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Government Affairs & Public Policy Excellence: Optimizing Group Structure &

Operations

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Table of Contents

•Project Blueprint – pg. 3•Executive Summary: Benchmark Insights and Research Group– pg. 4 •Government Affairs Group Structures: Key Trends & Drivers of Sub-group Evolution – pg. 11•Government Affairs Group Models and Structures – pg. 28•Government Affairs & Policy Groups Staffing Benchmarks: Key Trends in Resourcing Government Affairs Groups – pg. 37

TOC Continued

•Government Affairs & Policy Funding Levels & Sources: Examining the Resources Invested for Success – pg. 43•Government Affairs & Policy Group Services: Trends in Service Levels & Key Priorities – pg. 49•Government Affairs & Policy Responsibilities: Trends in Forging Accountability & Clear Roles – pg. 60•Communicating the Value of Government Affairs & Policy In a Global Bio-Pharma Company – pg. 67•Contact Information – pg. 72

Table of Contents

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Universe of Learning: Government Affairs & Public Policy Benchmark Research Participants

Participants in this benchmarking research included 16 Government Affairs and Public Policy executives and managers at 15 leading bio-pharmaceutical, healthcare and medical device companies.

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Most Participants Hold Job Title of Director or AboveResearch participants included a Vice President, Executive Directors, Medical Executives, Directors and Managers. More than 44% of benchmark partners were directors or above, 38% were managers and 19% were vice presidents – all of whom worked directly or indirectly in Government Affairs and Policy functions.

JOB TITLEVice President Director

Executive Director Director

Senior Director Senior Manager

Senior Director Senior Manager

Medical Executive Manager

Director Manager

Director Manager

Director Manager

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Key Functional Perspectives Inform the BenchmarksBenchmark partners reflect functional experience that interacts directly or indirectly with the Government Affairs function. Because Government Affairs resides in different places across different companies, diverse functions from Government Affairs, Federal Affairs, Communications, Medical Affairs and Public Policy participated in this study.

GROUP OR FUNCTION

State Government Affairs Government Affairs

Public Policy and Advocacy Global Regulatory Affairs

Medical Affairs Global Public Policy

Medical Affairs Federal Affairs

Government Strategy & Relations Federal Affairs

Government Affairs Operations Corporate Affairs

Government Affairs Corporate Affairs

Government AffairsCommunications & Government

Affairs

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Key Insights & Observations from Analysis – 1

Differentiated Services Are the Norm for Government Affairs: Almost three-quarters of participants said they vary the level of services – staffing, time, responsiveness – across internal customers. The practice reflects the significant impact that Government Affairs can have on important business issues such as reimbursement and regulatory. It further underscores how small expert staffs provide services to diverse stakeholders while reflecting differences in stakeholder issues and impact. Government Affairs Groups Seek to Balance Centralized Focus with Decentralized Local Needs: Nearly half of all benchmark partners employ Regional Models and Hub-and-Spoke Models in designing their structural approach to serving diverse geographies. Both approaches seek to balance centralized policy and GA perspectives while reflecting local needs across continents and country units. Purely centralized or decentralized shaping factors are less commonly employed. A balanced approach – such as the Hub-and-Spoke model – can be advantageous in dealing with reduced staff and growing emerging markets.

Differentiated Services Are the Norm for Government Affairs: Almost three-quarters of participants said they vary the level of services – staffing, time, responsiveness – across internal customers. The practice reflects the significant impact that Government Affairs can have on important business issues such as reimbursement and regulatory. It further underscores how small expert staffs provide services to diverse stakeholders while reflecting differences in stakeholder issues and impact. Government Affairs Groups Seek to Balance Centralized Focus with Decentralized Local Needs: Nearly half of all benchmark partners employ Regional Models and Hub-and-Spoke Models in designing their structural approach to serving diverse geographies. Both approaches seek to balance centralized policy and GA perspectives while reflecting local needs across continents and country units. Purely centralized or decentralized shaping factors are less commonly employed. A balanced approach – such as the Hub-and-Spoke model – can be advantageous in dealing with reduced staff and growing emerging markets.

Field interviews and study analysis produced many observations and benchmark findings. Key study insights reflect the inter-related evolution of a company’s commercial structure and how Government Affairs is organized to serve internal and external customers.

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25%

25%

19%

75%

69%

Business UnitFocus

Matrix Model

Product Focus

Project Focus

Therapeutic AreaFocus

(n=16)

Q2. Government Affairs Sub-Group Structure: Note all functional factors describing how your Government Affairs organization is designed.

Government Affairs Structure Follows Business LinesBusiness Units lead the functional design factors shaping Government Affairs Sub-Group Structure – followed closely by matrix models whereby Government Affairs staff serve more than one internal customer group or unit. About one-quarter of the companies employ product-focus, project-focus or therapeutic-area-focus in designing the GA structure.

% of Companies

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One Big Pharma’s Government Affairs Serves Across BUs

A Top 20 Pharma company divided its company into four Business Units: Pharmaceuticals, Devices, Diagnostics and Nutrition. The company’s Government Affairs group consists of four teams: State, Federal, Global and Reimbursement. The State team serves as generalists while the others are specialists. While Government Affairs serves each of the four BUs, the level of service varies by the units’ economic impact for the company.

Pharma- ceuticals NutritionDevices Diagnostics

State

FederalGlobal

Reimbursement

Spec

ialis

tsG

ener

alis

ts

FederalGlobal

Reimbursement

FederalGlobal

Reimbursement

Government Affairs = State, Federal, Global and Reimbursement teams

FederalGlobal

Reimbursement

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Government Affairs Group Models & Structures

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POV: Leveraging Resources - Merging Federal-State Roles Requires Clear Objectives, Overlapping Visits in Critical StatesOne Government Affairs veteran said it’s possible for one person to be effective in a dual federal-state role, but it will require clear goals and priority-setting. While the GA staffer can focus on Congress all year, for most of the states that staffer can limit herself/himself just on the state government sessions, and work with the state representatives then.

“Well I think it’s doable if you have the targeted selection of what you’re trying to do. So work those Congressional delegations, either within the domestic offices in the states or actually go to the Hill and try to create a relationship there as well. I mean it’s going to take time, but if you schedule your itinerary properly, you could probably work that.”

– Interviewed Director, Government Affairs

To Merge Federal and State RolesIn Government Affairs:

Target your issues and prioritize them.

Identify states where you need to be aggressiveand pinpoint critical states where you needto be more active.

Create relationships with Congressionaldelegation while in critical states.

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Differentiated Services Are the Norm for Government Affairs

About three-quarters of participants said they vary the level of services – staffing, time, responsiveness – across internal customers. The practice reflects the significant impact that Government Affairs can have on important business issues such as reimbursement and regulatory. It further underscores how small expert staffs provide services to diverse stakeholders while reflecting differences in stakeholder issues and impact.

Q21. Differentiating Services: Does your Government Affairs & Public Policy group differentiate its service levels (i.e. amount of staff support, time invested, speed of

response, etc.) to different internal customers?

(n=11) % of Companies

No, 27%

Yes, 73%

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Communications & Goal Setting Best for Building Bridges With Other Corporate Affairs Functions & Internal Customers

Intensive communication was chosen as the most highly effective way of forging close ties with other Corporate Affairs teams and internal customers. Goal setting/alignment activities also ranked high in importance for building bridges with colleagues and stakeholders.

Q26. Forging Close Working Ties: Rate the effectiveness of various approaches to build bridges and forge close ties among Government Affairs and Policy group members, other Corporate Affairs function

colleagues and internal customers.

(n=11)

Highly Effective

Somewhat Effective Neutral Somewhat

IneffectiveTotal Effective

Intensive Communications 55% 27% 9% 9% 82%

Corporate Goal Setting 27% 55% 9% 9% 82%

Cascading Goal Alignment 18% 55% 18% 9% 73%

Planning Alignment 27% 36% 36% 0% 64%

Budget Setting Linkages 18% 45% 36% 0% 64%

Embed function / structure optimization updates on staff meeting agenda's 10% 50% 30% 10% 60%

Collaboration Events 9% 45% 36% 9% 55%

Monthly Staff Meetings 9% 45% 36% 9% 55%

Interlinking goals among groups 18% 27% 36% 18% 45%

Co-location 0% 40% 50% 10% 40%

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