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					Boots Centre for
Innovation
Developing the Open Innovation Model at Alliance Boots
Inno Design Tech Expo
Hong Kong
13 Dec 2007


                 Martin Reilly
             Managing Director
          Boots Centre for Innovation
               United Kingdom
          Our presentation today

Introduction to Alliance Boots

The Boots Centre for Innovation, and the Open Innovation model
Alliance Boots
An international pharmacy-led health and
beauty group
Alliance Boots
We are a leading international health and beauty group offering
a range of products and services to customers, working in
partnership with manufacturers and pharmacists in more than
15 countries.

Our two core businesses are pharmaceutical wholesaling and
retail pharmacy (health and beauty).

Our teams are committed to delivering products and services
that help people look and feel their best.
1. Facts and figures
Retail
         Europe’s leading retail pharmacy business with
           approximately 3,000* retail outlets

         Internationally, Alliance Boots operates over 400
            pharmacies in Italy, Republic of Ireland, Norway,
            the Netherlands, Thailand and through an associate
            in Switzerland

         Alliance Boots own brand products sold through
            wholesale and to selected retail partners in 19
            countries:
            Canada, Czech Republic, Dubai, Finland, France,
            Indonesia, Italy, Kuwait, The Netherlands, New
            Zealand, Norway, Portugal, Romania, Russia, Spain,
            Switzerland, Taiwan, the UK and the USA

         Health and beauty products, pharmacy-led services
           and advice provided to millions of customers and
           patients
         Sourcing Head Office here in Hong Kong
                       No 1 brand for Trust in the UK!
          We lead all UK competitors in being seen as “trustworthy”
                                            Brand Measure - Trustworthy % Agreement
     80%


     70%


     60%


     50%


     40%


     30%


     20%


     10%


      0%
             2005



                      2005



                                2005



                                            2005



                                                   2006



                                                          2006



                                                                 2006



                                                                          2006



                                                                                 2006



                                                                                        2006



                                                                                               2007



                                                                                                      2007




                                                                                                                    2007
                                                                                                             June
                                                                                                             2007
                      Aug




                                                                          Aug




                                                                                                                    Aug
                                                           Apr




                                                                                                       Apr
                                            Dec




                                                                                        Dec
             Jun




                                                   Feb




                                                                 Jun




                                                                                               Feb
                                 Oct




                                                                                  Oct




            Asda               Lloyds              Sainsbury            Superdrug         Tesco         Boots
Source: Synovate quarterly brand tracking
2. Core values
Our core values


Partnership

Trust

Service

Entrepreneurship

Simplicity
‘Full of New Ideas’
Our reputation for trust is unsurpassed

We have a team of experts in place who we want to
 build on this to increase the numbers of new products
 we have on our shelves

Being ‘Full of New Ideas’ will:
    Drive customers into our stores
    Give wide distribution for innovative products from
     our suppliers and grow their businesses
Boots Centre for
Innovation

 Providing support and funding to bring innovations to market
     Introducing Boots Centre for Innovation

•   Boots Centre for Innovation was launched on 1 April 2007
•   Based on the campus of Swansea University.


                   Non-profit making partnership between:

                        •   Boots The Chemist
                        •   Longbow Capital
                        •   University of Wales Swansea


•   Unique opportunity to work with Open Innovation model to
    access and develop products that would otherwise not be possible with
    resource levels in Head Office
•   Ultimately looking to sell products developed within Boots Centre for
    Innovation exclusively through Boots stores and retail partners
    worldwide
Who are our partners?

                                Longbow Capital

•   Venture Capital company based in London & Edinburgh
•   Set up in 2004
•   13 partners
•   Specialise in funding healthcare innovations
•   Invest in small unquoted companies
•   Manage investments to point of realisation – sale or IPO
•   Offer investors the opportunity to invest in these companies
    through the Longbow Healthcare Fund
Who are our partners?


                                         Swansea University

Headed by Professor Marc Clement – Vice Chancellor of University of Wales
and trustee of Wales for NESTA, Head of Innovation at Swansea University
and Deputy Chair of Boots Centre for Innovation



                      Welsh Assembly Government



Secured RSA (Regional Selective Assistance Grant) of $600,000 over 3 years
What do we do?
Provide support and funding with new technologies and product ideas
to meet Boots consumer needs in key areas:


•   Improve and maintain the health, look and feel of skin
•   Improve the health and appearance of teeth and gums
•   Devices that enable people to monitor key aspects of their health
•   Improve the health, appearance and comfort of eyes
• Improve digestive health, particularly issues related to stress, poor
  diet and obesity
• Minimise the severity and duration of pain
• Improve quality of sleep for everyone, including pregnant women,
  babies and the elderly
• Minimise the complications of living with diabetes & other chronic
  diseases
• Anti-ageing products and devices for mind and body
• Create more convenient methods of taking and using medicines and
  health products
                               BCI Process
                   Turning Ideas into Saleable Products

Idea and                BCI Idea      Sign BCI Terms &      BCI meets with        Review at BCI Idea
supporting              Assessment    Conditions            idea holder to        Assessment
information             Forum         including nominal     gather more           Forum
received                              royalty to BCI        information
Confidentiality                                             Sustainable
Agreement signed                                            Competitive
if required                                                 Advantage
                                                            Analysis



  Boots              Implementation           Product                     Due
  NPI                                         Development                 Diligence
  Process

                     Investment               Investment
                                                                   • Technical status of idea
                                                                   • Safety profile
                                                                   • IP status - patents filed, IP risks
                                                                   • Consumer validation
                                                                   • Development and supply
                                                                   capability
  What makes for successful innovation?

Health and Beauty Products

……which meet real needs of consumers

……which can be explained in a few words and via a clear and
     attractive pack design on a shelf

……where the product benefits are really of benefit to people’s
     lives



If you have one of these, then we are interested!
                Closed Innovation

           Research              Development




Research                                             Markets
Projects




                 Firm Organisational boundaries       Source
                                                  Chesbrough 2003
                 Closed Innovation

           Research              Development




Research                                             Markets
Projects




                 Firm Organisational boundaries       Source
                                                  Chesbrough 2003
                  Open Innovation

           Research              Development


                                                       New
                                                      Market



Research                                              Current
Projects                                              Market


                                                        New
                                                       Market



                Porous Organisational boundaries       Source
                                                   Chesbrough 2003
                      Open Innovation

           Research              Development


                                                       New
                                                      Market



Research                                              Current
Projects                                              Market


                                                        New
                                                       Market



                Porous Organisational boundaries       Source
                                                   Chesbrough 2003
Open Innovation in Action


 •     Mutual advantage through collaboration not
       competition
 •     A truly interdisciplinary environment
 •     A team of professionals from a range of sectors will
       evaluate product opportunities for Boots with support
       of ILS expertise
 •     New product ideas will be welcomed from individuals
       and firms
 •     Promising products will be developed with venture
       capital investment
 •     Products will be marketed through the Alliance Boots
       and partner networks
What have we achieved so far?

•   Received over 120 approaches


•   Assessed over 100 projects from around the world, including South
    Africa, Denmark, USA and China


•   Signing Terms and Conditions with first three companies


•   Currently reviewing around 40 projects


•   Launch of first two BCI “Products” in Boots stores in Spring 2008
Notable Events

• Innovation Fair at Cosmoprof, Hong Kong 12-14 November 07

• Inno Design Tech Expo: Hong Kong 12-14 December 07

• Arab Health Expo: Dubai 28-31 January 08

• BioWales: Cardiff 12-13 March 08
                         Summary

From laboratory to shelf …………..
• BCI will
   – Support an idea to turn it into a saleable product

   – Provide and co-ordinate expertise and resources that would
     not be typically available to small companies

   – Access funding to support development activities

   – Engage with Boots Category Marketeers
          Thank You
Martin Reilly
Managing Director
Boots Centre for Innovation


martin.reilly@bootsinnovation.co.uk
+44 1792 602677

				
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