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Successful Transitions: ‘How to Optimize Value and Gracefully End Alliance Relationships’

Posted By John W. DeWitt, Tuesday, March 27, 2018

You’ve probably got a process for kicking off an alliance. What about when it’s time to end the alliance relationship? On Tuesday, March 27, at the 2018 ASAP Global Alliance Summit, two veteran partnering executives tackled the topic of “How to Optimize Value and Gracefully End Alliance Relationships.” This session combined the insights and perspectives of Ron McRae, CSAP, director of alliance management at Janssen Biotech, and Steve Twait, CSAP, vice president of alliance and integration management at AstraZeneca.

As it so happens, “AstraZeneca and J&J are working through a transition right now,” Twait noted. “While we didn’t turn it into a case study, we were able to pull in some learnings from that. And while the two of us coming together was serendipity for the conference, we actually have some history and current projects that our companies are working on together.”

Prior to the 2018 Summit, I asked the two of them: Why do you feel that the topic of graceful exits and transitions is important to delve into more deeply? What inspired the two of you to invest your time into sharing your case examples and insights?

“Alliance management professionals typically have toolkits with practices and tactics for kicking off an alliance. There is a lot of excitement and commitment to that phase of the alliance lifecycle. However, the same is not generally true when it is time to end the alliance relationship.  Alliances come and go, but successful management of an alliance transition requires both timely and effective planning as well as flexible problem-solving capabilities at all levels. It also may require a fair amount of persuasion to ensure commitment as colleagues want or need to move on to new responsibilities,” McRae noted.

If it’s over, why does the transition matter so much? “It is important to eliminate or minimize any customer disruption to preserve asset value and even reputations of the partners,” McRae responded. “In the biopharma industry, it can even have life or death consequences depending on the indications of the product and/or availability of other medical options.”

In these cases, “the connection to patients is something we need to think about,” Twait noted. “You’ve got patients relying on the product, as you transition it to the other company, so you need to make sure you keep the patient in mind and don’t interrupt what they need.”

Even when lives don’t hang in the balance, “we should also keep in mind that we want to make sure we manage these situations as effectively as possible, as we may have another ongoing or future alliance opportunity with the partner,” McRae added.

Twait and McRae emphasized that the toolkit for graceful exits is not entirely unfamiliar.

Many of the same governance structures and tools utilized during other phases of the alliance lifecycle can be used during transitions or terminations, but the emphasis of some may change and new ones may still be needed—for example, alliance transition agreements and their components,” McRae explained.

More to the point, because of their relationships and skillsets, alliance executives are the right people at the right time during a transition.

“Alliance management is uniquely positioned in most organizations to maintain that value as the asset shifts hands from one partner to the other, because of existing relationships externally and internally, as well as our persuasive mindset and commitment,” McRae said. “Having led several transitions, we have experienced a number of lessons learned that we are sharing with our alliance management colleagues to help them anticipate and navigate similar situations.”

To be clear, this is not about when “alliances go bad.” It’s about timely, well-managed, intentional transitions.

“Transitions are part of any alliance,” Twait said. “Up front, we say this isn’t talking about when an alliance fails for technical reasons, but more about taking a thoughtful approach to how you transition something that’s been unbelievably successful—you’ve had a longstanding partnership but eventually it made sense for one company to manage the asset. Our focus is more on key learnings when, because of any number of reasons, the time is right for you to transition.”

McRae and Twait provided a number of such examples.

“Some of Ron’s examples involve a very mature alliance transitioning into a different phase,” Twait explained. “Some of the examples I provided are transitions, even divestments, where AstraZeneca is transitioning a product to another company because we are, for whatever reason, focusing our efforts in other areas.” Getting the transition right makes a crucial difference because you’re “leveraging years of relationships if it’s happening after a long relationship,” he continued. “You have people who have invested years in a product, business, and patients.”  

Tags:  alliance executives  alliances  AstraZeneca  governance structures  Janssen Biotech  Ron McRae  Steve Twait  transition 

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