Pharma industry alliances are increasingly critical to success. They are gaining on R&D in terms of importance, especially
since many companies are falling short in their internal pipelines and need to look outside for promising compounds. Today,
nearly two-thirds of the top 20 pharma and biotech companies have established alliance-management functions. These usually
cover deals in the discovery, development, and marketing space.
These companies have also adopted a variety of industry best practices and achieved some notable successes. One example: The
partnership between Eisai and Pfizer produced Aricept (donepezil), a drug considered the gold standard in the Alzheimer's
market. The results of this particular alliance have been so striking that even after nine years on the market, the drug boasted
annual worldwide sales that had grown 11 percent as of the third quarter of 2006.
Despite the proven value generated by innovative alliances, most pharma companies remain committed to a traditional approach
to structuring their partnerships. By contrast, mature industries, such as oil-and-gas and utilities, have developed considerable
diversity and effectiveness in this area. Like the life-sciences sector, these high-risk, R&D-driven industries require major
capital investment, face long lead times to market, and operate in heavily regulated environments.
An analysis of established and emerging trends in the pharma industry and in others suggests that three principles are key
to strong partnership management.
Over the past decade, the annual number of pharma–biotech partnerships has hovered between 250 and 300. Many follow the traditional
script, with equal representation from both parties in all activities and decisions, much like the animals boarding Noah's
ark in pairs.
What such matchups fail to recognize is the specific strengths of each partner. Designing the alliance to reflect each party's
core competencies can increase efficiency across the board. By dividing responsibilities—say, day-to-day development decisions
go to the biotech wonks, while the pharma's marketers play to their own strengths—risk is distributed more rationally, in
contrast to equal partnerships, where decisions are made slowly, unsettling biotechs for which failure of the product may
mean failure of the business.
Consider the partnership between Pfizer, the pharma industry leader, and (OSI) Eyetech, which specializes in novel therapeutics
to treat diseases of the eye. Nominated in 2004 for a Breakthrough Alliance Award at the annual Allicense Conference, both
companies brought strong marketing and medical skills, keeping the team focused on the customer–product needs and the mission
of the collaboration.
The drug the alliance produced, Macugen, an anti-angiogenesis agent for age-related macular degeneration, was being introduced
in a nascent market. Plus, as a treatment injected into the eye every six weeks, it required the companies to work closely
to generate sufficient safety data to overcome patient fears. In order to achieve this goal, they organized around each firm's
specialties. "Because the companies had different infrastructures, we worked hard to understand each other's priorities and
motivations," says Paul Chaney, president of (OSI) Eyetech. "Eyetech targets the retina community in the United States, while
the Pfizer sales and marketing organization brings our message to ophthalmologists as well as retinal specialists."
The team's clear governance empowered members to make decisions. When conflicts arose, the companies considered it a failure
if the issue needed to be escalated to senior management. An expectation was set around these norms, and people were held
accountable. This continuous pushing down of decision-making also drove trust and motivated teams to realize "each other's
strengths within the alliance," according to Robert Besthof, Pfizer's global commercial leader.
The team also made a point not to forget the human element—and, after the first year of launch, celebrated what they had accomplished
in a challenging marketplace. "It was important to step back and think about the new option we were able to bring to patients
as a result of our efforts," says Neil Levine, Pfizer's former US group leader, ophthalmology.
To extract all potential value from an alliance, partners must learn to think outside the contract. Once a partnership starts
doing really well, however, the tendency is to remain narrowly focused on the original intent. By shifting attention to new
opportunities, the alliance can keep evolving.