Profitable Partnerships: Developing Excellence in Alliances

Competition to secure inlicensing deals for the most promising new compounds is increasing, and the balance of power between big Pharma companies and small biotechs in these deals is shifting. Larger companies can no longer expect start-up companies simply to take the most generous licensing offer without consideration of other deal factors. These smaller companies seek hard evidence of commitment and expertise in alliance partners, as well as an increased role in decision-making and commercialization of new products from their partners. These goals are often at odds from the larger firm's desire to maintain control over the marketing and sales efforts in alliances. Such natural differences in objective can generate natural tension between large and small companies. If not handled well, challenges inherent in both codevelopment and co-promotion alliances can damage the health and progress of the resulting relationships.

In light of the changing deal landscape and these critical alliance management issues, business development organizations at large Pharmaceutical and biotech companies alike seek to improve their own business development efforts to successfully negotiate strategic alliances that are most valuable to their goals. This study looks at the most critical factors in managing the deal-making process. Specifically, this study examines the areas of:

• Strategic Alignment
• Cultural Fit
• Communication
• Commitment
• Due Diligence
• Negotiation
• Decision-making Process
• Flexibility
• Team Coordination
• Resources

Key Findings

1. Exhibit transparency throughout the alliance to build trust and maximize efficiency.
2. Displaying openness during and after the negotiation phase of a deal is an element that most interviewed executives cited as necessary to ensure success.
3. Manage the natural tension between large and small companies during negotiations to facilitate alliance progress.
4. Cooperation usually is not a natural act for companies in the same industry - best-in-class companies recognize this tension and work to openly resolve conflict and encourage cooperation.
5. Openly discuss scenarios in risk-taking to make sure expectations are clear.
6. Interviewed executives cited frequent disappointment with issues of risk-taking when dealing with partner companies.