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Dealing with significant unplanned events in alliances is important work. It's is critical to maintain the ongoing health of the alliance by applying sound governance principles and minimizing the disruption to normal operations wherever possible. So how can you stabilize your ships in rough seas?
Thirty-foot swells. Gale-force winds. Seasickness. The spray of the ocean over the bow. These descriptions conjure up a vision of stormy seas and a ship fighting for survival in the open ocean. We’ve all seen footage of ships being tossed about as the captain and crew fight to stabilize their vessel in rough seas.
To address the impact of a major unplanned event, captains and crews of companies need to minimize risk, maintain value wherever possible, and determine the best path forward in uncertain times. Across the supply chain, through development and commercialization, there are countless aspects to consider.
It’s difficult enough to lead through rough seas as one company. Add an alliance partnership to the picture, and a significant unplanned event like a pandemic (or a tornado, typhoon, major fire, or other force of nature that disrupts normal operations) can magnify the effects. Navigating the winds and waves across two companies requires extensive coordination and communication to ensure the alliance reaches its next port of call.
Dealing with significant unplanned events in alliances is important work. Pharmaceutical alliances are in place to help patients live longer, healthier lives through partnered medicines, requiring continued product development, manufacturing and supply, and commercialization. It is critical to maintain the ongoing health of the alliance by applying sound governance principles and minimizing the disruption to normal operations wherever possible.
How can you stabilize your ships in rough seas? Start by focusing on value inflection points – points in time where value is created or destroyed1 (see Figure 1). Value inflection points usually consist of events within the product life cycle, such as regulatory actions, competitor data release, new indications, and access changes. While you can see the storm coming from miles away with most value inflection points, we’re focused on the points you haven’t anticipated.
The COVID-19 global pandemic represents the first value inflection point in a generation that is likely to impact every single alliance. Regardless of type – early stage development, late-stage development, or commercialization – there has been, or likely will be, some sort of impact in the short, medium, or long term. How each alliance’s captain and crew steer through the value inflection point could determine whether they float or sink, keep or lose cargo, and arrive timely or late to their destination.
One approach to steadying the ship is first to understand both partners’ issues and then to help each other resolve the common problems to get the ships to their destination. To do this, review the issues from your own company’s point of view (Company A), from the partner company’s point of view (Company B), and then as an alliance (Figure 2). Alliance issues generally fall into one of these three buckets. This structure can help in understanding what you can influence or change (issues on your ship or issues impacting both ships) and what may in fact be outside your control (issues specific to the partner’s ship that you can’t do anything about).
Leading through the impact of significant unplanned events goes beyond operations. These situations may bring about varied emotions in both captains and crew. Anxiety, fear, and other emotions may come to the forefront, as each person deals with the pressure of navigating rough seas in their own way. The psychological impact of being in a long-lasting storm cannot be underestimated and can affect the full range of alliance interactions and communications. When emotions run high, in governance meetings or elsewhere, call a time-out and regroup. Then continue pushing forward.
Using the structure outlined above, you’ll want to evaluate three important categories to facilitate smooth operations and preserve as much alliance value as possible:
(1) Address governance considerations to ensure ongoing decision-making and adaptation to the ever-changing environment.
(2) Consider the stage of the alliance-is it early stage, late stage development, or commercialization? What value inflection points are unique to its current stage? Which are common across all stages?
(3) What are the key value inflection points influenced by the unplanned event? Are there perhaps any upside business and human risks and legal uncertainties (e.g., a chance to relaunch a struggling alliance)? What are the downside business, legal and human risks and uncertainties? How can the alliance mitigate risks for the benefit of patients and the alliance?
As you consider governance, certain guiding principles can enable alliance leadership to quickly and transparently address issues and opportunities in rough seas. Our Top 10 List is shown in Figure 3:
Taking a deeper dive into the product development phase, you’ll want to address the unique financial, regulatory, research, and manufacturing points of view while working to stabilize the development ship. Consider any impact on the alliance budget, as well as any impact on important milestone payments. It also may be useful to review those little-used elements of contracts that address “force majeure” and consider the impact upon the alliance if there are issues with delivery of contractual obligations.
From a development and regulatory point of view, consider the possibility that patient treatment or follow-up might be delayed, and determine whether contingency plans might be required. The alliance may experience an impact on regulatory interactions and responses, as well as data disclosures, where contingency plans may also be useful. Within research, social distancing and other containment methods may or may not impact experimental timelines and key deliverables. It may be important for the alliance to consider alternative strategies to minimize disruption of laboratory activities. Within manufacturing, consider an alliance review of employee health safety plans and mitigation measures in the event of production delays.
As captains and crews navigate issues in commercial alliances, they too need to consider financial and customer-facing matters. Financially, consider the impact on the budget for the alliance, and how this might affect each partner individually. It may be necessary to address milestone payments here as well. You may find that delivery of contractual obligations might be difficult to fulfill, such as expectations for sales representative detailing or other measures. The alliance might also evaluate the impact on new patient starts and refills. You may seek opportunities to help meet the needs of customers, on their terms, through innovative online education and promotion programs. Perhaps this also provides an opportunity to increase sales representative training programs. If the partnership is struggling, perhaps the event can offer an opportunity to restart, with a dialogue between the partners focusing on approaches to improve alliance health coming out of the major event. The same types of regulatory and manufacturing considerations mentioned earlier can also apply to commercial alliances.
In a storm of the magnitude of a global pandemic, the effects of intense waves, torrential rain, and severe winds are substantial. As with any significant unplanned event, alliance captains and crew who apply good governance principles and consider the unique aspects of development and commercial collaborations in the short, medium, and long term can help their flotilla navigate the stormy seas. As always, the goals are ensuring minimal disruption, maintaining alliance health, and helping as many patients as possible via the creation of alliance value. The sun will peek through the storm clouds. Calmer seas lie ahead.
About the authors
Michael W. Magdycz, R.Ph./CA-AM, is Director of Alliance Management; Kelly J. Eads, R.Ph./CA-AM, is Director of Alliance Management; Linda Rorick-Kehn, Ph.D., is Director of Early Phase Alliance Management; and David S. Thompson, CSAP, is Chief Alliance Officer - all at Eli Lilly and Company.
We would like to acknowledge Steven W. Walker CA-AM, Brent H. Harvey CA-AM, and David Herrin CA-AM, Directors of Alliance Management at Eli Lilly and Company, for the expertise contributed to this article.