Being the partner of choice is an aspiration larger pharmaceutical companies would be happy to admit to having as a deal making goal. However, is it a meaningful aspiration? Or is it just a sound bite aimed at biotech companies hungry for a deal? Interestingly, it is not an idea often voiced by smaller biotech companies.
The concept of partner of choice, as well as addressing the process leading up to a deal, goes beyond the deal and into the relationship within the alliance and its management. Consequently alliance management is increasingly seen as a way to mitigate the chances of alliance breakdown for reasons other than project failure. In this context, commitment beyond the deal is seen as essential for alliance success.
One would think that biotech companies, which have relatively smaller portfolios and higher chances of exposure to failure, would be prepared to invest in alliance management, because this is not simply a mechanism for ensuring that the current deal prospers, it is, in addition about building a relationship for future deals. So, in an era where deals are not only necessary but also essential for survival, it is surprising that the biotech community has not given alliance management a higher priority.
In light of this situation, what is the position of the larger pharmaceutical companies? Well, it means that they are often the only party in a deal that has a 'professional' manager dedicated to the task of alliance management. This state of affairs can make things one-sided and negate the relationship between the companies - thus leading to an outcome opposite to that intended!
"Alliance management is increasingly seen as a way to mitigate the chances of alliance failure."
Is being the partner of choice the factor that helps the deal to go the larger company's way? Possibly, but other factors, such as aversion to risk, can also influence the partner selection process. This is why the concept of partner of choice can be pushed too far: does the partner of choice pay more for the deal - is that partner less risk adverse? Here, we need to remember that both paying too much and taking on higher risk are likely recipes for future alliance failure.
Key to future success will be the multi-alliance deal with options on future drugs and/or technologies. The future partner of choice will be committed for the longer term, have multiple options and work to ensure that success is the more likely outcome.
Fintan Walton
Chief Executive Officer
PharmaVentures Ltd