Editor's note: The following articles are compiled from The BioWorld BioPartnering Report 2009: Strategies and Paradigms of the Deal. For more information or to order a copy of the report, please visit www.bioworld.com.
According to the presentation "Managing Partnerships for Success: Building an Effective Alliance Management Capability" by Wyeth's Kendra B. Eager at the BIO 2008 convention, effective alliance management provides strategic value, financial value and operational value. Strategic value includes making better decisions, while financial value includes increasing value to all partners and increase efficiency. In the category operational value, Eager places improving effectiveness with common tools and processes.
"The most expensive agreement is the one that breaks down after it is signed and/or fails to deliver its goals," said P&G Director of New Business and Technology Development Kevin E. Driscoll in his presentation "Alliance Management: Managing Collaborations for Success" at BIO 2008. He reported statistics from Anderson Consulting that 70 percent of alliances researched had failed. Also, 30 percent of alliances fail outright and an additional 23 percent achieve only limited objectives, according to Alliance Analyst.
To help bump up these numbers, Greg Wiederrecht, vice president and head of the External Scientific Affairs department of the Merck Research Laboratories, advises companies to have detailed work plans for early-stage collaborations, with timings carefully laid out. That way, everyone will understand and appreciate the expectations.
"You really have to respect the partner's aspirations and vision," Warwick Bedwell, vice president, global head of business development, pharma partnering for Roche, told BioWorld Today. "If a partnership is to work together over the long-term it must be based on a sense of strong and shared goals."
Wiederrecht said that companies need two kinds of alliance management. One type should focus on what he calls the softer end of things: communication and relationship-building. "You have to dedicate time to that. It doesn't just come. It requires time spent on it, and people have to work on that." In addition, alliance management should be directed as the scientific part of the alliance.
"Those alliance managers are empowered to make decisions, communicate through the organization, to clear any bottlenecks, and then make sure that the contracts are being properly implemented as they were intended," Robert Little, vice president and chief commercial officer at Halozyme Therapeutics Inc., told BioWorld Today. "Unlike many small companies we have dedicated alliance managers for our key partners, allowing for appropriate firewalls, and we believe this is an investment paid back with a successful and profitable alliance. In the event that there are any areas that need discussion, they bring it up to the next level, and it's generally speaking addressed very quickly."
"Most large companies now have at least 30 alliances, and many have more than 100," according to the article "Measuring alliance performance" by Jim Bamford and David Ernst in The McKinsey Quarterly.
They found, in looking at more than 500 companies, that "fewer than one in four alliances have adequate performance metrics in place." As a result, the article stated, "alliances tend to be run by intuition and with incomplete information."
Alliance Management the Eli Lilly Way
Eli Lilly and Co. has partnered since the 1920s, when it joined up with the University of Toronto's Fred Banting and Charles Best to make insulin for the treatment of diabetes.
The company has since developed principles for alliance management that it says can be "used by companies of all kinds and sizes."
According to Lilly Alliance Manager Andy Eibling's presentation "Alliance Management at Lilly" at the BIO 2008 convention, "Lilly's goal is to become the fastest growing company in the industry and maintain independence through a constant stream of innovation derived from our internal pipeline as well as external collaborations."
The company's integrated approach to partnerships is based on four principles:
• Establishment of alliances within the corporate strategy of the companies involved. Partnerships are tools, and should be based on both company's strategies. "Fundamentally, there are not strategic alliances."
• Creation of "replicable business processes that can be applied from alliance to alliance."
• Active management of knowledge capital, such as "how contract clauses and governance structures have worked."
• Shaping and developing the capabilities of those involved in the partnership.