Japanese companies also place a higher value on trust, loyalty, and respect than American and European companies. Therefore,
deals with Japanese companies may take longer to close. In order to make the deal work, Argos had to spend a lot of time building
the relationship through numerous meetings over three years that included both companies' representatives traveling to New
York, San Diego, Germany, and Japan. Taking the time to get to know and trust one another was a key component of Kirin's due-diligence
process before signing the deal.
Some companies are concerned not only with the terms of the deal, but also about fostering a true, long-term relationship
with their partner. This is certainly true in Japan, in which there is a long-term loyalty-based cultural perspective.
This was evident in the Kirin partnership, where most Kirin executives with whom Argos dealt had been with the company for
more than 15 years. (Compare that to most American companies, where employees join and leave more frequently.) Therefore,
in Argos' case, it was important to keep in mind that because the people negotiating the deal terms were going to literally
live with it for many years, Kirin placed a greater value on obtaining a trusted partner.
Japanese companies may represent an extreme case of trust building, but for Argos, the lesson of working with Kirin was that
an elaborate courtship can pay off. It is important not to shy away from big corporations that take a long time to negotiate.
Many large companies present multiple hoops for biotechs to jump through. But it's crucial to stick with the process because
the long-term confidence and trust that are built will prove invaluable in the future.
From the Trenches
Relationships fall apart for four main reasons:
Lack of responsiveness by either side Responsiveness builds trust. You must recognize the issues that are critical to the other party and address them as quickly
Divergent goals A biotech and pharma company agree to invest millions of dollars in a technology with the clear intention of developing a
commercial product. If the technology suffers an early setback and either party decides to change its ultimate goals, the
partnership will likely end. If the goals remain the same but the strategies change, there is a greater chance of maintaining
the relationship. Emphasis is placed on strategies, but it's also important to make sure you keep up to date on the partner's
Failure to anticipate potential problems Recognize that problems will occur. Strong relationships built on mutual trust and frequent communication will often help
you avoid deal-killing issues.
Lack of clarity at the outset It is critical to maintain open communication beginning with the first meeting. You must talk through what each side really
wants (both on a collaborative as well as an individual basis) to get a clear understanding of each other's goals. Initially
and throughout negotiations, if one party does not mention an issue due to hesitancy that the other party will not comply,
the price down the road will be much greater than if all issues had been addressed at the start. Face difficult issues on
the front end because the consequences for ignoring them will prove worse on the back end.
If you hit an impasse during negotiations, be willing to take a step back and take some time away to work through the issues.
There is a perception that deals will lose momentum if discussions cease for a period of time. However, rushing through negotiations
leaves room for mistakes, and taking a break allows both parties to regain their composure and perspective.
If you have any problem, own up to what is going wrong—and include the other party in the decision-making process. If the
other party feels there is a problem, address it and take their opinions seriously. Have a sense of what are important problems
versus what are perceived problems to the other side. If it's important, address it immediately. If the other party is overly
concerned about an issue and you do not view it as a problem, indicate your take on the situation right away.