4% to +6%


Organic
(excludes foreign exchange, acquisition & divestiture impacts)



Acquisitions & Divestitures

Sustainable Sales Growth

innovate

how we innovate

A Call to Action . . .

“We will acquire 50% of
our innovations from
outside P&G”


President and Chief Executive

The Procter & Gamble Company

A.G.Lafley

&

develop

research

connect

C&D vs R&D…

50%


our labs

from

50%


our labs

through

US Industrial R&D by Size of
Enterprise

Company Size



<1000 employees

1,000


4,999

5,000


9,999

10,000


24,999

25,000+

1981

1989

1999

2001

4.4%

9.2%

22.5%

24.7%

6.1%

7.6%

13.6%

13.5%

5.8%

5.5%

9.0%

8.8%

13.1%

10.0%

13.6%

13.6%

70.7%

67.7%

41.3%

39.4%

Source:
Open Business Models: How to Thrive in the New Innovation Landscape

by Henry Chesbrough (Harvard Business School Press, 2006), page 22.


Just a few examples of C&D . . .

Olay Vitamins

Crest New Tubes

Tide Stainbrush

Clairol In
-
Store
Shade Selector

Kandoo Wipes

Pantene
Sonic
Comb

Mr. Clean
Magic Eraser

Glad Press N Seal

Charmin
Fresh
Mates

Swiffer Duster

Mr. Clean Autodry

Olay Daily

Facial Pillows

Old Spice
Shave Gel

Visia Beauty Imaging

Olay
Regenerist

Olay White
Radiance Facial
Mask

SK
-
II Facial Mask

SK
-
II Airtouch
Foundation

Prilosec OTC

Crest Scratch N Sniff Pkg.

Crest Liquid
Dentifrice

PuR /
Whirlpool
Refrigerator
Filters

OTC Drug
Registrations

Metamucil
Capsules

Pringles Dips

Pantene Hair
Styling
Products

“Connect & Develop”

Inside P&G’s Innovation Model


+35% of new products have elements that
originated from outside P&G


Up
from 15% in 2000



R&D productivity has increased by nearly 60%



Since 2000 stock collapse


Share price has

doubled


Our portfolio has

grown
to 22 billion
-
dollar brands


P&G…the world’s largest consumer
packaged goods company



Inside P&G’s innovation journey



Inside P&G Pharmaceuticals’ new
innovation strategy

Agenda

1887

Vicks VapoRub

launched by

Richardson
-
Vicks


1901

Pepto
-
Bismol

launched by

Norwich

Over 100 years old . . .

P&G Pharma’s Strategic Model

Acquire, Develop & Market…(Connect & Develop)


Strategic choice to exclusively partner,
license or acquire
all

of our new drug
candidates



How? Our new drugs will come from a
network of academia, biotech and
pharmaceutical industry relationships



Restructured our R&D and commercial
organizations to excel at identifying,
evaluating, negotiating and managing
long
-
term, mutually beneficial partnerships.

P&G Pharma’s Strategic Model

The Best of
Both

Worlds…

You & P&G…Think of the possibilities


Marketing Expertise
and Unique Insights

of the world’s largest
consumer company



Personal Touch

of a
small pharmaceutical
company with
deep
experience and
proven capabilities

in
our focus areas

P&G Pharma’s Strategic Model

Acquire, Develop & Market


We
eliminated our Discovery

organization
(300 people) and most of their laboratories



We
retained our complete Development

organization (650 people).



We
established a Search & Evaluate

organization (35 scientists) who have
responsibility for helping find and screen
licensing opportunities

Our New R&D Structure (July 2006)

musculoskeletal

gastrointestinal

women’s health

focus areas


Strategically focused on 3 therapeutic areas
where the patient plays an active role

in
managing their health




Musculoskeletal


Osteoporosis, Rheumatoid Arthritis and Osteoarthritis



Gastrointestinal



Ulcerative Colitis, Crohn’s disease, IBS and GERD



Women’s Health




Overactive Bladder, Incontinence, Menopausal symptoms


P&G Pharma’s Strategic Model


Why will it work?

* Corporate interest: hair growth and skin aging

Our Pharma Partnering Experience

Recent deals…P&G and Nastech

Feb 2006

Recent deals…P&G and Ablynx

April 2006

Recent deals…P&G & ARYx

July 2006

P&G Pharma Partnering Philosophy

The real test of a successful alliance
negotiation is not a signed contract

with all desired terms agreed in full…

…it is whether the companies

share a

common vision
,

feel like

the

deal is fair
, are

contractually

motivated to do what’s right
,


and can

work together over

the long term
!

“Negotiate for Implementation”

the

of both worlds

best