Co-promotion agreements and a wide variety of strategic alliances are redefining the pharmaceutical industry. Yet interviews with 28 executives from 12 companies that have chosen or are seeking a pharma partner to market a late-stage compound confirm a disturbing fact: Despite much executive-suite talk about becoming the "partner of choice," few companies have devoted the resources needed to build alliance infrastructures that will support the entire portfolio of co-promotion deals, licensing agreements, R&D collaborations, and other relationships that are quietly reshaping their organizations.
This article describes those findings and challenges pharma executives to
The days of alliances as something companies do are gone. Today, companies are alliances, and their ability to manage those networks will determine industry leadership and transform the competitive landscape in fundamental ways.Co-promotion alliances exist because major pharma companies' pipelines fall short of the growth that CEOs want and shareholders demand. Although companies dedicate billions of dollars, the finest minds, and the best equipment to developing new blockbusters, success remains serendipitous, and new therapies often emerge from companies that lack the ability to market them effectively. The greatest opportunities emerge when the right product connects with the right sales force-even when the two originate in different companies.
The success of drugs such as Celebrex (celecoxib) and Lipitor (atorvastatin) has led to fierce competition for late-stage compounds. When a compound holder announces that it is looking for a marketing partner, large companies line up to bid for the opportunity. The innovator must consider its choices carefully before selecting a marketing partner-and for good reason. The right partner can make the difference between a blockbuster and a me-too product.
The executive interviews revealed that late-stage compound holders have strong feelings about what they seek in a marketing partner. The two most important characteristics are the partner's abilities to pay for the compound and the wherewithal to market and sell it aggressively. If a potential partner demonstrates excellence in every other way but fails to meet the patent holder's financial and sales needs, that company is out of the running. Of course, all large pharma companies can bring those two capabilities to the deal if they are serious about the product.
So other criteria come into play. Those interviewed say they avoid working with companies that
The survey participants were particularly sensitive to two issues:
The decision making process must be efficient. Compound holders seek marketing partners with a similar vision and sense of urgency. Their managers understand that the marketplace does not care how many internal committees review a proposal, and they tear their hair out when they're told that those committees meet only once a month. It's hard to rationalize decision making delays when competitors are quickly closing the gap.
The potential partner must provide adequate support for implementing the deal. Late-stage compound holders seek marketing partners that agree to joint training in alliance management. That training must include tools, metrics, and management techniques that allow bright but inexperienced managers to navigate both the external partnership and the internal forces within each company. Managers must learn to identify problems for early resolution as well as processes for resolving conflict, integrating structures, and making collaborative mid-course corrections. Innovative companies understand that world-class implementation brings world-class results, and they will settle for nothing less. Their search is not for just any partner, but for one that brings a complete set of skills.
Compound holders steer clear of companies that cannot agree internally on the alliance's goals and objectives. One executive characterized the confusion that can result: "Partnering with a large pharmaceutical company is like dating an octopus. Two arms are hugging you, two arms are strangling you, and God knows what the other four arms are up to."
Both parties must understand that every alliance is really three relationships in one:
A deal's success is determined by each company's ability to simultaneously manage all three relationships. The marketing partner must be able to seamlessly integrate the activities of its own marketing, sales, regulatory, and research groups while coordinating those resources with the partner. That partner, in turn, must seamlessly manage its own internal relationships. Deals suffer when confusion or disconnection exists between groups in either company or between both. And, if there are disconnects in all three relationships, the entire partnership is at risk.
Patent holders seek security in their marketing partners' internal relationships. They look for companies whose internal groups
In the battle to influence perceptions, the potential marketing partner must demonstrate that the two companies' strategies are mutual and long-term. The most effective way to make that point is for the entire therapeutic area team (TAT) to make the marketing presentation.