Strategic alliance executives
pharmafile | November 8, 2011 | Feature | Business Services, Manufacturing and Production, Medical Communications, Research and Development, Sales and Marketing | CTPartners, Strategic alliance executives
Given the extraordinary costs and risks associated with drug discovery and development, it’s not surprising that an increasing number of companies have stopped ‘trying to do it all’, and that alliance-based business models have become increasingly prevalent across the life sciences sector.
Economic, regulatory, and competitive pressures are encouraging biopharmaceutical companies, large and small, to partner with each other and with academic research institutions to create synergistic relationships that capitalise upon the competencies that each organisation brings to the table.
So, for many organisations, the question is no longer “Do alliances make sense for us?” but rather, “How do we most effectively manage our strategic alliances so as to achieve profitable growth and create sustainable enterprise value?”
Significance of alliances
For some companies, alliances now account for significant portions of their revenues, sometimes even more than half. They also fuel much of the product pipeline, with smaller biotechs and non-profits serving as incubators for innovation, while the larger firms contribute the resources and know-how necessary to bring promising products through development, clinical trials, and commercialisation.
With alliances becoming an increasingly mission-critical part of their business, building a high-quality alliance management team ranks among the top talent management priorities for many biopharma companies. A growing number of firms are appointing a Chief Alliance Officer (CAO) into the ranks of their senior leadership, mindful of downside risk that can result from poor or negligible alliance management.
This can run the gamut from missed commercial opportunities to failed development programs. In the worst of scenarios, badly managed alliances may result in legal disputes or significant investor losses as well. Jan Twombly, a foremost expert on alliance management and the president of The Rhythm of Business, a Newton, MA consulting firm, describes it as “an emerging and significant profession.”
She notes that: “Today, every major biopharma corporation is actively involved in alliance management.” It’s even the case, she says, that some business schools have begun to include alliance management in the curriculum.But alliance management is still a new field. Some nine out of 10 life sciences companies have a group whose primary responsibility is managing alliances, almost two-thirds of which have been in existence for less than five years.
As a result, companies are continuing to define their alliance-management needs and with it, the appropriate skill set and career path for their strategic alliance managers.Some firms might start with alliance executives to handle one or more relationships, then add alliance leaders, ultimately moving to create an alliance management executive leader or chief alliance officer position as the benefits from strategic alliances become obvious. These CAOs may report directly to the CEO or another C-Suite executive and often interact with the board of directors as well.
Equally, however, other companies may still be relying on project managers or another member of the organisational team to manage these relationships – an approach that can be less than effective if these individuals are time-strapped or poorly equipped for the multiplicity of demands that true alliance executives handle. While noting that: “Alliance governance is probably the mainstay of what alliance management is all about,” Brooke Paige, senior director, Alliance Management at Ipsen, emphasises that “the critical role of an alliance executive is much more than governance alone.”
Delivering on strategic intent
She explains, “Successful alliance professionals, especially CAOs and other senior executives, are able to internalise and deliver on the strategic intent of an alliance partnership – from the viewpoint of their own organisation, as well as that of their partner – regardless of the complexities that are inevitably involved. It’s delivering on these needs which really drive value for both partners.”Kimberly Brue, who serves as senior director, Alliance Management, Tysabri, at Biogen-Idec has held positions in various companies (including Sanofi and Sanofi-Pasteur).
A molecular biologist by training, she notes that to be successful as an alliance executive, one must possess a comprehensive management toolkit. “After all,” she says, “even though alliances are built upon contractual relationships between organisations, at the end of the day, these relationships consist of people who are collaborating to make something important happen. There’s got to be transparency, trust, and good communication.”
The essential skills she believes a CAO needs include “an understanding of psychology, sociology, body language, and cultural differences, in addition to the ability to manage deliverables, contractual governance, and strategic alliance,” and much more.
Multi-faceted position
Regardless of the specific way that any organisation defines this executive position, there is always one basic priority: helping the alliance to succeed, in the fullest way possible, in achieving its key objectives. Common responsibilities assumed by alliance professionals include launching and implementing alliances; managing governance procedures; interpreting and monitoring contracts; negotiating with partners on how to achieve objectives; and working to understand the partner’s positions and explaining these to internal personnel.
At some organisations, these professionals get involved even before alliances are fully negotiated. In these cases, they may work proactively with internal stakeholders in order to clarify goals and achieve alignment within the organisation.Kimberly Brue considers it one of her responsibilities to “not only manage alliances directly, and to manage the relationships of alliance partners with each other, but to leverage common strengths and identify new opportunities for innovation or development within each company.”
Recruiting and retaining the right professional for this position can be a challenge for a number of reasons. For one, it’s not easy to find seasoned talent in a fledgling field, since growing demand outstrips supply.Meanwhile, it sometimes can be difficult to figure out who would be the right person for a position, when organisations fail to fully appreciate the multi-faceted complexities of this position.Depending upon an organisation’s assessment of the specific complexities in its alliance portfolio, it might seek to promote or recruit its alliance executives from related disciplines.
Professionals may come from finance, human resources, sales and marketing, project management, or business development. If a number of key alliances are based in one particular country or region, someone in a country management position might be asked to transfer into this role. At CTPartners, we have found that in alliance management, the most important indicators of future success are often intangible ones.Strong professional backgrounds and an in-depth understanding of marketplace dynamics are essential, of course. But so are ‘soft skills’ such as emotional intelligence. This necessitates an especially intensive and creative approach to talent recruitment.
So, for example, the most successful life sciences alliance executives combine top-quality business management skills with an innate ability to build productive relationships between teams and individuals. They are collaborative to their core. Meanwhile, the strongest alliance executives are subtly attuned to, and respectful of, the cultural differences between organisations. They are great networkers, which is especially important when it comes to helping to keep various internal interests aligned. And there’s more. The best alliance executives are flexible by temperament and strategic in their orientation. Features like these give them the ability to grow, along with the alliances that they manage, over time.
Strategic pitfalls
But successful alliance management depends not only upon putting the right person in the job, it is also about defining this job in ways that best support the institution’s strategic objectives. Strategic pitfalls include confusing business development with alliance management. At first glance, the two functions seem to have a great deal in common and, of course, there is some overlap. But business development professionals are, by necessity, focused on the deal itself, whereas alliance managers need to devote their energies and attention to the relationship that develops after the ink dries on a contract.
With two different skill sets (and mindsets), the BD department is not usually the best source of alliance management talent. It is also dangerous to take internal alignment for granted. Strategic alliance professionals recognise that a successful collaboration depends upon trust, transparency, and effective communication between all parties involved. But that’s much harder to achieve if various parties within the home institution view the alliance differently, in terms of its objectives, challenges, and so forth.
If employers fail to appreciate this important aspect of the job, they risk handicapping their alliance management team or putting an inappropriate person in the position.Finally, it is important that alliance management sits within the right reporting structure. One trend that should accelerate is designing a reporting structure that gives CAOs access to the chief executive or one of his or her direct reports.
Board interaction with key alliance executives should also be encouraged, to ensure that alliance management is delivering upon its strategic potential. For anyone tempted by alliance management, it is worth remembering that many life sciences alliances last for five or 10 years or even longer, depending upon the success of the venture.
So it is highly likely that alliance executives will enjoy recognition for the value they deliver as these relationships progress.It is worth noting, too, that in a recent global survey of nearly 50 biopharmaceutical organisations, it emerged that in companies whose alliance management groups are more than five years old, half of chief executives and their direct reports perceived alliance management as being essential in achieving corporate strategy.So when it comes to the life sciences sector, many things are unpredictable. But the rising importance of alliance management is not one of them.
Alex Bennett and Steve Cornacchia are principles at the Life Sciences and Healthcare Practice at global search firm CTPartners. www.ctnet.com
