BTD Survey: Biotechs Should Learn Less, Smile More, and Do It Big Pharma’s Way
Management consulting firm BTD Consulting delivered a sneak preview of its new study on how to optimize biotech–Big Pharma alliances, and some of its results and recommendations may shock you. Nick Palmer, partner, and Dillon Lewis, managing partner at BTD Consulting, shared top-level findings from the dozens of interviews the firm conducted with biopharma, venture capital, and private equity executives in ASAP’s February webinar “Working as Equals: A Biotech Plan for Big-Pharma Alliance Success.”
The study’s conclusions were formulated from the perspective of the smaller biotechs.
“There are behaviors that large firms engage in that can be counterproductive. They can be bureaucratic, they can be slow, they can [exhibit] not-invented-here [syndrome], they can be, ‘My way or the highway,’” noted Palmer. “Let’s turn the mirror toward ourselves. What can we the executives at a smaller firm do, regardless of the larger firm, to increase the likelihood of success and hopefully increase the likelihood of supportive behavior from your larger partner?”
BTD broke out its recommendations into three broad sections: 1) four attitudes that differentiate successful small firms, 2) escalation approaches, and 3) homework. The study broke the four attitudes in the first of these three pillars down further: 1) expect excellence, 2) learn less, 3) do it their way, and 4) stay upbeat.
“Doublecheck Equals Double Cost”
As Palmer drilled further into the concept of expecting excellence, he stressed that this had a lot to do with trusting your partner and not constantly looking over your counterpart’s shoulder.
“If you have chosen a good partner, you should expect that partner to deliver,” he said. Palmer added that companies often make the mistake of applying a “defensive mindset” and “doublechecking everything.” He recalled another study he conducted years ago that found that the bottom half of alliances in terms of speed-to-market were impeded by extra checks and balances. “Doublecheck equals double cost.”
Learning Isn’t Free—or Fast
It was at this point that Palmer arrived at some of the study’s counterintuitive guidance. “Learn less” may sound like cutting corners, but Palmer began this part of the discussion by flipping the question in a way.
“Would you rather learn nothing and be wildly successful at market and go public or be purchased for a huge price, or learn a lot of stuff and not be as successful at market?” he asked.
Biotechs have to build in extra time to get people up to speed on a Big Pharma institution’s science, process, or way of thinking. As secondment can absorb even more time.
“If it delays things by two or three weeks, is it worth the cost? Learning is not free,” said Palmer. “That learning takes an investment, a plan, and a focus.”
Their Way Could Be a Window to Success
One might argue that the next attitude, “do it their way,” is even more surprising.
“Boy, has this gotten some reaction,” admitted Palmer, who recounted one executive telling him that “if he told his CEO this, he would be fired.”
“I understand the caricature: big, dumb, slow firm,” said Palmer. “But they make big money.” At the end of the day, Big Pharma can offer tremendous expertise and a proven track record of bringing drugs through the entire development life cycle, from idea to market success.
“All else equal, why not do it their way? It’s proven, it’s tested,” said Palmer, who suggested that biotechs could integrate the best parts of their processes if they could demonstrate that it would improve results. “[But] don’t expect them to throw their system out the window.”
Smile in the Face of Adversity
Staying upbeat is a lot less controversial, but much harder to do in practice when the going gets tough. Big Pharma alliance managers are often the messenger when changes in budget, timing, or priorities negatively impact a biotech collaboration.
“If you’ve ever been the one to deliver that kind of message, it can be very unpleasant, and you don’t look forward to doing it. The more you make that difficult for her, the less she is going to be willing to engage with you and talk about the hard issues,” said Palmer, who advised listeners to be part of the solution, not the problem. “If you can find a way to stay upbeat, even in difficult circumstances, if you can keep positive energy in the system, you can change the way other people across from you behave. If you make it easy for that executive you’re dealing with to come to you and present a problem before it becomes a lot larger, before an irreversible decision has been taken, you’re more likely to be successful.”
Don’t Poke the Bear Unless You’re Ready for a Scar
Palmer then went on to dissect the second section of BTD’s findings on how to escalate issues against a background with a sign that read “don’t poke the bear.” He began the discussion by granting that interventions can certainly work once. It isn’t uncommon for someone in the biotech firm to leverage a personal relationship with the Big Pharma CEO or other senior executive, thereby bypassing the alliance manager counterpart or immediate point of contact. Of course, that means the latter may get an angry, or at least bemused, phone call from their boss.
“If you escalate around the person you’re dealing with by using some of these back channels, it can work; it is going to get a reaction. It will leave a scar,” said Palmer, who advised doing so “with clear intent and understanding of not just what it might do but of the implications, both short- and longer-term” if the biotech team feels it’s necessary.
“A company doesn’t trust another company. People trust other people,” Palmer continued. If biotechs insist on doing this, it should be after careful consideration by their leadership. “You can escalate—more power to you, and it may be the right thing to do. Those decisions ought to be made at the top levels of your smaller company” with the aforementioned four attitudes in mind.
Get the Picture? Know Where You Fit at a Granular Level
When it comes to homework and background research, Palmer endorsed the traditional “3-D” model that evaluates a partner based on strategic, operational, and cultural fit. Palmer said biotechs must know at a “granular level” the “detailed picture of where you fit into what they are doing” with the Big Pharma company. This means evaluating the biotech’s asset against the Big Pharma’s pipeline, compounds, and therapeutic areas.
“Are they involved in another development that would diminish the value of your company’s contribution? Are they pursuing two different routes on a particular indication?” asked Palmer. “Are there opportunities that you can find—extensions of your own technology into other areas of their business?”
Provision Operations to Mitigate Misunderstandings
As for the “operational homework,” Palmer threw out a basic checklist to start with.
“Who is going to do what? What processes and systems are you going to use? Which ones? How are they going to run? Those who have been in alliances for a while have seen hiccups over planning processes,” he said.
Palmer has seen a variety of issues throw a wrench into partner operations over the years. Sometimes, it’s senior executives disengaging after the initial planning cycles. Other times, a mismatch in fiscal years can complicate activities. Simple language misunderstandings can leave partners in a tangled mess. Palmer gave the example of an alliance in which a cable company and a cell phone carrier had a different definition of the word “provisioning” that resulted in a contractual dispute that took six weeks to resolve.
Get a Clue: Learn Your Partner’s Values
Culturally, Palmer stressed the importance of putting on a detective hat and reading between the lines to understand the multinational partner’s values and behaviors.
“How do people interact and connect with people? A lot of this has to do with being sensitive to clues, it has to do with talking and creating dialogue,” he said.
BTD has put together a white paper summarizing these findings. This is far from the final product, however. The firm plans to refine its conclusions based on additional interviews it plans to conduct in the coming months. The final report is expected to be released at the 2023 ASAP BioPharma Conference later this year.