ISPETalkYang01 26 06B

Leadership in Manufacturing and Engineering Organizations: 

Leadership in Manufacturing and Engineering Organizations Patrick Y. Yang, Ph.D. Executive Vice President, Product Operations January 26, 2006 ISPE Bay Area Subchapter Meeting

Genentech - a cool company by the bay: 

Genentech - a cool company by the bay

Thirty Years Science-based Growth: 

Thirty Years Science-based Growth

Total Operating Revenues: 

Total Operating Revenues For the full year 2005, total operating revenues exceeded $6.6 billion, doubling our total operating revenues in the 2 years since 2003. ($ in millions) A 44% increase over 2004

Our Culture: 

Our Culture As of December 31, 2005, we have ~9,500 employees, an approximate 25% increase over 2004. In 2005, we were named by Science magazine as “the top employer and most admired company in biotechnology and the pharmaceutical industries” for the fourth year in a row. This month, FORTUNE magazine named Genentech as the #1 company on the 2006 list of "The 100 Best Companies to Work For". We have earned a place on the FORTUNE list for eight consecutive years. We remain focused on working to protect and nurture our culture.

Genentech’s Executive Committee: 

Genentech’s Executive Committee Richard Scheller Art Levinson Ian Clark Pat Yang Sue Hellmann David Ebersman Steve Juelsgaard

Genentech’s Executive Committee Dressed up for Halloween: 

Genentech’s Executive Committee Dressed up for Halloween Sleepy Grumpy Snow White Happy Sneezy Doc Bashful

Our key business challenges: 

Our key business challenges Successful new product launches Pricing/Reimbursement Manufacturing execution Supply chain risks R&D Productivity Culture: being innovative and efficient Competition/Follow-On Biologics

Excellence Means Being Innovative and Disciplined(The key word is “and”, not “or”… The risk is we become a “big pharma”): 

Excellence Means Being Innovative and Disciplined (The key word is “and”, not “or”… The risk is we become a “big pharma”) Innovative / Entrepreneurial Disciplined / Efficient

Genentech’s Cell Culture Capacity Growth Challenge: 

Genentech’s Cell Culture Capacity Growth Challenge

Big Pharma vs. Great Biotech: 

Big Pharma vs. Great Biotech What are the differences? Sizes and scales Success rates Priorities Cultures

Big Pharma’s Manufacturing: 

Big Pharma’s Manufacturing Complex Supply Chain High Inventory Long Cycle Time Non-responsiveness Good/Fair Customer Service Islands of Excellence High Priority of Quality and Compliance Over capacity

Typical Big Pharma “Reengineerging” or Cost Cutting Solutions (usually too late): 

Typical Big Pharma “Reengineerging” or Cost Cutting Solutions (usually too late) Simplify. Mandate common processes. Create one source of global information Provide ease of access to key operational data Focus resources on high-value added activities Analyze expeneses and eliminate wastes Eliminate redundant functions Apply Six Sigma and Lean Manufacturing Reduce Work Close plants, cut overhead, sell assets.

Typical Big Pharma “Reengineerging” or Cost Cutting Solutions (usually too late): 

Typical Big Pharma “Reengineerging” or Cost Cutting Solutions (usually too late) Simplify. Mandate common processes. Create one source of global information Provide ease of access to key operational data Focus resources on high-value added activities Analyze expeneses and eliminate wastes Eliminate redundant functions Apply Six Sigma and Lean Manufacturing Reduce Work Close plants, cut overhead, sell assets.

Other Big Pharma Reactions when Things Don’t work: Where did all the money go? How do we spend it?: 

Other Big Pharma Reactions when Things Don’t work: Where did all the money go? How do we spend it? IT Systems Support $600 $1021 Up $101 / 13% Human Resources $68 Finance/Bus. Dev./Licens. $109 9% Of Total Executive/Admin $159 MRL Other $264 $1,600 Up $176 / 13 % Administrative $142 Depreciation $121 15% Of Total $4,300 Up $766 / 22 % 42% Of Total MMD Period Costs $1,176 $3,176 Up $97 / 4 % Manufacturing Expenses $700 Other Division Support Exp. $127 33% Of Total Depreciation $350 $10,000 Up $1,140 / 13 % $5,000 Sales & Marketing $3,000 Benefits $1,600 Other $317 Administration (G&A) $443 Clinical Development $994 Basic Research $342 Administration/Other $740 BUSINESS INFRASTRUCTURE DRUG DISCOVERY/DEVELOPMENT ORDER GENERATION MARKET DEVELOPMENT AND Promotion $1,446 Clinical Programs International MATERIALS & PRODUCTION TOTAL EXPENSES Direct Selling $1,686 Cost of Sales $2,111 Payroll Why wait until you are in trouble?

Two perspective of Genentech’s culture: 

Two perspective of Genentech’s culture Informal Genuine Authentic Intensive Hard working Nimble Fun Fair

What’s hard to imitate: 

What’s hard to imitate Employee’s passion for their jobs Productive dialogues Effective decision making Follow Through and Feedback Operating system Innovation (not just creativity) Leaders at all levels Right people in the right jobs

What does success for me look like?: 

What does success for me look like? Best place to work Most admired manufacturing organization 10X productivity in 10 years Strong pipeline: many new molecules into Development Many new products successfully launched #1 in Oncology in the U.S. High annual earnings growt Significant positive cumulative free cash flow Most innovative, most efficient company

The Ultimate Measure of Our Success: 

The Ultimate Measure of Our Success We are committed to developing products that address significant unmet medical needs We are committed to ensuring our marketed products are available to qualified uninsured or underinsured patients in the United States

Final Thoughts: Manufacturing and Engineering Leader’s Profile: 

Final Thoughts: Manufacturing and Engineering Leader’s Profile Passion for what they do. Ability to facilitate, teach and lead. Principle centered - thus, ethical and predictable behavior. Trustworthy, candid and transparent. Responsible and responsive 360 degree - always connected with reality. Flawless follow-up - always meeting commitments. Attention to details - nothing falls through the crack. Great judgment and excellent decision making. Emotional strength – having the courage to make tough decisions and the heart to implement it thoughtfully. Emotional intelligence – having the skills for interpersonal productivity, conflict management, collaboration and team achievements. Always learning

In conclusion…: 

In conclusion… What are my best learning experiences: General Electric Execution: get the job done HR development processes Speed, simplicity, self-confidence Management as a feedback control system Employability: always learning Merck Passion: “medicine is for the patients” Integrity and honesty Systems thinking Curse of the Most Admired: lessons learned Globalization Genentech Real passion Authenticity: being self and genuine Work hard, play hard Feet on the ground