11. Understanding Partnering Options
A wide array of partnering models can be utilized to vary the level of control and risk for the parties involved. Collaborative
marketing arrangements are attractive when a product needs additional marketing support to be realized. Licensing agreements
are common among research institutes, primarily because the partnership provides autonomy to both parties. It should be recognized
that collaborative development agreements can indeed leverage resources and capabilities to realize new synergies, e.g. expands
knowledge and skill base, alleviates high cost of in-house skills, etc.
Minority investments can drive additional funding while maintaining a majority role for the organizations. Conversely, joint
ventures can offset the risk and capital costs associated with growing a new research component. Mergers and acquisitions,
though less common, are an option when additional synergies can be realized, or a premium price can be paid.
Implementing and managing commercial partnerships require significant strategic, operational, and relationship management
competencies. It is critical to have a robust commercial partnership process in place in order to realize the full spectrum
of benefits that may be achieved. Introspective analysis can identify strengths and areas of vulnerability, particularly at
a time when product innovation and R&D initiatives are both costly and occurring at a pace that is slower than the pharmaceutical
industry believes it should be, so that it can maintain competitive advantage.
Capital is needed on an ongoing basis by research organizations and biotech companies, not only to fund research, but also
infrastructure, IT, regulatory requirements, as well as the overall cost of competing. Some of the concerns of investigators
can be mitigated through effective deal structuring.
Clearly, the cost of securing research grants/funding is increasingly challenging and competitive, and as a result, the process
can be erratic. Despite the perception, commercial partnerships need not be exclusive to only the largest research institutions
or biotech companies. In fact, small organizations with limited resources can be equally adept at pursuing agreements.
Commercial partnerships are an effective way to differentiate both research institutes and biotech companies. It is critical
to recognize that while financial return is the primary driver of a commercial partnership, the cultural fit can sustain its
success. The failure to proactively examine partnering opportunities is profound, but the consequences of making precipitous
decisions are potentially devastating. A sound, well-conceived strategy that realistically identifies implementation challenges
is a prerequisite to embarking on a successful commercialization partnering strategy.
Allan Fine is director and Jon Meyer is associate director of Navigant Consulting. They can be reached at afine@navigantconsulting.com
and jmeyer@navigantconsulting.com
respectively.
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