John Buckingham, former Johnson & Johnson Pharma VP of Business Development and SVP, Alliance Management for a semi-virtual US specialty pharma company, explores a number of key considerations in preparing for negotiations of original licensing agreements, as well as for re-negotiations, a common requirement of both successful and struggling collaborations. John focuses particular attention on how to better understand the needs and motivations of a prospective partner and, closely related to this, what governance considerations to strive for during negotiation of an agreement. This session is a must for anyone who has had direct, personal experiences with the "good, bad and the ugly" of licensing agreements. Part of the MaRS Best Practices Event Series: http://www.marsdd.com/events/details.html?uuid=59a78761-cac4-4015-a5a5-7f63522408e9

2. Setting The Table:
Preparing for Licensing Negotiations
John Buckingham
MaRS Best Practices Series
April 14, 2010

3. What to do before…

4. Today’s Objectives
 Understand what `good’ preparation for
negotiations looks like
 Consider approaches to enhance effectiveness
and efficiency of your efforts to prepare
 Identify resources for additional information

5. Negotiation Perspectives

6. Group Input
What should you do,
before starting formal negotiations?

7. Key Elements of Thorough Preparation
Due Diligence Playbook Environment Negotiation Team
 Conduct `Due Diligence’ Investigation of Potential Partner
 Prepare Negotiation `Playbook’
 Shape Negotiating Environment
 Select and Prepare Negotiation Team

8. Key Elements of Thorough Preparation
Due Diligence Playbook Environment Negotiation Team
 What is their strategic focus?
 Are they financially sound?
 Check conduct/outcomes of current and past partnerships:
 Reference sources: Press releases, SEC filings,
ReCAP, Windhover, etc.
 Personal networking (adhering to confidentiality
requirements)
 Use technical due diligence activities collect relevant
information from prospective partner staff

9. Key Elements of Thorough Preparation
Due Diligence Playbook Environment Negotiation Team
Prepare Negotiation `Playbook’:
Some Key Principles:
 Focus on interests, not positions (of both parties)
 Identify/create options likely to satisfy both parties
Reference: `Getting to Yes’, R. Fisher, W. Ury & B. Patton,
2nd Ed. (1991), Houghton Mifflin Co.

10. Key Elements of Thorough Preparation
Due Diligence Playbook Environment Negotiation Team
Seven Key Elements :
 Interests
 Options
 Alternatives
 Legitimacy
 Communication
 Relationship
 Commitment

11. Key Elements of Thorough Preparation
Due Diligence Playbook Environment Negotiation Team
Interests
 Determine what you need or care about
 Strive for alignment with company
stakeholders regarding `what’ and `to what
degree’, for key interests
 Anticipate the business interests of the potential
partner and the personal interests, relevant to the
negotiation, of their negotiating team

12. Alliance Structure and Management Considerations
Vulnerable Enthusiast Dynamic Duo
High
Strategic Importance to
Your Company
Imbalance Balance
Balance Imbalance
Low Simple Pairing Potential Bully
Low Strategic Importance High
Potential Partner

13. Key Elements of Thorough Preparation
Due Diligence Playbook Environment Negotiation Team
Options
 Identify potential ways in which greater value could
be created, i.e. `increasing the size of the pie’
 Develop alternative ways to satisfy your interests
and to solve anticipated problems in the
negotiation

14. Key Elements of Thorough Preparation
Due Diligence Playbook Environment Negotiation Team
Alternatives

15. Key Elements of Thorough Preparation
Due Diligence Playbook Environment Negotiation Team
Alternatives

16. Key Elements of Thorough Preparation
Due Diligence Playbook Environment Negotiation Team
Alternatives
 BATNA
 Best Alternative To Negotiated Agreement
 May include:
 Other potential partner(s)
 Continuing independent development
 Merger or partnership alternatives
 Other creative options

17. Key Elements of Thorough Preparation
Due Diligence Playbook Environment Negotiation Team
Legitimacy
 Prepare supporting rationales for your key goals:
 Industry benchmarks
 Precedents
 Accepted Principles
 Supports `fairness’ of your view
 Provides other team with `fairness’ arguments for their
stakeholders

18. Key Elements of Thorough Preparation
Due Diligence Playbook Environment Negotiation Team
Communication
 Plan for effective communication of your key
interests (to ensure these are heard properly by
partner)
 Anticipate what you expect to hear from partner
regarding their key interests (so you can be more
alert to new information)

19. Key Elements of Thorough Preparation
Due Diligence Playbook Environment Negotiation Team
Relationship
 Keep in mind that the relationship tone during
negotiations carries forward into a future
relationship
 Plan for a constructive, joint problem-solving
approach, rather than a win/lose mindset

20. Key Elements of Thorough Preparation
Due Diligence Playbook Environment Negotiation Team
Commitment
 Think through what `done’ means
 Identify the activities and/or level of
performance you will need from your potential
partner, to properly address your interests
 What `consequences’ are appropriate to
negotiate, to better ensure your partner will
perform as planned?

21. Key Elements of Thorough Preparation
Due Diligence Playbook Environment Negotiation Team
Shaping Environment
 Creating positive `buzz’ about your offering
 Use of public statements to reinforce key interests
 Recruiting/developing influential champions
 Identifying and developing `back channels’

22. Key Elements of Thorough Preparation
Due Diligence Playbook Environment Negotiation Team
Selecting and Preparing the Negotiation Team
 Determine who will represent potential partner
 Designate negotiation leader
 Define roles of other team members
 Review key elements of Playbook with team
 Establish guidelines for confidentiality

23. `Emergency` Preparation
Focus On:
 Interests
 Options
 Alternatives
 Legitimacy

24. Resources
Professional Associations:
 Licensing Executives Society (USA & Canada) – Toronto Chapter
 www.lesusacanada.org
 Canadian Healthcare Licensing Association
 www.chlassoc.ca
Courses:
 Harvard Business School:`The Program on Negotiation for Senior
Executives’
 www.pon.harvard.edu/category/courses-and-training/
 Stitt Feld Handy Group: Negotiation Workshops (Canada)
 www.sfhgroup.com/ca/training/negotiation/

25. Today’s Objectives
 Understand what `good’ preparation for
negotiations looks like
 Consider approaches to enhance effectiveness
and efficiency of your efforts to prepare
 Identify resources for additional information

26. Questions?

27. Setting The Table:
Preparing for Licensing Negotiations
John Buckingham
MaRS Best Practices Series
April 14, 2010