Business Development for the Biotechnology and Pharmaceutical Industry.
IN THIS SUMMARY
In Business Development for the Biotechnology and Pharmaceutical Industry, Martin Austin describes the basic processes needed to identify new business opportunities and to bring pharmaceutical alliances to a successful close. Business development is any activity that alters the status quo of the business. It may include planning, adding for growth, subtracting for profit, business process improvement, and competitive awareness and advantage. The skills base for business development has three distinct areas: industry specific knowledge, analysis, and communication. One of the key activities in business development is maintaining the company's portfolio of products. As a result, it is necessary to understand the objectives of the company and to plan accordingly. Austin recommends viewing the portfolio not only as a snapshot, but also as a continuum. To balance a portfolio, three major areas should be played off of one another: life-cycle management, development, and overall portfolio balance. A common question is where pharmaceutical companies find their business opportunities. From a business development perspective, a search strategy is needed to reduce wasted effort and to find suitable candidates. There are two landscapes to investigate when conducting a search. The first is the internal - who and what does the company know already? The second is external. There are four major steps associated with a search: assimilation, accommodation, synthesis, and crystallization. One of the most contentious issues in business development is valuation. In healthcare markets, a typical modeling technique is called "top down" - the model is created using sales data from existing products in a market as the definition of the market for the new product. More complex models include the underlying epidemiological data for the disease. The next step in the valuation process is to produce a forecast. The most usual approach is to look at a model and derive an initial estimate of the product's potential. Austin recommends subjecting the model and forecast to sensitivity testing. To realize value from a transaction, the choice of deal structure is very important. The main types of structure found in the pharmaceutical industry are licenses, acquisitions, and joint ventures. In considering which deal structure suits a company best, it is important to consider issues like resource comparison, portfolio fit, financial strength, management depth, and dependence on success. Before entering negotiations with a company for the rights to a product, it is necessary to conduct due diligence. The general categories of information needed for due diligence include intellectual property, contractual relations, human resources, ownership structure, operational liabilities and assets, and a business plan. For negotiations, a clear negotiating plan is useful to ensure that all points are covered during each discussion. The negotiating plan may refer to the basic building blocks of transactions: objectives, strategy, and tactics. The negotiation team should consist of at least two people who are present on every occasion when there is interaction between the parties. After a product has been selected and the terms of the deal have been negotiated, the details must be captured in a contract that allows the parties to achieve their objectives. While a corporate contract lawyer is essential, governance of the contract process must be managed by business development. Business Development for the Biotechnology and Pharmaceutical Industry is intended to help readers understand how to identify and structure new business opportunities. It guides readers through the basic steps required to plan a pharmaceutical product portfolio and then create alliances to fulfill that vision. The book is written for primarily for people who are in business development roles in biotech and pharmaceutical companies. It is designed to be read from cover to cover.