This presentation, held among 26 expert-led presentations given to an audience of over 100 Alliance Management professionals in May 2017, covered a case study from both the Seller (the large pharma company) and the Buyer (the smaller acquiring company) perspective. Presenters from Merck and Aralez answered the key questions of what happens when an asset changes hands, why the burden usually falls to the Alliance Management department, and how Alliance Management can best work through the complex issues that you will encounter during divestment, transition, and post-transition phases.
Atkins 2017 Strategic Alliance Management Congress presentation
1. A Smooth Transition:
Alliance Management Case Study in Divestment
Harry Atkins
Senior Director, Corporate Development and Alliance Management
Aralez Pharmaceuticals US, Inc.
and
John Parapatt
Director, Business Development/Divestitures
Merck & Co., Inc.
May 3, 2017
2. Discussion Outline
2
– Divestment – what’s the likelihood of your involvement?
• Snapshot of divestment activity across BioPharma in 2016
– Differing scale, differing experiences, differing perspectives
• Merck & Co., Inc.
– Overview of Alliance Management at Merck
• Aralez Pharmaceuticals Inc.
– Alliance Management within an extremely lean specialty pharma
– Divestment transition process
• How is it different / similar to a typical partnership deal?
– The successful 7-month transition of ZONTIVITY®
• Using Alliance Management tools to navigate an asset transition
– Lessons Learned
• Takeaways on managing the complexity of a transition
• What you, the Alliance Manager, brings to a divestment / transition
5. Significant activity in asset transactions:
Selected deals Jan 2016 to present
5 Source: Bourne Partners
6. About Merck
6
Our company is known as Merck in the United States and Canada.
Everywhere else, we are known as MSD.
Vision: To make a difference in the lives of people globally through our
innovative medicines, vaccines, and animal health products.
Business: Our core product categories include diabetes, cancer,
vaccines and hospital acute care, and annual revenues in 2016 were
$39.8 billion.
Business Development: A key enabler of Merck’s strategy. Divestitures
support company priorities.
Alliance Management: Bold, meaningful collaborations, with the potential
to impact the lives of millions. Developed reputation for strong partnership
capabilities, including divestiture execution.
7. About Aralez
7
Aralez is an emerging global specialty pharmaceutical company
designed to:
• Maximize the value of a broadened portfolio, growing revenue base and geographic
footprint across North America and Europe
• Build on our anchor positions in cardiovascular disease and pain management
and opportunistically expand into other specialty therapeutic areas
• Access high potential growth opportunities through aggressive but disciplined BD&L
and strategic M&A
• Build value organically and leverage competitive platform to accelerate transformation
and execute growth strategy
• Maintain a lean, nimble and performance-oriented operating model
• Align with shareholder interests with a strong focus on creating shareholder value
9. Alliance vs Divestment / Transitions
Perceived differences between typical Alliance
perspective on a partnership timeline versus the
perspective of two parties transitioning an asset
9
Alliance
Transformation
Alliance Management Perspective
on Key Activities
Agreement
Signing
R&D Commercialization
for what could be years
depending on commercial success
Alliance
Integration
Alliance
Maintenance
Termination or
Re-negotiation
Alliance
Negotiation
Divestiture – Transition Perspective
on Key Activities
Asset Due
Diligence
Asset
Negotiation
HSR-
AntiTrust &
Closing
Transition
Services
Transition Ends,
Deliver Value
12
Agreement
Signing
10. 10
– Divestment – what’s the likelihood of your involvement?
• Snapshot of divestment activity across BioPharma in 2016
– Differing scale, differing experiences, differing perspectives
• Merck & Co., Inc.
– Overview of Alliance Management at Merck
• Aralez Pharmaceuticals Inc.
– Alliance Management within an extremely lean specialty pharma
– Divestment transition process
• How is it different / similar to a typical partnership deal?
– The successful 7-month transition of ZONTIVITY®
• Using Alliance Management tools to navigate an asset transition
– Lessons Learned
• Takeaways on managing the complexity of a transition
• What you, the Alliance Manager, brings to a divestment / transition
Case Study: ZONTIVITY®
11. About ZONTIVITY®
11
Unmet Need: In the US, there are an estimated 7.6 million post‐MI
survivors and more than 13 million individuals with peripheral arterial
disease.
First-in-class: ZONTIVITY® is the first and only therapy shown to inhibit
the protease-activated receptor-1 (PAR-1), the primary receptor for
thrombin on platelets and considered to be the most potent activator of
platelets.
Day 1: On September 6, 2016, Merck sold assets and rights related to
ZONTIVITY® in the US and Canada to Aralez.
12. Managing Timelines, Complexity, Uncertainty
12
Select Post-Closing Deliverables
• Regulatory documentation and filing of regulatory transfers
• Execution of certain ancillary agreements (e.g., pharmacovigilance)
• Promotional and medical information assets
• Financial systems and accounts in place for invoicing / payments
• Preparation of financials as required by applicable securities regulators
Beyond the Agreement
• Information needs not anticipated
Change of Manufacturer Transition
• Coordinating communications with customers
13. What the Alliance Manager Brings to the Table
13
Making “Large Pharma” Navigable for Partner: Leverage relationships
and knowledge of inter-connected functions. Core and extended teams
involved over 12 functional areas and many individuals.
Communication: Clear, “what it means to me,” translation of Agreements
for internal teams.
Empowering Functional Teams: Empower direct communication,
planning and decision-making between functions at both companies.
Give and Take: Negotiate for long-term success, not short-term wins.
Fairness (e.g., allocation of expenses not identified in Agreements) builds
trust.
Hold Yourself/Partner Accountable: Treat deliverables and timelines as
important to your Partner and expect reciprocity.
