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PharmaDeals Business Commentary

Be Quick, be Brave, be Successful (2005-11-01)

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The need to build pipelines in the pharmaceutical industry carries on unabated and the industry continues to drive towards doing more and more deals. Whether a company is a large corporation or a smaller biotech, everybody needs to in-license or acquire innovation to build portfolios.

So who are the successful companies?

The greatest challenge is resource and organisation: resource in terms of people and financial strength; organisation in terms of strategy, management and decision making. The problem with deal making is that it is governed by opportunity. This imposition of a deterministic approach is incredibly frustrating. For example, a company planning to do an acquisition over the next year will only be presented with a limited number of opportunities. Having probably failed through a proactive approach because there is no suitable target available for acquisition, the company will simply abandon its plans. In the following year a real opportunity may present itself and the company has then to take a reactive approach. However, it is likely that none of the resources previously in place are still positioned for use, so the company may find itself unable to do the deal.

"The problem with deal making is that it is governed by opportunity. This imposition of a deterministic approach is incredibly frustrating."

It is important to realise that to be successful companies need to have in place the resources and organisation to do a deal at any time. This includes the ability to pull the deal together, perform due diligence and make rapid decisions. Speed is of the essence; it can determine success or failure.

Streamlining decision making is key to success. The more a company has enabled its valuation and evaluation processes to filter opportunities and turn them around as decisions, the more likely it is that it will succeed. The greatest block to doing deals can often be fear of making the wrong decision, and empowering your decision-making capabilities is one of the key components to success. An effective due diligence process will contribute enormously to improved decision making.

Resources do not always have to be internal though. Outsourcing their resource requirements to consultancies such as PharmaVentures and other specialist firms can enable pharmaceutical companies to be flexible in their organisation and move fast.

Fintan Walton

Chief Executive Officer

PharmaVentures Ltd