"J&J's alliance management team sensed an emerging issue when the company's Velcade [bortezomib] partnership with Millennium
Pharmaceuticals began to move in a new strategic direction. Realizing that the new direction was in conflict with their company's
business plan, Millennium personnel began to express concerns. Our alliance team quickly stepped in, along with the alliance
manager at Millennium, and apprised senior management at both companies of the incipient problem. The situation was resolved
at the top and the solution quickly communicated, nipping the concerns in the bud."
Laureen DeBuono, Thermage
Strategic congruence is not only a matter of going-in agreement. It must be continuously managed as the partnership confronts
a marketplace characterized by chance and churn.
2 Make It Win-Win
Maybe it goes against the fictitious high-testosterone image of deal making, but entering a partnership is not a zero-sum game in which one side is the victor and the other the vanquished.
Rodney Ferguson, now a partner in the venture capital firm of J.P. Morgan Partners, was involved in legal affairs and business
and corporate development at Genentech for 11 years. He remembers an alliance between Leukocyte (which has since been purchased
by Millennium) and Genentech. Leukocyte was responsible for the lion's share of the development work, with Genentech taking
the lion's share of the profits. Even at Genentech's board meeting to approve the deal, it was clear that Genentech's directors
believed the deal was very much one-sided in its favor.
With so little to gain, Leukocyte quickly lost interest, and the project floundered. Leukocyte was bought by Millennium, which
realized that Leukocyte had signed on for a bad deal. "It took five years to develop the product, when it should have taken
two," Ferguson says. "That's typical of deals that don't provide equal motivation to both sides."
Ferguson contrasts the Leukocyte deal with a role-model partnership: the alliance formed between Genentech and Idec to co-promote
the blockbuster cancer drug Rituxan (rituximab). "There was a mutual need," Ferguson explains. "Idec had a great cancer product
with early but compelling clinical data. It needed money and manufacturing help to get its recombinant molecule antibody to
market. Genentech was the premier manufacturer of recombinant proteins, and it needed revenues in commercial products."
Robert Wills, Johnson & Johnson's pharmaceuticals group
Ferguson also says Genentech's head of research at the time, Art Levinson (now CEO), was the first to see the potential for
Rituxan. "Art was intrigued with the idea of letting a smaller partner take the lead in developing a new drug, and he made
sure that Genentech took a hands-off approach. Idec led the clinical program up until approval and did the early manufacturing;
Genentech took over commercial manufacturing. Both companies sold and promoted the product, built a joint sales force, and
commercialized the product together. It was a win-win for both.
3 Get (and Keep)Top-Level Commitment
Two senior vice presidents want to partner and champion a deal in their respective companies. Their enthusiasm is contagious. The deal is signed, and the partnership takes off. A year later,
both executives have moved on to other jobs. Progress slows—or stops entirely—and the joint venture falls apart.