The State of Alliance Management_Inova Software

THE STATE OF ALLIANCE MANAGEMENT

IN THE LIFE SCIENCES

www.inova-software.com © 2017 Inova Software

1) Introduction 3 2) The Importance of Alliance Management 4 3) The State of Alliance Management 6 4) Responsibilities of an Alliance Manager 10 5) Key Pains 13

6) Best Practices 15

Contents

© 2017 Inova Software www.inova-software.com

Alliance management is a relatively new but

important function in the life sciences

industry. It is up to alliance managers to

drive collaborations towards maximum

value. Half of the product pipeline value is

dependent on successful alliances. Yet,

despite its importance, alliance

management is still not fully established

within many pharmaceutical and biotech

companies.

To understand the current state of alliance

management and the role of alliance

managers in the life sciences, Inova

interviewed 16 of our Inova Alliances

clients. These participants represent

advanced alliance managers, working in an

established department with defined

processes and tools.

1) Introduction

To create a more complete picture of the

current situation, we have also included

studies by Deloitte and The Rhythm of

Business. Together, this information

reveals not only the current state of alliance

management, but also key best practices

that life science companies must consider

adopting.


Effective alliance management is essential to success in the

life sciences industry. On average, 50% of current revenue

and 50% of product pipeline value depend on successful

alliances.2

2) The Importance of Alliance Management


Alliance management is both critical to

success today, but the impact of alliances

is destined to rise. A Deloitte study of

pharmaceutical, biotech, and medtech

companies in Western Europe revealed that

82% of companies expect their alliance

management activity to increase, while the

remaining 18% expect it to stay the same.1

Remarkably, no organization expected their

alliance management activity to decrease.

The rise of alliance management, like the

increase in partnering activities generally,

is driven by the need to develop new

products quickly, to reduce costs and to

gain access to new markets, all while

limiting risk.

82%

18%

Pharma Companies' Expectations for

Alliance Management

Will increase Stay the same

2) The Importance of Alliance Management Page 5 of 19


3) The State of Alliance Management

Alliance management is relatively new to the life sciences,

existing as a distinct function for a little more than 15

years.3 Its implementation is still erratic - some

organizations are very advanced while others have yet to

establish a dedicated department. In organizations that do

have alliance management departments, however,

common practices and methods of organization are

emerging.


Alliance management’s implementation

Despite its importance, many companies do

not prioritize alliance management. In a

Deloitte study, 63% of companies did not

have a dedicated alliance manager.

Even worse, half of that 63% did not know

where the alliance management function

sat from an organizational point of view.

Typically, alliance management exists in

larger companies (sales over 15€ billion)

and R&D intensive companies (committing

at least 10% of sales to R&D).1 In our

survey, our respondents were exclusively

from established alliance management

departments in mid and large-size

organizations.

Departmental organization

We found that most companies have just

one alliance management group, reflecting

efforts to consolidate and optimize

departments. Occasionally, multiple

alliance management groups are created to

manage specialized markets such as

emerging markets and markets with unique

regulatory requirements.3

0%

20%

40%

60%

80%

100%

One Two Three Three to

five

More than

five

Number of Alliance Management Groups within Company

Perc

enta

ge o

f Respondents

3) The State of Alliance Management Page 7 of 19


Regardless of how many departments there

are, alliance management most often

reports to the business development

department rather than directly to the CEO

or to R&D.

Taking a closer look at the make-up of the

department itself, according to our study,

mid-sized companies have about 3 global

alliance managers, whereas as large

organizations average 15.

As for the alliance managers themselves,

they usually oversee alliances involving

assets that are stage 3 or later. However,

the number of assets managed by each

alliance manager varies.

We found that of the 15 alliance managers

at a large company, 4 dedicate 100% of

their time to one highly strategic alliance, 7

manage 10-15 alliances, and 4 handle

asset management (divestment).

4

4

7

People Managing Highly Strategic Alliances (1 per person)

People Managing Asset Management

People Managing Standard Alliance (10 per person)

Division of Duties within Alliance Management Team at Large Pharma



0%

20%

40%

60%

80%

100%

Geography Lifecycle

stage

Business

unit,

division,

therapeutic

area

Combination

of these

factors

Perc

enta

ge o

f Respondents


As the graph below shows, several factors

are taken into account when assigning an

alliance to a manager, including geography,

lifecycle stage, and business unit, division

or therapeutic area.3

However, it must be noted that the alliance

management department is not the only

department involved in alliances. The R&D

department, for example, manages R&D,

academic, and research collaborations.

These collaborations tend to be more

numerous and earlier stage, making them

riskier and less valuable in the short-term

but with a potentially important payoff in

the future.

In our survey, respondents from midsize

companies reported that 2-3 people

manage collaborations, whereas

respondents from large organizations

reported 30-40 people managing

collaborations. For large organizations

therefore, the global alliance management

department handles approximately 80

alliances, but R&D has closer to 600

collaborations. Additionally, local

commercial-only agreements are not

handled by alliance management, but

instead by local business developers.

Factors for Assigning

Alliance Management Responsibilities


Alliance managers perform a variety of tasks, from getting

collaborations started and maximizing alliance value to

resolving disputes and tracking performance. The ultimate

goal of an alliance manager is to drive profitable alliances.

4) Responsibilities of an Alliance Manager


In Inova’s client survey, alliance managers

cited tasks such as:

Initiating and facilitating the project

launch after deal signature. Alliance

managers are under pressure to ensure

that projects get started quickly. Time

is a critical factor in the successful

launch of an alliance.

Leading and driving alliances to

maximize the strategic value of each

alliance throughout its lifetime,

including providing support during

operational and financial negotiations.

The alliance manager must proactively

push stakeholders from both

companies towards value creation.

Getting all internal parties aligned.

Inova’s clients reported that 80% of

their interactions are internal. Most of

these interactions are with the finance

department, but they also need to

coordinate with the legal department,

ensuring contract terms are interpreted

correctly, and project leaders in the

R&D department.

Raising awareness internally regarding

the value of alliance management.

Making colleagues aware of the value

of alliance management encourages

greater buy-in when it’s time for

training.

4) Responsibilities of an Alliance Manager Page 11 of 19


Pre-empting issues and resolving

disputes - one of the most important

duties of an alliance manager. With a

global view of the partnership,

managers can head off potential

conflicts. When problems do occur, the

alliance manager plays an instrumental

role in solving them quickly and

successfully.

Ending collaborations. Despite

everyone’s best efforts, some alliances

will fail. When they do, the alliance

manager is an invaluable resource for

concluding the contract.

Tracking performance and milestones.

Reporting not only helps alliance

managers improve, but ensures that no

obligations have been forgotten.

Be perceived as the best company to

partner with, the ultimate goal of every

alliance manager.

4) Responsibilities of an Alliance Manager Page 12 of 19


5) Key Pains

As they fulfill their duties, alliance managers experience

the same challenges and difficulties time and again. They

are under pressure to launch alliances fast and maximize

their value.


The first key pain cited by Inova clients was

the time to launch - it is a ticking time

bomb. Preparation time for alliances is a

crucial challenge. Some alliances don’t

survive the conception and negotiation

phase. It is rare for the preparation time to

happen faster than expected.1 Moving

alliances swiftly from deal signature to

launch is a decisive factor in their success

rate.

Second, getting everyone onboard

internally is difficult, especially during the

ramp-up and launch phases. Often,

progress is slow-going, requiring multiple

layers of approval from very busy decision-

makers.

Third, Inova clients discussed maximizing

the value of each alliance as a key

challenge. Alliances have an enormous

amount of potential, but ensuring that the

potential is fully exploited is hard.

The fourth and final pain is the lack of

reporting. In Deloitte’s study, 45% of

respondents had no way to measure

performance.1 Alliance management cannot

truly improve without a way to measure

their activities. Further, the best way to

make alliance management more visible

throughout the organization is by

demonstrating its success.

5) Key Pains Page 14 of 19


6) Best Practices

Using the experiences, challenges and responsibilities

reported by Inova clients, clear best practices emerge,

including how to organize the alliance management

department, how to best manage information, and what

reports help alliance managers perform better.


To get started, the first key best practice is

having a dedicated alliance management

department. A dedicated department

ensures that alliance management has

consistent advocates within the

organization, that expertise is cultivated,

and that experience is effectively leveraged.

According to Deloitte, “the average return

on investment from alliances is positively

correlated with the number of partnerships

one engages in.”1 Alliance building is a

capability developed over time and through

experience. With a dedicated alliance

management department, this expertise

becomes easier to share with colleagues.

Additionally, alliance management should

be one single department that reports

either to business development or directly

to the CEO.

Doing so ensures consistency in how

partnering activities are handled and

improves internal communication. If several

alliance management departments are

necessary, one single tool should be used

to prevent information silos and to

encourage similar processes.

More globally, alliance management should

be fully integrated into the organization’s

processes and tools. Business

development, alliance management, and

the R&D teams make big gains in efficiency

and performance when they share

processes and tools. For example, after a

deal is signed, business development

hands a large amount of information over

to alliance management. Sharing a common

tool ensures that nothing gets lost in the

transition.

6) Best Practices Page 16 of 19


Additionally, the tool used by alliance

management should incorporate reporting.

All too often, reporting is neglected,

leaving no concrete way to measure

success or performance. Alliance managers

perform better if they can quickly analyze

their activities and determine what needs to

be done. Reporting should provide both an

overview of all alliances and detailed

information regarding specific

collaborations.

For example, a priority report compares all

alliances according to specific criteria, such

as the strategic importance and monetary

value, enabling the alliance manager to

prioritize and focus resources on the most

promising ones. Other useful global reports

are an overview of incoming/outgoing

payments, forecasted vs actual payments, a

list of all late payments, and the ROI of

each alliance.

Alliance managers also need a report that

assembles essential alliance information,

such as: partner name, upcoming financial

and non-financial obligations, issues being

resolved (if any), related licensed products

(if any), the last joint steering committee’s

meeting minutes, results of the last health

check, and agreement dates such as the

expiration date and next steps.

Finally, alliance strategy documents are not

just a formality. They actually shorten the

time from conception to execution.1

Alliance management departments should

draft strategy documents with care.

We would like to thank all our clients that

took part in the alliance management

survey. Your responses will be used to

construct our roadmap and future

developments. It is thanks to your feedback

that Inova has been the leading partnering

solution for the life sciences.

6) Best Practices Page 17 of 19


Inova is the #1 CRM for partnering in the life sciences.

Over 100 Pharma and Biotech companies (including 40% of

the Top 50) use Inova’s platform to securely manage all

their partnering activities including scouting, licensing,

business development, alliance management and more.

Our out-of-the-box solution is configured according to

our expert industry knowledge gained from over 16 years

of market leadership. As a result, you’ll spend less time

managing information and more time collaborating with

partners on your next big breakthrough.

Learn more at www.inova-software.com


Sources

1) Deloitte. Strategic Alliances in the Life Sciences.

Are You Ready? Deloitte Switzerland: 2014

2) Twombly, Janice and Jeffery Shuman. Be a Leader

Not a Follower: Findings of the 2012 Practice of

Alliance Management in the Biopharmaceutical

Industry. The Rhythm of Business: 2012

3) Twombly, Janice and Jeffery Shuman. The Practice

of Alliance Management in the Biopharmaceutical

Industry. The Rhythm of Business: 2010.

Page 19 of 19


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The State of Alliance Management_Inova Software