Rob Hockney Ph.D.

4. The Industry � Meeting Future Unmet Need

6. High Attrition � A Constant Challenge  Only 7% of candidate drugs become products!! R&D has a long tradition of high technical risk and an obvious way to improve final productivity is to reduce attrition of our candidate drugs. Safety and efficacy issues remain as major hurdles which we now are addressing head-on in our new strategy. To reduce efficacy attrition due to disease mechanism failure, we are introducing Discovery Medicine where we better integrate clinical applications with early discovery research. To reduce compound failure, we will evolve our front-loading approach in predictive toxicology and drug scaling to man. Finally, we have introduced a new early portfolio management model to ensure that the most promising projects are supported in the best way. ------------------------ JP>>This is an old slide, but please note that I have added �Right Technology� as one of the key strategic objectives that AZ is pursuing. We firmly belive that effectively harnessing emerging technologies to address R&D attrition is one of the best ways to boost innovation and productivity. R&D has a long tradition of high technical risk and an obvious way to improve final productivity is to reduce attrition of our candidate drugs. Safety and efficacy issues remain as major hurdles which we now are addressing head-on in our new strategy. To reduce efficacy attrition due to disease mechanism failure, we are introducing Discovery Medicine where we better integrate clinical applications with early discovery research. To reduce compound failure, we will evolve our front-loading approach in predictive toxicology and drug scaling to man. Finally, we have introduced a new early portfolio management model to ensure that the most promising projects are supported in the best way. ------------------------ JP>>This is an old slide, but please note that I have added �Right Technology� as one of the key strategic objectives that AZ is pursuing. We firmly belive that effectively harnessing emerging technologies to address R&D attrition is one of the best ways to boost innovation and productivity.

11. Ergo something is seriously wrong. Some hypotheses: We make poor investment decisions We manage collaborations poorly It is a fact that reality all too often does not accord with expectation. Furthermore we fail to respond (adequately) to the emerging discrepancyErgo something is seriously wrong. Some hypotheses: We make poor investment decisions We manage collaborations poorly It is a fact that reality all too often does not accord with expectation. Furthermore we fail to respond (adequately) to the emerging discrepancy

12. Ergo something is seriously wrong. Some hypotheses: We make poor investment decisions We manage collaborations poorly It is a fact that reality all too often does not accord with expectation. Furthermore we fail to respond (adequately) to the emerging discrepancyErgo something is seriously wrong. Some hypotheses: We make poor investment decisions We manage collaborations poorly It is a fact that reality all too often does not accord with expectation. Furthermore we fail to respond (adequately) to the emerging discrepancy

14. Ergo something is seriously wrong. Some hypotheses: We make poor investment decisions We manage collaborations poorly It is a fact that reality all too often does not accord with expectation. Furthermore we fail to respond (adequately) to the emerging discrepancyErgo something is seriously wrong. Some hypotheses: We make poor investment decisions We manage collaborations poorly It is a fact that reality all too often does not accord with expectation. Furthermore we fail to respond (adequately) to the emerging discrepancy

15. Ergo something is seriously wrong. Some hypotheses: We make poor investment decisions We manage collaborations poorly It is a fact that reality all too often does not accord with expectation. Furthermore we fail to respond (adequately) to the emerging discrepancyErgo something is seriously wrong. Some hypotheses: We make poor investment decisions We manage collaborations poorly It is a fact that reality all too often does not accord with expectation. Furthermore we fail to respond (adequately) to the emerging discrepancy

16. Ergo something is seriously wrong. Some hypotheses: We make poor investment decisions We manage collaborations poorly It is a fact that reality all too often does not accord with expectation. Furthermore we fail to respond (adequately) to the emerging discrepancyErgo something is seriously wrong. Some hypotheses: We make poor investment decisions We manage collaborations poorly It is a fact that reality all too often does not accord with expectation. Furthermore we fail to respond (adequately) to the emerging discrepancy

18. Ergo something is seriously wrong. Some hypotheses: We make poor investment decisions We manage collaborations poorly It is a fact that reality all too often does not accord with expectation. Furthermore we fail to respond (adequately) to the emerging discrepancyErgo something is seriously wrong. Some hypotheses: We make poor investment decisions We manage collaborations poorly It is a fact that reality all too often does not accord with expectation. Furthermore we fail to respond (adequately) to the emerging discrepancy

20. These are results of a survey of 135 companies across a range of industries What we see here is that, aside from failure due to technical / scientific issues, e.g., we did the studies well but the results did not support moving the project forward, the single largest cause of alliances not meeting their stated goals, or failing outright, is due to Poor or Damaged Relationships Between Partners As we discussed already, we are not even talking about having partnerships EXCEED initial goals as a result of value added through the power of collaboration LET�S REMEMBER: We are not working to improve RELATIONSHIPS for the sake of making new friends, everything we do to improve relationships is done in the interest of GETTING THE PROJECT DONE in a way that meets our business objectives!These are results of a survey of 135 companies across a range of industries What we see here is that, aside from failure due to technical / scientific issues, e.g., we did the studies well but the results did not support moving the project forward, the single largest cause of alliances not meeting their stated goals, or failing outright, is due to Poor or Damaged Relationships Between Partners As we discussed already, we are not even talking about having partnerships EXCEED initial goals as a result of value added through the power of collaboration LET�S REMEMBER: We are not working to improve RELATIONSHIPS for the sake of making new friends, everything we do to improve relationships is done in the interest of GETTING THE PROJECT DONE in a way that meets our business objectives!

21. Ergo something is seriously wrong. Some hypotheses: We make poor investment decisions We manage collaborations poorly It is a fact that reality all too often does not accord with expectation. Furthermore we fail to respond (adequately) to the emerging discrepancyErgo something is seriously wrong. Some hypotheses: We make poor investment decisions We manage collaborations poorly It is a fact that reality all too often does not accord with expectation. Furthermore we fail to respond (adequately) to the emerging discrepancy

22. Ergo something is seriously wrong. Some hypotheses: We make poor investment decisions We manage collaborations poorly It is a fact that reality all too often does not accord with expectation. Furthermore we fail to respond (adequately) to the emerging discrepancyErgo something is seriously wrong. Some hypotheses: We make poor investment decisions We manage collaborations poorly It is a fact that reality all too often does not accord with expectation. Furthermore we fail to respond (adequately) to the emerging discrepancy

24. Ergo something is seriously wrong. Some hypotheses: We make poor investment decisions We manage collaborations poorly It is a fact that reality all too often does not accord with expectation. Furthermore we fail to respond (adequately) to the emerging discrepancyErgo something is seriously wrong. Some hypotheses: We make poor investment decisions We manage collaborations poorly It is a fact that reality all too often does not accord with expectation. Furthermore we fail to respond (adequately) to the emerging discrepancy

25. Ergo something is seriously wrong. Some hypotheses: We make poor investment decisions We manage collaborations poorly It is a fact that reality all too often does not accord with expectation. Furthermore we fail to respond (adequately) to the emerging discrepancyErgo something is seriously wrong. Some hypotheses: We make poor investment decisions We manage collaborations poorly It is a fact that reality all too often does not accord with expectation. Furthermore we fail to respond (adequately) to the emerging discrepancy

26. Ergo something is seriously wrong. Some hypotheses: We make poor investment decisions We manage collaborations poorly It is a fact that reality all too often does not accord with expectation. Furthermore we fail to respond (adequately) to the emerging discrepancyErgo something is seriously wrong. Some hypotheses: We make poor investment decisions We manage collaborations poorly It is a fact that reality all too often does not accord with expectation. Furthermore we fail to respond (adequately) to the emerging discrepancy

27. Ergo something is seriously wrong. Some hypotheses: We make poor investment decisions We manage collaborations poorly It is a fact that reality all too often does not accord with expectation. Furthermore we fail to respond (adequately) to the emerging discrepancyErgo something is seriously wrong. Some hypotheses: We make poor investment decisions We manage collaborations poorly It is a fact that reality all too often does not accord with expectation. Furthermore we fail to respond (adequately) to the emerging discrepancy