partnering for success

In a world full of advisers, the world of biotech is no exception. Recently, Xconomy, a US Business, Life Sciences and Technology News site organized a round table of life sciences leaders from San Diego, a renowned global centre for biotechnology. CEOs and financiers were invited to offer observations and advice for biotechs seeking deals with Big Pharma. Opinion included the following:

• Lack of access to capital is the No. 1 driver of behaviour in dealmaking. Without sufficient capital, biotechs hold little leverage in negotiation. Expect deals in the current environment to be less up-front and much more heavily back-end loaded.

• A thorough understanding of the value of what it brings to the table is vital for a biotech to secure the optimal deal.

• Competition in bidding can make an enormous difference to the value of the deal. An example given was of a $475m deal which would probably have commanded only $100m if there had been just one interested party.

• Laying the groundwork and networking beforehand is vital and ideally is commenced by the CEOs several years before the deal.

• A biotech improves its value and strengthens its negotiating position with a strong patent portfolio.

• It is important not to push into premature partnership deals in order to offload development costs and/or to seek third party validation.

• It is important to stay smart and flexible in what is an ever-changing landscape.


It is an interesting exercise to also consider the perspective of biotechs on what they ideally seek in a Big Pharma partner. A survey answered by100 biotech executives and published last year found the following:

• Roche struck gold in four categories as the company most associated with deal structure flexibility, executive leadership, alliance management, and manufacturing expertise.

• Merck led in five categories: responsiveness, BD/licensing group access, therapeutic areas of interest (tied with Novartis), control over development, and ‘develop and prosper,’ a metric related to post-deal success.

• Novartis took the prize for TAs of interest, regulatory capability, and research expertise.

• Pfizer excelled in global reach and access/reimbursement, as well as in an area it would perhaps rather forget: ‘pay highest price.’


http://www.xconomy.com/san-diego/2012/01/20/

http://invivoblog.blogspot.com.au/2011/03/what-biotech-wants-from-big-pharma.html