Waseem Noor

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.

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.