Hints and Tips for Negotiating and Managing National and International Deals

Once a company has made the decision to partner or collaborate [1] and has found the right product or the right partner [2] – the next step is to create a strong relationship and negotiate the best possible deal for both parties.

Create clear objectives and identify benefits

Negotiating and managing a deal needs to begin with clear, precise and well-defined objectives and outcomes as well as an understanding of mutual benefits – these can form the basis for the whole process. [3]

Build and manage a collaborative relationship

Partnerships can last for many years and involve intense negotiation. Priorities and objectives can also change over time, especially as science moves forward, and as markets change. Creating and nurturing a transparent and trust-based relationship, with frequent, clear communication and regular face-to-face or virtual meetings, can make the process smoother and ensure that both parties remain focused on the goals and objectives. Managing the deal itself may require setting up governance frameworks, joint committees and processes to ensure that the partners remain aligned. [3-6]

Having a clear route for communications, with reporting requirements and systems, is important for both parties in a collaboration, and helps to build relationships. For a small deal or a small company this may involve one ‘point person’ for key communications; for a larger deal or in a larger company, this may be a team of people. [6, 7]

Deal with differences

It’s important to be aware that big pharma and startup companies work in different ways and have different cultures. The decision-making process is likely to be slower in a large company as the infrastructure is more complex. The focus on return on investment may be greater as a larger company is more likely to have shareholders. [7]

Collaborations can cross international boundaries. Because of this, companies need to be aware of the potential effect of cultural differences. There can be a cultural impact on decision-making processes, communication styles, negotiation tactics and approaches to teamwork. For example, different cultures can react differently to disagreements, find direct styles of communication challenging, or place greater emphasis on relationship-building.

There can be variations across countries on the emphasis placed on regulatory compliance, such as the importance of documentation or formal processes. The attitudes to risk in drug development, or the importance of pricing, can also vary around the world. Language barriers can slow down discussions, lead to misunderstanding, or cause issues with clarity and trust.

These differences can be managed by investing time and effort in understanding each other’s culture and business etiquette, building relationships both formally and informally, getting to know different markets, and becoming familiar with local regulatory and compliance requirements. Communications must be clear and in plain English, or be translated accurately into local languages. Working with local experts can be exceptionally valuable in cross-border and cross-cultural dealmaking. [5, 8-10]

Even a difference as simple as a time zone can be challenging when co-ordinating meetings and communications. This can be handled by allowing staff allocated to the project to work flexible hours for part or all of the time. Using communications and project management tools to keep people up to date, and collaborating with local project managers, can also make the process run more smoothly. [9]

Where it comes to marketing and patient engagement, cultural differences can be significant. As an example, direct communication about certain symptoms or health conditions may be difficult. While this may not specifically be a deal issue, it is something that should be borne in mind. [7]

Manage the data and intellectual property

Data and intellectual property (IP) are key to drug development, and partners need to ensure that the agreements are clear concerning intellectual property ownership, and licensing and commercialisation rights, as well as data sharing. This includes: [3, 5, 6]

· Defining the IP and data, and the corresponding license rights, contributed by each partner

· Establishing exclusivity/non-exclusivity

· Defining any sub-licensing rights

· Outlining processes and accountability covering any potential patent infringements or IP disputes

Set operational terms

Operational roles, responsibilities and requirements will vary from deal to deal, and are based on each partner’s internal capabilities. They can include administrative roles such as asset transfer, governance structures, reporting, quality and safety, pharmacovigilance and compliance, as well as drug development and commercialisation roles such as preclinical and/or clinical development, manufacturing, pharmacovigilance, and regulatory and commercialisation aspects. [6]

Work out the desired financial deal structure

The financial deal needs to include upfront payments, milestones, royalties and options, and be based on risk and reward for both parties: [3, 6]

· Set clear amounts and schedules for upfront and milestone payments, and any royalty rates

· Set milestone payment development objectives or sales thresholds

· Set any revenue-sharing components based on milestones.

Measure success

Partners need to agree on the parameters to measure the success of the deal. Metrics will depend on the agreement and project but could include: [5]

· Revenue generation and profitability

· Productivity and efficiency gains

· Innovation and new product development

· Market share expansion

· Patient outcomes and satisfaction

The metrics should be analysed and discussed in regular meetings, and renegotiated as required. [5]

Negotiate the deal

An ideal deal provides the best possible terms for both partners. The key points to remember during negotiation include: [3, 6]

· Ensure that the asset/assets are valued fairly – this requires detailed financial modelling

· Put together a list of must-have and non-negotiable deal terms

· Be aware of regulatory and compliance requirements

· Have a framework in place for decision-making, conflict resolution and monitoring progress

· Make sure that the milestones are clear

· Ensure that the financial terms are fair

· Put operational roles in place

· Clarify data and intellectual property provisions

· Ensure that communications processes and responsibilities are clear

· Leverage experts as required

There are a number of tools and approaches that can support the successful negotiation process: [11]

· The traded concession – concessions can be offered in exchange for desired outcomes for the benefit of both parties

· Bundling – creating a package that includes both more and less desirable options

· Challenging dealbreakers – discussing non-negotiable parts of the deal

· Managing choice – creating alternative proposals for discussion

· Timing – can be used both positively and negatively, but gaining acceptance on timelines can help to manage the process and confirm the partner’s commitment to the deal

Negotiation isn’t always a two way process, and can reveal potential areas of manipulation that do not bode well for a long term relationship: [11]

· Giveaway/takeaway – creating an apparent problem and then taking it away or offering a solution to the non-existent problem

· Cherry-picking – selecting only the most desirable aspects of a deal

· Timing – can be used to put unfair pressure on the other party

· Attrition – repeating the same point to wear down the partner.

Creating and negotiating a deal is a painstaking process, but putting in the work increases the chance of a fruitful long-term relationship and a successful deal. This in turn means that patients and healthcare professionals will be able to access drugs to meet unmet medical needs.

References

1. Elvidge, S., Working Collaboratively: Using Co-operation to Boost Pipelines. Pharma Sources: An Eye on the Biopharma Industry, 26 September 2024. Available from: https://www.pharmasources.com/industryinsights/working-collaboratively-using-co-operati-76751.html.

2. Elvidge, S., How to find and select the right products and partners. Pharma Sources: An Eye on the Biopharma Industry, 15 October 2024. Available from: https://www.pharmasources.com/industryinsights/76768.html.

3. Kaylor, A., 8 Steps to Negotiating Successful Pharmaceutical Partnerships. TechTarget, 8 November 2023. Available from: https://www.techtarget.com/pharmalifesciences/feature/8-Steps-to-Negotiating-Successful-Pharmaceutical-Partnerships.

4. Burik, A., Nine tips to succeed in pharma-biotech partnerships. Labiotech, 20 March 2023. Available from: https://www.labiotech.eu/expert-advice/biotech-partnerships-tips/.

5. Strategic Alliances: Partnering for Success in the Global Pharma Market. BioTech. Last accessed: 22 July. Available from: https://biotech-spain.com/en/articles/strategic-alliances-partnering-for-success-in-the-global-pharma-market/.

6. The Complete Dealmaking Guide to Out-licensing and Partnering for Pharma and Biotech Companies. Biopharma Vantage. Last accessed: 7 August 2023. Available from: https://www.biopharmavantage.com/guide-out-licensing-pharma-biotech.

7. Tips for Partnering with Big Pharma. University Lab Partners. Last accessed: 19 October 2020. Available from: https://www.universitylabpartners.org/blog/tips-for-partnering-with-big-pharma.

8. Charles, E., Global Pharmaceutical Marketing: Navigating Cultural and Regional Nuances. PharmaPhorum, 22 June 2023. Available from: https://pharmaphorum.com/market-access/cultural-intelligence-key-global-pharma-landscape.

9. Implications to Global Pharmaceutical Licensing Partnerships. Galen. Last accessed: 10 October 2024. Available from: https://galen-pharma.com/blog/implication-to-global-pharmaceutical-licensing-partnerships.

10. Hredil, H., Culture Matters: How to Navigate Global Pharma Challenges. LinkedIn, 8 December 2023. Available from: https://www.linkedin.com/pulse/culture-matters-how-navigate-global-pharma-challenges-hanna-hredil/.

11. Cox, R. 7 Powerful negotiation tools used in Pharma Licensing Negotiations. CELforPharma. Last accessed: 11 October 2024. Available from: https://www.celforpharma.com/tips-and-insights/7-powerful-negotiation-tools-used-pharma-licensing-negotiations.