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Revamped Bayer Alliance Practice Relieves Partnering Headaches

Posted By Jon Lavietes, Saturday, August 29, 2020

Five years ago, Bayer’s R&D alliance management group knew it needed changes. Even though its core partners were happy in their collaborations with the 150-year-old pharmaceutical and over-the-counter medicine institution, the external perception in the broader pharma community landed in the lower tier, according to its internal research.

The R&D group embarked on changes to its alliance practice in order to improve its function and achieve three larger organizational objectives: 1) deepen the company’s understanding of the mechanisms of diseases that were getting increasingly complex; 2) broaden its drug portfolio into new modalities, technology, and external innovation; and 3) make its operating model more flexible, in general.

Bayer was contending with a variety of changes in its operating environment. First, the number of alliances—and the number of people from outside the organization working on Bayer initiatives—was growing fast. Moreover, the company was engaging in new types of collaborations, such as digital health partnerships, in which it found itself in the unfamiliar position of being the inexperienced party. Partners increasingly had their own alliance networks playing roles in Bayer collaborations, which added a new layer of complexity to the management of these collaborations.

Two Bayer executives shared the story of the company’s still-in-progress alliance management makeover in an on-demand 2020 ASAP Global Alliance Summit session, “Enabling Strategic Change—Cultural and Alliance Capability Development,” which took viewers through the internal and external changes that were made in order to modernize its alliance practice and improve its standing within the broader pharma partner community.

Bayer’s New Training Regimen Comes Up ACEs

The first step in upgrading Bayer’s organizational alliance capability was to overhaul alliance manager training. More specifically, the practice instituted highly tailored individual plans; executives were coming to alliance management from a variety of areas (e.g., marketing, R&D, business development, etc.) and each had different strengths, weaknesses, and bodies of knowledge.

Bayer complemented this individualized training with its Alliance Community Excellence (ACE) initiative, which brought in outside experts, sometimes from unusual places, to hold court on facets of alliance management. Michael Kennedy, PhD, director of strategic alliances in Bayer’s Business Development & Licensing group, spoke of one instance where a former FBI trainer taught alliance managers how to identify and neutralize lying and deceit. The ACE program also placed an intense focus on external networking, including deepening the alliance group’s interaction with the ASAP community. As part of the ACE program, the alliance management practice also set up a help line so that nobody in the organization felt like they were on an island. 

“Who are you going to call? It’s not Ghostbusters. It needs to be somebody within our broad alliance community that people can call, either as an alliance manager running into some challenging topics and wanting to discuss it or somebody on an alliance team. They can pick up the phone and call one of us alliance managers for help,” said Kennedy. 

Complementary Principles, Competencies Go Hand in Hand

Bayer structured its training into six core competency categories: 1) alliance know-how, 2) collaboration, 3) joint problem solving, 4) organizational agility, 5) flexibility, and 6) conflict management, and developed curriculum for executives of different levels (e.g., rank-and-file team members vs. alliance leaders). Each of these areas consisted of three to five individual skills. Kennedy explained that the organization sees synergy between these areas and that they can be broken down into three complementary pairs—organizational agility helps optimize alliance know-how, flexibility aids collaboration, and conflict management is an inevitable part of joint problem solving.

Kennedy walked the virtual audience through a set of foundational principles grouped into two broad categories—1) “Establish,” which dealt with structure and process, and 2) “Practice,” guidance around mindset and culture—that similarly went hand in hand with each other. Each alliance needs resources—namely, the right people, capacity, and investment—but they are useless if partners don’t have access to Bayer leaders. (Resources represent an “Establish” principle, while access comes from the “Practice” category.) Governance, another “Establish” principle, is nothing without alignment, which Kennedy defined in this context as “speaking with one voice.” Communication, both in terms of timing and consistency, to partners and the public at large is paramount, but problem-solving capabilities will eventually be necessary when it breaks down. For years, Bayer struggled to acknowledge partners’ differences, but in recent years the company has strived to safeguard the value joint initiatives are expected to bring to allies. Carry out all of these principles, and Bayer partnerships will generate execution and trust.

“[Execution and trust] really are the foundational pieces of our partnering principles,” said Kennedy.

A New Alliance Culture: Play to Win vs. Playing It Safe

Of course, principles and competencies only go so far if a corporate culture isn’t designed to optimize them. Bayer had a lot of work to do in this area, according to Christoph Huwe, CSAP, PhD, director of strategic alliance development for R&D Open Innovation & Digital Technologies at Bayer. First, the company had to stop operating in silos. To that end, it adopted the mantra “assets over function,” recounted Huwe in describing the new collaborative mindset that encouraged employees engaged in alliances to prioritize activities that were necessary to advance a drug candidate to a clinic or patient. Bayer relaxed its traditionally “top-down” command-and-control model, so that its employees had the freedom to execute accordingly without having to run every decision up the ladder within the company.

Bayer similarly loosened its risk-averse ways to enable the alliance practice to “play to win and learn over playing it safe”—according to Huwe, the organization was previously less inclined to make mistakes. From a strategic standpoint, Bayer’s mentality switched to one of “science over process.” That is, instead of trying to force a drug to work for a preplanned indication, it would follow the science and pursue another indication if initial research showed the asset was better suited for it.  

Cards on the Table: Alliance Game Players Learn Practice’s Four Pillars

Of course, culture starts at the top, so the alliance practice puts its senior leaders through rigorous team and individual training to lead by example and accept what Huwe characterized as “very candid feedback about inconsistencies” in what they preach and what they do vis-à-vis partner initiatives. Midlevel management retraining was also critical, according to Huwe, since the majority of people working on alliance engagements reported to executives at this level.

Since senior executives usually developed the company’s alliance strategy in advance, it was up to the alliance practice to rebrand itself and communicate the new vision to the rest of the organization through “game-ified” cross-functional team-based exercises. For example, the alliance practice created a board game that was divided into the four pillars of Bayer’s internal culture—collaboration, experimentation, customer focus, and trust. About a dozen players would break into smaller groups where they would be asked to discuss whether actions detailed on playing cards were “blockers or drivers” of these four cultural mainstays. The smaller groups would ultimately reconvene to share and discuss their findings in one large discussion.

Huwe said the alliance management team also instituted new “health-check–style surveys,” which measured “awareness, agreement, involvement, and impact,” to make sure the new culture was taking root. Huwe placed a special emphasis on the “agreement” piece.

“You have to have an understanding if the organization is really on board because if they aren’t you have to think of ways to get them there,” he said. “Senior leadership will be much ahead of the rest of the organization in their agreement to the process, so they need to understand that we’re not quite there yet, and they have to continue to work with the rest of the organization to get there.”

Out of Its Comfort Zone and into Global Pharma Networks

Bayer also embarked on several new measures to improve its reputation as a partner externally.

“We’re trying to leverage the partner’s strengths and capabilities and not trying to turn them into more like Bayer. This is causing us to get out of our comfort zone and expand the way that we think and the way that we work with partners,” said Kennedy.

Case in point, Bayer previously had a company policy limiting press releases to deal signings and phase 3 or later. However, the company has recently relaxed that internal standard to accommodate partners that were eager to issue announcements detailing successes in earlier stages of the drug development cycle. In addition, the normally process-driven company has taken steps to become more flexible. For example, it cut the number of steps in its governance process to approve a deal by more than half.

Bayer has in some cases chosen to collocate employees at partner sites, and it has also opened up business and innovation centers in regions around the world considered hotbeds of pharmaceutical activity, such as San Francisco, Boston, Osaka, Beijing, Singapore, and Berlin.

“We’re going to where the networks are already existing and not asking people to come to Bayer [headquarters],” said Kennedy, who added that the company can now take partners to these sites to give them an up-close look at Bayer’s affairs.

The company has established effective online platforms, hosted more partnering events, and increased its conference presence, even bringing actor Michael J. Fox to one show to speak about the company’s efforts around Parkinson’s disease. Today, half of the company’s top 10 products come from partner initiatives, accounting for more than half of Bayer’s revenues.

The opening slide of Kennedy’s roadshow presentation now says it all: “Bayer is a partnering company.”

Huwe and Kennedy had more to share about Bayer’s partnering transformation, so make sure to use your Summit registration information to catch the full presentation in the Summit portal. While you’re there, peruse more than 20 other insightful sessions from the first-ever virtual ASAP Global Alliance Summit.

Tags:  alliances  Bayer  Christoph Huwe  collaborations  Digital Technologies  Global Pharma Networks  Michael J. Fox  Michael Kennedy  Open Innovation  partnering  partners  strategic  transformation 

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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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Q4 Strategic Alliance Quarterly Sourcing Outtakes: The Power of the First Draft, Ever-Changing Tech Standards, Customers and the Cloud, Value vs. Discounts

Posted By Jon Lavietes, Wednesday, December 11, 2019

In our upcoming issues of Strategic Alliance Monthly and Strategic Alliance Quarterly, we will examine the changing nature of supplier collaborations in today’s business world. In a lengthy feature for Strategic Alliance Quarterly, we dive deep into how advanced digital technologies are transforming sourcing and procurement managers’ jobs such that they now need alliance management skills and practices to effectively carry out their responsibilities. Meanwhile, a feature in our next edition of Strategic Alliance Monthly explores how a company can become a preferred supplier in the eyes of its partner.

As is the case with just about every piece we put together for ASAP’s publications, there were plenty of great insights left over from our interviews with experts from the ASAP community that don’t appear in either article. Here are just a few of those nuggets.

Alliance Agreements and the Power of the Pen

Andrew Eibling, CSAP, vice president of business development and alliance management at Enable Injections, Inc., made it known several times during our conversation that he felt that, in pharma, the procurement division was generally a parking lot for nonstrategic partnerships. In other words, wind up with a procurement manager as your point of contact and odds are that you have almost zero chance of having any real influence over the partner organization’s affairs. In that discussion, Eibling noted that initial contract negotiations offered a sign of how a partner will view your organization and relationship. The goal is to agree on a contract that hews closer to the principles set forth in The ASAP Handbook of Alliance Management rather than a boilerplate supplier agreement, and the best way to ensure this is to compose the first draft for the partner’s review.

“Somebody has the power of the pen. Who drafts the agreement first? Everyone wants to take the first pass because that becomes the substrate you’re going to work from,” said Eibling. He added that an alliance agreement “tends to be more bidirectional versus what we would get from a monodirectional supplier agreement [where] you will do what’s on the schedule according to the terms we agreed to, and that’s that.”

Are We a “Standards Fit”?

An important element to assembling a tech alliance that we didn’t end up exploring in great depth in the feature was the layer of complexity added by the number of disparate standards for emerging technologies, such as cloud and IoT, competing in the marketplace. Companies putting together a smart tractor, for example, have to find partners that are not only a feature/function fit and a cultural fit but also a “standards fit,” so to speak—that is, they base their systems on technical protocols that align with your IT architecture.

“Things are moving so fast. You might get a standard out there and get everybody to adopt it, but then some new technology comes along that disrupts it all. You’ve spent all this money on standardization and it didn’t endure. That’s one of the reasons why, as a supplier, you need to know what your customers’ sourcing strategies are, and if you’re going to be compatible with the direction they are going in,” said Russ Buchanan, CSAP, vice president of strategic alliances at Xerox and ASAP’s chairman emeritus.

As an example, Buchanan talked about how companies that base their technology on proprietary standards want to be sure to avoid getting entwined with organizations that are placing their chips on open source models.

“OK Google: I’m Seeing Other Cloud Companies”

Subhojit Roye, CSAP, vice president and head of alliances at Tech Mahindra Business Services, singled out the three cloud Goliaths—Google, AWS, and Microsoft—as another potential source of complexity in constructing an alliance. One or more of those vendors may pressure the manufacturer to make it the exclusive cloud platform for the new product or service, but in many cases decent portions of the OEM’s customer base may be split among each of the three cloud leaders. The manufacturer can’t risk alienating a portion of its clients. Thus, the sourcing manager may need to stand up to a powerful market mover, something alliance managers have been doing for years.

“Suddenly, if you’re the procurement manager you have to explain to Google, ‘I’m sorry, but customers are demanding that we have to talk with all three companies,’” Roye said.

Don’t Nickel-and-Dime a Valuable Relationship

More than one interviewee stressed that lower prices are no longer the end game for sourcing and procurement managers. Overall value is the buyer’s main goal. Roye explained the situation in greater detail.

“The procurement function is becoming more and more strategic. The chief marketing officer is becoming critical. Chief customer service officer, the head of sales, and the CEO are suddenly banking on the procurement officer to say, ‘Listen, those days are gone. Don’t nickel-and-dime the vendor. Don’t ask him to give us a $10 item for $6. We’d rather get more value for $10. We’d rather pay him $12 to make sure he’s happy with us, he gives us our products on time—we don’t wind up with a screw-up on Thanksgiving or during the winter holidays—or he doesn’t switch at the last minute and go to a competitor.”

Remember, this is just what hit the cutting room floor. Be sure to check out the next issues of Strategic Alliance Monthly and Strategic Alliance Quarterly for more great insights into alliance management vis-à-vis the sourcing and procurement functions in today’s corporate landscape. 

Tags:  alliances  Andrew Eibling  AWS  Cloud  digital technologies  Enable Injections  Google  IoT  Microsoft  procurement  relationship  Russ Buchanan  Sourcing  Strategic Alliance Quarterly  Subhojit Roye  Tech Mahindra Business Services  Tech Standards  transforming sourcing  Value vs. Discounts  Xerox 

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