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Alliance Management: CBI West Coast Commercialization Mtg SEP09


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Alliance Management: CBI West Coast Commercialization Mtg SEP09

  1. 1. 2 nd Annual West Coast Summit on Medical Device and Bio/Pharmaceutical Commercialization & Product Launches ___ . ___ Beyond Licensing and Acquisition: Building Commercial Competency and Revenue Through Alliance Marketing & Management Michael W. Young Fmr. Senior Director, Alliance Marketing & Management Eisai Inc.
  2. 2. Brief Objectives <ul><li>To introduce / reinforce the evolution of an important commercial skillset: Alliance Management. </li></ul><ul><li>To understand why the Life Sciences industry is moving toward alliances. </li></ul><ul><li>To use the oncology space as an example. </li></ul><ul><li>To understand, at a high level, the implications of good and poor alliances. </li></ul><ul><li>To understand the impact of alliance management on product launches. </li></ul>
  3. 3. Launch Readiness Best Practices <ul><li>Comprehensive, well-documented launch plan (every year’s plan is a launch plan) </li></ul><ul><li>Compelling, evidence-based, audience-appropriate, value proposition </li></ul><ul><li>High priority, common view of the importance of the asset (by all partners and vendors) </li></ul><ul><li>Effective business model and pricing / reimbursement strategy </li></ul><ul><li>Accurate segmentation, targeting, and product positioning </li></ul><ul><li>Effective marketing communications </li></ul><ul><li>Quality sales tools and training </li></ul>
  4. 4. Julia Brown’s 7 Deadly Sins <ul><li>1. Misjudging Market Potential </li></ul><ul><li>2. Underestimating Investment Required </li></ul><ul><li>3. Inadequate Pre-Launch Investment </li></ul><ul><ul><li>Not investing resources in assuring a strategic alliance delivers more value than it costs. </li></ul></ul><ul><li>4. Disappointing Investors </li></ul><ul><li>5. Inadequate Pipeline </li></ul><ul><li>6. Failure to Manage Growth and Change in Company Culture </li></ul><ul><ul><li>Failing to understand and “learn” your partner as well as your own company. Due diligence never stops. </li></ul></ul><ul><li>7. Deal Structures </li></ul><ul><ul><li>Not incorporating the downstream alliance structure and anticipating collaboration needs. </li></ul></ul>
  5. 5. What kinds of Strategic Alliances benefit? <ul><li>Co-promotion </li></ul><ul><ul><li>Rx + Salesforce = Commercialization </li></ul></ul><ul><li>Co-Development / Joint Research </li></ul><ul><ul><li>University + Rx Co. = Product </li></ul></ul><ul><li>Licensing Agreements </li></ul><ul><ul><li>Rx Indication / Rx License = 5 yr opportunity </li></ul></ul><ul><li>Distributor Agreements </li></ul><ul><ul><li>Rx / Dx + Intl. Co. = Globalization </li></ul></ul><ul><li>Personalized Medicine </li></ul><ul><ul><li>Dx + Rx = Better / Cost Effective Outcome </li></ul></ul>
  6. 6. Our R&D Pipeline Commercialization Shift: Co-Development and Alliance Marketing
  7. 7. Commercialization Shift: Co-Development and Alliance Marketing <ul><li>In 1970, 80% of US drug development was done in a FIPCO vertical (in-house). </li></ul><ul><li>By 2000, this had dropped to less than 40%. </li></ul><ul><li>Estimates are that by 2010, 50% of the revenue generated by Big Pharma will come from licensed / alliance partner compounds.* </li></ul><ul><li>Drivers: </li></ul><ul><ul><li>Big Pharma seeking to fill pipelines quickly and with less cost exposure than previously </li></ul></ul><ul><ul><li>Availability of nearly ripe biotech fruit (diagnostic, drug, and technology) </li></ul></ul><ul><ul><li>Mitigating risk of product failure (shared-risk) </li></ul></ul>*Source:, 02/08
  8. 8. Commercialization Shift: Co-Development and Alliance Marketing <ul><li>Nearly 70% of industry drug entities fail at Phase II despite strong indicators for success. </li></ul><ul><li>Alliance development programs, well managed, can reduce the overall failure rate impact and associated costs. </li></ul><ul><li>Published data suggests in-licensed compounds have a higher POS in reaching the market than in-house gallenic programs.* </li></ul><ul><li>Alliance development in areas outside of the company’s core competencies, allows in-house resources to remain focused. </li></ul>*Nature Reviews Drug Discovery, 06/06
  9. 9. BD / Strategic Partnering Arena Very Active <ul><li>Q3’08 overall pharma/ biotech dealmaking was 2 X Q2’08. </li></ul><ul><ul><li>105 alliances / research deals </li></ul></ul><ul><ul><li>$4.4B in Financing </li></ul></ul><ul><li>Merger & Acquisition volume was nearly 2 X the previous Qtr. </li></ul><ul><ul><li>$23B in Financing </li></ul></ul><ul><ul><li>26+ deals (50% over $100M) </li></ul></ul><ul><li>2009 Economic Tsunami will wash over the healthcare industry and those still swimming will prevail. </li></ul>Source: In Vivo, Deal Statistics Quarterly, 11/08
  10. 10. Oncology Alliance Arena Also Very Active <ul><li>Overall pharma / biotech alliances were up 1.5 X Q2’08* </li></ul><ul><ul><li>Most active areas were Oncology, Drug Delivery, and other large molecule deals </li></ul></ul><ul><ul><li>43+ alliances (known values) </li></ul></ul><ul><ul><li>$4.5B in Financing </li></ul></ul><ul><li>Growth in oncology alliances is outpacing most other categories </li></ul><ul><ul><li>Smaller niche companies need to mitigate development risks </li></ul></ul><ul><ul><li>Larger companies taking positions in oncology with partnered or acquired technology outside their core expertise </li></ul></ul>Source: In Vivo, Deal Statistics Quarterly, 11/08
  11. 11. Degrees of Separation <ul><li>An Alliance is often defined as: </li></ul><ul><li>any business arrangement in which the success of one partner is tethered to the success of both. </li></ul><ul><li>a relationship wherein both partners benefit as none does alone. </li></ul>Acquisition Merger Joint Venture Strategic Alliance Franchise Alliance Joint Team Relationship Outsourcing Partnership Out / In License Customer / Vendor Transactions Need for Alliance Management Adapted from: “Managing Alliances for Business Results”, Weise, 2006 Degrees of interdependence between companies
  12. 12. Pharma / Biotech growth linked to Alliances <ul><li>Nearly half of today's top-grossing drug products are the result of partnerships. </li></ul><ul><li>Companies across the industry annually spend hundreds of millions of dollars to utilize other firms' discovery, development and marketing capabilities to meet shareholder expectations for growth. </li></ul><ul><li>This pressure to maintain strong portfolios underscores the importance of alliance management. </li></ul><ul><li>Alliance management has become a critical path capability in the deal-making process and assuring profits to a majority of pharma, biotech, and device enterprises. </li></ul>
  13. 13. <ul><li>After the Deal, </li></ul><ul><li>the burden rests on </li></ul><ul><li>Alliance Management </li></ul><ul><li>personnel to </li></ul><ul><li>keep relationships </li></ul><ul><li>Healthy and Growing. </li></ul><ul><li>Ensuring a productive collaboration is a daunting </li></ul><ul><li>responsibility requiring many components: </li></ul><ul><ul><ul><ul><ul><li>Ample senior-level and organizational support </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Efficient project coordination </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Effective conflict resolution and intervention </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>And constant, open communication </li></ul></ul></ul></ul></ul>
  14. 14. Alliance Marketing: The New Commercial Skillset <ul><li>But it is here, after the joint “honeymoon” that many alliance “marriages” fall apart. </li></ul><ul><li>After the deal is signed, a significant percentage of strategic alliances fail (end or are not productive) because of poor relationship management. </li></ul><ul><li>Companies tend to believe relationships cannot be systematically managed and made a part of the working infrastructure. </li></ul><ul><li>A core competency in Alliance Management can be of particular value during product launch. </li></ul>
  15. 15. After the Deal is Made… Foremost Identified Causes of Alliance Failure Percent of All Failed Alliances Adapted from: “Managing Alliance Relationships – Ten Key Corporate Capabilities, Ertel, et. al., 2001
  16. 16. Characteristics of Successful Alliances <ul><li>Intercompany relationships are more family-like </li></ul><ul><li>The best organizational relationships, like successful marriages, are true partnerships that meet agreed upon objectives in a mutually respectful manner </li></ul><ul><li>Cross-cultural and cross-border </li></ul><ul><li>alliances require even more </li></ul><ul><li>challenges to corporate norms </li></ul><ul><li>in order to maximize the value </li></ul><ul><li>of the relationships </li></ul>Adapted from: Harvard Business Review – Collaborative Advantage: The Art of Alliances, R. Kanter 1994
  17. 17. Communication is Key at All Levels <ul><li>Governance structures are an important roadmap. </li></ul><ul><ul><li>Leadership turnover </li></ul></ul><ul><ul><li>Contract disputes </li></ul></ul><ul><ul><li>Recognition of achievements </li></ul></ul><ul><li>The use of Steering Committees, Joint Operating Committees, Joint Marketing Committees is common. </li></ul><ul><li>Frequent meetings / ave. 1 / Qtr. </li></ul>
  18. 18. Communication is Key at All Levels <ul><li>Increased use of Social Media 2.0 </li></ul><ul><ul><li>Linked-IN, Twitter, Facebook </li></ul></ul><ul><ul><li>Building e-groups </li></ul></ul><ul><ul><li>Finding connections builds bridges </li></ul></ul><ul><li>CEO >< CEO </li></ul><ul><li>Mktg Dir >< Mktg Dir </li></ul><ul><li>Project Mgr >< Project Mgr </li></ul><ul><li>Alliance Dir >< Alliance Dir </li></ul>
  19. 19. Why can’t we all just play nice in the sandbox? ~ Strategic Partner’s Lament
  20. 20. We Forget There are “I”s in “WE” <ul><li>Individual Excellence </li></ul><ul><ul><ul><li>Both partners are strong and contribute to the relationship. The motives are positive (to make more than the sum of the parts). </li></ul></ul></ul><ul><li>Importance </li></ul><ul><ul><ul><li>Both partners make the Alliance a priority because they want the collaboration to work. </li></ul></ul></ul><ul><li>Interdependence </li></ul><ul><ul><ul><li>The partners NEED each other and have complimentary assets and skills – they can’t accomplish alone what they can do together. </li></ul></ul></ul><ul><li>Investment </li></ul><ul><ul><ul><li>The partners provide tangible assets to a long-term commitment (products, processes, finances, etc.) </li></ul></ul></ul>Adapted from: Harvard Business Review – Collaborative Advantage: The Art of Alliances, R. Kanter 1994
  21. 21. There are “I”s in “WE” <ul><li>Information </li></ul><ul><ul><ul><li>Communication is to the extent possible, open. They share information required to make the relationship flourish including “life” goals, technical data, known obstacles and anticipated opportunities. </li></ul></ul></ul><ul><li>Integration </li></ul><ul><ul><ul><li>The partners build links and operationalize ways of working together using technology (IT), joint meetings, shared task groups and do so at many levels within both organizations. </li></ul></ul></ul><ul><li>Institutionalization </li></ul><ul><ul><ul><li>Guiding principles and governance are established to make clear partner responsibilities and processes for getting things done. </li></ul></ul></ul><ul><li>Integrity </li></ul><ul><ul><ul><li>Both partners treat one another honorably and engender mutual trust. They do not abuse information they gain, nor do they undermine one another. </li></ul></ul></ul>Adapted from: Harvard Business Review – Collaborative Advantage: The Art of Alliances, R. Kanter 1994
  22. 22. Alliance Productivity <ul><li>A survey of 108 senior executives and alliance managers in 93 companies shows that when one of their alliances fails because the partners cannot work together, both partners fail to realize a significant amount of forecasted value. </li></ul>“ Managing Alliances for Business Results”, Weise, 2006
  23. 23. Alliance Productivity <ul><li>An alliance with a good working relationship can generate many times the financial value as one with a poor working relationship. </li></ul><ul><li>Alliances with true, collaborative, good working relationships deliver 73% more total value through: </li></ul><ul><ul><li>Earnings (sales) </li></ul></ul><ul><ul><li>Cost savings </li></ul></ul><ul><ul><li>Innovation (second product, licensing) </li></ul></ul><ul><ul><li>Quality (manufacturing yields, returns, etc.) </li></ul></ul>Source: Managing Alliances for Business Results, J Weiss, 2006
  24. 24. Consider Your Alliances <ul><li>Could your organization benefit from a strategic alliance or get more from the ones your already in? </li></ul><ul><li>Are you cultivating a business development deal that will link you with another company in a non-traditional way? </li></ul><ul><li>Are you already in an Alliance but not achieving your joint objectives? </li></ul><ul><li>Do you have or are you planning to add dedicated Alliance Marketing managers? </li></ul><ul><li>Will you build a collaborative corporate mindset? Alliance first >> Results follow. </li></ul>
  25. 25. Consider the Alliance Advantage <ul><li>Companies that excel in alliance management position themselves to win new deals. Those companies which demonstrate successful collaborations will attract other companies looking for strong allies. This can help in filling critical portfolio holes and penetrating exciting new markets </li></ul><ul><li>Alliance Marketing seeks to effectively maximize the value of all strategic commercial alliances (co-promotion, co-marketing, and licensing / distribution agreements) in terms of: </li></ul><ul><ul><ul><li>Net revenue from the enterprise </li></ul></ul></ul><ul><ul><ul><li>Market / Partner perception of your company </li></ul></ul></ul><ul><ul><ul><li>Enhancement of perception as “partner of choice” </li></ul></ul></ul><ul><ul><ul><li>Realization of all contractual opportunities / milestones </li></ul></ul></ul>
  26. 26. Wanting to be a Global Partner of Choice Sales & Marketing Research Development Production
  27. 27. <ul><li>Must demonstrate a proven track record of partnership success </li></ul><ul><li>Need a wide range of partnership experience </li></ul><ul><li>Continuously learning to be a Collaborative, Flexible Partner </li></ul><ul><li>Build a reputation of fair and honest business dealings cross-company </li></ul><ul><li>Cultivate international presence and expertise </li></ul><ul><li>The fully-integrated life sciences company of 2010’s will have Strategic Alliances </li></ul>Becoming Partner of Choice in Your Space
  28. 28. Providing Marketing Creativity and Vision One partner says the glass is half empty, The Other say the glass is half full. The Alliance Manager: What is the objective? To Fill the glass? To Empty the glass? Maybe, We’ve Got The Wrong Size Glass?
  29. 29. In the end, it’s all about meeting the needs of the patients we serve… Thank you! Be well & be in touch!