Anatomy of a Managed Partnership
July 2008
Michel Abiteboul, vice president of global business development at NovaQuest, outlines various partnering solutions for today’s global pharmaceutical marketplace.
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With big pharma desperately hungry for new products and a more efficient business model—and small and mid-sized pharmaceutical companies constantly needing funding—drug developers both large and small are embracing strategic partnerships. For big pharma, a partnering approach affords the opportunity to bolster development pipelines without taking on too much risk or adding to their already massive fixed costs. For small and mid-sized companies, partnering offers alternative sources of capital, infrastructure and expertise to help optimize a clinical development program or support the commercialization of a product in later stages. For companies of any size, however, a properly managed partnership must include a shared vision and a flawless execution of processes in order to be successful and lucrative to both parties.
Because every alliance is unique, NovaQuest employs a managed partnership model that’s flexible enough to address the individual needs of our partners. To that end, we’ve developed a partnership approach that leverages our experience and expertise in helping our partners bring innovative products to market.
Strategic Resourcing
One of our core partnering solutions is strategic resourcing—long-term, peer-to-peer relationships designed to assist partners as they manage transformational change. Strategic resourcing can take several forms, including “virtual” development or commercialization (complete outsourcing of those services); co-development or co-commercialization of a compound or portfolio; functional outsourcing; or a straightforward “badge-flip” exercise. The key to all strategic resourcing however, is alignment between the two organizations—an absolute focus on agreed outcomes and managing to ensure that all objectives are being achieved.
The benefits to the partner company can be significant, including process optimization, reduced fixed infrastructure, increased efficiency and program success. Strategic resourcing models can also involve a risk-share approach, if appropriate.
One example of strategic resourcing involves a top-20 pharmaceutical company that wanted to outsource the development of a number of strategic assets. It needed a partner with the full range of development resources and deep experience in a specific therapeutic category. The resulting strategic resourcing partnership with NovaQuest provided a totally integrated solution with joint teams at strategic (senior executives), management and operational levels. The partnership has enabled the company to take a “lean team” approach while relying upon NovaQuest for functional implementation. The results: vastly reduced administrative oversight versus the “CRO as a service provider” approach, with full operational integration and continuity of project teams, which is difficult, if not impossible, using traditional RFP-driven fee-for-service outsourcing. In addition, overall efficiency has been increased by allowing NovaQuest to drive processes that both reduce timelines and leverage significant Quintiles therapeutic expertise.
Investment Partnering
Investment partnering is a strategic partnership in which some form of financial risk-sharing—cash and/or services—is an element. The goal typically is to provide the partner with a strategic and financial solution to progress the asset through certain clinical, regulatory or commercial stages. At NovaQuest, we have a number of investment mechanisms that are very flexible, and we customize our investment partnerships to meet the unique operational and financial needs of our partners.
NovaQuest’s approach to investment partnering deliberately combines financing with a co-development or co-promotion element. This is the manner in which our investment model is different from purely financial solutions. NovaQuest can contribute unique, peer-level expertise in critical functional areas and deploy intellectual and managerial capital that complements (but doesn’t compete with) our partners’ capabilities. This incremental collaboration adds more than money to development and commercial programs, lifting the overall value of the programs for all stakeholders.
Importantly, NovaQuest investment partnerships do not require that partners give up strategic control of their programs or transfer intellectual property. Our partners keep control of their assets and overall strategy, and retain the lion’s share of their program’s long-term value. The model is designed to deliver the best of industry partnering (relevant intellectual and managerial capital exchange) while avoiding historical pitfalls (governance delays, competing priorities, etc.). NovaQuest manages investment partnerships to which more than US$2 billion has been committed over the past eight years—a clear indicator of how this customized, industry-alternative partnering model is successfully addressing today’s challenging market needs.
Preparing for a Partnership
Before any partnership is launched, pharma executives first need to be very clear about their own company’s strategy. What do you want to do with your company? Where do you want it to go? If everything goes according the plan, where you want to be in five years? These are very important questions, and a company needs to have agreement on the answers with their executive team, their shareholders and whoever else may be involved before progressing into a partnership. Being very clear about the corporate strategy is a major, critical step to a successful alliance.
Once the overall strategy has been defined, executives must have realistic expectations about the potential product. All involved need to be realistic and assess, very carefully, the risk and potential pitfalls of the product and the development plans down the road. It is also very important to be realistic about the amount of money involved in developing a product. Often we see companies underestimate the cost of running a Phase II or Phase III trial, and this approach can result in higher costs in the long term. So, there needs to be a very clear understanding of the costs, the timelines and the risks involved, which speaks straight to the strength of the management team: perhaps the most important element in any successful partnership.
Ultimately, it is the company’s leadership that will drive the partnership. Management teams need to be very transparent about their company’s needs and current issues so that potential development partners may be confident in both the underlying scientific platform, management capability and commitment to the program and therefore the elements required for a successful and productive alliance.
In summary, NovaQuest offers long-term, outcome-focused partnership solutions to the pharmaceutical and biotech sectors. These partnerships can support product development and/or commercialization of brands, but their individual structure will be completely tailored to each company’s specific needs. Partnership elements are varied and can include the provision of funding, resources, therapeutic expertise or process optimization, but the overarching principle is one of aligned vision and objectives plus strong management, which together ensure success for both parties.
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