2013 Dealmakers Outlook - Pharmaceutical Executive


2013 Dealmakers Outlook

Pharmaceutical Executive

Looney: AstraZeneca is notable for moving its business development team and placing it directly in the R&D unit. What attributes does this structure bring to the dealmaking process? Has it been transformative?

Ladha: Business development activities have always been an important element in our R&D strategy. Previously, the entire business development team reported in a straight line to our CFO. What actually changed is that we became a flexible unit with members deployed into R&D as well as various commercial and corporate functions, depending on need. That is the key: we go to where our contributions are required. One important aspect of the restructure is that it allows us to deepen our contacts at the early development stage, where we work closely with the scientists. It ensures that all internal players will have a close understanding of our strategy in distinct therapeutic areas and how we can achieve this strategy in terms of both our internal portfolio and where we can add value from opportunities outside the company.

Paau: Our experience has been that when we have an idea or an asset in a specific area we are less successful if it is presented to the in-house R&D people with an existing stake in the same area. The "not invented here" syndrome in Big Pharma is very real. If they didn't invent it, it can't be that good.

Looney: So who then do you in academia prefer to work with?

Paau: We prefer a two-step process, starting with a dialogue among technical experts who know the questions and answers that any potential licensee should require in vetting the scientific integrity of the asset. Then if we come back it is important we interact with someone with the authority to make a decision. You would be surprised how often there is no one in the room empowered to act.

Gallagher: This dance among partners is a vital indicator of the success of any deal. The choreography is complex, particularly when we, as a small company, work with Big Pharma. Each party marches to a different drum, and this is reflected in the pace of decision making: the bigger the company, the slower the pace. With more at stake, small companies cannot tolerate long periods where nothing happens, yet this is fairly common in our interactions with the majors. My advice? Prepare for the long haul and incorporate that into your negotiating plan.

On a positive note, things have changed from the day when the big companies always thought they had the edge on talent. The perception was that if you weren't employed by the majors, you weren't a contender. Today, biotech and the smaller companies are treated as equals, largely because there is so much talent migration—from Big Pharma to biotech, from branded to generic, etc. This tends to allow people to relate better to others, and to understand what the opposite side of the table wants to secure from a particular deal. Establishing that hierarchy of need early on is in my experience one of the most critical success factors in negotiations.


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Source: Pharmaceutical Executive,
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