High-Risks to High Reward

May 01, 2011
By Pharmaceutical Executive Editors

In the world of biopharmaceutical partnerships, the number and value of alliances are at historical peaks. Intense pressures to fill pipelines, lower development costs, and bring products to market are inspiring pharma and biotech companies to join together in increasingly complex ways.

As these relationships become more complicated, expensive, and integral to business strategies, in-house alliance management functions are bearing greater responsibility for the progress—as well as the outcome—of major partnerships. Firms both large and small are struggling with the realization that in most cases, traditional alliance management methods are insufficient to support that growing weight.

So what's the best way to tackle the broad spectrum of issues presented by multifaceted alliances? In our experience, you must first take the big-picture view of alliance management—and then apply specific, common-sense tools to mitigate the risk and maximize the value of these vital strategic partnerships.

New Tools of the Trade

Since Lilly first established an office dedicated to alliance management in 1999, the alliance practice has evolved from managing relationships to minimizing risk. Today every strategy, approach, and tool we employ springs from one common purpose: to proactively mitigate and manage the business risk, human risk, and legal uncertainties inherent in every alliance.

As our philosophy has evolved, so too have the tools we use to manage alliances on a daily basis. Some foundational elements of our practice include:

» 3-D fit analysis: a tool used to assess partnership compatibility across three dimensions: operational, strategic, and cultural;

» Governance implementation: leading and influencing effective governance meetings, including proper meeting frequency, appropriate agenda topics with clear objectives, internal premeeting alignment, participants with decision-making authority, and documentation of appropriate decisions and actions;

» Strategic futures exercise: a tool that provides the foundation for a successful alliance startup by generating mutual long-term goals, understanding potential obstacles, and aligning on guiding principles and behaviors that will help the team overcome potential obstacles; and

» Voice-of-the-Alliance (VOA) health assessment: an annual assessment performed on major alliances to gauge the current state of the partnership and identify issues requiring attention.

Armed with the knowledge that our main objective is to reduce risk in every alliance and ultimately generate something of value, we have developed a series of new tools to use as each relationship and project progresses. These tools provide us with the specific means to mitigate all the risks that we encounter at the onset of a partnership, during the execution phase, and in all ongoing interactions thereafter. While we can't cover every available method, we offer here several representative examples.

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