Tuesday, March 22, 2011

What Biotech Wants From Big Pharma Partners: Survey Says!?

With Big Pharma's internal R&D productivity in the proverbial toilet, business development plays a critical role in securing drugmakers' future wellspring of innovation. Thus, what biotechs think of pharma as partners matters, perhaps more than it ever has before.

Two companies that can pat themselves on the back? Roche and Merck & Co., who took home top honors as best partners in a recent survey of biotech execs published by the Boston Consulting Group.

GSK, Novartis, Eli Lilly and Pfizer also scored well, with one biotech – Celgene – sneaking onto the leader board with the third-highest proportion of respondents having a favorable impression of the company’s partnering capabilities. (Celgene's appearance shouldn't surprise our blog readers; in our 2010 Deals of the Year competition, the biotech, whose deal making prowess will be analyzed more completely in an upcoming IN VIVO feature, chalked up wins in two different categories.)

The BCG survey is the fourth in a series, following similar efforts in 2003, 2006 and 2008. The goal, says BCG partner Simon Goodall, is to determine the key characteristics companies are looking for in a partner, and which buy-siders are best fulfilling those wishes.

The survey was sent to about 500 heads of business development and chief executives during the summer of 2010, and the results are based on approximately 100 responses. Interestingly, BCG found that changes in Big Pharma corporate leadership could impact the perceptions of potential biotech partners quite quickly; despite Chris Viehbacher’s short tenure at Sanofi-Aventis, for instance, biotechs believe the French pharma is a more attractive partner because of its more outward-looking focus.

Moreover, views of Roche and Merck were not hurt by their respective mega-acquisitions of Genentech and Schering-Plough. And Japanese companies – which scored poorly in earlier surveys and were largely indistinguishable in potential partners’ view of their characteristics – have made great strides both as a group and individually. Several now score above the average overall.

“In 2003 the results told us that everyone was awful,” recalls Goodall. Less than one in three companies received a positive overall response from BCG’s list of biotech partners. Those results improved in 2006, and again in 2008, with nearly half garnering positive responses. At the same time the list of biotech ‘wants’ shifted from solid commercial capabilities to a willingness to allow biotechs to retain control over their assets. At last reckoning, in 2008, the full impact of the financial crisis was yet to be felt by the biotech community, says Goodall. “They felt they wouldn’t be as badly affected as pharma,” he says.

The financial meltdown and its impact on the biotech financing climate have helped to shape biotechs’ current wish list of important partner characteristics. In 2010, practical considerations like clinical and sales/marketing capabilities, alongside a partner’s ability to add value to a biotech’s compound, rose to the top of the list. Fuzzier characteristics, including ‘responsiveness during the deal negotiation process’, ‘fit with corporate culture,’ and ‘alliance management capability’ faded in importance. Even so, “organizations are thinking more carefully about how they project a partnership image,” says Goodall. “There’s a careful orchestration and coordination and companies are recognizing they need to make decisions more quickly, and be more efficient.”

BCG has not divulged the “losers” in its survey (feel free to ruminate in the comments below), and so we’ll have to make do with analyzing which pharma companies performed the best against key characteristics in the eyes of the respondents.

Ranked as a percentage of responders that agreed a company exhibited particular criteria, Roche struck gold in four categories, as the company is most associated with deal structure flexibility, executive leadership, alliance management, and manufacturing expertise. Merck led in five categories: responsiveness, BD/licensing group access, therapeutic areas of interest (tied with Novartis), control over development, and ‘develop and prosper,’ a metric related to post-deal success.

Pfizer and Novartis took honors in three categories apiece. Novartis took the prize for TAs of interest, regulatory capability, and research expertise. Pfizer excelled in global reach and access/reimbursement, as well as in an area it would perhaps rather forget: ‘pay highest price.’

Price tags aside, on the whole it appears that industry is moving in the right direction -- and when business development is companies' best hope at securing the next generation of important, valuable drug candidates, that's good news for everyone.

UPDATE: you can request a copy of the survey here.


Unknown said...

Your link to the BCG site does not take you to their study. How do you get the study results?

Chris Morrison said...

Thanks Jeff. That's true. BCG gave us a redacted version of the study results with some charts and graphs and we interviewed Simon, as you see. BCG has decided not to more widely distribute the results, though we did ask if we could link to the version of the study that we saw and they declined.

Jan Twombly said...

I find it puzzling that Goodall says "alliance management capability" faded in importance among desirable partner characteristics. In the next sentence he describes the outcomes that effective alliance management achieves.

Perhaps there is a lack of understanding about who is driving the outcomes deemed important in a partnering environment, such as careful orchestration and coordination, as well as speed of decision making.
This is the core or what biopharmaceutical alliance managers do.

Simon Goodall said...

I'd be happy to share our charts and findings with anyone who is interested, please feel free to reach out to me directly at There should also now be a link on the web site that directs you to me as well.