The bad news: according to a study in the Harvard Business Review by Jonathan Hughes and Jeff Weiss, 60 to 70 percent of these alliances fail (“Simple Rules for Making Alliances Work,” November 2007). Of the pharmaceutical and biotechnology companies that once focused exclusively on their own research and development, BusinessWeek Research Services says 75 percent now rely on partnership efforts to develop new products. Furthermore, there is an ever-expanding effort to identify, develop, manage, and commercialize third-party science while leveraging partnerships for all key operational business functions. Yet our research shows that some industry experts believe 90 percent of all alliances suffer inefficiencies, cost overruns, and time delays resulting in an inability to reach clinical or economic potential—a sobering statistic.
When the Stars Align
The cause of most of these failures? Behavioral dynamics. Also known as “the human factor.”
“Outside of technical and clinical outcomes, the difference between success and failure of an alliance often relies on a couple of senior-level individuals setting the example and influencing the teams. Having these star leaders on an alliance is a key factor of success,” Avat says.
Companies must gain better insight into the behavioral strengths and weaknesses of each team member. From small academic to large clinicaland-commercial alliance initiatives, behavioral factors have a significant negative effect. This issue can be rectified quickly and inexpensively. Why Alliances Fail A 2010 study of 223 pharmaceutical directors, managers, vice presidents, and CEOs conducted by EurekaConnect found that leaders in alliance management have been focusing primarily on: 1) Contract structure, 2) Governance, 3) Conflict resolution, and 4) Process “Going from an integrated business model to a collaborative one—which is the new norm with most companies’ pipelines and more and more marketed products springing off or relying on alliances—is proving challenging across the industry,” says Xavier Avat, director of alliance management at Gilead. “Business processes have to adjust and sometimes lag the changes required by the collaborative model.” In addition to the business process is the human factor. Avat says that in his previous roles he has seen “promising alliances with large investments struggling unnecessarily because of poor behaviors or dysfunctional leadership.” 44
Conversely, difficult products coming late to competitive markets have sometimes done better than anticipated, which Avat credits to outstanding collaborative efforts.
Kimberly Brue, CSAP, director of alliance management for the Prospective and Strategic Initiatives division at Sanofi-Aventis, agrees. “While the relationship is often cited as the cause of delays and technical failures (much of this relates to the behaviors of individuals), companies have put very little focus, thought, or effort into addressing this major determinant of successful product development,” she says. “At Sanofi-Aventis, we see this as a major opportunity to immediately impact alliances and dramatically affect project initiatives through better understanding, training, and alignment of our team and our partner’s team.” Many alliance groups focus on identifying measures that satisfy financial models and measure task completion but often fail to assess the human capital that can make or break a new product. “Most alliance managers, scientists, clinicians, and business personnel involved in alliance management have little knowledge of the tools that are used to analyze behavioral dynamics,” says Mike Leonetti, CSAP, executive director for HealthCare Partnerships at Boehringer Ingelheim and former ASAP chairman and Biopharma Council chair. “Most are not trained to address behavioral issues. While many HR departments are technically skilled in addressing behavioral issues and career development, the unique dynamic that exists with collaborations and alliances typically limits internal efforts to interaction with a partner’s team.” Strategic Alliance Magazine