3 Steps to Better Drug Development Alliances
The pace of partnerships continues to accelerate in the pharmaceutical and biotech industry.
During the first half of 2012 drug makers agreed to partner on 72 compounds in development, amounting to $4 billion, according to a recent report from Evaluate Pharma. While growing in popularity, these alliances are also becoming increasingly complex.
With shared decision making and more management time required to guide collaborations, industry partnerships face huge challenges and rising but hidden costs (1). Yet there are ways to keep these vital alliances from getting swamped by complexity. Here are a few collaboration tips to consider.
- There’s no doubt that parties on both sides of recent alliances have scrutinized the terms of the deals down to the letter. But a broader perspective and more integrated thinking can pay off before the ink is dry. At this early stage, it makes sense for greater involvement from the finance group who can dig deeply into the partnership and apply accounting metrics to help understand the present value of future complexity. Insight from finance will give more confidence in partnership negotiations to the business development people who will sign the deal as well as performance benchmarks for the R&D or commercial people responsible for making sure the alliance functions.
- No one is a mind reader, so it’s important to ask the right questions and carefully assess your potential partners’ position to discern what they really need out of the alliance and what they can give up in order to meet your needs. Thinking outside the immediate deal could bring new answers to satisfy objectives on both sides. Let’s say a smaller company wants to build its marketing capability but the larger partner is unwilling to open the door to co-promotion rights on a compound that is part of the deal. This could become a sticking point, but it’s possible the larger partner would allow co-promotion to happen on one of its more established drugs. This would give the smaller company access to new marketing expertise and experience without asking the larger partner to compromise on its original principals.
- It’s common to go into any partnership with the hopeful idea that you’ll do everything together. But this thinking could put the alliance at risk with duplicative and wasteful decision making. Instead, consider that less collaboration and a separation of responsibilities may bring more value to the relationship. For instance, rather than combining both regulatory teams to pave the way for agency approvals in all markets, why not get one side to focus on the FDA and the other side to concentrate outside the U.S.? Clear definitions of roles and responsibilities, and the decision making process as well as performance measures will ensure that the partners area working together most effectively – even when they’re working apart.
Forming and managing collaborations is one of the most challenging jobs facing industry professionals today. But it is also one of the most important and potentially most rewarding. As the intensity of research and development continues to increase so will the number and complexity of alliances required to deliver the next generation of breakthrough therapies.
- Making pharma alliances work, A Mallik, B Zbar, and RW Zemmel, McKinsey Quarterly, February 2004, Accessed 15 November 2012.
- Key challenges in pharma-biotech alliances and effective management, P Mudhar, Frost & Sullivan publications, Accessed 15 November 2012.