Masters of the Universe

Moderator:

Panelists:

Transcript

JM: Jeff, I ask the questions here. All right, we’ve been doing this one for – I think this is my fourth one. And really, in all seriousness, is a great way to end this great day because there were a lot of tremendous speakers, but at the end of the day, to my left are 5 of the top individuals in our industry, and they’re always so nice to come and talk and give their candid response. And I usually like to get them towards the end of the day because they’re a little tired, so they’re a little more open. But let me start with a couple slides about what we’re trying to do here of the Masters of the Universe. So you can see here that each one of them has their own significance as a master of their universe. But what we heard today, and what I’m going to start hitting these gentlemen with questions are around four what I consider keys to success around innovation, productivity efficiency, a vibrant industry and collaborative relationships. If you think about what we heard, somewhere along the line these 4 topics were hit. We have many positive forces helping our industry with unmet needs. Strong global demands, strategics and startups, and a progressive, engaged physician community. And obviously we have some challenges from regulatory to reimbursement to gaps in access to care. If you think about then, as we go forward, the hot topics that have changed over the last couple of years are health IT and data management. Practitioners are constantly requesting from us more data, more information, how they follow their patients, etc. We have the consolidation in the evolving industry landscape, we’ve got patients now asking doctors while they’re there, why am I getting this treatment, why am I paying this treatment. And then of course we’ve got the roles of the small and nimble providers versus the large multinational players. So what I’d like to do is – usually what I do is I ask one question to each of the five panelists, and then I’ve got several questions that I’m going to try to get 2 or 3 gentlemen to address. And so I’ll do the first one, and I don’t need to introduce these gentlemen. If you don’t know who these gentlemen are, I don’t know where the hell you’ve been the last several years. So let me start with Jeff. Jeff, you’ve done a tremendous job in a short period of time to accelerate growth at Alcon. Which has really picked up significantly. What are you doing to really ramp up innovation in order to fuel this future growth?

Jeff George: Yeah, so thanks for question, Jim. You know, I joined last May, and I think May year to date last year we were growing less than 3% top line, and profits were slightly down. And so we had a couple good quarters, but it’s early days. I think we’re not growing double digit like Mike and the team are doing at B&L. But growing 6 to 8% the back half of the year, top line, a couple quarters of double digit growth, bottom line. But ultimately, it’s really all about innovation. And we’re very focused at Alcon on accelerating innovation. I think that frankly our innovation lagged in the past 5 to 10 years, and so that’s been a big part of what we’ve been working to do. If I look across the 3 platforms of our business, about $11 billion business in eye care. In surgical we have really been focused on not only leveraging some great innovation that’s happened when I look at Centurion, which is a new, state-of-the-art phacoemulsification platform for cataract surgery, we placed about 2900 units, and that’s been a nice boon to the business. But we’re really focused on mid to long term. So we really placed a lot of bets in the IOL space. We’ve taken the number of projects from about 9. When I started I think we had 9 last June. We’re up to about 25 projects right now, and some exciting new launches that we’re planning right now coming later this year in Europe in the trifocal and preloaded space. We had an approval today, a couple days ago, from FDA. Just got dual aspect reimbursement. If I look at the pharma space, which is still our largest business, both pharma and surgical are about 4.2, 4.1 billion dollars last year. And we’ve been very focused on the retina space. This is going to be a huge growth driver for the future. I’m very excited about the phase 2 clinical trials that we’ve seen vis-à-vis Lucentis and Eylea in the head to heads in terms of efficacy with good, prolonged duration of action. I look at the double digit growth that we’re driving in dry eye and our fixed dose glaucoma combinations like Simbrinza and Azarga. Really excited about those spaces. They’re still 67 million people with glaucoma, and about half of those don’t even know that they have it. And then in the vision care space, which is a smaller business, but still over 2 and a half billion, we’ve been really focused on driving very innovative new contact lenses. So our Dailies Total1, which is a water gradient silicon hydrogel has had great acceptance out of the gates. It’s priced at a pretty big premium to J&J’s product, but has been able to take about half the market in the US, despite a big price premium. So I think things like the Google partnership, which we announced a few weeks after I joined, we’re very focused on it. And part of it is just a philosophy that actually if it’s done in the right way, you can do early stage innovation well in big companies. I look at Novartis on the pharmaceutical side. The majority of our revenues today were developed in-house, early stage. Products like Diovan, with 6 billion in peak sales, or Glivec at 4 and a half billion in peak sales, or Tasigna and Afinitor in cancer, or even new products like LCZed, or LCZ, which is going to be a multi-billion-dollar chronic heart failure product, or Cosentix in autoimmune, which was just approved. So I come at it from a philosophy of saying looking at the room here, and what you do is absolutely critical. I’m agnostic as to whether we’re developing it within Alcon or with you, and as I think Laurent talked a little bit on the panel earlier, there’s a tremendous amount of collaboration that we do with scientists and engineers in startup companies in the room. And so as Mike, as you talked about I agree with your philosophy of both looking at internal and external levers for innovation. But it’s something that – it’s the only way that we impact patients. We served 260 million patients last year at Alcon with our medicines and treatments. It’s the only way we grow that is through innovation.

JM: Ludwin, one of Zeiss’ key goals is to stimulate and strengthen the innovation culture at Zeiss. How are you driving this forward? What’s the energy behind this innovation cycle that you talk about?

Ludwin Monz: It’s actually true that innovation is key to Zeiss. And let me explain why. Zeiss is a very old company. Actually, it’s 170 years old. And we’ve been in medical technology for more than 100 years. And what our customers know us for is actually innovation. And there’s a long series of firsts of things that Zeiss brought to ophthalmology. And let me just mention some. The slit lamp was introduced to the market by Zeiss. Surgical microscope was invented by Zeiss. OCT was brought to the market first by Zeiss. Optical biometry was invented by Zeiss, and even we talked about that earlier today, the trifocal IOL was brought to the market first by Zeiss. And there are actually many more. So that’s what our customers know is for, and this is why innovation is so important to our company. What we focus on is patient outcome. We focus on efficacy, on safety for a very simple reason: our marketing is about facts. So this is why we actually need that. And that is also looking forward what we need. And when you say what are you doing to foster innovation at Zeiss, it is – I can simply summarize it. It’s many things, but from my experience, the most powerful thing is to network the organization, to network the organization with physicians, to network the organization with research, with research institutes, universities, science in general. And of course to network the organization with other companies. We do not need to invent everything on our own.

JM: Michael, interesting presentation today. I think Valeant has completed over six major acquisitions, including Bausch and Lomb in ’13. Simple, it’s not easy to do to acquire. People think sometimes the easiest part is to write a check. How do you evaluate your M&A potentials? You said everybody at Valeant is in charge of BD, if I heard you correctly today. How do you evaluate going along that way?

J. Michael Pearson: Sure. Is this working? Yeah, great. So we look, we sort of have two screens when we look for acquisitions. One is a basic financial screen, which all companies are going to have. We all have the responsibility of, whether we’re private or public, earning a good return for our shareholders. So that probably is quite similar to most companies. What we do look for is we look for types of assets, opposed to a lot of companies will say we want to be number one in oncology, and they’ll go out and try to figure out what oncology companies to buy. Our aspirations are to find markets and submarkets that fit a number of criteria. We look for good reimbursement, whether it’s cash pay or private pay, so we’re looking for good reimbursement; we’re looking for underlying growth markets like ophthalmology, where it’s just patient driven growth, so it’s a lot easier to compete in a market, especially when you have to compete against these guys. If it’s all growing, then we can all win, and I think that’s why we’re all in ophthalmology. We look for markets where physicians still play the critical role in product selection. If you look at some areas of medicine in the United States and around the world, the physician really doesn’t have much choice, and we think it’s important. If we’re going to differentiate our products and through better outcomes and through science, then we want physicians to be part of the decision makers. And we look for assets that are durable; i.e., that yes we do have drugs that have patents, but we’re looking for drugs where there’s life cycle management opportunities. That’s why we like medical devices, it’s why we like the surgery area. So those are some of the kinds of characteristics we look for. So we have a strategic screen, and then we have a financial screen. In terms of the actual integration, we continue to learn. Not all integrations go smoothly. We were lucky in the B&L integration. I think it went pretty well. Some of the things we’ve learned is we tend not to touch anything that touches the customer. So when we bought B&L we made a commitment internally and externally that we were not going to change our sales forces. So we have not changed – there’s been no sales representative facing the customer that has left our organization unless they were either not performing or they choose to leave. So that’s very important. We get things with the back office we take care of very quickly. We try to make decisions very quickly. A lot of companies integrate things over years, and we try to integrate them over months or days and get our focus back on the customer, and not have our people worrying about will I have a job in three months. I’m sure we make some decisions that are wrong by moving so quickly, but I’d rather make a wrong decision and fix it later than make no decision at all. So I think that’s our philosophy. I think the fact that our company makes a fair amount of acquisitions has also built an internal capability that we’re not terrible at it, and I think that helps as well.

JM: Murthy, you talk about the continued success for more than 20 product launches, now and over the next several years across major geographies. How do you balance the geographical desire? How do you balance first the new technology development, and then what are the unmet clinical needs that you’re really spending your time on?

Murthy Simhambahatla: Well, we try not to put the product portfolio and geographic expansion in competition. The way we manage it is we ask the question of what it takes to be successful in each priority, country or geography. And out of that, there’s invariably a few things you need to consider. The first is do you have the right portfolio to compete in that geography. And if you don’t, you might have to partner with others. You asked the question of the right leadership, the right capabilities, the right commercial footprint. Do we have a coherent global clinical and regulatory strategy that’s run as efficiently as possible, just given the heterogeneity of regulations? And then you kind of list all of that out, and invariably, out of this exercise, you do get a foundational global portfolio. But some local nuance. For example, we have IOLs that were specifically developed for certain geographies. We have phaco platforms that were specifically developed for those geographies. Now when you look at our global product platforms, you asked the question of what key unmet needs are we addressing. When it comes to IOLs we are pretty focused on providing as many options and as much customization for physicians and patients, particularly for multi-focal IOLs. That’s a big focus for us. Now if you look at the whole category of PC IOLs and multi-focals, it’s kind of stagnated and we all know why. There’s some inherent tradeoffs. And the only way to grow the segment is to correct those tradeoffs. So there’s a tremendous amount of focus also on lenses that provide an external radial vision, what kind of minimized dysphotopsias, that’s a big focus. But it’s also quite a bit of investment in what I would call improving the operational efficiencies and workflow in the OR, whether it’s through innovation in phaco or laser cataract surgery or preloaded systems. And finally, the one big unmet need where I think industry has stagnated quite a bit is in Lasik technology. There just hasn’t been a lot of new innovation, particularly in the United States in Lasik. So we made a conscious decision to invest the most we have in almost a decade in re-energizing Lasik.

JM: So Bill, you’re sitting amongst these four strategic giants, and you and Andy and a couple others were talking about how it’s your desire to help supplement their gaps. I think you mentioned something about that venture capital funding remained steady in ’14 and it’s getting a little better in ’15. What subsectors within ophthalmology do you find to be the most desirable now for you as you look at assets?

Bill Link: We pay attention to that, Jim. And I hope it overlaps entirely together, and it’s not rocket science. It’s the larger segments and those that are underserved. And so if we just parse through those, and I’ll get 50 or 60% of it right in all. But we talked about presbyopia today. So there’s the aging of the world’s population, and again, it’s a lifestyle issue rather than a disease based issue. It’s vision correction. But wow, wouldn’t it be cool if we had seamless near and far vision like we were 25 or 18. So presbyopia continues to be an area that we focus on, no pun intended. And then external disease as well, because it’s complicated. Dry eye specifically is an area that we care a lot about, and the fact that it’s complicated and it’s probably not a single source of a problem adds to the challenge, but also adds to the opportunity. So dry eye as a category is an area that we watch a lot. Retinal disease, of course. And this is a disease, no kidding, a family of diseases. And it’s age related. And one of the things that I’ve mentioned before, that I respect so much and appreciate about the ophthalmic sector: it’s two parallel sectors. One is vision correction, and the other is age-related. There’s disease based and it’s age-related diseases. A lot of the healthcare sectors that we focus on for innovation are primarily disease or exclusively disease, and then age-related. And here we have two parallel large markets, and they tend to overlap as well. So those are just some examples, Jim, of what we think about.

JM: Thanks, Bill. So I’m going to go right to Jeff and Ludwin on this because I think about – when I thought about this question, I thought of your two entities immediately. The ability to capture and analyze patient data is so critical today for the physician. So Ludwin, tell me how you’re helping physicians capture this data, and what you see as the future. And then Jeff, build on that.

LM Yeah. We’ve actually done basically three things. The first is that we started 7, 8 years ago to integrate standard interfaces into our devices that will allow to extract data. So we basically integrated Dikom interfaces so that our devices can store their data in a standardized way. That was step number one. Today, all our devices have such interfaces. Second step was then to establish what we call a data management platform. So now we have – it’s called Forum. That’s a data archive on the one hand, and it can actually make use of that data. So we’ve developed that platform and we’ve installed it in thousands of accounts so far. So it really has a wide spread in the market. So that was level number two. And the third one is actually the interesting one because now we help our customers to bring their historic data onto that platform, which is obviously key if you think about glaucoma, for example. The historic patient data is key. And once we have that, we can do the analytics and data analytics. And here we started. And glaucoma is the most obvious field where we call it work places. What it is basically is to make use of that data to analyze the data and provide additional insights. So that is the three step approach which we’ve taken.

JM: Jeff, want to build on that?

JG: Yeah, just to maybe build on your comments, Lud, and for us at Alcon, we’re very focused on patient outcomes, and you referred to this earlier. The whole intent strategically of creating an integrated cataract refractive suite starting with Verion, which is our preoperative surgical guidance and diagnostic system through to femtosecond lasers and phacoemulsification platforms, through all the way to intraoperative aberrometry is really about leveraging data in a way that we can continuously feed back that data to our software embedded within the hardware through improving algorithms that really are going to change the way that patients are treated, and improve patient outcomes. Let me give a specific example of what I mean. We acquired a company called WaveTec, which many of you know. I think some of you may have seen the Dick Lindstrom video, and Tom Frinsi was the CEO of WaveTec was speaking about Dick. And what Tom’s company has done that’s really been cool for us, and why we feel very good integrating this with our cataract refractive suite is if you look at the patient outcomes, leveraging interoperative aberrometry, it’s really a marked difference. So we did a clinical trial before acquiring it, which we funded and did in collaboration with WaveTec, where we had 111 patients, and we did a contralateral observer masked, multi-center, randomized clinical study, where one eye in each of the patients was treated using the standard of care, using some of the best surgeons, some of whom are in the room, around the world, many of them here in the US. The other eye was then treated using intraoperative aberrometry as an add-on to what they were already doing. And with astigmatic correction, what we saw is only about three-quarters, 76% of the time, some of the best surgeons in the world were getting to within half a diopter correction. Leveraging a better data platform and intraoperative aberrometry, it was closer to 90%, 89%. We’ll continue to feed that data back in order to improve the algorithms and improve the patient outcomes. So that’s the first way in terms of patient outcomes. I think the second thing that I’d mention is just smart devices and the opportunity. And part of the reason after I was appointed last April, about a year ago, I went out to Silicon Valley and spent some time with the Google team. And initially was a little bit skeptical. I’d heard about and read about some of the things they were doing with the glucose sensing lens, and thought, well it’s worth a shot, worth bringing a couple of my MD PhDs and others out there to really spend some time with them. And they really blew our face off in terms of what they were doing around smart devices and the ability to not only from a glucose sensing lens perspective or looking at autofocus with in the accommodating space, but looking at how can we leverage devices to measure intraocular pressure and glaucoma, for example. So I think, to compliment, I agree with a lot of what Ludwig had said earlier in terms of mining the data, developing the right architecture and the right systems to capture the data. But I also would add on the element of patient outcomes number one, and secondarily, the importance of smart devices and the wearable space. And I think there’s been a lot of hype in this space, but I also think there’s really quite a lot of potential as well.

JM: Michael and Murthy, Amazon we know is the reigning and undisputed champion as we think about customer service. And in fact, I was reading an article. The CEO’s fond of saying that we’re not competitor obsessed; we’re customer obsessed. We start with what the customer wants, and we work backwards. If you applied this tenet to ophthalmology, how do you insure your organization is truly customer-centric? Michael, I’ll give it to you first. Murthy, you can build on it.

MP: Well, I hope we’re customer-centric, and we certainly are looking to improve every day. The majority of our people, if you take out manufacturing, and in some cases we manufacture ourselves; in some cases, we use contract manufacturing, about 80% of our employees are customer-facing, i.e., they have some interaction with the customers. So it is very important to us that we listen to customers. And most customers have my email address. They have Ari’s email address, and it’s really cultural that if – and also with patients. We’ll take any call and we’ll try to follow up. So I don’t think it’s something that you can dictate. I think it’s something that has to be part of the culture of the company. I’ve had a chance to talk to a number of physicians already at this meeting and it’s really always the first question I ask is what can we do better, and where are we letting you down. And again, I think in this industry, I think all companies are actually quite good at this. I think I talked about spaces we like, and I talked about earlier where physicians really make decisions. And you’d better be willing to listen to your customers and adapt and find products or you’re not going to be successful. So I think that’s key to ophthalmology. And I see it with all the companies, that all the companies are always striving to work with customers. So I think that’s good. I think it’s a good culture. We see it in dermatology, too, which is our other large business, where that interaction with the company is a source of innovation and every day we just try to get better. I think a key to it is also trying to stay humble throughout the organization, and the customer is king, and listening and responding, opposed to getting into intellectual arguments is kind of the approach we like to take.

JM: Murthy?

MS: Yeah. So I spoke earlier about the geographic focus and I think that’s helped us a fair bit in terms of bringing the customers’ needs into the corporate environment versus pushing a few outside. That wasn’t working effectively all the time. But also found that we were listening to customers, but we weren’t acting with the right sense of urgency. And that had to change. Listening is one thing, but if you can’t actuate on that and solve the customer’s needs in a timely manner, then we haven’t really done a job. And all of these new lenses and platforms I’ve talked about really came from the customers telling us what the issues were, what the tradeoffs were, and then we acted on that. But it’s not just technology. There’s a lot of other interactions with customers where they provide us with feedback in terms of how we engage with them. For me the trick really is acting fast, not just listening.

JM: Bill, you started this meeting off talking about all the companies that obviously have been influenced by this great session, but also a lot of companies doing IPO activity. I’d love to hear do you think that’s a sustainable in our industry? Is it just a short term activity? Is it just trying to find funding? What’s the rationale?

BL: Well I hope it’s sustainable, but there’s some market factors that are outside of our control here relative to the public markets and the availability of capital and the ebb and flow there. And I think we try to understand it and track it and respond to it. When we finance a company, we have a base plan that we will finance the company to cash flow positive, OK, and so that it isn’t dependent on a public market exit or a public market financing. If, as we’re on that path, the public markets are open and receptive and the quality of the company and the appeal is right, then it’s terrific to have the IPO path. And candidly, what happens periodically, and I’ve had this happen a few times, is we’re on our way to an IPO, kind of no kidding, that’s what our focus is, we’re trying to get there and do well there, and that path then stimulates corporate interest. Very candidly, there’s a lot of public information about the company and it’s an open process, etc., so we view it as an important aspect. It’s not required, but it really enhances the overall innovation market if that IPO market is friendly.

JM: OK. Murthy and Jeff, get the two A’s here. Improving access to healthcare, major goal of government. In fact, research indicates there’s going to be a shortage of physicians, especially in the EU in the near future. What can industry do in ophthalmology to help prepare for this approaching gap between supply and demand for quality care?

MS: I’ll answer from the perspective of Abbott since we are primarily surgical. There’s obviously tremendous needs in the pharmaceutical space as well. So the one thing we do know is the number of surgeons isn’t going to grow very fast in Europe or in the US for that matter. And therefore they only way you’ll treat more patients with limited budgets is to become more efficient. And there is a lot of inefficiency in the system. In recent years, when you look at cataract surgery, there’s been a fair bit of complexity that industry has added to cataract surgery for good reason. There are good reasons for that in order to improve outcomes. I think the next phase is to simplify and to relentlessly take the complexity out of the OR. And the end goal has to be improved predictability, reduced standard deviations, and reduced case times. So that’ll drive the productivity of the physicians up, and maximize the OR time. But I think by doing this effectively, you also give the surgeons an opportunity to delegate some of their workload to other healthcare professionals. So not everything needs to be done by the surgeon, but you need predictability and a nice system to be able to do that. One only needs to look at 2 what should be relatively simple things for a surgeon. IOL power calculations and toric alignment. And there’s nothing simple about it today. With multiple diagnostic platforms, preop, intraop, all throwing information at the surgeon, and there’s no simple algorithmic approach to determine consistent outcomes each time. So I think there’s a lot of opportunity here to simplify.

JM: Jeff?

JG: I would add on to your comments, Murthy, first of all by agreeing with you in terms of the importance of simplification and integration. One of the things that we’re spending a lot of time on now in Irvine just north of here, we have about 1500 people in R&D and manufacturing of our surgical equipment, and we’re working a lot now on really driving integration so that we can drive improved efficiency. Because I think you highlighted the fact that there’s going to be a real dearth of supply on the ophthalmology front. And to your second point around delegation, that was a point I was going to make, which is I think there really is an opportunity to off-load more and more responsibilities to the optometry community. We have I think quite a good, highly trained optometry community here in the US that adds a lot of value. I was meeting with a surgeon earlier today who was saying 95-plus percent of his referrals come from the optometry community in Atlanta, where he’s the leading surgeon doing cataract surgery. And so I think that’s an element. And when I look at from a patient need perspective, there’s still 20 million people around the world that are blind from cataracts. There’s still – you know, there’s 25 million people that have age-related macular degeneration, and no cure today for geographic atrophy. You’ve got over 90 million, 91 million people that have diabetic retinopathy with the incredible in obesity that we’re seeing in diabetes around the world, and I said 65, 70 million people in glaucoma. And give the cost pressures that are inherent to healthcare today, and the huge growth that we’ve seen in healthcare spending, which has been roughly three times GDP growth over the last 4 or 5 decades, I think it’s incumbent upon us as leaders in the industry to not only look for streamlining and integration of technologies within the operating room, but also look at how do we insure that we’re serving different populations. We have a very big business in emerging markets or products or like Murthy, is very focused geographically. We’re in 180 countries, almost 3 billion dollars of sales in emerging markets. And there are segments of the markets where you really have to take a mid-tier approach, or take a slightly different approach than the very premium approach that historically has been the modus operandi predominately here in the US.

JM: So Ludwin and Michael, building off what Jeff kind of just stirred in my thought process here, you think about geographical expansion, and I have to say that I think the regulatory hurdles are not as severe as they’ve been in the past. Right here in the US I think we’re seeing much better. So how do you determine where’s the next big geography? How do you determine where you’re going to advance across the globe? And I’ll go to Ludwin, you first, and Michael, you back it up.

LM: Actually, we do not make that decision based on regulatory too quickly. So our general approach is to develop products for the right, so if we develop a product we try to get approval in all countries. And just that in some countries it takes longer, and others are faster, but in general we try to get product to market everywhere. Looking at different geographies, it’s more about the opportunity and the need of these geographies. If you think of the emerging countries for example, the needs are very different and there’s a huge opportunity. China, India, Southeast Asia, for example. South America. And they have very special needs, and so we look at the opportunity. We try to understand these needs, and then develop products very specifically targeted at these needs.

JM: Michael?

MP: Sure. We take I think a slightly different approach than most healthcare companies, pharma companies in terms of as we think about geographies. For us it’s all about growth and where is the growth going to happen. And so and that’s how we deploy our capital. Because at the end of the day, that’s the most – for a company, where you deploy your capital is probably the most important decision the CEO and the boards make. So we’re looking for countries that will have long term growth potential. That tends to be the emerging markets, so we’ll put a lot more capital into countries like Vietnam and Indonesia. We’re making a lot of investments in Middle East, Northern Africa. We also like to invest in markets that are out of favor. Like right now we’re looking in Russia pretty seriously, at a number of things, because most companies will not invest in Russia right now, given the political environment. Similarly, in the Middle East. So we do that because prices go down, you can get better deals. But we try to invest based on the long term. What’s the world going to look like in 20, 30, 40 years? We’ve always invested heavily in the US and we will continue to do so, given what I believe to be really good long term growth potential. But there are some markets where we sort of de-emphasize from a capital deployment standpoint. The other thing that drives our decision making is healthcare truly is still is largely a local phenomenon. If you look at the most prescribed drugs, in some countries it varies wildly to other countries. Part of that has to do with demographics; part of it has to do with just social customs. So we’ll never try to force a product everywhere in the world. We’ll leave that up to our local management to make that decision because they’re the ones closest to the customer. And so it’s a slightly different approach, I think, compared to some traditional companies.

JM: Bill, I remember we’ve had many discussions. You sit on many public boards, but you have the unique opportunity to sit on small company boards, and you sit there and you say we have to learn to fail fast. Why can’t the large companies take the same mentality that small companies have on failing fast?

BL: I think they can. I think they can on a project level. And there’s an honest difference if you have a portfolio of projects in a single entity, and then you’re measuring the progress and performance of all those projects. And one of my biggest setbacks as a decision maker at Chiron Vision is I killed a project because it was in trouble at budget time. And we re-deployed capital, and later I regretted it because it was a worthy project that later re-emerged in a private company and did beautifully well. And so one of my learnings as maybe a business leader in that setting is you have to be really thoughtful when you’re dealing across a portfolio because every project will have its ups and downs. And it’s awful if the down is at budget time. And so one of the things I love about those small private companies is we only have one or two bets, and we stay on task. And sometimes we overdo it, and I look back and I say, Yeah, three years ago and $22 million ago we should have killed it. But more often than not, if we learn and are candid and capable, we learn from that iterative process, keep it funded, redirect, and maybe do really well. So it’s just a different setting. There’s not a right way and a wrong way. It’s just two different settings. And so often the small companies will bring projects through that tough iterative phase more efficiently than a large corporation can for two reasons. One is they’re more nimble, and they other is they have to do it. It’s do it or die.

JM: Jeff?

JG: You know, I just want to reflect on that because I think the conventional wisdom that large pharmaceutical companies don’t innovate well is largely true, right? If you look at the last few decades of innovation that’s come out of big pharma, it hasn’t been that strong. I think there are some exceptions. I think Novartis is certainly one of them. And one of the brilliant things that I think Dan Vasella, our long time chairman and CEO did wisely was he was willing to go against the grain and create a totally separate culture, where research on the pharmaceutical side was totally detached from budgets and – not that we don’t focus on budgets within a certain level of the organization, but he disaggregated it from development. He said, Look, we’re going to move our research headquarters to be together with Harvard and MIT and Cambridge, where we can attract great talent. And it’s paid off really well. One of the things that they did, you know Mark Fishman who is a cardiologist in Harvard Med School, and I think still has a part time faculty appointment there, is creating small teams of people, really very innovation focused culture that operates in many ways more like a series of startups. So if I look at – we took, for example, last Thursday and Friday I took about 25 leading glaucoma specialists from around the world to the Novartis Institute for Biomedical Research, which is Mark Fishman’s research organization. And what was amazing is as we listened to the scientist, and we did lab tours and a number of other things, and reviewed the projects, a number of them commented that they don’t talk about budgets. And money doesn’t come up because they’re focused on the science. And our view at Novartis has been if you focus on the science, you do the right thing for patients, and you don’t worry too much about the market size, you really focus on will this make a difference for patients, you can have incredible returns. One quick example: the story of Glivec, which is a drug that our marketeers at Novartis originally said, you know, kill it. This is a small population of people with chronic myeloid leukemia, and they die pretty quickly, and this drug can be 100, $200 million. We’re going to waste money it. And Dan Vasella said, No, we’re going to let the science dictate how we do this. And we went ahead full steam with it, and ultimately it turned into a product that extended people’s lives for years, and became, you know, I think at peak sales, Glivec was 4 and a half billion dollars today, something around that level. And it’s Novartis’ largest product. And I think that speaks to a culture where you’re allowing scientists to do what they do best, which is great research, great early stage scientific innovation, and not make them too beholden to budget, so you avoid, Bill, the kinds of situations that you’re talking about where we could make some pretty bad decisions as business people if we’re just going in and driving the research allocation decisions. And frankly, you know, it takes a while, and the results speak for themselves in terms of what’s coming out of Mark Fishman’s pipeline.

JM: OK. The price of admission is just to have the thought from these five gentlemen. So let’s give them a big round of applause and thank them for their time.