Pharma partnerships and alliances are the bedrock of progress in the pharmaceutical industry.
They allow organizations to leverage on each other’s resources for synergy, drive innovation and in essence achieve their respective goals with much more ease and efficiency.
That being said;
Not all potential partners are an automatic fit for you.
So, how do you, as a business, select the best partner that aligns with your goals, aspirations and overall strategic direction?
The book Partnerships for Profit written by Jordan Lewis provides a comprehensive framework of criteria to be considered when evaluating for potential partnerships.
The principles therein shall provide the basis of this article.
So how do you evaluate potential partners?
1. Adding value
The first question you need to ask yourself is whether the company earmarked for collaboration strengthens the value propositions of your own product offerings.
Does the partner decrease time to market thereby enhancing your competitive position?
Does combining your two capabilities enhance your product performance?
If you were to develop a pharmaceutical product together, could it significantly lower your costs and risks?
If you were to do joint marketing of your products, could it lead to an enhanced product image?
These are some of the fundamental questions that you need to seek clarity to before inking a collaborative agreement with a potential partner.
Practical example: Within a company that distributes inhalers, product value could be added by partnering with one that distributes spacers. These products complement each other and would improve their individual performances when they are marketed together.
2. Improve market access
Does the potential partner open new markets/marketing channels and frontiers or significantly enhance your marketing and advertising efficiency?
A company whose products suit and complement yours could potentially be a good fit.
Practical Case:
Just like many industries, the pharmaceutical landscape is a highly competitive one. Two companies; SmithKline and Glaxo (before their eventual merger) exemplified this all too well.
You see, many years back SmithKline had comfortably dominated the market with a certain gastric acid reducing drug called Tagamet (Cimetidine) reaching sales close to a billion dollars.
This was before Glaxo threw itself into the fray.
Glaxo started marketing Zantac (Ranitidine) and to shave off its competitor’s overwhelming market share, it decided to partner with a Swiss company called Hoffman La Roche. An act that proved to be a game changer.
With the dynamics of the partnership, Glaxo was able to assemble a team of 5000 sale reps to market Zantac, overshadowing SmithKline ‘s team of 1500 that was focused on Tagamet.
Needless to say, Zantac took over the market.
3. Strengthening operations
Can a potential partnership ensure your operational efficiency is enhanced resulting in a reduction of costs?
Well, it should.
Through experience in the industry, pharmaceutical companies are able to learn how to custom-structure their procedures and processes so as to take advantage of enhanced economies of scale.
A blooming partnership should be one where partner companies are able to share their individual know-how and resources to make each other operate in a better, clear and cost-efficient manner.
Practical example: Sharing logistical aspects of your businesses such as transportation and warehousing can fundamentally cut costs of your operations.
4. Adding technological strength
Does collaboration with your new partner lead to a shift or an upgrade to a better technological infrastructure?
Do they have enough experience with this new technology to make your transition seamless?
A partnership resulting in use of better technology is one you should consider.
Practical example: If you are seeking a partner to aid in vaccine manufacturing, it would be wise to identify one who has a more advanced technological gear than that in your immediate disposal.
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5. Enhancing strategic growth
Is the alliance that you want to create in line with the strategic direction earmarked for your business?
It is important to always ensure that there is a strategic fit and alignment between the direction of growth for your organization and that of the potential partner.
If not, this may be a red flag on the entire prospective relationship.
Once alignment is confirmed, this sets the stage for both companies to experience exponential growth due to unity of path for growth.
Practical example: If you are a company whose strategy is to increase its insulin market share across Sub-Saharan Africa, you would do well to combine resources with a compatible company that holds the same strategy.
6. Sharing insights and learning
How willing is the company to share its key data points, insights and information with regard to their mode of operations, successes and learning experience?
Both partners can greatly benefit from a huge pool of information generated before and during a collaboration.
Apart from learning from each other, this openness fosters an environment of trust that allows partnerships to thrive and derive great value.
Practical example: Is the partner able to share their unique market information on the main sale drivers for their consumer health product line that has allowed them to grow their customer base?
7. Increasing financial strength
Particularly on investments that require huge capital outlay, is the potential partner willing to put money where their mouth is?
Sharing of capital and other costs is crucial since it effectively reduces the risk that each partner is exposed to. It also highlights the level of commitment a partner is willing to engage in the collaboration.
An ideal partner should be one who is willing to take on some of the risk through investing their own money or using assets already in their disposition.
Conclusion
Africa is seeking to enhance its pharmaceutical sector and partnerships; collaborations and strategic alliances will be essential to ensure that this goal is achieved.
Whether in vaccine manufacturing, clinical trials, cold chain medicine logistics or regulatory system strengthening these relationships are key.
For any form of collaboration to thrive, partners need to establish an open channel of communication and cultivate mutual trust in each other.
A partner needs to be clear in their minds what their strengths are and be willing to leverage on that so as to complement the strengths of the other partner.
Anything short of that will not yield a win-win scenario and the partnership will inevitably break down.
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About the author
Bevin Likuyani is a pharmacist with vast experience in the industry and an MBA from the School of Business, University of Nairobi. He is also a certified supply chain professional (CSCP) from the American Association of Supply Chain Management).
bevin@africanpharmaceuticalreview.com
