a large pharma perspective on product...
TRANSCRIPT
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A Large A Large PharmaPharma Perspective Perspective on Product Partnering on Product Partnering
Dr Chris HendersonAstraZeneca Global Licensing
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Scope of PresentationScope of Presentation
• AstraZeneca• AZ Global Licensing• Partner Characteristics• Challenges
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Marketing ExcellenceMarketing Excellence• AstraZeneca has adopted a TA focus,
enabling us to achieve world-class marketing and sales capacity in our chosen fields. We have developed and marketed many products which have become market leaders.
• In addition to introducing novel compounds, we have gained a strong reputation for strategies to extend the value of our brands.
• These skills and expertise put us in an excellent position to successfully exploit our future products, both in-house and licensed-in.
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GI34%
CV22%
Respiratory11%
Cancer13%
Neuroscience14%
Other6%
Key Therapy AreasKey Therapy Areas
• 5 Areas of FocusTherapy Area RankGastrointestinal 1
Cancer 2
Respiratory 5
Cardiovascular 6
Neuroscience 6
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US49%
Europe33%
Japan6%
ROW12%
Global PresenceGlobal Presence
• 2003 sales = $18.8b Country Rank
Europe 3
Nordic countries 1
UK 2
France 4
Germany 5
USA 6
Japan 14
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Global PresenceGlobal Presence
AZ salesforcesDistributors
Subsidiaries in 45 countries
Distributors in 70 additional countries
15,000+ sales representatives
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Scope of PresentationScope of Presentation
• AstraZeneca• AZ Global Licensing• Partner Characteristics• Challenges
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AZ Global LicensingAZ Global Licensing• An International Department providing a deal-
making capability across the Business.
• A centrally managed but dispersed organisation with resources deployed at key R&D sites and in major commercial centres (UK, Sweden, North America).
• Focus on global and major licensing territory deals.
• Integrated with other partnering groups (eg. Bus. Dev.; Global Discovery Alliances) through Therapy Area Partnering Teams.
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Global LicensingGlobal Licensing
Mike Henry, VP Global Licensing(Stanhope Gate)
Russ Gantt, Exec. Director, (North America)(Wilmington)
Roger LLoyd, Exec. Director(Alderley)
Lars Odsell, Exec. DirectorTransaction Managmt., (RITA, GI)
(Lund)
Transaction Managmt (NA)Steve Rushton (Global CNS, Cancer)
Will Mongan (CV)Mahendra Gupta (GI, Infection )
Transaction ManagmtBob Nolan (Cancer, Infection)Chris Henderson (CV & Japan)
Evaluation Managmt (NA)Rob Johnson (RITA, GI)Jeff Witcher (CNS, Pain)
Evaluation ManagmtAdrian Flinn (Due Diligence & Japan)Alan Warrander (Cancer, Infection)
Evaluation ManagmtAnders Waas (CV)Ulf Jonsson (GI)
(Mölndal)Christer Carling (RITA,
Devices)(Lund)
Information ManagerAnnaCarin Larsen (Lund)
Note: Where Therapy Area alignment is indicated, this represents primary, but not exclusive, responsibility.
Karen Gallant (ISMO)
Licensing FinanceLicensing FinanceDenise Goode. Director
Paul HodgkinsonAndrew Whelan Judith Wright
Martin Unsworth(Alderley)
Updated March 2004
Licens. Finance(N America)John BrazzoFred ChenJill Kienzle
(Wilmington)
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Sponsor
Owner
Evaluation Management
TransactionManagement
EVALUATION MANAGEMENT•Deployed at key R&D centres•Captures external investment needs•Establishes and manages evaluation
and due diligence teams•Establish networks
OWNER (TA, RA)• Advocates deal• Recipient of deal
TRANSACTION MANAGEMENT• Located in each major commercial centre• Overall project management• Principal contact with partner• Secures commercial, financial, legal support• Principal negotiator• Prepares investment proposal• Establish networks
SPONSOR• SET member, Senior
Management Support
Global Licensing Responsibility
Operating Model: Management Of DealOperating Model: Management Of Deal--making making
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Business ProcessBusiness Process
ManageCloseEvaluateIdentifySpecify
0 1 2 3
Evaluate
4 5
SPECIFY - Develop external investment needs with internal clients.IDENTIFY - Search and screen opportunities to meet needs.EVALUATE - Progressive evaluation of technical, commercial and
strategic merits of individual prospects.CLOSE - Develop deal proposition, negotiate terms, prepare
contracts, secure approval to sign.MANAGE - Effective handover to recipient Manager in the Business.
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Strategy Definition:Key AspectsStrategy Definition:Key Aspects
• Licensing strategy - subset of business strategy (R&D, Marketing Companies)
• Senior Management guidance on strategic direction and prioritisation
• Licensing staff engaged in the strategic process
• Co-ordinate external investment strategies within the ‘licensing community’
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TA/RA TA/RATA/RA
TSAR TSARTSAR
CV TAMT[TA + RA]
SET (LEC)
CORE PARTNERING TEAM
AZ Business Strategy
CV Business Strategy
Disease Area Options
CV Partnering Strategy
Define StrategyDefine Strategy
TSAR
TA/RA
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Licensing Executive CommitteeLicensing Executive CommitteeMEMBERS:EVP: PS&L EVP: ISMO (RoW)
EVPs: R&D HoD: LegalEVP:N.America Business VP: Licensing (Sec)
• ROLE:• Provides strategic direction and prioritisation to
Global Licensing• Reviews deal proposals and provides authority to
proceed to due diligence and contract negotiation• ‘On line’ decision making; participation in
negotiation• Performance measures for licensing
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• Close engagement with key information sources (R&D, marketing companies). Easy accessibility
• Promote understanding of Licensing visionvision, role and remit
• Clear communication of strategic targets. Proactive v.s. Reactive
• Provide feedback. Reward ‘finders’
• Knowledge management is challenging
Opportunity Identification: Key aspectsOpportunity Identification: Key aspects
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• Licensing staff aligned with key clients but operate flexibly.
• Progressive evaluation - suitable initial filter process.
• Definition of owner and sponsor with early engagement of key functions (technical and commercial): single Deal Team that expands as evaluation proceeds.
• Recognition of licensing commitment in personal goals and reward for Project Team members.
Opportunity Evaluation: Key aspects Opportunity Evaluation: Key aspects
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Licensing Identification & EvaluationLicensing Identification & Evaluation
RA/TA Strategy
Licensing objective
StrategicAd hoc
Lic. Proj.Group
ISMO/NAAssessment
Disease AreaLicensing Team
Due DiligenceTeam
TAMT/RAMTreview
LEC
CV LicensingTeam
Deal Closure
Transition/Post Deal Team
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Therapy Area Partnering TeamTherapy Area Partnering Team
Objective & task to:
• Establish and Drive the TA/RA licensing objectives.• Identify and screen licensing opportunities and make
recommendations to TAMT and RAMT.
• Facilitate the interface between key functions
which are all represented.
• Permanent team (8-10 people).
• Led by Global Licensing.
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Scope of PresentationScope of Presentation
• AstraZeneca• AZ Global Licensing• Partner Characteristics• Challenges
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From Purchase to PartnershipFrom Purchase to Partnership
BiotechHighly Innovative
Risk TakingRapidly EvolvingFIPCO potential
Platform to Product
Big PharmaInnovative but Risk Averse
Highly CapablePipeline is Lifeblood
Commercial PowerhouseGlobal Player
Technologies
Capabilities
Products
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Why Alliances fail?Why Alliances fail?
• Not enough time or commitment spent establishing strong team-based working relationships between the 2 organizations
• Cultural mismatch and lack of strategic consistency
• Lack of clear objectives; individual objectives need to be transparent to the other partner (ie. No hidden agendas)
• Change in organizational structure or personnel
• Most factors are considered “manageable” with exception of Failure in Technology and Drastic Changes in Environment 0 5 10 15 20 25 30
Ineffective GovernanceStructure
Drastic changes in businessenvironment
Failure in technology
Other
Market potentialoverestimated
Poor integration process
Poor alliance leadership
Objectives of partners werenot compatible
Differences in partner cultures
% of mentions
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Choosing your Partner: Other Key Considerations Choosing your Partner: Other Key Considerations
ManagementIs the mission and strategy of the alliance appropriate
to both partners? Are management practices compatible/synergistic? Are resources allocated appropriately? Where does the alliance fit
within the overall strategic intent of the partner? Importance to the partner?
Organisation and Work ProcessesHow effectively will the work be organised? Are skills and capabilities
of partner complementary? Are critical roles and responsibilities recognised? Is the decision making process compatible? Could
dispute resolution be problematic.
CultureIs the culture and behaviour of management and staff
of partner compatible so that people will work together effectively? Do principals and staff likely to be seconded to the alliance trust one
another? Are there hidden agendas? Will information be shared freely?
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Scope of PresentationScope of Presentation
• AstraZeneca• AZ Global Licensing• Partner Characteristics• Challenges
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Business EnvironmentBusiness Environment• Pharmaceutical innovation is increasingly a
“mixed economy” > 30% of Big Pharmaproducts are from outside sources.
• R&D productivity remains an issue.– Registration of NMEs in decline?– Genomics revolution yet to deliver fully
• High growth and profit aspirations are at odds with the level of innovation and sector funding.
• Intensified Big Pharma competition to acquire products. Everyone is potentially a ‘Partner of Choice’.
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Partnering OptionsPartnering Options
Licensing?
discovery alliances
co-development
fostering
marketing collaborations
joint ventures
spin-offs
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The Changing Deal EnvironmentThe Changing Deal Environment
Profit Sharing
Royalties
Co-funding
Quids
Convertibles
Equity
Loans
Cash
Milestones
Royalties
Upfront
‘Traditional’
Cash
‘New World’
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Other Issues for Large Other Issues for Large PharmaPharma
• Partner of choice? • Deal Complexity• Finance Issues (eg. M/S capitalisation;product margins)
• Global vs Regional Product Partnerships • Quids• Profit Share vs Cost Share• Optimal Alliance Management
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Drivers for PartneringDrivers for Partnering
Growth expectationsMarket PressuresGlobalisation of marketsThe Technology raceNeed for InnovationR&D productivityIncreased costsNew players
Partnering is a strategic imperative
Respect your Partner’s needs within your own framework