Considering Intangibles

Oct 01, 2005
By Pharmaceutical Executive Editors

All partnerships run into stormy weather. When that happens—as it inevitably will—what saves the day is trust. That's a lesson I learned vividly a few years ago while my company, Argos Therapeutics (then known as Merix Bioscience), was putting together an alliance with Kirin. While we were still in negotiations, several senior-level managers left Argos negotiations with Kirin Brewery's pharmaceutical division. Argos experienced some senior-level management turnover. It could have been a deal killer. Instead, Kirin hung in, and the remaining key Argos executives were able to rebuild the internal negotiation/management team and see the deal through the due diligence process, and then through some scientific hurdles.

What made the difference, and preserved the deal when other companies might have walked away? In part it was good alignment between the companies. Argos, for example, works in developing vaccines based on dendritic cell immunotherapy rather than cell research on a broader scale. Kirin was committed to the dendritic cell field and was enthusiastic about Argos' technology. Just as important though were softer issues. Kirin respected our leadership and valued the relationship. It could see the long-term benefit of collaborating with this company, thereby displaying loyalty despite the short-term challenges. When Argos experienced a temporary problem with its process before the deal with Kirin was signed, it was honest about the problem and included Kirin in its strategy to solve it. A potential disaster turned into another opportunity to build trust.

Relationships fall apart for the following four main reasons:
The playing field has become increasingly competitive for companies seeking to collaborate in the development and commercialization of new products. Biotech partnerships among scientists, academic institutions, and pharma companies provide many challenges, including identifying the right partners, developing strong relationships to overcome hurdles , and dealing with cultural differences in an increasingly global market.

Companies must discover ways to develop common goals during the relationship-building stage of a partnership, and how to weather some of the storms they are certain to encounter. I share some lessons learned from our experience in the trenches—and in particular, a roadmap of common temptations to avoid when negotiating a deal. The bottom line is that the human resources—or more appropriately, human relations—factor plays a key role in your firm's ability to develop and close deals, and to live with them afterward.

Making Corporate Relationships Work

A marriage is more than a wedding. And a successful partnership is much more than signing a contract. In the realm of biopartnerships, success comes from working with a partner over a period of several years to develop a new technology. It depends on having the right mix of:

  • common goals
  • similar levels of commitment
  • mutual trust and respect built over time.

These elements are crucial not only to starting a new relationship, but also to weathering the rough times that inevitably occur. To make these points more tangible, let's look in a bit more detail at the Argos-Kirin partnership. Because Kirin is a Japanese company, certain cultural issues came into play; however, the overall relationship guidelines apply, regardless of geography.

Cultural differences and intrinsic, core values can can be critical factors in developing a partnership with certain organizations. It is vital to prove that you are both committed to the technology and to the field, and that you trust each other enough to ensure collaborative development.

This was particularly important in our case, given Kirin and other Japanese companies take a longer-term view than US companies. Argos worked at fostering a relationship for three years before securing a deal to develop therapies using dendritic cells with Kirin. But that investment paid off, creating a strong foundation on which Argos and Kirin were able to build a strong collaboration.

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