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Lilly and WuXi App Tech: Tips and Insights from a Successful Western and Chinese Pharmaceutical Collaboration

Posted By Cynthia B. Hanson, Friday, September 9, 2016

Only 50 percent of China’s population is urbanized, which means the pace of change over the next decade is likely to be colossal. Its already one of the largest and fastest growing pharmaceutical markets. But it also can be one of the most challenging for alliance managers to negotiate because of the cultural differences. 

Eli Lilly and Company is known for being one of the firstand most persistentpharmaceuticals to make inroads into China. The company began with an R&D partnership with Shanghai-based WuXi App Tech in 2003. Last year, the companies entered into a significant strategic collaboration for a new project as part of a global program. 

For Brent Harvey, CA-AM, director of alliances at Lilly, the test tube is clearly more than half-full when it comes to doing business in China. “How do we leverage the difference between our two companies or cultures for competitive advantage?” he asked during the session “A New Model for Western and Chinese Pharmaceutical Partnering,” at the 2016 ASAP BioPharma Conference “New Faces, Unexpected Places in Partnering: The Foresight to Lead, the Foundation to Succeed” held Sept. 7-9 at the Revere Hotel Boston Common, Boston. 

Assisting with the presentation was Zhihui Qiu, Director of Strategic Transactions, at WuXi App Tech (Shanghai) Co., who shared her company’s perspective. The two company representatives discussed their approach to resolve cultural differences, cut government red tape, and extract long-term value from the partnership. They provided several valuable tips gleaned from the experience: 

IP Security
Harvey: We typically manage the IP at the mother ship. But we also have local counsel. It is so hard to keep track of what’s going on there, so it’s important to have that local presence. 

Qiu: IP is receiving increasing attention in China. Dedicated IP Courts were established in China earlier this year. In the United States, you tend to have very good IP management. In China, it is not a big practice yet. You probably need local help and US counsel to work together to make sure you are protected. 

Contracts

Harvey: We try to de-risk as much as we can in the contract. We tend to view it as definitive, while the Chinese view it as general guideline. When I think about Western trust, it’s someone who honors his or her word. In China, this perspective is about honing change in mutualities. Chinese people want to stay practical. They don’t want to rewrite their contact. 

Qiu:  Contacts tend to be simple and boilerplates are greatly simplified. As the relationship evolves, the contract may be replaced by a new one to better serve the purpose. 

Making the Deal

Harvey: It’s very important to have high-profile executives helping to build trust and social capital. In Western culture, the deal is the deal, and we would probably celebrate it by going to a bar. 

Qiu: We might celebrate the major deals with a ceremony. The government is trying to foster and build innovation in pharma industry, and we would invite multiple government officials and key opinion leaders to the ceremony to raise their awareness. 

Planning and Team Meetings

Harvey: Time zone differences can be challenging; use a lunar calendar because holidays will change. It’s very important to have actions and decisions clearly documented in meeting minutes. The Chinese have a different approach to planning with optimistic and aggressive milestone dates. It has benefitted Lilly to be stretched and pushed by aggressive Chinese firms. Relationships are important, but there is a lot of turnover in Chinese firms, which is something you should be aware of going in. 

Qiu: Chinese company power is more centralized, which allows the Chinese to push. Our teams are Western educated; the English is really good, which helps a lot with communications. You won’t need translators. Face-to-face meetings are important. 

Regulatory pathways

Harvey: China issued a new policy to allow biotech companies to hold product licenses. Manufacturers used to be the only ones who could hold the license. Things change so quickly in China, and you need to think about how you are staffing your alliances to be agile and adaptable in this very, very dynamic environment.

Qiu: New drugs used to be produced by the multinationals, and domestic companies didn’t have the capability for innovation, but that has changed in the last 10 years. A government agency set prices incentives for innovative drugs developed by domestic companies. 

Government Regulation

Harvey: It took a lot of conversation, the documents were in Chinese, and requirements needed transcription. It took a lot to engage the expertise of Lilly’s Shanghai and Beijing offices. It was not easy to figure out what we needed to do to have an acceptable package. 

Qiu: You need local people who truly understand regulatory affairs in China. Your approach depends on what route you are going and the specific goals you are trying to achieve. 

Tags:  ASAP BioPharma Conference  Brent Harvey  contracts  cultural differences  cultures  Eli Lilly and Company  Government Regulation  high-profile executives  IP Security  partnership  pharmaceuticals  Planning and Team Meetings  R&D partnership  Regulatory pathways  strategic transactions  WuXi App Tech  Zhihui Qiu 

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Minding Your P’s & Cues When Managing an International Alliance: Lessons Learned for Citrix and Fujitsu

Posted By Cynthia B. Hanson, Wednesday, May 25, 2016
Updated: Saturday, May 21, 2016

Running an alliance is a lot like running a marathon, said John-Marc Clark, managing director of global SI sales at Citrix Systems. “Both cover long distances at a fast pace over a long period of time. Strategy, planning, perseverance, consistent training, and teamwork are critical success factors.  And you can measure the results,” he noted during his talk “Going Global: When the Whole is Greater than the Sum of the Parts,” at the 2016 Global Alliance Summit“Partnering Everywhere: Expert Leadership for the Ecosystem,” held at the Gaylord National Resort & Convention Center, National Harbor, Maryland.  

Clark has been “running” in international alliance marathons for years for Florida-based Citrix—with record-breaking companies such as Tokyo-based Fujitsu, an information technology equipment and services company. Fijitsu is Citrix’s No. 1 partner out of the company’s 10,000 partners, said Clark. It is the largest IT company in Japan—providing technology ranging from super computers to smart phones. “Two or three of the largest Citrix-led deals worldwide were with Fijitsu. We share a pipeline, and we have an open kimono in regard to our business together. We have top-down sponsorship at the CEO level for entire regions, which is very important.” 

The metrics show the partnership is “growing like crazy,” he added. The Compound Annual Growth Rate (CAGR) has been 15 percent over five years for Citrix-based bookings. “Both companies bring tremendous assets to the equation” and incredible customers, such as the German Federal Employment Agency, which is working on locating jobs for one million refugees streaming in from Syria, he noted.   

This marathon “has really been a fantastic journey,” he continued, while launching into the fascinating cultural aspects of doing business with a Japanese company. In the beginning, the 15-year plus partnership “was not a true global alliance. It was more like an assembly of relationships. I was not an alliance manager—I was asked to go into this role because I am highly international. I speak four languages,” he explained. “I knew no one at Fijitsu, which was a big problem.” In one early meeting, “the Fijitsu participants never said a word,” he recalled. “It was more like a ceremonial meeting.” 

As he studied Japanese culture and the new business dynamics, Citrix’s alliance with Fijitsu blossomed. The following hurdles were critical in developing the international partnership, Clark said: 

  • Be like Tom Sawyer, who convinced 15 people to paint a fence—build virtual teams and communication. Don’t make it your project. Make it our project. Use E-mail distribution lists and Share File on the cloud. Communicate constantly, and do your best to link people together. Go out of your way to take your alliance into company events, and always have a one-line elevator pitch. Global organizations don’t collaborate very well: “Your role is the connective tissue.”
  • Don’t default to travel, but don’t underestimate the power of travel. If you really want to build a relationship, go there to seal the deal: “’When in doubt, go on the road,’ a boss once told me. In the beginning, it was imperative. It legitimized me in the eyes of Fijitsu,” he recalled.
  • Establish trust and integrity: If trust is lost, all future negotiation is lost. In a massive and complex organization, identify the critical people with which to establish relationships: “I first worked on integrity and building solid relationships because it was a way to handle potentially contentious and litigious situations.”
  • Create and review a plan; apply precise metrics. Have a tight explanation on what the value proposition is for your company, your partner, and the client. Act on things that are measurable. Read the book The Four Disciplines of Execution by Chris McChesney, Jim Huling, and Sean Covey.
  • Have well-written, organized, and fair contracts. “When I came onboard, there were 70 contracts with Fijitsu. It was like black magic: We had people who only knew what the terms were. There is only one now. I believe in the model that when Dec. 31 comes around, everything should auto-renew and harmonize,” he added.

Tags:  alliance manager  Citrix Systems  communication  Compound Annual Growth Rate (CAGR)  contracts  culture  Fijitsu  global alliance  IT  John-Marc Clark  Metrics  partnership  The Four Disciplines of Execution 

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