1. Healthcare Career Strategies: • 1999 L&BD Executive Survey • Defined Health L&BD “Add-on”

2. Objectives • Survey industry compensation norms and ranges for healthcare L&BD Executives • Assess job satisfaction and the implication for Career Development • Explore the potential impact of external forces (e.g., consolidations and financing) on careers in L&BD

3. Agenda I. Introduction; Respondent Data II. Compensation By Pharma vs. Biotech By Position By Gender Comparison to Prior Years III. State of Mind Job Satisfaction Career Plans Impact of Significant Industry Trends

4. Organizers • Gayle Mills, Eos Biotechnology • Arlene Morris, Coulter Pharma • Ed Saltzman, Defined Health

5. Special Recognition • Defined Health • Ginny Llobell • Deborah Lunn • Respondents (You know who you are!) • L&BD Survey • DH Qualitative Analysis

6. Response to Survey # of responses =170 (156 analyzed)

7. Sample: By Title Title % of Respondents President/CEO/COO 7% Exec./Sr. VP 7% Vice President 25% Director/Exec. Director 42% Asst./Assoc. Director 4% Manager 11% Counsel 4% Most are Corporate Development, Business Development, Licensing

8. Sample: By Industry and Geography n =170

9. Sample: By Gender You guys always seem to outweigh us

10. Sample: By Education “Most of the people at biotech are scientists, you don’t necessarily need another scientist.” “The importance of science is probably overemphasized. I know some great dealmakers that have no science background.” • > 50% have a graduate science and/or business degree • Business degrees slightly more common than science • Business degrees slightly more frequent in Biotech than Pharma

11. Sample: Years in Current Position “I try very hard to make my job very interesting so someone else will want it. This is the best way to find your replacement. My plan is to move around big pharma, or make internal progress within big pharma.”

12. Compensation: Drivers? Doing deals is an imperative for both sides

13. Compensation Drivers • L&BD isHOT, HOT, HOT! • Doing deals is an imperative for both sides • “it’s one of the few ways out of woods. We can’t raise prices any more and our discovery engines will only get us so far.”[Paraphrased from DH interviews.] • “Everyone does business together now, nobody operates alone, and you need to do deals to survive.” • Headhunters are calling ; 40% of cos. are 1 person “short” • Tremendous job security being in L&BD

14. Compensation Conclusions(1) • Salary: Pharma  Biotech • Cash Bonus : Pharma > Biotech “Pharma is a high paying industry.” “Anything I see as a threat to my wealth-building capability will send me out the door.” More Pharma Execs making $125-175K; More Biotechs making >$175K

15. Compensation Conclusions(1) • Stock Options: Biotech > Pharma 90% of Biotech L&BD execs get options < 75% of Pharma L&BD execs get options

16. Base Salary % of Respondents

17. Cash Bonus % of Respondents % of Base Salary

18. Total Expected Compensation - All % of Respondents

19. Compensation Conclusions (2) • Salary by Position: Managers Directors VPs Top Dogs The “$100K+” Manager 1997: 85% < $100k 1999: 45% < $100k The VPs really get the spoils -- (vs. 1996) 3x more likely to be in “$175K+ Club”

20. Base Salary: Managers Managers (n=19) % of Respondents

21. Total Expected Compensation: Managers Managers (n=19) % of Respondents

22. Director Compensation... “His peak earning years came and went without a ripple.”

23. Base Salary: Directors Directors (n=78) % of Respondents 3% of respondents $175,000 - $199,999

24. Total Expected Compensation: Directors Directors (n=78) % of Respondents

25. Base Salary: VPs Vice Presidents (n=53) % of Respondents

26. Total Expected Compensation: VPs Vice Presidents (n=53) % of Respondents

27. Base Salary: Top Dogs Top Dogs* (n=11) % of Respondents *President, CEO/COO, CFO

28. Total Expected Compensation: Top Dogs Top Dogs* (n=11) % of Respondents *President, CEO/COO, CFO

29. Compensation Conclusions (3) • Salary By Gender Glass Ceiling is Shaking But Not Breaking! • Greater percentage of women vs. men with base salary >$175 - $200K, but… • Women are 3-5x more likely vs. men to earn < $100K. • Twice as many men as women earn > $200K

30. Base Salary by Gender % Respondents

31. Total Expected Compensation by Gender % Respondents

32. So, Are We Happy???? • Biotech Execsprofess to be happierthan their Pharma counterparts - especially with regard to: - Role of BD in company - How company does deal - Career path “Pharma makes decisions more slowly, by committee. It isn’t a decision-making role, it’s facilitating. The role of BD for biotechs is much more important. You look to BD to bring in $ as you look to financing to bring in $.”

33. So, Are We Happy???? • Biotech & Pharma L&BD execs have equal levels of “satisfaction” with their compensation -- about a 2.5 on a scale of 1-5. • Most are secure in their prospects for the future. “There is tremendous job security in being the head of business development. Every start-up has to fill this role. Everyone does business together now, nobody operates alone, and you need to do deals to survive. Even when biotechs go through massive layoffs, BD is the last to go.”

34. BD’s Role

35. So, What Are We Bitching About?(and how many worlds apart are we?) Principal Factors Making Job Most Difficult PharmaBiotech Internal Politics 62% 29% Lack of Budget for Doing Deals 39% 22% Risk Avoidance of Company 44% 10% Unrealistic Expectations of Co 25% 16% Lack of Products 29% 45% Lack of Experience of Others in Co 32% 41% Unrealistic Expectations of Boss 15% 33% Lack of Training of Others in Co 20%28% Inexperience of Potential Partner12%23%

36. And, What Are We Going to Do About It? • 55% Plan To Stay With Present Company, and move to another position in... Marketing & Sales 16% Pharma 4% Biotech Operations 15% Pharma 28% Biotech L&BD (Higher Level) 47% Pharma 48% Biotech

37. Where are we going? Interestingly, though, nobody wants to jump the fence… <10% of Pharma or Biotech L&BD execs would consider a move to the other side “Pharma makes decisions slower, by committee. It isn’t a decision-making role, it’s facilitating.” “Biotech is squirrely. They’re always begging for money.” “Biotech companies are exciting and challenging, and there are lots to pick from.” “There’s a certain age by which you need to make the move from pharma to biotech. Beyond it, you might not make it.”

38. And, What Are We Going to Do About It? • 45% Plan To Hit The Road Within 2 Yrs Biotech 54% Pharma 36% Trigger Event PharmaBiotech Lack of advancement 25% Lack of advancement 20% Internal politics 21% Merger 20% Merger 18% Co. may run out of cash 16% Inadequate comp. 14% Inadequate comp. 15% Lack of deal funding 11% Internal politics 11%

39. Speaking of Lack of Advancement.. “At what hour tomorrow do wish to resume your humdrum existence.”

40. So, Where Are We (NOT) Headed? • Not to the Beach or Golf Course! • <10% of L&BD execs plan to retire within 5 years • Not to the Consulting Ranks (Yeah!) • <5% of L&BD execs will start their own business or hang out a shingle “Japan would be OK, but Pakistan is out at this point.” “My goal is to become CEO of a biotech company.”

41. Denial, anyone? • Mergers? • Acquisitions? • Wall Street 20% growth per annum expectations? • Dearth of late stage product opportunities? • Trouble securing biotech financing?

42. The .com Financing Environment

43. BD Optimism

44. Denial, anyone? • Nearly 80% of L&BD execs believe there is a medium-high chance that their companies will remain independent over the next 3 years. • But, 32% of biotechs believe there is a medium-high chancetheir companies will run out of $ within the next 3 years • “Biotechs merging out of desperation will create a bigger, more desperate company” • >50% of Biotech execs expect their companies to launch a product within 3 years.

45. Where are we going? Ex-Healthcare? Less than 1%, would leave healthcare for another industry But, not because they’re ill-equipped… “[Healthcare is] more exciting than the latest Internet play, and it isn’t quickly obsoleted in 6 months.” “Dealmaking in biotech is more complicated than in other industries. The product is a “hope and a dream.” The business itself is more complex, there a longer time frames and heavy science, R&D and legal and regulatory issues to contend with.” “Moving to another industry would be like a cakewalk”

46. Observations • Smarter people are sitting on both sides of the table (and both sides need smarter people…) • “The people sitting across the desk from us are getting as smart as we are -- they realize the value of the assets they have.” • “Why do you think these deals have gotten so expensive?!!”

47. Observations • There’s plenty of room in biotech! • 1400 biotech cos w/1-2 L&BD staff • L&BD is “FILO” - first-in, last-out • vs. Pharma - how many L&BD execs can Pharma companies absorb… • “my job is to bring in late stage opportunities. There’s a chance, that if I do a good job, I’ll be out of one.” • “in the event of a hostile takeover, there would likely be 1-1 redundancies…”

48. THE END

49. Tools of the Trade in or Out of Healthcare - What makes a good L&BD Person Track Record; Success Intelligence Ability to get the Job done Creativity to bridge the gap and solve problems Good Tools, and critical judgment to know you have them Great interpersonal skills, the ability to articulate and make people feel comfortable Power of persuasion and diplomacy

50. Advanced Degrees Graduate Degree Earned