The Demise of the Global Brand - Dirk Heyman, Sun Microsystems

The demise of the global brand? Dirk Heyman Global Head, Life Sciences and Consumer Products Industry Sun Microsystems



The demise of the global brand?

Dirk Heyman
Global Head, Life Sciences and Consumer Products Industry
Sun Microsystems

Thank you to eyeforpharma for having me. I am going to talk about the aspect of global branding and the new definition as we see it happening of global branding. A lot has been discussed today about research and how that is changing, about some of the pressures within the pharmaceutical industries and Life Sciences industries. And I am going to try and have it all together and get a new perspective on where branding is moving. I am not going to talk about the allergies so don'st worry. I am going to make the parallel with some of the innovative things we see happening within the consumer sector because there are some parallels that can be made and some lessons learnt from that industry.

So, the demise of the global brand. Very quickly, why do we see the shift to the DTC sales and marketing, the science revolutions very quickly, but has been discussed tremendously and to a large extent the question of global branding, is it still working or is it still changing? The world of one, what do people do? And then the conclusion. As has been said by several speakers of pharmaceutical industry, it is a very, very profitable industry by whatever means you look at it, profits as a percentage of revenue, profits as a percentage of assets, profits as a percentage of equity, this is Fortune 500 of last year versus the medium of Fortune 500 and that is here. So, you could start wondering, why change? Things are going very well. But your stocks were down by 19% and it has been discussed several times. Actually the production breakthrough of new medicines has gone down. Here you see on the graph the FDA approvals of new drugs and in 's99 this has actually gone down and you see remarks from Garnier saying, we don'st have enough in our collective pipelines and the combined toys of Warner Lambert. You see the numbers to maintain the same double digit code they have. They need to develop an impressive amount of new blockbustered works. It's not a small amount, it's an impressive amount.

The generics, they'sre clearly coming. We know about patent expression. Boston Consulting Group with it's 30% of sales loss to generics because of that. Generics in prescription filling has already doubled between 's84 and 's96 and that trend is still continuing. But I think a major aspect that is also coming and has been discussed is the change in public opinion about the pharmaceutical industry and right throughout my presentation is what I have done is use as much as possible sources that the public has access to, to give you a feel of what consumers see happening every day before them. This is out of the DFT patently over priced. I am a direct sales rep with titles like that. It doesn'st really give a good name of the pharmaceutical industry. Viewers day, lots of debates, pharma companies sponsored $80 million in a campaign in the Presidential Election, but also some countries there is no longer debate. Legislators are taking action in this country by January 1st. The pharmacist can switch a prescription from a branded drug to generic drug involving the prescriber. He needs the approval of the patient but no longer of the prescriber. That's already happening in this country. Science and technology, major breakthroughs, tremendous benefits but also tremendous side effects. The market exclusive is getting compressed in time. And you

see here about Celebrax, it faced competition and within 5 months and that of course has an impact on profitability. The response has been largely, partly the mergers and acquisitions that we see today, but that's more a cost cutting response but very much also an ever increasing sales and marketing to maintain market share. This is out of, I think, Messeurse Today where you see promotion for Clarityn, among Tropicana, Minute Maid and all that stuff. A number of sales people in the US. It's a massive amount. 2 weeks ago I was at a presentation in Washington with the Pharmaceutical Research and Manufacturing Association and they predicted that by 2001 there will be 100 000 sales reps in the United States alone. You can start wondering to whom are they going to sell? This is an economy of diminishing return.

Commercial spending has been discussed as well. This is, again, US numbers. Last year it reached almost $14 billion dollars. It's interesting when you look at the cost breakdown of a branded drug versus a generic drug. In both cases it is the sales marketing administration is already more than 3 times that of research and development. So, there is something going on here. Has this worked? Yes, until now this has worked very, very well. Here is an example of birth control pill from Auto McNeil, a J&J subsidiary. The side effect is it clears acne and they got the approval to promote that. And of course you can imagine all young girls, teenage girls, young women, going to their prescriber saying, yes I need a pill but actually I want really that one because it has a beneficial side effect.'s And of course you can imagine that drug became the number one birth control pill in the United States. So, it does work. An overview of the FDA rating versus the top selling drugs in the States in March/April 2000. A) number A rating is a massive or an important therapeutic gain. B) the drug offers modest gains versus other products and C) more or less. Look at the right side, you don'st see any A's, you see 4B's and 6C's. So you can ask the question, is innovation therapeutic gain enough to sell a drug?'s And the answer is clearly, no.

DTC, that has been discussed and is it coming to Europe? I think personally it is. Here we have a Swiss example and that has appeared several times in the Swiss newspapers. You know exactly what the product is about. It's very, very clear but this is allowed in Switzerland. So, it is coming. So, today's market, it's a very profitable industry but there are tremendous pressures. The lowest one, Wall Street, is one of them which I haven'st gone into discussion, but as our industry you yourself also of course under the pressure of Wall Street. But I think what's more important and that is going to dramatically impact the way we go to do branding is the genetic engineering and that has been discussed clearly in the earlier discussions this morning. What people like Harvard are expecting that this has a major dramatic impact long term, not only in your industry but in other industries as well. And the way we see that happening is that pharmaceutical companies, food beverage, personal care, agri business, specialty companies are starting to share a common language, which is basically digital decode. One common language means you can compute it, you can share it. That means that you have industries that now start to share a language. That means convergence and disruption is going to happen. We'sve seen that in other industries as well. This is an industry that we are in the midst of that, Sun and other companies. Telecommunications, media and information technology. The acquisition of Time Warner by AOL is a very, very good example of that. What does that mean as well? Are we going to see major corporations out of this? Yes and no. Maybe, maybe not. We don'st know. But it's clear that we know of a major personal care detergent companies where every member of the Executive Board has now a genetics expert

assigned to him as a personal assistant because they want to know what's happening. We know of tariff Bioinformatics of a major pharmaceutical firm has moved to become Head of Bioinformatics of a major confectionery and pet food firm. Things are happening, companies are learning. And borders start to blur. A few examples, this is what people are reading and in the mindset of a consumer this creates expectations and they start to feel like Here Tropicana, which is a Pepsico company, is going to starting to brand it's Tropicana fruit juice as a product you can use in curbing hypertension. So, from a consumer perspective, this becomes important. It becomes for them less differentiated between a pharmaceutical drug or a drug and another product, which is a fruit product. Health foods, Userceuticals, U-Lever and Johnson & Johnson are already competing with each other, including new fabric may help transmittable disease. Cosmeseuticals, detergents, etc, etc. And according to Wall Street we are already the first personalized drugs on the market in Australia.

What does that mean? You get new players. If companies like Procter & Gamble, Uni-Lever and all that are getting in your space and don'st think this is not possible, they'sre very, very big companies. They have a lot more strengths than you have, but they are very different. So, you get new players, new rentals, new substitutes, you get merger disposals, and then you get the whole thing that was discussed this morning from science to industrialized science, average to unique patients at specific diseases, diagnostics and prevention like enhancing products and this is where you could expect some of the consumer firms move in. Some of the products of L'sOreal in Continental Europe are still regarded as a cosmetics product. In the UK they are already regarded as a drug and that's where the borders really start to blur. And then personalized self care and management. That means that out of the research and discovery, we see the personalization and the mass customization happening. I won'st say the one to one healthcare but something closely where you start taking care of healthcare and drugs by genotype. That puts pressure on the value chain, on the pipeline. More clinical tests, more products to make and ship, but also fragmentation of markets. That has been discussed, you can'st. The blockbuster model when you have genotypes you really have to cut it literally into pieces and it has to still go through the whole value chain. And of course an enormous amount of information. That is going to create disruption and confusion. Consumers, physicians, hospitals, regulators, politicians, they will start wondering, what is happening? Also your own employees might start to wonder what is happening. Things are changing very quickly. Deception creates uncertainty and this is where branding comes in. One of the key advantages of branding is it puts a human face around a company. It builds identity for a company. But then where is the pharmaceutical company and global branding. This is a list of the top 20 global brands in the world. And the first one is Coca-Cola, then comes Microsoft, IBM, McDonalds, Nescafe, Hewlett Packard, whatever, but you don'st see any pharmaceutical company in there.

And this is where I'sm going to make the parallel with the consumer goods industry. It also responds to basic human needs. Food, hunger, thirst, protection, product proliferation, I'sll give you a few examples of that one, generic product competitions, yes, they have those. Margin pressure? Well, their margins are extremely small compared to yours. Public opinion? Think about Coca-Cola, what happened in Belgium, or now if you want to speak about Fort and Firestone, and they have a middle man. Is it expensive for them to launch new products? Yes. On the left hand you have numbers of a new drug, on the right hand you have the actual number of the Magtree disposable

razor. 14 years of research and development, $1 billion research development and market launch. This is a make or break for the Gillette company. Now, not all companies are so expensive or all products so expensive to launch, but you are on average in the US talking about $30-50 million a piece.

CPG companies have always and for a long time been regarded as the kings of branding. Procter & Gamble, Coca-Cola, McDonalds, all these people. You can question, well they'sre so strong about that one. Is everything happening, is everything happy and hunky-dory there? Is the global brand exactly what you want and does technology and innovation still matter? And the answer is yes and no. Global brands has lost it's appeal to a large extent and this has a lot to do with how companies became so confident about the strength of their brand that they started ignoring the consumer. And there was a backlash. Unilever, for example, is axing 75% of it's brands. They'sre going back to their core brands. They'sre going to close 100 factories and lay off 25 000 employees. Talking about product introduction and who is now really the owner of the value chain. It's no longer the manufacturer, it's not even Walmart, the biggest retailer in the world, it's the consumer. The industry has tried to gain and maintain market share by entering massive amounts of new products. There you have just food in US, 17 000 products in one year were introduced in the US markets of food. This is crazy, this is not, and multiply this by $30-50 million dollars a piece. This is why this is no longer working. A company that is suffering enormously, for example, is Kellogg's. Kellogg's were also a couple of years ago on that list that you saw previously. One of the strongest brands in the world. They thought they were so strong that they could increase prices. They didn'st know this generics competition coming in and consumers slowly switching to the generics. And they tried out and they found out, hey this takes okay.'s And there you see the market share of Kellogg's in the cold cereal markets which is a flat market. So, this is absolute decline of market share.

A couple of years ago in the UK, when you bought a box of Kellogg's it says, if you don'st see Kellogg's on the box, it isn'st Kellogg's in the box,'s in order to survive now, they will make private label products on behalf of the Sainsbury's, the Asda's and the Walmart's of this world. That's where they go. Quaker wrote this for sale and apparently nobody wants to look or buy it. Coca-Cola looked at it and rejected it. Danone looked at it and rejected it. But software companies are doing extremely well. L'sOreal is an example where you see profits rose the stock market has gone up 900%. So, you can also question why? Why are some companies in the consumer space, the companies that know branding and merchandizing inside out, why are some surviving, why are some disappearing? And here is the answer. Because some of the consumers are very knowledgeable. They'sre typically and quite skeptical in that they seek brands that are meaningful to them. Very important is time. Time is scarce, even for your consumers, for the patients and there is an over branding in the brick world and I must say the Internet didn'st solve this in the virtual world. It's an avalanche of brands.

It gives me the point of what is a definition of a brand, a multiple definition but I like this one. A brand is a promise. And here you see the promise of Merk, Sharp and Dome, HIV, your days are numbered.'s This is actually a copy of an advertisement they run. So, branding becomes keeping that promise and we'sll discuss how companies can keep that promise.

But a target audience, and I think that has been discussed as well, but I would like to extend the target audience for branding is no longer only the physician, it's now the patient and the consumer. But also the hospital, your current and your future employees, the regulators, the politicians, the thought leaders in a community. That means it's the network, it's a community and a tribe. Words have been used like that. The problem with that and that you have to take care of is that they have different decision cycles. They have different buying criteria. They go for other sources of information. So, you need to find the touch points that made them select your product. So, media elusive target, media elusive consumer. The average consumer no longer exists and possible consumer firms have already understood this. I am a chameleon. I have choice, unpredictable, I want price quality, I buy based on circumstances. I know when I'sm vocal, I want instant gratification, time is a core asset. Here we have 2 companies. Both major brand leaders, Danone of France and Coca-Cola. On the left hand, Danone, now you see between brackets the company name in the States. Already they adopted it because it's easier for an American to say Danon than the French Danone. What they did is they tailored their product to local cultures and lifestyle. Their major product is Yoghurt. It's a boring product, yoghurt, it's very boring. Yoghurt is yoghurt, but they made it hip. Why? They changed it, they targeted young teenagers. They adapted the packaging to teenagers doing sports and all that stuff. So, no little spoons, you have those little tubes and you squeeze and yoghurt comes out. And they made it very hip. They target women. Part of the healthy, decent, lifestyle. It became extremely successful. They'sre market leader in the States. Now, they'sre extending that and they are bringing that ball to the market what's called purified water. It's not spring water, it's basically tap water which is purified. But they'sre market leader already in the States. On the right hand you have Coca-Cola. The tradition of Coca-Cola has been to sell one brand globally. This is the ultimate global brand, irrespective of culture. Atlanta decides. Push it extremely hard. Even in the States they'sre sponsoring schools and whatever you have you see banners of Coca-Cola in schools and in classes and everything. Ignore the consumer, that's what happened to them. Some people in this room might remember the case, I think it's about a year and a half ago, in Belgium, the contamination of 6 school kids that got sick and Coca-Cola ignored that. And the Belgium Government stepped in and ordered a total recall. The French Government followed, the Spanish Government followed and the Portuguese Government followed, then Coke reacted. But it was too late. The mindset of the consumer was already changed. This has cost them. This is 4% of Coca-Cola's worldwide market. This has taken 25% of their net profit for that year and the CEO was gone a couple of months later.

They'sre changing strategy, by the way. They'sre putting now decision power back in the local culture. I want price and quality, but real innovation still is important in a product. People don'st look for copy cats, they look for real value in products and this is an example of a product that is very close between a drug and a toothpaste. It is a consumer product. It's total toothpaste from Colgate. It's the first oral pharmaceutical. It contains Tricolsan and what they did is they changed molecules so that it sticks to the enamel. They had to go to FDA validation. It took them 10 years, $35 million, but look at the graph there. Colgate Palmolive Total versus the leading brand in the States, Procter & Gamble's Crest. And still they sold it by 25% higher margin or higher price than P&G did. So, it does work, that works. But you have to make it very clear, both to the dentist, in this case, and to the patient. Even my dentist today, I asked her last time, what toothpaste should I use?'s She said, Colgate Total,'s no discussion. Real

innovation, I think, with marketing. L'sOreal. If you think you spend lots of money on research and development, less than 25% of revenue on R&D. They'sve learnt about what's called investors or the inventors dilemma. Kill your own successful product because somebody else will start attacking you if you don'st. Re-invent yourself. So, 50% of the products are updated every 2 years. It's very important that they break down the barrier between involvement and sales and marketing. They force their departments to sit together. And also they tailor. I know that Internet gives me even more information. Here you see the prices of 3 antihistamines, Clarityn, Allerga and Zertac and this is appeared in News Aid Today, but you find it on the Internet as well. So US readers consumers say, why am I paying 2 times more than in other countries in the world? Explain that to me.

And you better have your act together. Product recalls have a, or let's contamination's and all that stuff have a profound impact on consumers and consumers create now opinions online and here you see some examples. Perrier, $2.5 million lost on the Benzine issue. Notwishia, Coca-Cola, The Frank & Foodsman Centre and Aventis. Dioxin, shakings, mad cow, this list here that keeps on and on. So, consumers get more and more sensitive to that. And you can bet your life, something bad will happen. It's just a question of how you respond. The quality control, batch and low tracking are essential. Instant gratification, I want it now, this is not what you want when you are, for example, an online pharmacy and a customer goes on and wants a prescription at work. Here's an example, this is another company. But you don'st want that.

Now time, and this gets to a very concept. Consumers have limited time and we get more and more interrupted every day. There are now 6 interruptions every hour for the office worker in the United States. And you can see on the left hand it's a massive amount of interruptions happening. But we see interruption everywhere. The number of advertisements hitting the average consumer between 71 and 91 has gone from 500 to 3 000. We call that UP Alzheimer, it's noise. What are you going to do? Throw more advertisement budgets to it and your competitor will follow and you throw more and they will follow and you get a nice collection of wars. The Coca wars are very, very famous in this aspect. But it really becomes noise. People start to ignore it. It will get worse. 18-44 radio stations. This is US data. 4-200 television channels; 4 5000-18 000 magazine titles; 2 400 Internet radio stations and 20 million Internet sites. Who has time to get that information? In broadcast advertisement worked when you had 4 national television channels. Right, you have a captive audience. On the right hand you don'st have a captive audience anymore. That is gone. That is what is happening and companies indeed like Procter and I'sll give you an example of what they'sre trying to do to find other ways to reach consumers. The only way we can change that is you need to cut through the clutter, the hype, the noise, but that means you need to know who he or she is and he and she is changing. So, micro segmentations orientation becomes very important. He and she wants a personalized, meaningful interaction with you. Those 2 trends create what we call the world of one. It's not only happening in your industry, it's happening in other industries as well. So, that leads us to, where is branding moving? It's no longer just advertisement and marketing, it's starting to understand what you knew to do to keep my business as an individual consumer or stakeholder, physician, hospital, whatever. Customized products, accessibility, real personalized marketing communication, no excuse services, trust privacy and a rapid change to competition trends and markets. Those are what we believe are absolutely core elements. All can be addressed. It's not easy, but it can be done. Develop the right product to me. If you

refer to this morning about the whole discussion about indeed pharmacogenomics, genomics, proteomics and all that molecular revolution, that needs massive computer power and I'sm not going to give you an introduction about computer technology. If you want, we have a very high performance system on our booth here and there are some people who can discuss exactly how those things work. But let's say the information technology vendors IBM, Compaq, SGI, are working very hard to deliver their type of all this type of computing you need, either to standard technology, what's called HPC Service Mainframes, computer forms, dedicated hardware or, and that's more and more a trend where people are looking at use. There is so much computer power unutilized within your company or over the Internet, use that unutilized computer power and people are trying to work and experiment with all those things.

Other futures, optical computing and even DNA computing. Now, people need massive computer power. The more, the merrier. That then becomes a question of, well, we have even if the company is extremely profitable, we still have limited resources.'s Price performance becomes important. This is where price performance is going to. So, the industry will be able to deliver very soon extremely high performance, cost performance systems. Moor's Law has been discussed. This is a view of scientific American and the computer power curve versus $1000. And you see that we are now hitting for a dozen box you get about a power from insect brain. 2020 you will get about one mouse brain. 2030 we will get 4000 boxes of power of one human brain. And by 2060 $1000 PC will buy you the power of all human brains together. So, there is no problem there. That is not the issue. It's not the core issue. The core issue is, yes, you have this massive amount of information and you have microwaves and protein scanners and DNA sequencing and they'sre creating even more data. Remember Celera discussing they have 100 terabytes of data. What are you going to do with that? You need systems and processes and ways within your R&D departments that put that data together that makes it then manageable, so work flow management systems even in research and development areas become important to get to clinical development as fast as possible.

Make the right product for me. The factory of the future. The factory of the future will have one man and a dog. And the dog is there to watch the machines and the man is there to feed the dog. This is a quote from Unilever and about 10 years old. The Chairman of Unilever. This can be done and there are already companies we have in pilot sites and some automotive companies have factories which are virtually peopleless, there are no people in there. The reason why this becomes suddenly important again is because you go from one big batch of product to several smaller batches and you need the flexibility to change very quickly to new trends.

A company that is taking mass customization in production, delivery and marketing to a far extent, is again, Procter & Gamble. This is a company called Reflect.com. It's basically a joint venture of P&G with a Silicone Valley company. And what Reflect.com does, women go on the web site, they define their profile and they can just start ordering But they can start ordering personal care products like soap or shampoos, but it's not a standard product. They can define exactly what they want. The smell, the texture, the packaging and Proctor & Gamble, or in this case Reflect.com will make that to order and ship it to the customer. It's a total different mind share. This is a logistics challenge? Absolutely. Will they make a profit? I doubt it but that's not the core issue. The core benefit of this for Proctor & Gamble, this is a mass merchandizing machine, a very efficient one as they start to understand what consumers actually want to buy. So, by

seeing what's happening, what people actually want, you can bet your life that's what happening will come in the mass merchandizing machine that P&G is so good at. And then you get quotes like, my PC just went down. There it is again. Once you can figure out how to get to someone's home, who needs Walmart? Because the people who lose now the interaction with the end consumer is not Procter & Gamble, it's Walmart. So, P&G tries to get back a multiple way of interaction with consumers.

Deliver the right product to me. This is about delivering customized products to customers. You take a chip, hook it up to an antennae so it can transmit it's data and you give that chip a unique number, 96 bits. That is 33 trillion, trillion, trillion combinations. The antennae will transmit the 96 bit number assigned to the chip and then you put it on an everyday product like this, for example, or a box of medicine and you link that to the Internet and you get some interesting information about that specific product. And you can start putting low cost readers in your car and start tracking the product throughout it's whole life cycle, where it is, how it has to be handled, how it has to be recycled, disinfected, whatever. You have shelves where you put readers in so the shelves know what's on the shelf and when it has to re-order new products. You have devices. A microwave could be another device as well and that can relate to the product just by reading the pack. Now, this is wireless, you don'st need a scanner, there's no barcode, it is wireless. And of course there are lots of other uses and I think what you will see happening if you'sre in the industry, on the left hand, we'sve lost the left hand I'sm afraid. You will see, I will have to read it. A lot of companies are involved in making things like this happen. So, the industry, in order to respond to all those challenges created by global branding and others is, building virtual themes, consortia, that come together and try to solve an industry wide solution. Involved in this is, for example, MIT, Procter & Gamble, The Philip Morris Group, Gillette, International Paper, UCC and Eon, which are 2 standard bodies of the barcode, Sun Microsystems and CR Motorola etc, etc, etc.

We call this T2T. Basically, if you come from the US, and it is Internet related, it has to have 2 letters and a 2 in the middle. So, that means things talking to things. But the whole idea is to create a globally transparent supply chain, to put readers everywhere and the readers will cost about $10 and the chips basically will cost, a couple of years from now, 1 cent. And you put it everywhere, stores, drug shelves, laboratories, wards, operating theatres, whatever you want to do. And the nice thing about it and the very interesting thing about it is that it will give everybody, not just an SKU will identify a product, this will be not a bottle of Franzuser, whatever this thing might be, which is an SKU, but this will be this bottle made that date, transported there, kept at that temperature there, so the expiration date is this etc, etc, etc. You'sre identifying a product uniquely. It's wireless connected to the Internet and of course the whole thing will be totally standards based. That means you can start tracking product and containers, even without opening the container you will know what's in the product. That's interesting from the retail side, but it's also interesting from the healthcare side. The hospital pharmacy, the intensive care, the ward, the patient that's home, disposal and recycling. Now this has some interesting impacts financially and we did here simulation on the margin of reduction and production and distribution costs versus the marginal increase in net profit and you see the difference between brands and generics and just by the supply chain optimization this will give by knowing exactly what you have on you inventory.

I think much more important is again, and this links back to branding, is an improvement, a massive improvement in customer and consumer service. Improved load tracking. Foreign smuggling detection. You own your own ID's, you know what's happening. Improved quality of perishable products. Product recalls online. You can recall within the consumer at home. If you have a batch that has gone wrong, you can warn, at home, of the consumer. The medicine cabinet, if it's an intelligent medicine cabinet can start beeping like ding, ding, ding, something's happening, take this thing out.'s Change of product introductions, good manufacturing packages, good clinical practice, good laboratory practice. You have the perfect tracking machine. Personal consumer service, compliance and adverse effects. I'sm personally allergic to iodine so I have to watch out what I am eating. If I have a Smart Card with me based on this technology, I take a product that contains iodine, I can get an immediate warning, don'st take this.'s Same thing about adverse drug reactions. Automatic re-orders, faster purchasing process, no queue at point of sale actually, because there won'st be a point of sale. It's just reader. Your trolley knows exactly what's in, you leave the store, bang you get your bill or it gets automatically debited from your credit card. And tracking your flow, desk protection etc, etc. The more we talk about it, the more advantages that we find. Real personalized marketing communication. It has to be interactive focus, relationships and tribes. There is a plethora of marketing and advertisement techniques and I think a lot of consulting firms and my apologies to my consulting colleagues, a lot of consulting firms will make a lot of money out of this. You have traditional broadcast and you have new techniques. Emails, biomarketing, career marketing, customer relationship management, outdoor advertising, mixed media, whatsoever. There is no one single solution. You need a combination, a bit of everything. And the whole idea is that you need to balance in time what are you using? Product costs which basically push versus pull which is basically the interactive approach. And over time, as your product life cycle evolves, you need to change strategy. And despite the .com drain and everything that's happening, and the NASDAC went down tremendously again yesterday, the web is an important channel. And companies like Procter & Gamble and Uni-Lever have protected that. They have noticed that indeed, women for example, Uni-Lever, they found out that 85% of the decisions made are done by women for that product. So they target explicitly women community sites.

And it's already been discussed and indeed, for example, women have a much higher percentage code over the Internet to look for e-healthcare or healthcare information. What we still see too much is people telling us, well, we do this. We do have a destination web site. We do banner advertisement.'s And the answer is of course, so what, so do 20 million other people.'s You need to go to the physician, the customer, whoever you'sre relating to and you want to influence at the point of decision. When he needs to make a decision, you want to get right information to him. That's real personalization. The type of information he needs. Whatever device he or she is using. That means common, consistent interact and conversation.

Procter & Gamble again. And you should start watching them. They have 72 e-business initiatives going. They don'st know yet which one will survive but they are learning very quickly. The power of relationships. UI, new line of haircare products called Fizzy.'s Basically what they used was a combination of new and old technology. The different market research, they spotted the trend setters within their target community and they approached them. And to link, to consumer and net, they created a sort of community.

And the goal was, you totally just go and tell friends. And that actually worked for them. The program generated 1 million referrals to the web site in less than 6 months and only 15% of the marketing budget for this has gone to traditional broadcast advertisement. Other examples of buzz gunso marketing or contextual marketing or whatever the new lingo will be of tomorrow is, the whole idea of transforming consumers from passive to becoming active participants in your marketing process, in your branding process. Merk's launch osteoporosis. Basically what they did is they created a market before they launched it. They did it two ways. Carefully select high level scientists, but also launch campaigns and again at their target market, women. So, it became a topic of discussion. Women go their physician saying, I read about osteoporosis,'s and all that stuff and bang, there is Merk with their product. Another example, Johnson & Johnson banner ads for Tylanole headache reliever. It enfurls when the NASDAC or the Dow goes down 100 points at e-progress sites. And the other one is Clean & Clear, again a J&J example. Again, where they reach young teenage girls and use chat rooms to get in communications. Again the thought leaders. And spat and used those people so that they go and tell their friends about their products.

There's a plethora of web personalization technologies, profiling, email, dynamic content, mining, collaborative filtering, etc, etc. The pitfalls of that one, there are more than 200 tools on the market. But tying separate pieces together, it's not a solution. You'sre dealing with people so know-how strategies kill segmentation are very, very important. You need to deal with privacy. If you don'st do real personalization it backlashes, it becomes a source of irritation. Personalization is not a standard email with your name on the top line. That's not real personalization.

That means that also when you select a personalization technology and a common foundation, you must make sure that you can plug in back office systems so, again, that the consumer gets a consistent message whatever way he uses to reach your company. And one of those we believe is our technology curve.

Accessibility. I think the real power of the network is indeed, it hasn'st already been discussed, Metcalf Floor, the power of the network is a number of nodes square and good examples of there are Napster, e-Bay, chat rooms and whatever. This is the real, real power. People talking to each other, creating online communities, influence and stuff. An example of this is a prototype we developed with a company called Tailbob in Sweden and it's basically a consumer patient centric community network. An example, you have a teenager, a guy called Joe and he goes to the physician and he has a real serious problem and he needs to take his medication at regular 24 hour intervals. So, the physician enters that data in the system and Joe can decide, yes I want a reminder by SMS, by WAP, by voicemail, whatever, it's really not important.'s So, he gets that message and he's not responding because he's with his girlfriend. After a few hours a message can go to a family member who's concerned, the mother. She can take the phone and start yelling at him. Or suppose that he responds and says, yes, but I have a headache.'s The pharmacy, because that's where he buys his product could say, yes, but you are taking an anti acne product.'s So, he could send a message back, watch out there is an incompatibility with those things. You have to take enough time between the two drug intakes.'s Or what is more serious, even the Life Science company yourself could say, yes, we'sve noticed a side effect with some companies. This is what you need to do to avoid or diminish the side effects of that.'s That is real personalization. That is becoming a one way interaction with a community built around an individual patient.

Access to product. In Zurich you can already buy Coca-Cola with your mobile phone, you don'st need money anymore. Some companies are working on drug automated dispensing machines in the US. So, we see these things coming. We will have sensors around us and on us. There are lots of items coming on types of shirts and whatever devices that we carry that link our bodies to the Internet. A glucose, blood pressure, whatever, and then of course people are already talking about sensors in us. Why not? Clinton announced a $500 million nanotechnology initiative, $60 million of that will go to NASA, National Cancer Institute and the Telephone Institute of Technology to collaborate on the development of nanomedicine.

Trust privacy is a critical element that has been discussed. Now we don'st believe this is something any company can solve on it's own. Physicians, consumers, FDA, regulators, whatever, don'st want to go to the identification process of a Lily, of a Glaxo, of a Pfizer, when they'sre all different. It just doesn'st work. This is an industry wide problem so it needs an industry wide solution. And the industry has solved the same problem and it's the financial industry. And think about it, consumers have 2 things they don'st want a lot of people to know about. Their bank account and their health. So, 40 financial institutions came together and created a company called Identris. And they built a whole infrastructure, not only technology but also all the processes and all that stuff. And what it does is delivers privacy, authentication. Verify the identity of the sending party. Integrity, ensure that information is not changed in transit. Non repudiation, they went through all the legal processes in all the major countries in the world so this can be validated by Court of Law. Global systems interoperability, and this system has now been approved by the Federal Reserve Board, by On Greenspan. This system is operational. So, what we want to do is saying this is basic infrastructure. If you send a letter of credit or another type of information, it really doesn'st change that much from an infrastructure point of view. This is the type of approach that could solve a major problem, we believe, in the pharmaceutical industry. Authorization, are the identities okay? Are you authorized to deliver the documents, for example, when you'sre Glaxo you want to send an NDA to the FDA, you want to make sure that it's that individual with the FDA. The whole system allows different levels of privileges and all that.

You can build then a total trust of what we call a trusted network Life Sciences company. With the physician, the patients, the FDA, Regulators, the thought leaders, subsidiaries, CRO's, banks, pharmacies, whatever, based with this same system.

All that and I didn'st cover rapid changes to competition and no excuse services. But all that generates massive, massive amounts of data, of information. People will need to have access to that information at the point of decision wherever they are. That means that, absolutely critical, and I think there was a workshop from Oracle about it, and I think the topic was absolutely right. If you want to swim in the data but not drown in the data, so data mining is still, it has some bad reputation but it becomes a critical skill. Getting information out of data becomes very, very important. Doctor Philip Loftus, Glaxo Wellcome, he already said this, 99 out of the 100 things we need come from outside our company. So, exploiting information becomes absolutely a critical asset. Things like Auto-ID, Identris, for the banks it's open standard. Lots of companies can use them, but it's the companies that exploit the data the best that will win. As Faheem said, experiment, change of culture. Think out of the box. Work with people that think out of the box. Think versus framework. Procter & Gamble have 72 e-business initiatives going but they'sre not just anarchy, this is controlled anarchy, I would call it. They have a

focal point within their organization. They know exactly what's going on, they monitor very carefully what's going on. And then they will pick the ones that are very profitable for them. Think methodology, pilot and deploy and this is where companies like ourselves have the means and the tools to help you do that.

Four ways you have to plan for the unknown. We don'st know where the world is moving to. You'sll have a massive data deluge and 99% of the data you don'st control, neither the format. It comes from outside of your company. The same with users. 90% of new users of your data will come from outside your company. You don'st control them. The same with devices. The world of just a PC is totally over. There will be lots of devices talking to you. If you think of your IT organizations, the IT organization was about automation and technical competencies. It has to move to innovation and service management. The world of one does require some things from your IT organization just as security, global access, agility, learn from other industries, learn what other people in the telco and the financial industries have done. Decide whether it's core and outsource what is not core.

We believe IT becomes a service. It's a network. You have the presentation layer, you have a functional layer and you have a data layer and you have to decide at the last point in time what, for example, the presentation layer will be, because your consumer or your patient will be sitting in his car, will use his mobile phone, will be at a kiosk or whatever, and you want to reach him exactly at the point of decision. We are extending that with projects like Auto-ID to inanimate objects. A lot of companies are extending that to include the living species, ourselves and other animals as well. The real promise of connecting, and I can really recommend this book, but the real promise of connecting computers is to feed people by imbedding the means to solve problems and things around them. That means height of complexity of IT. It's becoming very possible to do that.

What we discussed was convergence of industry, mass customization, personalization, leading to the world of one. The way global branding changes, and then the whole IT aspect around it.

Conclusion. Yes, we'sre going to see a revolution, it's not only for your industry but for other industries as well. The major drives, and this is actually a slide that was developed by the Director of Eli-Lilly, he said the 3 major things affecting my company is computer power, genomics, is networks and society. And I think this slide really captures it very, very well what's happening.

We will see the world of one, personalized marketing, mass customization, pervasive computing, massive computing are coming. Relationships do go wrong. The companies that manage relationships the best will be the best brand leaders. It's 2-way, it's interactive, it's not just the physicians, there's a lot of people. And networks rule. Global branding is absolutely essential in a period of insecurity. People will be attracted to brands they trust. But they have to be meaningful. Exploiting information is a core asset and question your own organization. We do that. Even in Sun I think we re-organize every 6 months because we question our own organization every time. But you can'st do it alone anymore. Partnerships, even with your competitors sometimes, become essential to solving industry wide problems. You come together, you form and address a problem, deliver a solution and then the partnership disappears. And I think Faheem

already made a reference to this quote. The former CEO, the pillars of piece of software, if you'sre more of an information company than we are a direct company. And I think that's it.