BD projects are invariably complex and it's easy to be overwhelmed by the amount of information that is generated in an investigation,
much of which turns out to be "noise" from the standpoint of valuation and risk management. It's essential for BD professionals
to identify early on the most important factors that determine a compound's value to their company, and focus most of their
efforts on understanding them well.
An example from the dermatology market is instructive: A company acquired a new formulation of an existing chemical entity
that had lost patent protection. The company knew generic versions of the original formulation would launch within weeks of
this product, but it had expected the new formulation to be sufficiently differentiated to withstand the competition. Indeed,
the company was successful in generating prescriptions, but then they quickly discovered that pharmacies were substituting
the generic for over half of the scripts. The product was deemed a failure. The risk of substitution should have been recognized
as a crucial variable in the original analysis—yet the noise diluted this risk.
4. Access the Right Resources
BD is inherently a cross-functional enterprise. Most companies maintain a small team of BD professionals who must engage experts
from other departments to evaluate opportunities. Recruitment of the right individuals from those departments is vital. The
most effective individuals are those who offer a specific technical or market expertise, who possess influence in the organization,
who are comfortable with the ambiguity and uncertainty inherent in BD projects, and who have a capacity for insightful analysis
with an integrated, strategic perspective.
Often these people are among the best and the brightest in their departments, and their services are in high demand. Even
though they may find BD projects attractive to work on, getting access to their time requires senior-level support.
5. Support BD Initiatives—Not Projects
BD depends on the power of influence more than almost any other discipline. BD professionals must cultivate champions in other
parts of the organization who will provide resources, lend support in decision-making forums, and facilitate integration after
the deal is completed. It takes a lot of time and effort to build and maintain this kind of support, and at times, BD professionals
can become victims of their own success. It is common to hear complaints about "living dead" projects that they no longer
believe in but must continue to work on because of senior-level sponsorship.
The challenge is to generate enthusiasm without creating an emotional commitment that makes it difficult to kill deals if
necessary. This is easier to accomplish by building support for the BD initiative as a whole, rather than on a project-by-project
The most powerful tool for building organizational support is to establish a set of BD objectives that are shared by the senior
leadership team. These objectives can take two forms. The first, based on metrics and incentives, creates the strongest tie
to personal motivation—but it also tends to be imprecise in its operation. Typically, the metrics are quantitative ("We must
complete two deals in 2006"), which concentrates minds wonderfully in the last quarter of the year. But companies that use
that approach run the risk of falling behind and not meeting their BD objectives, which can negatively affect due diligence
activities and negotiation leverage.
Companies can take another approach by developing a strategic framework for BD that outlines a defined set of growth platforms
that incorporate therapeutic areas of focus; primary, secondary, and tertiary technology bets in those areas; and perhaps
ancillary diagnostic or service capabilities that enhance the total solution set. To the extent that it articulates a compelling
and credible future position and charts a robust pathway to achieve it, the framework represents a powerful tool, guiding
BD search activities, informing the screening criteria, and effectively "pre-selling" individual projects that fit.