Research Triangle Park, NC – Alliances and partnerships are common in the pharmaceutical and biotechnology industries, but successful unions are a little more rare.

Any drug in development faces the prospect of scientific setbacks and outright failure. When two or more companies get together on a project, however, subtler issues such as communication gaps and mismanaged expectations combine to undermine promising partnerships.

A new study from Cutting Edge Information, “Business Development Spending and Structure” (www.PharmaDealMaking.com), reports that 38% of survey respondents blamed poor communication as a key reason for alliance failures. Another 33% of respondents said failures stemmed from a poor understanding of the different roles in a partnership.

Many companies have developed a solution to these subversive stumbling blocks: alliance management specialists, whose diplomacy helps resolve conflicts, keep communication lines open and focus both companies on alliance objectives.

The report found that alliance management groups are uncommon among smaller organizations that annually review fewer than five deals. Only 14% of survey respondents in this group fielded any kind of alliance management function, and no company reported a dedicated alliance management budget. The bottom line: these companies tend to be more focused on product development than alliance diplomacy.

On the other hand, 67% of companies that formally review more than 20 deals per year have an alliance management group. The largest budget in this group is $25 million, though most companies spend $4 to $6 million to chaperone their ongoing partnerships.

These larger organizations have a lot riding on their alliances, and they are willing to spend the money to ensure smooth sailing. “Bigger organizations depend on co-development and co-promotion deals to keep pipelines stocked and revenue flowing,” said Eric Bolesh, lead author of Cutting Edge Information’s report. “It makes sense for them to have formal structures focused on healthy alliances and happy partners.”

 
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