Keys to Success - Pharmaceutical Executive


Keys to Success
An overview of recent industry deals reveals 10 principles for developing and maintaining strategic partnerships.

Pharmaceutical Executive

In the fight to eliminate redundancy, it's smart to keep in mind that the focus should always be on retaining the best-in-class and to not assume that the systems and structures of the larger partner are better than those of the smaller one. William Dubiel, vice president, North American services, Bayer Healthcare Diagnostics recalls, "When Bayer acquired Chiron, our CEO, Rolf Clausen, told everyone on both sides, 'I am the first employee in a new company. All of you are going to join me in this company, which we will create together, taking the best from Bayer and Chiron.' He looked at both companies objectively, made only changes that added value, and tried not to disrupt those things that were working well."

6 Watch What You Reward Competition has its place in business, but not between partners. Think collaboration, not one-upmanship. People often react to a merger by building protective walls around their operation. Without a shrewd balance of both positive and negative consequences to modify such behavior, that fortress will never come down. Look at the reward system and ask: Are we discouraging ego-based behavior and encouraging teamwork?

Performance is not only about tracking and evaluating hard-edged results. Build team and relationship skills into performance evaluations, the way it is done at J&J within its pharmaceutical group. Wills says that in his company such skills are "a built-in expectation. It's how people are supposed to do their job. Everyone who participates in an alliance is compensated for behaviors that contribute to mutual success."

Martin Wing
Look not only at individuals but also at structures and systems that encourage competition. Competitive wars are often most intense in the sales units. Ferguson considers the Genentech/Idec Rituxan deal one of the best ever because of the way the sales force was structured and rewarded. "Dick Brewer, head of sales and marketing at Genentech, and Bill Rohn, senior vice president of commercial operations for Idec, sat down together and mapped out the sales strategy," Ferguson says. "They developed their plan, then carefully considered where each company's sales force was going to be deployed. They made sure the two groups weren't calling on the same physicians. You can divide it up a number of ways—family practitioners versus specialists, community-based physicians versus hospitals, geographical areas. The important thing, which Dick and Bill never forgot, is to make sure your people are competing with other companies, not one another."

A performance environment that does not include an effective feedback system is woefully deficient, especially when it comes to modifying behavior. Referring to the Bayer/Chiron merger, Dubiel concludes that the integration would have gone much more smoothly if more attention had been paid to human resources issues, including feedback. "We could have been better one-minute managers," he says. "If someone has a poor attitude or is engaging in unwanted behavior, you need to give them immediate feedback, based on the observable behaviors."

7 Establish Protocols for Decision Making The ability to make decisions is the acid test of effectiveness, especially when two companies become partners. Smart partnerships establish clear protocols for decision making. For example, at J&J, decision-making protocols—rules of the road—are built into most agreements. The company outlines which decisions will be made unilaterally, which will be collaborative, and which by consensus. It also determines who will have the final say, what will happen if there is a dispute, and how issues will be escalated. "If you don't spell out all of this in the agreement, differences of opinion would have to go to arbitration, which isn't to the advantage of either partner," Wills says.


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