You’ve assembled a great team and negotiated what seems to be a good deal with a partner. But if you are Bayer HealthCare, before you seal it with your legal teams, what do you need to consider before launching into what might be a 10- or 15-year arrangement?
“We’re talking about a process that needs alliance management, legal writing, and business development,” said moderator Ben Gomes-Casseres, CSAP and author, consultant, and professor at Brandeis University. “A mix of disciplines is probably what our message is here today. Claudia’s job is to get the deal, Karen’s is to live the deal, and John’s is to paper it over and make it legal. Three functions that are very important to coordinate,” he added, referring to the three panel members at the 2015 ASAP BioPharma Conference practical how-to session “Making the Link between Alliance Deal and Alliance Life”—Claudia Karnbach, vice president and head of business development and licensing, specialty medicine, Karen Denton, CA-AM, director of alliance management, and John A. Calvo, senior counsel.
In the traditional business model of biopharma alliances, a lot of handover and passing of the baton took place after the deal was inked. But companies like Bayer are evolving toward a more integrated approach, Gomes-Casseres said. “If we can have the same people around the table negotiating and launching the deal, and get the same team doing due diligence and managing the alliance, it all helps with stronger alliance and consistency.”
“You need to look at the deal through the lens of the contract,” added Calvo from the legal perspective. “Do we have mechanisms in the contract, how are we going to deal with lifecycle development? Those are the kinds of things you need to think about early on, because at negotiation, it’s really too late. … Just as we build in a mechanism for joint value, you need to look for disconnects such as if the parties are sharing expenses 50/50, but one party holds the decision-making.”
“Building on what John just said, we now have model where the alliance manager is pulled into the deal early,” said Karnbach. “We saw how this would benefit us in renegotiations. We are striving to have very few renegotiations. If you do direct development, at times things are changing quite fast and what you put in the contract is outlived tomorrow. What we have to do is build with transparency, common interest, and common value with the partner.”
“I am the main beneficiary here,” observed Denton from her alliance exec’s perspective. “I get a deal that is much more future-proof and manageable. The alliance is much easier to put into place.”
“I am the second beneficiary because I don’t have to jump into renegotiation,” added Karnbach. “I can only try to encourage all of you to incorporate this model because it will improve the [long-term] deal you do with other partners.”
“There has been a lot of change in mentality among alliance managers and attorneys,” said Denton. “When I first came into alliance management, we sat in different camps. If problems came up in alliance management, alliance managers would see it one way and legal would see it another way. John and I now meet every week—we are in the same tent and work together, to each other’s strength.”
Calvo concurs. “We now discuss alliance issues when they are minor issues, before they blow up.” And one of the key benefits is the continuity: “In the past, everything was so siloed.”
But can bringing in the alliance manager at an early stage be disruptive? asked Gomes-Casseres.
“You need the consistency of people bringing stability and knowledge, not migration,” answered Karnbach. “Loss of knowledge can be avoided by having a person at the table and living the alliance later on.”
Denton recounted a positive partnering experience she had involving a very fast launch with a full team around the table in less than two weeks.
“That ability to hit the ground running can be valuable to both the company doing the deal and the partner company as well,” she said. “Listening to the parties’ needs and interests is necessary to structure the deal, but even more important when you start to live the deal. So when you are living the deal, you have to have an eye on the partners’ interests.”