Becoming the Partner of Choice

Co-promotion agreements and a wide variety of strategic alliances are redefining the pharmaceutical industry. Yet interviews with 28 executives from 12 companies that have chosen or are seeking a pharma partner to market a late-stage compound confirm a disturbing fact: Despite much executive-suite talk about becoming the "partner of choice," few companies have devoted the resources needed to build alliance infrastructures that will support the entire portfolio of co-promotion deals, licensing agreements, R&D collaborations, and other relationships that are quietly reshaping their organizations.

This article describes those findings and challenges pharma executives to

• discuss how the findings relate to their own companies or to a particular therapeutic area or strategy

• share that information with all the company's functional areas

• build alliance creation and implementation expertise into their companies as core competencies.

The days of alliances as something companies do are gone. Today, companies are alliances, and their ability to manage those networks will determine industry leadership and transform the competitive landscape in fundamental ways.

Co-promotion alliances exist because major pharma companies' pipelines fall short of the growth that CEOs want and shareholders demand. Although companies dedicate billions of dollars, the finest minds, and the best equipment to developing new blockbusters, success remains serendipitous, and new therapies often emerge from companies that lack the ability to market them effectively. The greatest opportunities emerge when the right product connects with the right sales force-even when the two originate in different companies.

The success of drugs such as Celebrex (celecoxib) and Lipitor (atorvastatin) has led to fierce competition for late-stage compounds. When a compound holder announces that it is looking for a marketing partner, large companies line up to bid for the opportunity. The innovator must consider its choices carefully before selecting a marketing partner-and for good reason. The right partner can make the difference between a blockbuster and a me-too product.

The executive interviews revealed that late-stage compound holders have strong feelings about what they seek in a marketing partner. The two most important characteristics are the partner's abilities to pay for the compound and the wherewithal to market and sell it aggressively. If a potential partner demonstrates excellence in every other way but fails to meet the patent holder's financial and sales needs, that company is out of the running. Of course, all large pharma companies can bring those two capabilities to the deal if they are serious about the product.

So other criteria come into play. Those interviewed say they avoid working with companies that

• have a slow, cumbersome process, such as committee-by-committee decision making that schedules meetings just once a month

• fail to provide strong support to both companies' implementation teams during the course of the alliance

• favor internal projects at the expense of the partner's compound or are unwilling to take the partner's strategic needs into account

• have a history of failed or poorly handled deals

• withhold support during the alliance's implementation stage

• fail to learn from experiences with former partners

• provide no alliance training programs for both companies' teams

• fail to use the latest alliance management processes or diagnostic techniques.

The survey participants were particularly sensitive to two issues:

The decision making process must be efficient. Compound holders seek marketing partners with a similar vision and sense of urgency. Their managers understand that the marketplace does not care how many internal committees review a proposal, and they tear their hair out when they're told that those committees meet only once a month. It's hard to rationalize decision making delays when competitors are quickly closing the gap.

The potential partner must provide adequate support for implementing the deal. Late-stage compound holders seek marketing partners that agree to joint training in alliance management. That training must include tools, metrics, and management techniques that allow bright but inexperienced managers to navigate both the external partnership and the internal forces within each company. Managers must learn to identify problems for early resolution as well as processes for resolving conflict, integrating structures, and making collaborative mid-course corrections. Innovative companies understand that world-class implementation brings world-class results, and they will settle for nothing less. Their search is not for just any partner, but for one that brings a complete set of skills.

Compound holders steer clear of companies that cannot agree internally on the alliance's goals and objectives. One executive characterized the confusion that can result: "Partnering with a large pharmaceutical company is like dating an octopus. Two arms are hugging you, two arms are strangling you, and God knows what the other four arms are up to."

Both parties must understand that every alliance is really three relationships in one:

• the compound holder and the marketing partner

• key groups within the marketing partner's company that must coordinate and integrate their resources for the alliance to succeed

• key groups within the compound holder's company.

A deal's success is determined by each company's ability to simultaneously manage all three relationships. The marketing partner must be able to seamlessly integrate the activities of its own marketing, sales, regulatory, and research groups while coordinating those resources with the partner. That partner, in turn, must seamlessly manage its own internal relationships. Deals suffer when confusion or disconnection exists between groups in either company or between both. And, if there are disconnects in all three relationships, the entire partnership is at risk.

Patent holders seek security in their marketing partners' internal relationships. They look for companies whose internal groups

• agree on the alliance's objectives and each group's role in achieving them

• give the deal a high priority relative to other projects in the internal portfolio

• commit an appropriate share of their best resources to the partnership

• commit resources for the alliance's full duration

• coordinate efforts internally and integrate their work project(s) with the partner

• provide a consistent and predictable framework for handling disconnects, disagreements, and unforeseen situations

• include implementers in the planning process.

Selecting a co-promotion partner is based on a combination of solid facts and not-so-solid perceptions. The potential partner's financial capacity and marketplace history represent the hard facts, and the intensity of each prospect's desire to take the compound to market influences perceptions. But a potential co-marketer must deliver the message that it is passionate about gaining access to the compound and persuasively describe its relationship to the rest of the projects in the company's internal portfolio.

In the battle to influence perceptions, the potential marketing partner must demonstrate that the two companies' strategies are mutual and long-term. The most effective way to make that point is for the entire therapeutic area team (TAT) to make the marketing presentation.

The team manager begins with a detailed view of the prospective strategy, identifying gaps in the company's product line and showing how the patent holder's product fills those gaps. Next, the research director describes internal projects that complement the product and suggests other projects that might maximize the product's value over time. The marketing executive explains the program in detail, clearly outlining the market model and each company's role in it.

The pitch may demand a significant effort and cost. Pfizer reportedly spent $1 million on its presentation to Pharmacia for Celebrex. Although such a multi-element, multi-person presentation goes well beyond the status quo, one executive interviewed described it as an important part of the selection process: "The TAT presentation showed us that the entire team will champion the compound, not just the business development person."

Companies with products ready for market believe in the adage, "Success breeds success." In two recent surveys, one by PricewaterhouseCoopers and one by the author, pharma executives listed Pfizer as the partner of choice. Its huge success in co-promoting Lipitor and Celebrex clearly demonstrates its ability to transform late-stage compounds into marketplace blockbusters. The interview responses reinforced those survey results.

Patent holders look for partners with a history of successful co-promotions, especially in the therapeutic area of interest. They also value companies whose reputations extend to doctors, patients, regulatory agencies, and other key players in the industry. And, to gain a clear understanding of how well a candidate can integrate its people, systems, and culture with a partner, compound holders interview the candidates' previous partners.

There are two phases in a partnership's life cycle, and success depends on relentlessly managing both. In the first phase, the business development group plans and negotiates the deal. It is a complicated and sensitive process, and each company's executives can call on highly skilled professionals in various disciplines-marketing, legal, international tax, and finance-for guidance or technical help. Furthermore, the business development team's experienced members have devoted their careers to creating and structuring deals, a skill that usually leads to the negotiation of high-quality transactions.

Once the papers are signed, the implementation phase begins. Team members from various internal departments work with their counterparts in the partner's organization to achieve the alliance's objectives-which is not as simple as it sounds. Two companies with disparate decision making structures, computer and communications systems, cultures, and reward systems must coordinate sophisticated technologies and systems. The new partners must achieve progress on each of those fronts in the early days of the agreement, when expectations are high and time frames are short. Lilly became a more attractive marketing partner by creating an Office of Alliance Management, a department that provides professional and timely support to the implementers in each of the company's partnerships.

All the survey respondents say they seek partners that seamlessly integrate alliance management practices into the company's fabric. They understand that success results from relentless devotion to coordinating and integrating the two companies' activities and focusing them like a laser beam on the partnership's goals and objectives.

It is no longer enough for a big pharma company to point to a few successful commercial ventures. Companies must show they are serious about managing the entire alliance life cycle and maximizing the performance of every deal. They are in a race to earn the title "partner of choice" by developing an internal infrastructure that supports the effort. Yet, although one or two companies have taken an early lead, the race is still wide open to serious competitors.