Partnerships have long been the lifeblood of both large pharmaceutical companies and small biotech startups. Today, small biotech companies increasingly have the upper hand, as innovative technologies disrupt the competitor landscape and rich capital markets have lessened the necessity for deal-making.
These factors give biotech companies more choices in how to fund their research and development as well as how they commercialize new products. They also provide enhanced leverage in selecting partners and negotiating contract details. As a result, transformational global collaborations across the industry are displaying new levels of creativity and flexibility.
Clinical collaborations
Many emerging partnerships for developing new drugs and devices center around clinical trial collaboration. A number of factors drive these collaborations, such as the ability to move faster and de-risk a costly portion of development. Other factors include the opportunity to develop combination drugs in immuno-oncology, or the acceptance by the Chinese FDA of product development largely based on data generated outside of China.
These collaborations take a variety of forms, including sharing costs with the goal of also sharing clinical data or providing a drug for a partner’s clinical trial in a combination setting.
Drug development, especially in oncology, is moving at a rapid pace. Clinical collaboration allows organizations to explore more possibilities for developing novel therapeutics even faster. From preclinical research to Phase 1 or 2 clinical trials, these partnerships can be valuable. By forming a partnership for Phase 1 work, for example, two or more parties can work together on an exploratory basis without the contractual burden of a long-term commercial agreement or exclusivity terms.
Indication-specific partnerships
If a successful product has the potential to be used across multiple indications, biotech companies might look to a partnership to maximize the value of their brand for indications they lack the resources, time, or expertise to develop. Partnering with a large pharmaceutical company, for instance, can help a biotech extract additional value from its successful product. However, transactions that split indications are still relatively rare and can pose significant difficulties, such as antitrust concerns in the European Union and China. Careful negotiation is key, and partnerships should be meticulously structured to avoid overlap.
Partnerships in Asia
The Chinese biotech industry has become a major driver of global licensing deals, and is often an area of keen interest for biotech companies. China offers immense potential for reaching large numbers of patients in a short time frame, thanks to rapidly growing investment interest in life sciences products.
Joint development partnerships are increasingly common in China and other Asian markets. Pharmaceutical companies are working to develop multiregional global trials that enroll patients in China, the United States, and Europe. While such trials facilitate approvals in multiple jurisdictions, they also raise complexities regarding allocation of responsibilities, costs, and rights to data and intellectual property.
3 tips for successful partnerships
There are three key imperatives to ensure that partnerships not only survive, but thrive. These include:
- Evaluate contract structure early. When negotiating, biotech companies must look at all elements of the contract structure holistically and throughout the life cycle of the partnership. Big pharmaceutical companies are engaging in licensing deals earlier than ever, so an increasingly important question for them is how to structure a contract to avoid giving away too much of the company’s value too soon.
- Make sure company cultures are complementary. Cultural fit is a key factor in ensuring a successful partnership. When the parties do not have the same background, being attentive to their respective constraints is essential for success. A small biotech should learn to navigate the complexities of a large pharma company, and a large pharma company should learn the need for flexibility and speed of a smaller biotech.
- Assign a point person. Even after the contract is signed, challenges will arise in the operational aspects of a collaboration. Having a single strategic point of contact within each partner organization, typically an alliance manager, to handle the flow of information and management of day-to-day administrative tasks such as information and resource requests can help smooth the onboarding process of the collaboration.
Even in the best partnerships, industry or corporate changes can throw a collaboration off course. Reasons for early termination include loss of interest, change in corporate strategy or priorities, or lack of financial resources. That means parties to a life sciences partnership should conduct thorough due diligence on issues such as manufacturing practices, development capability, scientific understanding, and regulatory requirements, and include in the contract clearly defined goals that are both firm and reasonable.
There is a lot to think about when it comes to navigating the increasingly complex life sciences licensing landscape. With collaborative partnerships on the rise, evaluating the contract structure of a deal early, ensuring the cultural fit is right, and championing a smooth operational process are vital for companies looking to achieve excellence in the future.
Emmanuelle Trombe is a Paris-based partner with McDermott Will & Emery, a health care law firm.
