How Partnering Pays Off: Leveraging External Assets to Boost Pipeline Value

The research is in: external drugs and molecules are critical for developing a pipeline of promising drugs. The competition for the best assets has also ramped up. To win the best opportunities, organizations must be better and faster than their competition at search, evaluation and deal-closing activities.

Most of the pipeline is sourced externally

We’ve already discussed why life science companies must open up to external opportunities in order to improve their success, but just how much of an impact can it have? According to a recent Forbes article, smart business development deal-making is essential to creating transformational late stage drugs.

The author arrived at this conclusion by analyzing the drugs labeled by Goldman Sachs as high potential pipeline drugs in January 2014. 75% of these drugs were acquired either through in-licensing activities or M&A. In-licensing alone accounts for 50%.

High Potential Drugs

Next, the author compares this data with an assessment by Deloitte, who found that 2/3 of the industry’s late stage pipeline valuation is from externally-derived programs.

External Innovation Boosts Pipeline Value

Unsurprisingly, pharmaceutical companies are now overhauling their R&D programs to incorporate more external opportunities.

Reshaping R&D departments: innovation hubs, open innovation portals, drug hunting

Merck is the latest large pharmaceutical to make headlines as it transitions to a more open innovation model. Merck is establishing innovation hubs in 4 different regions to identify early and late stage opportunities. This is part of their, “strategy of actively seeking external scientific innovation to bolster our pipeline with candidates that provide unambiguous promotable advantage,” according to a Merck spokesman cited in the Wall Street Journal.  Merck certainly isn’t alone. GSK, Pfizer and J&J have all undertaken similar efforts. Eli Lilly and AstraZeneca have launched online Open Innovation portals while Novartis and Roche are turning scientists into drug hunters. This increased interest in external assets has lead to a sharp increase in what it takes to win the best.

Beyond deal value: expertise, quality and speed are also needed to win

For an up close look at what it takes to win, The Wall Street Journal detailed the experiences of Dr Peter Lebowitz, SVP, Global Oncology Therapeutic Area Head at Janssen. Dr. Lebowitz pursued, and Janssen eventually acquired, Imbruvica. The drug has recently been approved and is expected to achieve blockbuster status with annual sales reaching $1.3 billion in 2018. But, more interesting than the success of the drug is what it took to win it.

First and foremost, scouting is highly competitive. To win the Imbruvica deal, Janssen had to move fast. Rival companies had a head start and were interested in the drug. Just 3 weeks after Lebowitz joined Janssen, he was off to see Pharmacyclics in person. Lebowitz was so convinced by the opportunity that he emailed his boss from the plane, setting off a rush of presentations, conference calls and international flights.

Second, more of often than not, someone at your company already knows the asset. Janssen already knew the company and the drug. They had previously contacted Pharmacyclics to test interest in a deal. Pharmacyclics, however, wanted a collaborator with more cancer expertise. This leads directly to the next point: It’s about more than just money. Money is obviously important, but Pharmacyclics also wanted a high quality partner, someone with the right expertise and a shared vision for the drug. To win the best assets, organizations must be fast, informed and a partner-of-choice.

Improving partnering speed and quality with dedicated partnering tools

Business developers face a daunting task as competition increases for the best molecules, compounds and technologies. To give them an edge on the competition, Business Developers need a dedicated partnering tool – a Partner Relationship Management solution (PRM). PRMs are designed to help Business Developers do more in less time by managing more data better. They also provide a structured partnering process, helping organizations get back to their partners faster and more consistently. As a partner-of-choice and armed with the right information, business developers can win the best deals, more often.

To learn more, check out Inova’s new whitepaper: One Size Does Not Fit All – Why Partnering in the Life Sciences Needs More Than a CRM.

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