It's an all-too-common scenario for pharma and biotech companies. Without the presence of deal champions on both sides, it's
better to look elsewhere to fill the pipeline. An effective champion creates an enduring deal by first finding the win-win
and then making sure the transition, from the negotiating team to the execution team, goes smoothly. As the alliance progresses,
new people are continually being brought into the operation. Deal champions must stay around to answer their questions and
motivate them, or momentum will be lost. The first six months after signing are critical, and if a company loses its champion
during that time, it puts the deal at real risk.
Power is the breakfast of champions in building a partnership. "The more power a champion has, the more effective he or she
will be," Ferguson says. In a large pharma company, it's best when the person selling the deal is the senior vice president
of research, development, or clinical. On the other hand, when the CEO of a smaller company is committed to the alliance,
you know the whole company will take it seriously."
A sense of urgency is a good marker of commitment. For example, if you send the deal team a draft of a confidential disclosure
statement and it takes them a month and a half to turn it around, or if it takes a year to finalize a three-page term sheet,
chances are that senior executives do not think it is a high priority. They have not imparted a sense of urgency and importance
throughout the organization, so they are most likely not committed to the deal.
William Dubiel, Bayer Healthcare Diagnostics
Take the Theravance/GlaxoSmithKline alliance for Advair (fluticasone) as a model of top-management championship. "There was
a lot of high-level contact between GSK and Theravance executives: GSK's CEO, J.P. Garnier, Tachi Yamada, chairman of R&D
at GSK, and Theravance CEO Rick E. Winningham," Brinkley says. Within each company, there was also constant communication
between senior management and the developers: Yamada and Garth Rappaport, head of GSK's Respiratory Center for Excellence
in Drug Development, worked closely with that company's business development group. On the Theravance side, Pat Humphrey,
executive vice president for research, liaised with the research group. It was clear to everyone, in both companies, that
this project could happen."
4 Look For Cultural Fit
Culture is an organization's norms, values, and beliefs. It is the way an organization does business. Because culture exercises an imperceptible influence on decision making, a
cultural mismatch is an invitation to disaster.
Laureen DeBuono, CFO of Thermage, vividly recalls one such case. Nellcor, where she was associate general counsel, was a $1
billion manufacturer of respiratory and anesthesia machines, based in Silicon Valley. Nellcor's atmosphere was entrepreneurial:
Employees drove their own goals and were motivated with long-term cash bonuses and performance-based option plans. Strict
adherence to policies and procedures took a back seat to creativity and innovation.
In 1998, Nellcor merged with Mallinckrodt, which at the time was a $3 billion pharma and medical device conglomerate. Based
in Missouri, Mallinckrodt's culture was jarringly different from that of its smaller partner. It was a classic buttoned-down,
hierarchical environment that favored incentives such as country-club memberships and company cars over cash and options.