An 11-Step Program to Navigating Partnerships - Pharmaceutical Executive

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An 11-Step Program to Navigating Partnerships


Biopartnerships


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
and
respectively.


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