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Riding the Waves with David and Goliath: How a Venerable Big Pharma and a Plucky Little Biotech Sailed Through Storms to the End of the Rainbow

Posted By Jon Lavietes, Monday, October 5, 2020

The ASAP biopharma community is no stranger to big pharma–biotech alliances and David-Goliath partnerships. In general, the story usually centers around an entity with an intriguing molecule accompanied by promising science looking for a partner with deep expertise—and pockets—to help develop the therapeutic candidate into a viable alternative for doctors to prescribe.

Little Biotech Grows Up

But what happens if that ambitious young company eventually wants more? Does its larger ally accommodate its growth and evolution, or is it a sign that the two partners have grown apart? The answer depends on the collaboration—as the old axiom that has been bandied about in ASAP circles seemingly forever goes, “If you’ve seen one alliance, then you’ve seen one alliance.”

On demand now to attendees of the 2020 ASAP BioPharma Conference is the story of one David-Goliath collaboration that successfully navigated—and adjusted to—the little sibling growing up. The session “The Evolution Highs and Lows of a Biotech and Pharma Alliance” shares how the venerable 352-year-old Merck KGaA, Darmstadt, Germany and 13-year-old F-star Therapeutics first started working together in 2011 to explore the latter’s ability to make antibodies and ultimately evolved their collaboration into a complex M&A licensing arrangement in part due to F-star’s transformation from an R&D–focused company to one with bets on a wholly owned portfolio.

Senior Leaders Are a Couple of Blocks Short of Reaching Alliance Heights 

Margarita Wucherer-Plietker, CA-AM, director of alliance management at Merck KGaA, Darmstadt, Germany, began the story by listing six building blocks of alliances as defined by McKinsey:

  1. Strategy – Alignment of partnership objectives
  2. Culture and communication – Open and trust-based communication among all parties
  3. Operations – The establishment of a new operating model and performance metrics
  4. Governance/decision making – Adherence to key decision processes, and metrics for speed of decision making, stage gates, and timelines
  5. Economics – Defining how much value will be created by the partnership
  6. Adaptability – Proactive planning of how to tend to the relationship over time in the wake of industry and organizational shifts

She said that, according to McKinsey, executives tended to be aware of the importance of strategy, governance, and decision-making processes—parts of the organizational machine that C-suite executives are steeped in regularly—to driving alliance success. However, they also had a proclivity to undervalue intangible factors like culture and communication, as well as adaptability. Guess which of these cornerstones proved to be more valuable to Merck KGaA, Darmstadt, Germany, and F-star? (Spoiler alert: senior leaders have it all wrong!)

Data-Driven Mindset Fuels Alliance Growth 

When Sarah Batey, PhD, vice president of project and portfolio management at F-star Therapeutics, started at F-star in 2011, the collaboration was in its infancy with small teams of scientists working with a standard licensing agreement. The parties gelled quickly, finding that they were able to communicate openly and deliver consistently “against well-thought-out, achievable-but-still-demanding work plans.” The companies also found that they were simpatico in that each applied a “similar science and data-driven mindset” to their work, according to Batey.

The trust built over time ended up being a key factor down the road when the collaboration expanded in 2017 to include multiple assets, including the clinical candidate FS118. The collaboration expanded again in 2019 when F-star retained FS118, while Merck KGaA, Darmstadt, Germany, exercised the option for one discovery-stage program and retained the option for a second one. In 2020, the partnership would evolve again in the face of COVID-19 (more on that later) as Merck KGaA, Darmstadt, Germany, exercised another option on an immune-oncology collaboration and the companies added two more preclinical discovery programs. 

Even today, “the collaboration still thrives based on the joint data-driven decision making,” said Batey, who added that the team members rarely consult the contract to resolve a situation, an example of their ability to smooth out differences.  

Jiffy Lube: Seamless Execution of Governance Greases Well-Oiled Machine

How did these two organizations manage this growth? They devised a traditional model, with a Joint Steering Committee (JSC) overseeing Joint Project Teams (JPTs) for preclinical and clinical assets. It would turn out that nothing more intricate was needed because all stakeholders put in the necessary work to make the governance mechanisms function like a well-oiled machine. The senior leaders from both companies who sat on the JSC were well versed on the alliance’s mission and value propositions, and they made themselves readily available for critical discussions. The JPTs were made up of passionate scientists who deftly organized communications and project workflows. They would prepare detailed presentations at appropriate junctures for JSC meetings in order to thoroughly brief the leadership team ahead of moments when critical decisions needed to be made. (This seamless flow of communication between the JPTs and JSC stands in stark contrast to an alliance presented in another BioPharma Conference session that initially struggled to manage what information got delivered to its top committee.)

That isn’t to say that they didn’t have to make adjustments. The smaller F-star wasn’t accustomed to working with larger bureaucratic structures, so the companies agreed to prioritize stage-gate decision-making moments and make sure that alignment was achieved on important details.

On an operational level, alliance managers served as a “central point,” to whom project managers and leads would reach out whenever there was a question about budget, messaging, timelines, or another key element of the alliance, according to Wucherer-Plietker. Alliance managers proved to be effective gatekeepers, as they were able to efficiently facilitate engagement with business development, legal, IP, and other functions whenever they needed to be consulted.

“The key learning here is that a clearly defined touchpoint—a presence in the teams—between all parties and the central touchpoint, alliance management, was very helpful for this alliance to bring projects forward,” said Wucherer-Plietker, who pointed out that the importance of this communication flow contradicted senior management’s underestimation of this building block, as detailed in McKinsey’s findings.  

Stormy Weather and a Sea Change

This streamlined operation helped the collaboration sail through what Batey called “stormy waters” over the last several years.

“Even best laid plans can’t necessarily predict every future eventuality,” she reminded viewers.

The alliance has endured waves created by the departure of key personnel, including champions of the collaboration, and F-star’s evolution from a platform company into an organization with a proprietary pipeline. When F-star was making its move, it approached its partner about obtaining increased development and commercial rights for FS118.

“Ultimately, a change in pipeline prioritization resulted in the program fully reverting back to F-star, while Merck took the rights to an alternative program,” recounted Batey. The sides were able to negotiate a mutually valuable agreement for both sides—Batey called it “the rainbow at the end of the storm.”

The alliance also experienced external turbulence, or “at-sea waves,” said Batey, continuing with the oceanic theme. Like most biopharma collaborations, it confronted changes in the competitive landscape and scientific challenges related to target validation. However, in the presentation Batey spoke mostly about the surfing competition–sized wave disrupting everyone’s sea cruise: COVID-19. The pandemic allowed the parties to take a step back and evaluate the strategy and objectives pf the partnership, as well as what was best for patients. This is when Merck took the early option on the immune-oncology collaboration and added two more.

“In both cases, we really felt that those storm waves were a key trigger to critically review the collaboration and ultimately, in the end, bask in the rainbows. This was due to the strong relationship and trust that we had built. The strong boat was able to face the waves,” said Batey.

Wucherer-Plietker boiled down how the two organizations were able to find opportunities in times of crisis to four steps:

  1. Both parties acknowledged and appreciated that changes in the landscape could potentially cause a divergence in the parties’ interests and viewpoints.
  2. They maintained open communication on common goals and diverging interests as they related to strategic and pipeline changes.
  3. They developed a joint view and aligned objectives vis-à-vis the divergence in their respective priorities that resulted from the crisis situation.
  4. This allowed the allies to put initiatives in place that would help exploit whatever points of value remained in the collaboration.

Communication, Adaptability Turn Crises into Opportunities

To conclude the panel, Wucherer-Plietker preceded a list of key takeaways with the observation that “these building blocks, communication and adaptability, should never be underestimated.” She began the list with the assertion that an alliance is unsustainable without alignment around “high-profile alliance goals.” Wucherer-Plietker added that “these goals can be built and elevated over time.” The second key to success: enthusiastic teams who collaborate closely and communicate openly, not only when times are good but also when tough conversations are necessary. Next, trust, as always, is essential in an alliance. Wucherer-Plietker listed three ways to build it in the pharma context: 1) reliably deliver targets, 2) be transparent and define communications protocols at all levels, and 3) expect and appreciate change to the business and scientific environment over time. Finally, she urged viewers to view change as “an opportunity, not a crisis,” as they represent “inflection points” that could lead to new or reconfigured deals that work better for everyone.

More ASAP BioPharma Conference sessions, both prerecorded presentations and keynotes and panels from the livestream portion of the event, are available at the event’s portal, so check them out now for the latest trends and perspectives from biopharma alliance thought leaders.

Tags:  alignment  alliances  Big Pharma  Biotech  collaboration  communication  culture  Darmstadt  F-star Therapeutics  Germany  governance  M&A licensing  Margarita Wucherer-Plietker  McKinsey  Merck KGaA  operations  partners  partnerships  portfolio  R&D  Sarah Batey  Strategy  therapeutic 

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Driving Through Spaghetti: Navigating the “Chaos” of Biopharma/Digital Partnerships

Posted By Michael J. Burke, Wednesday, September 16, 2020

There are many things biopharma alliance professionals do well, and many areas where they shine. Partnerships between life sciences companies and digital organizations, however, while on the rise, remain the new frontier for alliance management. And to give alliance professionals their due, it’s often their organizations that are caught flatfooted by the demands and challenges that lie along the biopharma/digital divide. In fact, greater involvement by alliance groups might help operationalize and execute on these partnerships such that they fulfill their purposes and create more of their intended value.

That’s one of the assessments provided by Stu Kliman, CA-AM, and Ben Siddall, both partners in Vantage Partners, in their presentation, “Enhancing Partnerships Between Life Sciences and Digital Organizations,” on day two of the 2020 ASAP BioPharma Conference. (Vantage Partners is a platinum sponsor of the conference.)

In introducing Kliman and Siddall, ASAP president and CEO Michael Leonetti, CSAP, noted that this is “a topic that we’ve been talking about for a number of years at ASAP.” The two presenters agreed, with Siddall adding that what has changed in the three or four years since he and Kliman began facilitating such partnerships and doing presentations on the subject is the sheer proliferation of these alliances—to the extent that they can no longer fit on one slide anymore.

The trend is part of “an increasingly complex ecosystem, with biopharma at the center,” according to Siddall. The question, he said, is “How do we take advantage of all these relationships and manage [them] in a coherent way?” It can be done, he added, but due to the number of relationships involved, and the breadth and longevity of those relationships, “it’s a struggle.”

Changing Mental Models

Kliman mentioned that when biopharma people hear the word “partnering,” they have “a mental model for what that means,” which may be “somewhat narrow and [something that] happens linearly—the classic drug development and commercialization process.” But digital partnerships are a different animal. As Kliman put it, they tend to be “more invasive and more involved for alliance management than is typically the case.”

Kliman gave a couple examples of such partnerships, such as Concerto AI and BMS, and GE and Roche, before noting that there are often so many internal and external players and stakeholders involved, and so many different activities across the alliance life cycle, it can be challenging to coordinate all those functions and activities. “All that looks easy on a slide, but it’s hard to make all the pieces fit,” said Siddall.

And whose job is it, anyway? Both Kliman and Siddall, in different ways, made the case for alliance management groups to perform this difficult task.

Even in a “traditional” biopharma alliance, there is great complexity and a number of functions involved, and alliance managers tend to move among the different functions as needed to communicate and coordinate activities and ensure alignment, in addition to working closely with their opposite numbers at the partner company. With a biopharma/digital partnership, however, the number of functions increases and may include things like AI, tech suppliers, virtual trials (often international in nature), and more.

The Spaghetti Slide

Displaying a slide showing a veritable spider web of lines drawn between all these different functions, Siddall noted, “You see how complex the map looks. You’ve got this spaghetti.” Throughout the presentation, this was referred back to as “the spaghetti slide.”

Notwithstanding this complexity, said Kliman, “We believe the alliance management group is very well positioned to own these activities” and be the “change management driver” in digital partnerships. Other functions are simply not prepared to do it, he said.

Yet significant organizational challenges remain. Recent Vantage research shows that 74 percent of biopharma respondents said their organization has an explicit digital strategy—but 52 percent say that internal stakeholders are not clear about how to effectively engage their key digital relationships. What’s more, only 15 percent of respondents said their company has clear and operationalized approaches to manage digital relationships differently from more transactional vendor relationships.

“So how do you do this well?” Siddall asked. He cited what he called “three critical enablers.” To be successful, he said, organizations must:

  • Align decisions with strategy (“What’s the purpose? Why are we doing this?”)
  • Embed a cross-functional operating model to speed execution
  • Build the skills to enable agile collaboration

“Everybody’s Doing It”—but Not Everybody’s Doing It Well

Many companies simply ask, “Which partner does X?” he said, and then “get a list of big names.” This is the wrong approach. Rather, they should start with their overall strategy and ask, “What are we trying to do?” And, given the number of activities and functions involved, they also have to ask themselves, “How do we actively manage all that chaos, and make it strategic?”

In fact, Siddall said that alliance professionals not only need to manage the chaos, but they might need to create some as well. In so doing, they’ll need to avoid what has sometimes been the biopharma response to digital organizations’ ways: “That’s not how we do it here.”

Kliman acknowledged that the challenges of the biopharma/digital divide can make for a “differentially uncomfortable situation.” “As alliance managers, we like control,” he said. But there are far more digital partnerships now than just a couple years ago, and the number is expected to continue to rise. So get used to it—the future is here.

“The size and diversity of digital portfolios has grown,” Kliman said. “Folks have woken up to the implications for their organization. We see organizations bellying up to the [digital] bar.” Or as Siddall said, “Everybody’s doing it now.”

And although some of the skills needed for digital partnerships may be different, Siddall said it requires a “mindset shift” rather than reflecting a “skill set conflict.”

We Need a Navigator

Finally, Siddall’s pitch for greater involvement by alliance management in digital partnerships highlighted alliance managers’ role as “navigators” of different relationships, especially their ability to help partners navigate biopharma organizations and surface differences.

Kliman said he wouldn’t argue what alliance managers should or should not do, but the fact remains that companies need to have an approach to managing these partnerships—and who will be accountable to drive alignment around executing the operating model?

“It makes good sense with a portfolio of digital relationships that alliance management has a role to play,” he said.

Check back in this space for more coverage of the 2020 ASAP BioPharma Conference, and remember that the online showcase on Vimeo gives you all the livestream sessions in real time—and later, once they’re archived, in case you missed one—as well as all the on-demand content, sponsors’ messages, and more!

Tags:  agile  alignment  alliance management  alliances  Ben Siddall  collaboration  cross-functional  Digital  internal stakeholders  Life Sciences  Partnerships  portfolio  relationships  speed execution  strategy  Stu Kliman  Vantage Partners 

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Mashup or Culture Clash? When Biopharma and IT Meet Up in Digital Health Alliances

Posted By Jon Lavietes, Monday, August 3, 2020

It’s generally accepted that the alliance management profession is entrenched in IT and biopharma more deeply than in other industries. In these vertical markets, no business can sustain significant growth without developing an alliance practice and a deep portfolio of partnerships. No one company could develop a full stack of hardware, software, and cloud services on its own and still keep pace with the blisteringly fast tech sector, nor could a single pharmaceutical entity complete the entire drug life cycle solo for an entire portfolio of drug candidates.

Yet for many years these industries have operated largely in separate spheres based partly upon vastly different alliance principles. This is starting to change with the advent of digital health, an umbrella term that encompasses a variety of initiatives that utilize digital technologies to advance and streamline patient care in the form of preventive treatment, hyperpersonalized medicine, more accurate drug discovery, and a more efficient patient-provider relationship, among other applications. (See “Digital Health at the Crossroads,” Strategic Alliance Quarterly, Q4 2019, for more on this rapidly expanding area.)

Suddenly, cross-industry alliances are popping up everywhere, from GE Healthcare’s Edison intelligence platform (see “It’s the Data—and a Lot More,” Strategic Alliance Quarterly, Q1 2020), to the alliance between AstraZeneca and Flex spinoff BrightInsight, to the myriad data-driven pharma collaborations hard at work today. Now, Big Pharma, biotechs, and academic medical researchers are increasingly mingling with tech-industry startups, midsize companies, and Global 1,000 enterprises, necessitating the coalescence of these two alliance cultures.

Mind the Gaps

In their on-demand 2020 ASAP Global Alliance Summit session “The Alliance Management Mashup: Bridging a Digital Divide,” the proprietors of alliance management consultancy The Rhythm of Business laid out a common alliance framework that would help digital health partners on both sides better understand each other and function together more successfully.

Or course, to close gaps, you must first identify them. According to Jeff Shuman, CSAP, PhD, principal at The Rhythm of Business, the most glaring of these disparities is the timeline in which these industries innovate and bring solutions to market. In tech, companies develop products iteratively through agile processes in order to bring offerings to market in the tightest of windows—the “next big thing” can become yesterday’s news in a hurry. By contrast, it can take up to a decade to commercialize a therapy thanks to a stricter regulatory climate and pharma’s more methodical drug-development processes, although Shuman noted that today’s exceptional circumstances have led to some COVID-19 research being conducted in an “accelerated manner” using iterative techniques.

“‘Move fast and break things.’ That may help promote innovation, but it’s not a good principle when people’s health and lives are at stake,” said Shuman, referencing the famous operating philosophy Mark Zuckerberg used to take Facebook to stratospheric heights. Not a great recipe for pharma, to say the least.

Tech and biopharma differ in many other ways as well. Generally speaking, tech is solution-centric while the pharma market revolves around products. Tech solutions are code-driven, while pharmaceutical offerings involve complex manufacturing processes that are “highly customized for each drug and drug formulation, often requiring a dedicated cold chain to get from factory to patient,” said Shuman.

Technology products are peddled in large part through channel sales and collaborative selling efforts, while pharmaceutical firms spend lots of resources comarketing and copromoting joint products. Tech companies—particularly software vendors—can sell and distribute products through distributors, resellers, and system integrators,  or by “white labeling” their products­ via OEM agreements. Patients buy drugs from pharmacies, while pharma companies often rely on combination therapies. Where new subscription-based business models are predicated on the “land, adopt, expand, and renew” approach, pharma’s product-based life cycle management is usually expressed in the form of “new indications and new formulations.”

Disparities Extend to IT, Pharma Alliance Practices

Alliance portfolios, partnerships, and alliance manager roles look much different in these industries as well. Pharma alliances are negotiated individually and often underpinned by detailed long-term contracts with multiple subagreements, while tech partnerships can often be grouped along a particular area of focus and covered by blanket contract terms that apply to an entire partner program. Today, technology companies partner on platforms around common APIs, while pharma companies license individual assets. The pharmaceutical industry banks on partnerships at all stages of the drug-development life cycle, from research to commercialization, while tech usually partners when it is time to go to market.

Just about everything a tech alliance manager does is in the name of driving revenue—in fact, alliance practices are expected to generate new streams. Although revenue generation is a major imperative to pharma alliance managers, it is secondary to risk mitigation and maximizing the value of joint assets; pharma managers spend more time monitoring contract compliance—determining when amendments or entirely new agreements are necessary—than their tech counterparts do.

Tech alliance managers must earn the commitment of partner resources, while pharma contracts usually spell out resource obligations. Instead, biopharma alliance managers focus their energy on giving higher-ups “all the data they need to make smart decisions,” according to Shuman. Given the distributed nature of tech alliance management, the alliance division must actively engage field sales to get salespeople to actively shop an alliance solution. In biopharma, the field “doesn’t have choice,” in Shuman’s words.

Reconcilable Differences

How do you actually reconcile these differences? Jan Twombly, CSAP, The Rhythm of Business’s president, illustrated the answer with an anonymous case study where a Big Pharma corporation and a technology outfit leveraged the latter’s IoT platform to codevelop apps and medical devices and collect real-world evidence (RWE) from patients that would ultimately enable highly personalized care. Their business model rested on software subscriptions paid for by the biopharma entity to the tech company, which is “different from what biopharma companies are used to,” said Twombly. A collaborative framework was established in several key areas—the two organizations settled on joint development, cocommercialization, and revenue sharing arrangements. However, the pharma company was tasked with deciding what it wanted in the device, what the device would do, and what outcomes it would produce, while the tech company determined how to take the platform itself to market.

On a broader level, the companies needed to align on the intended outcomes, regulatory pathway, decision-making processes, and go-to-market messaging. This turns out to be easier said than done. Pharmaceutical companies are used to applying software to internal processes but not to product development, nor are they well versed in working with tech companies in a true vendor-relationship capacity. On a practical level, IT and pharma alliance managers have drastically different titles and functions.

“It may be challenging to engage in stakeholder mapping and getting the right people in the meetings,” said Twombly.

Extensive regulatory-, safety-, and quality-related processes are new to tech, which forced the IoT vendor in this case to rely on the pharmaceutical company’s expertise.

“[Pharmaceutical companies] should be in the lead when it comes to determining what the regulatory pathways are going to be,” said Twombly.

Lighter and Leaner Governance, Stronger Champions, and More Listening

Both entities needed to reimagine the governance process and the role of their joint steering committee (JSC).

“Governance-through-committee doesn’t work all that well in a lean tech company,” said Twombly, before noting that this presented an opportunity for the biopharma alliance managers to try on a lighter, “more agile” governance where teams met more frequently but for less time.

Governance is especially important in ensuring transparent decision making; it may require especially rigorous stakeholder management and a different decision hierarchy from what either side might be used to. In particular, the parties must devise a governance structure that helps partners align on evidence standards so that the tech company can produce data that will “pave that [regulatory] pathway” to meet the biopharma entity’s standard.

Senior leadership champions are especially important in getting stakeholders to understand the value of digital health partnerships and engage in the new modus operandi required for their execution. To foster collaboration, Twombly spoke of “listening to understand,” a process that involves creating a “common language with shared meaning” that helps leverage each party’s strengths. 

Follow the North Star—and Respect Culture’s Hearty Appetite

Twombly urged partners to boil down their discussion of desired outcomes to three points: 1) Align on a North Star—“know what it is that you are trying to produce, know what the outcome is that you want from this partnership, and keep everybody focused on achieving it”; 2) Agree to milestones and metrics; and 3) Make status against plans visible to all.

Twombly also reminded the audience of the old saying that “culture eats strategy for lunch.” To remedy cultural differences, she recommended that tech alliance pros assume the best of intentions on the part of their biopharma counterparts and speak up and provide alternatives when something won’t work in their environment. On the flip side, pharma companies need to explain their world, with visual aids showing how their organizations work, wherever possible. As with all alliances, everyone must celebrate successes and learn from mistakes.  

Twombly closed with a series of “tips and traps.” For the former, she outlined the following:

  1. Take time to understand how each partner innovates, goes to market, and what partnership looks like to them.
  2. Understand your counterpart’s focus, job, and core responsibilities.
  3. Use the alliance management foundation to decide how to bridge differences—the toolsets provided by ASAP “give you a common baseline which you can work from.”

The three traps to avoid?

  1. Allowing stakeholders to think that a digital health partnership is like all the others—“you’re really going to have to adapt new behaviors and ways of looking at things” because the status quo will not suffice, warned Twombly.
  2. Make sure each side appreciates and leverages what the other brings to the alliance.
  3. Don’t fail to champion your partner and partnership.

Above all, Twombly exhorted companies on both sides to recognize the high stakes and the game-changing potential of these collaborations.

“The promise for digital health is significant for both technology and biopharma companies, never mind the patients,” she said. “Allow these new therapies, applications, and ways of developing drugs to thrive.”

If you registered for the 2020 ASAP Global Alliance Summit, don’t miss out on the bounty of career- and partnership-boosting tips and tricks from some of the profession’s most senior practitioners. The three days of live Summit sessions, plus more than a dozen prerecorded presentations, are available to you on demand until Aug. 18. Log on to the Summit portal soon to access them before they’re gone! 

Tags:  Alignment  alliance practice  alliance principles  Biopharma  biotechs  cloud services  cross-industry alliances  Digital Health  digital technologies  drug candidate  Jan Twombly  Jeff Shuman  metrics  milestones  North Star  partners  partnerships  pharmaceutical  software  The Rhythm of Business 

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Make a Decision! Now More Than Ever, Alliance Decision Making Is Critical. Game Theory Can Help

Posted By Michael J. Burke, Tuesday, May 26, 2020

Most of us have probably worked on teams and within hierarchies where decisions were hard to come by: slow to be made due to fearful, indecisive leaders, or requiring multiple hoops to jump through to get approvals. It can have a crippling effect on projects and partnerships, and everyone becomes frustrated when things don’t move forward in a timely manner.

Now, with so much uncertainty due to the COVID-19 pandemic, it can be even more difficult to get decisions made. With teams spread out and working remotely, it can be challenging even to pull key decision makers together, much less to formulate a coherent strategy. But for every challenge there’s an opportunity, and for every problem there’s a potential solution. It turns out that game theory may hold some of the answers to this dilemma.

“How can we best make decisions?” Harm-Jan Borgeld, PhD, MBA, CSAP, asked in a recent ASAP Netcast webinar. “There is now an opportunity. Now is the time for alliance leadership.”

Borgeld is vice president and head of alliance management at Merck Healthcare KGaA, based in Darmstadt, Germany, and he copresented the webinar with Professor Stefanie Schubert, PhD, CA-AM, professor of economics at SRH University Heidelberg. Titled “Decision Making Beyond COVID-19 Times: Leveraging Your Capabilities by Employing Game Theory,” the May 5 presentation examined how decisions should be analyzed using game theory, how to make decisions more efficiently, and the important steps needed to move from thinking about a decision to implementing it and aligning around it.

Just Decide, Please

Even in the absence of a crisis, Borgeld noted, it’s more important for leaders to be decisive than to actually make “the right decision.” He even cited an article showing that of those CEOs who were fired, one third were let go for making the wrong decision, while the rest—the vast majority—were sent packing for their indecision. The bottom line? Alliance leaders, like other executives, can’t afford to be indecisive.

This becomes even more true under the conditions of COVID-19, according to Borgeld, given the following factors:

  • There is a greater need for speed in decision making now than ever before.
  • The usual ways of “informal influencing,” such as hallway meetings and watercooler conversations with key stakeholders, are currently unavailable.
  • Decisions are now often being made alone or in small groups of two or three.
  • There’s a very uncertain future ahead.

In effect, Borgeld argued, alliance leaders need to do the same things:

  • Negotiate
  • Communicate
  • Influence
  • Look ahead
  • Align
  • Implement

These actions will no doubt be familiar to alliance professionals in every industry, but in COVID-19 times, they’ve all become more challenging. Take alignment, for example. Before the pandemic, aligning with key stakeholders and team members could often be informal, taking place during a coffee break or over lunch, Borgeld said. But “now we need to align in a different way.”

Games People Play

How could game theory assist in this process? Schubert emphasized that “game theory is actually the science of strategic decision making”—a critical skill at any time, but all the more so during a crisis. In addition, the principles of game theory provide “a structured framework for deriving optimal decisions,” she said. This helps avoid situations where decisions are made on the fly without benefit of proper analysis, or conversely, where decisions are not made at all due to organizational paralysis and lack of leadership.

In brief, the application of game theory to a decision means asking these questions:

  • Who are the decision makers?
  • What are their options?
  • What is the timing?
  • What are the payoffs?

Borgeld and Schubert presented a fictitious case study involving Sandra, an alliance manager for Sapphire, a biotech based in China, and Michael, an alliance manager for Diamond, a US-based company. Sapphire licenses a drug product to Diamond under a codevelopment and cocommercialization agreement, and the two companies had planned to conduct Phase II clinical trials beginning on July 1, 2020. But once COVID-19 hit, the timeline for these trials became very uncertain, and the costs the two companies had budgeted for could be way off the mark. So what to do? How can Michael and Sandra make a good decision and align around it?

Schubert showed how, from Michael’s point of view, he needed to look at his options and Sandra’s preferences and decide on the best option based on the potential outcomes, or payoffs. Given this information—and the uncertainties—he and his company prefer to wait six months before deciding, by which time perhaps they’ll have a more accurate sense of how much the trials will cost and whether they can be carried out properly. Thus he needs to steer Sandra toward this decision and convince her to accept it, even though it is not her or her company’s preferred option. It’s not her worst option, either, so with this compromise perhaps they can agree to move forward.

If the outcome is not the one you prefer, as in Sandra’s case, you may need to “change the game you want to play,” Schubert noted, being creative about options and the timing of moves. She also stressed that this represents a simplified version of game theory application; to perform a more detailed analysis, you would need to calculate eNPVs—estimated net present values—including for situations where payments are uncertain, as with COVID-19.

“When you want to apply game theory, you have to focus on the aspects that are really important,” she explained. That also means you need to “put yourself into someone else’s shoes,” figuring out what their preferences will be before you can make your own decisions, taking both their preferred outcomes and yours into account.

Game Theory and Practice

Borgeld also had some tips for how these game theory principles could best be applied in actual alliance management decision-making practice. These include:

  • Look at all options at the same time instead of sequentially, the way you would when buying something on Amazon or eBay.
  • Go to the decision makers, present them with three options and their pros and cons—including one non-COVID option—and get approval for the option you recommend.
  • Be more efficient in conference calls and virtual meetings by paring things down to a “perfect agenda,” using strict time management and making sure to include one “context” slide before giving the options.

“Where you can really shine as an alliance leader is when you put the context there,” Borgeld noted. “And especially in these times when people are [spending] eight, nine, ten hours a day on conference calls, they are really happy when you end early. So try to limit it. I would never recommend a JSC call go on for three hours.”

In addition, Borgeld recommended monitoring the financial status of biotech partners, reviewing the contract’s force majeure clauses (“What could be the consequences? What could happen to us? Also, what could happen to the partner? Discuss it with the partner, and don’t wait too long”), and staying “two steps ahead” by looking at the short-term, midterm, and long-term horizons.

Schubert stressed that “Life is very complicated, and you have to find out what aspects are important, what are the decisions, and who are the players, the decision makers?” Approach the right people in order to decide together, she advised, based on a clear analysis of payoffs and outcomes.

One final thought from Borgeld: Get the meeting minutes out on time! Alignment and implementation are critical, so it’s important once decisions are made to communicate those decisions and send minutes out immediately—the same day if possible to avoid foot-dragging. “If you wait two weeks, people sometimes have second thoughts.”

All in all, it looks like applying game theory to alliance decision making could be a winning strategy.

Tags:  alignment  alliance leaders  alliance managers  decision makers  decision-making  decisions  Game theory  Harm-Jan Borgeld  informal influencing  Stefanie Schubert 

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Reset, Relaunch, Rebirth: Rejuvenating a Longtime Alliance to Create Future Value

Posted By Michael J. Burke, Thursday, October 17, 2019

What happens when a more than three-decade-old alliance that has gone through its share of turmoil nears the end of its contractual life? Does it simply wind down in collective exhaustion, ending with a whimper? Does it crash and burn? Or can it somehow rise from the ashes of the past?

            Two European biopharma companies struggled toward the answer to that question, and ended up resetting and relaunching their alliance to mutual benefit. Eric Ferrandis, CA-AM, vice president of strategic alliances at Ipsen, and Fabrice Paradies, director of industrial business development and global commercial alliance at Debiopharm Group, described the process of bringing their two companies’ productive partnership back from the brink and back to life in their presentation, “Partnership Reset and Launch: How to Complete the Past?” at the recently concluded ASAP BioPharma Conference 2019, held Sept. 23–25 in Boston.

            Paris-based Ipsen, a 90-year-old company specializing in oncology, neuroscience, and rare diseases, and the 40-year-old Debiopharm, a drug development company based in Lausanne, Switzerland, had an alliance going back to 1983 that had been very productive for both of them. This 35-year partnership sprang from a series of agreements and amendments for the licensing of Triptorelin—brand name Decapeptyl—a drug used in the treatment of advanced prostate cancer, endometriosis, and breast cancer, among other conditions.

            The DKP alliance, as it was known, created value for both companies, but as Ferrandis and Paradies acknowledged, it also had been set up in such a way as to cause “pain points” that those working on the alliance had never been able to address holistically. So what to do?

            As the alliance agreement neared its end by mid-2018, both companies’ CEOs agreed that a new alliance framework must be put in place, with negotiation leads empowered to get a new contract signed by the end of that year and relaunch the alliance for the long term. Accordingly, by July 2018 the companies hired the consultancy The Rhythm of Business to help get their partnership back on track by identifying the key problems that had hindered its efficient functioning and to assist in rebuilding a common vision for the alliance.

            The initiation of the reset process involved two workshop sessions covering two days and involving personnel from key functions across both companies. Among the key findings that emerged from those sessions:

  • Both Ipsen and Debiopharm still saw a promising future for the DKP alliance.
  • They also felt that the alliance’s current economic model would not unleash the full growth potential of the brand.
  • More indications launched in more territories globally would deliver greater value to both partners.
  •   Greater proactive investment in product innovation and life cycle management was required for continued success and growth.
  • The long-term relationship had laid a solid foundation, but some deep-seated divisions and differences still needed to be overcome.

Armed with these findings, the two companies’ negotiation teams—primarily three people on each side, with support from above and below—set about to restructure the alliance and set it on a better course, by:

  • Aligning financial terms in the new economic model, across all formulations of the product
  • Developing a joint life cycle management plan that fuels appropriate product innovation
  • Strengthen alliance governance to support the more ambitious economic model and operating framework
  • Working hard to build trust and ensure transparent and effective communication

As Ferrandis commented, “Everything is about trust.”

            As the new agreement was being negotiated, it was agreed that the old contract would remain in effect and the status quo of the alliance would continue on both sides. Other key points, according to Ferrandis and Paradies:

  • The need for a reset was agreed on by both companies.
  • There was buy-in by both companies’ senior leaders and leadership teams.
  • The revenue from the DKP alliance was important to both companies, so it was clearly understood that the reset/relaunch effort needed to go deep into both organizations.
  • The negotiation teams included representatives from alliance management, business development, and legal, and had input from a number of other functional areas—as well as critical support from senior leaders.

Both Ferrandis and Paradies admitted that while everyone involved wanted to “move fast” on the reset effort, it was important to lay the groundwork even before negotiations commenced to get the partnership relaunched. “We had to change the mindset” internally, said Paradies. Doing this work ahead of time—and having “the right people in the room,” as Jan Twombly, CSAP, principal of The Rhythm of Business, noted—led to a “new partnership spirit” in the alliance, according to Ferrandis.

            Ferrandis also cited leadership as “the greatest alliance management skill,” adding that behaving as a leader includes going to senior leadership when necessary to get buy-in and help get issues resolved.

            A new agreement was signed in 2018 that provided for 15 additional years of partnership between Ipsen and Debiopharm, featuring a new economic model with better-aligned financial terms, a new R&D framework with cost sharing for codevelopment mechanisms, new governance giving Ipsen final say over development and commercialization and Debiopharm control over manufacturing, and what the copresenters called a “commercial bold ambition.”

And once the new contract was signed, senior company personnel celebrated with a joint dinner in Montreux, Switzerland, on Lac Léman (Lake Geneva). The moral? For the rebirth of a long-running alliance like this one, said Ferrandis, “Don’t forget to celebrate each time you can.”  

Tags:  alignment  alliance management  codevelopmen  Debiopharm Group  Eric Ferrandis  Fabrice Paradies  Ipsen  negotiation  partner  partnership  Partnership Reset ASAP BioPharma Conference  R&D 

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