How Successful Companies Create and Develop a High-Value CI Function to Drive Better Business Decisions - Pharma and Device

BEST PRACTICES,

®

LLC

Best Practices, LLC

Strategic Benchmarking Research

How Successful Companies Create and

Develop a High-Value CI Function to Drive

Better Business Decisions

Copyright © Best Practices, LLC

BEST PRACTICES,

®

LLC

Table of Contents

Executive Summary

Research Objectives & Methodology

Participating Companies

Key Findings & Insights

Hallmarks of Excellence in Competitive Intelligence

Section 1: Key CI Sources, Activities & Deliverables

1A. Sources 1B. Activities & Deliverables

Section 2: Use of Third Party CI Vendors

Section 3: CI Resources, Structure & Operations, Functional Evolution

3A. Resources 3B. Structure & Operations 3C. Functional Evolution & Influence

Section 4: Best Practices & Lessons Learned

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Research Project Objectives & Methodology

Best Practices, LLC conducted this benchmarking study to identify best practices and innovative

methods for improving the strategic role and impact of the Competitive Intelligence function within

the pharmaceutical and related industries.

Best Practices, LLC engaged 35

Competitive Intelligence leaders from 32

companies in the healthcare industry to

participate in this benchmarking study.

Research analysts also conducted six

deep-dive executive interviews with

selected benchmark participants.

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Research

Objectives

Research

Methodology

Provide healthcare industry leaders

with metrics and insights they can

use to evaluate and compare the

performance of their Competitive

Intelligence organizations.

Develop findings & insights CI leaders

can use to increase the value of their

function and generate greater influence

within the corporation.

Topics Covered

Sources & Activities

- Key primary & secondary research activities

- When to use primary sources

- CI source effectiveness

- CI from social media & internal employees

- Most effective activities

- Percentage of work that is analysis

Budget & FTE Levels

Uses of Third Party Vendors

Top 5 CI Employee Skills

CI Evolution & Trends

Structure & Leadership

Best Practices & Lessons Learned

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35 CI Leaders Participated in the CI Benchmarking Research

Thirty-five Competitive Intelligence leaders from 32 companies in the healthcare industry

participated in this benchmarking study. Participants represented small, midcap and large

biopharmaceutical and medical device companies. Seventy percent work in U.S. locations.

Participating Companies: Benchmark Class

Abbott Nutrition, Amgen, AstraZeneca, Ariad, Bayer, Biocon, Boehringer Ingelheim, B Braun, Covidien, Daiichi-Sankyo,

Dentsply, EMD Serono, Emergent, Ethicon, Ferring, GSK, Glenmark, Janssen, Jazz, Johnson & Johnson, McKesson,

Medtronic, Merck, Novo Nordisk, Pfizer, Purdue, Sanofi Pasteur, Teva, Torrent, Upsher-Smith, Waters, Wyeth Nutrition/Nestle

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Key Findings & Insights (1 of 6 pages)

The following key findings and insights emerged from this study.

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CI Is Becoming More Decentralized

This research observed a continuing decline in the presence of centralized CI

groups over the past dozen years. Embedding CI within other functions (44%),

leads to emergence of shadow resources, work fragmentation, and lost opportunity

to leverage company size when purchasing services. Only 18% of participants

represent centralized, dedicated CI groups serving the entire company compared

with up to 85% in past Best Practices, LLC studies of pharma CI.

Year

%

Centralized

2001 85%

2007 67%

2010 31%

2013 18%

Results of Pharma

CI Studies by Best

Practices, LLC:

CI Functional Value Is Not Universally Recognized

CI is not yet seen as a traditional corporate function, such as Finance or Sales, and, as such, the value of the function

remains poorly understood by senior leadership. CI continues to be subject to a periodic ebb and flow of corporate

resources, as the perceived value of the function changes within individual organizations. Interviewed Competitive

Intelligence leaders agreed that the constant flux makes it difficult to maintain lasting relationships and generate influence.

Use of Advisory Boards to Collect CI Is Shrinking

The use of Ad Boards is down significantly from previous BPLLC studies, where as many as 90% of respondents engaged

them to gather intelligence. In this study, only 52% collect intelligence from advisory boards, and only 21% find them highly

effective for primary research.

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Hallmarks of Excellence in Competitive Intelligence

Competitive

Intelligence

Excellence

1. Build strong

relationships with a

few key customers

5. Provide relevant, forward-

looking deliverables with

analysis & recommendations

2. Focus on top decision makers and understand

their issues

6. Exhaust secondary

resources before engaging

in primary research

4. Choose questions (KITs) that are of a strategic rather

than tactical nature

7. Reduce risk by engaging

Legal in developing

polices & processes

10. Grow the function by

providing quality deliverables

that create demand

3. Hire staff with past

experience involving

outcomes responsibility

9. Measure results to

show that CI function

can ‘move the needle’

8. Engage internal

clients in a continuous

feedback loop

Ten key hallmarks of excellence were observed in CI programs at participating companies.

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Q. Please indicate the effectiveness of each of the following sources your company uses for primary CI research.

[Choose the best option for each primary source type.]

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Primary Research Source Effectiveness

(n=29)

KOLs Seen as Most Effective Primary Research Source (1 of 2)

28%

31%

31%

34%

38%

45%

66%

59%

21%

59%

45%

24%

34%

17%

3%

3%

7%

3%

3%

10%

48%

10%

17%

31%

17%

14%

Internet/Online

Clinical trial investigators for competitive products

Internal Employees

Medical Congresses

Investor analysts

Primary CI research vendor

Industry experts (e.g., KOLs)

Highly Effective Somewhat Effective Not Effective Not Used

% Responses

Two-thirds of participants rate Key Opinion Leaders/ industry experts as a highly effective primary

source for collecting CI, and another 17% find this source somewhat effective. Although clinical

investigators are less used for intelligence, 60% who use them rate them highly effective as well.

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Q. Approximately what percentage of your intelligence gathering work involves primary (field) research and what percentage

involves secondary (desk) research? [Total should equal 100%]

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Primary vs. Secondary Research Activities

(n=35)

Primary Research Accounts for More than 1/3 of CI Activity

% Intelligence gathering

from primary research,

38%

% Intelligence gathering

from secondary research,

62%

While the bulk of intelligence gathering requires secondary research, 38% of CI activity across the

benchmark class involves primary research. CI groups typically turn to primary sources and vendors

for access or when secondary resources have been exhausted and a question remains unanswered.

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Developing Insights/Recommendations Takes Brains & ‘Guts’

Creativity, guts, brains, and a ‘’sixth sense” are attributes CI people need to take their findings from

reporting to delivering insights and recommendations.

“It takes creativity. The ability to step outside your own seat and your own job function and think about it from another person’s

point of view—typically from another company’s point of view.” – Company A

“At some point it’s just a matter of guts. You have to be willing to be wrong before you can be right. You have to be willing to

put a stake in the ground and understand that sometimes you’re going to be wrong and that’s OK.” – Company A

Q. What does it take for a CI person to be able to develop insights and make recommendations?

“Hire smarter people. They have to be smart enough on day one to think

things through. The difference I see in CI staff who can deliver insights

and who cannot has everything to do with the individual staff and how they

are wired. It’s not an issue of training. Not everybody can learn it. You

have to grow/foster confidence.” – Company A

“They have to have the ability to understand the question, the implications,

the impact on the business, and then orchestrate the steps of the intelligence

process.” – Company E

“It’s about experience, and context, and having that sixth sense of things

because you've been involved in this activity for a period of time.”

– Company B

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Q. Overall, what three CI activities conducted by your group and/or your vendors most often produce actionable insights that

can influence business decisions? [List your Top 3 activities. You may include activities beyond those listed.)

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Top 3 Most Influential CI Activities

(n=35)

40%

33%

30%

30%

27%

23%

23%

23%

13%

Profiling

News Updates / Alerts/ Warnings

SWOT Analysis

Tracking, Mapping, Monitoring, Other

Primary Research

Clinical trial monitoring

War games/ Scenario Planning

Conferences

Market audits

% Responses

Profiling Is Top-Ranked Activity for Creating Actionable Insights

Forty percent of benchmark participants listed profiling among their top three CI activities for

producing actionable insights and influencing business decisions. Competitor, portfolio, and

product profiling were all mentioned.

“Head towards the hot spots - seek out where you can be most impactful”

Note: Survey

participants

indicated a high

value for

monthly/periodic

reports and a

much lower value

for daily updates.

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Percent of Companies Ranking Each Skill Among Top 5

This table shows which CI skills benchmark participants selected among their top five most important and the relative rank they assigned to each. Critical thinking was far in front with 44% ranking it #1 and 83% including it in the top five.

RankCritical

thinking

Communication/

presentation

Industry

experience

Competitor

profil ing

Intelligence

source

identification

Database/

Internet

searching

skil ls

Product

knowledgeNetworking

#1 44% 14% 11% 11% 3% 3% 3% 3%

#2 17% 11% 14% 8% 8% 3% 6% 3%

#3 11% 6% 8% 11% 14% 8% 6% 0%

#4 8% 14% 6% 3% 8% 8% 8% 11%

#5 3% 22% 3% 6% 8% 8% 8% 11%

Total 83% 67% 42% 39% 42% 31% 31% 28%

Rank InterviewingCompany

knowledge

Data

synthesis

Scenario

development

& planning

/war-gaming

Project

management

Portfolio

analysis

Financial

analysis

Pattern

recognition

#1 3% 3% 0% 0% 0% 0% 0% 0%

#2 0% 3% 25% 0% 0% 3% 0% 0%

#3 0% 0% 22% 3% 6% 0% 6% 0%

#4 6% 3% 11% 8% 3% 0% 0% 0%

#5 3% 0% 0% 11% 6% 6% 0% 0%

Total 11% 8% 58% 22% 14% 8% 6% 0%(n=36)

Q. Which 5 of the following employee competencies are most important for delivering maximum value CI performance?

[Choose only 5, placing your choices from top to bottom of list in order of their importance]

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Building CI Capabilities & Value Starts with Client Relationship

A veteran CI leader shared basic steps for growing capabilities and value in a small or fledgling

Competitive Intelligence organization. The steps emphasize building close relationships with a few

key customers and collecting feedback on the financial impact of the CI contribution.

Have a January 1 appointment on the

calendar of your primary customer or

customers.

Know their businesses well before you

walk in.

Start a conversation about:

Which of their objectives need

intelligence support to help make a

better decision?

What decision needs to be made in

what timetable?

How critical is it to the growth of the

company, or at least at producing

revenue or reducing cost?

Be able to directly link CI to an increase

in revenue, a decrease in costs, or an

opportunity cost that is avoided.

“It’s critical these days is to be able to say

the intelligence gathering program can

move the needle. If it can be measured and

attributed to CI input, that’s what gets

people recognized for value. Especially if

it’s a small, start-up group.” – Company E

Work with client to define KITs

Establish plan for fulfilling KITs

Execute the secondary research

Supplement with primary interviewing

if necessary to support analysis

Delivering intelligence back to customer

To close the loop, get client feedback—

immediately not at the end of the year

Use feedback to improve CI services

Steps for Building CI Capabilities & Value

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Best Practices, LLC 6350 Quadrangle Drive, Suite 200

Chapel Hill, NC 27517

www.best-in-class.com

919-403-0251

[email protected]

About Best Practices, LLC

Best Practices, LLC is a research and consulting firm that conducts work based on the simple yet

profound principle that organizations can chart a course to superior economic performance by studying

the best business practices, operating tactics, and winning strategies of world-class companies.

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How Successful Companies Create and Develop a High-Value CI Function to Drive Better Business Decisions - Pharma and Device