Most people consider themselves pretty good car drivers. It doesn't matter how many accidents they've been in, that their passengers grip the door handles so tightly their knuckles turn white, or that the near-collision with oncoming traffic is always the other driver's fault. People refuse to believe the way they drive is anything less than near perfect.
It's similar to the way CEOs think about their business development functions. Every company considers itself the "partner of choice." They're sure that their team can find and execute deals smoothly, quickly, and at the right price. But the reality—as anybody who's been in this field even for a short time knows—is quite different. Sure, there are the stars: Roche, Johnson & Johnson, and Teva have demonstrated formidable deal making for many years. But in general, business development capabilities in the pharma industry remain very patchy, with the number of poor performers far out-weighing the good.
Even the previously "hot" speciality pharma sector seems to be losing responsiveness and agility. Companies like Shire that emerged in the 1990s as sharp deal-makers have now grown-up and are much more pedestrian. Potential business partners are now more likely to hear phrases such as, "It's first being reviewed at the pharma licensing committee"—a sure-fire sign that the deal is a long way from completion. Such delays in the deal-making process not only engender frustration, but they also provide incentive and time for the licensor to seek out another, more responsive partner.That's not to say companies aren't trying to become more efficient deal makers. The shortage of internal late-stage pipeline candidates has, in recent years, spurred some big-cap pharma companies to tune-up their business development functions. Recent recruitment of a business development head at a Big Pharma company, including a salary package rumored to be in excess of $1 million a year, shows that at least one CEO is taking the matter very seriously.
However, in many cases, such adjustments merely cast the illusion of a more effective business development function—the teams get bigger, but not better.
How, then, can organizations become the company to do business with? You've heard about grand re-organizations, and other high-energy, low-impact solutions. But, for the most part, the changes needed to create a fast-moving and efficient deal-making organization are not brain science and are easy to implement. Here are 10 quick fixes that can drastically improve companies' deal performance—and in the process, ensure the company's short- and long-term prospects.
1. Bring back deal champions
Historically, business development was made up of individuals—not teams—with deep sales and marketing experience. This individual was, in essence, a project champion, and had responsibility for finding the right opportunity, organizing appropriate analysis, and then successfully negotiating what they saw as "their" deal.
Around the turn of the millennium—when the vogue for restructuring R&D was waning—management consultants turned their attention to the licensing function. In their reports, they documented inefficiencies, and proposed that specialist staff would be more effective than having individuals responsible for all facets of the deal process. In response, many companies split the deal function into three phases: search, analysis, and negotiation, with separate teams responsible for each part. This structure improved deal flow, mostly because it benefited from more resources. But in the process, the critical deal champions got lost.
Without the skill of a deal champion, momentum and corporate enthusiasm for the deal is often diminished. Another fallout is the loss of high-level communication with partners: The potential partner can lose faith that the specific sensitivities of their deal are being heard and communicated at a senior-enough level in the organization. As a result of these issues, although there are more opportunities flowing into the pipeline, completed deals that "move the needle" have been thin on the ground.