Toolkit: How To Be a Better Partner - Pharmaceutical Executive


Toolkit: How To Be a Better Partner
Big pharmas and little biotechs have been getting hitched for years. Now it's time to add a little innovation to the relationship. Three new rules will keep the game exciting.

Pharmaceutical Executive

Solvay Pharmaceuticals, a leading worldwide pharmaceutical organization, and Quintiles Transnational, a contract research organization (CRO), have developed one such groundbreaking alliance. Initially, the two companies had a typical transaction-based, or "fee for service," deal: Quintiles was a CRO to which Solvay outsourced clinical development of their Phase III products. But in 1999, Solvay's CEO, Werner Cautreels, wanted to reduce inefficiencies in its approximately 100 CRO relationships. Quintiles proposed a solution, offering itself as preferred provider along with reduced rates in exchange for a fixed percentage of Solvay's external R&D costs.

For Solvay, the savings in R&D would mean more money for completing trials. Under the partnership, Solvay could finish Phase II studies earlier and start Phase III as much as a year sooner. So pleased was the firm that even though the original contract specified that at least half of the external R&D costs go to Quintiles, ultimately the figure was closer to 90 percent.

This success changed Quintiles' thinking as well. Typically, a CRO needs to gain approval from the client before taking the next step. But the teams were encouraged to be more proactive, resulting in greater efficiency. "If you can do a project in eight hours instead of 12, then there is four hours' less revenue," says Jan de Witt, vice president of NovaQuest (the partnering group of Quintiles Transnational). "But the four hours saved can be put into another project, which would come back to us."

With the success of this first phase in 2005, Quintiles and Solvay recently agreed to a second phase. Checking its pipeline, Solvay found a bottleneck in Phase II. The partnership agreed that Quintiles would provide $25 million for Phase II, bear half of the costs, and receive a milestone payment from Solvay for each of the compounds reaching proof-of-principle. The new agreement could triple the capacity to process Solvay's early clinical projects: Before the alliance, approximately one Phase II completion was planned per year; that is expected to jump to three Phase IIIs per year.

"The whole idea was revolutionary—but the process was evolutionary," says de Witt of this novel partnering agreement involving shared risk and rewards.

In many industries, alliances have been formed that benefit not only the partners involved but the industry as a whole. For example, the Motion Picture Association of America (MPAA) was formed by competing movie studios to meet the common challenges of censorship and copyright. Today, the MPAA ratings systems are universally recognized. The life-sciences industry is beginning to develop alliances that address important issues, such as global health—unlike PhRMA, which focuses on political lobbying.

Take the Global Alliance for TB Drug Development (TB Alliance), which was formed in 2000 to work with governments, foundations, universities, and nonprofits. While governed by a board of directors, the alliance gets feedback from a stakeholder association of more than 35 groups, including the Gates and Rockefeller foundations and other funders. Among its many partnerships are joint programs with pharma to develop TB drugs, such as the licensing deal with Chiron for PA-824, which had been put on the shelf after an acquisition of Pathogenesis. The product is now completing Phase I. An alliance with GlaxoSmithKline (GSK) includes a joint research program around four projects designed to shorten the treatment time for patients with TB and develop novel therapies for drug-resistant strains.

The alliance is a win-win. In the Chiron case, the product was moved into human trials at a much faster pace than typically would have been possible. In addition, the TB Alliance obtained exclusive worldwide rights to PA-824 for TB, and Chiron committed to making the TB technology available royalty-free in endemic countries. As for the GSK deal, the alliance helps support 25 full-time scientists dedicated exclusively to the TB drug program, while GSK offers a matching number of staff and its drug-discovery expertise.


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