Business Development for the Biotechnology and ...

1 Business Development for the Biotechnology and pharmaceutical Industry For Clare Business Development for the Biotechnology and pharmaceutical Industry MARTIN AUSTIN. Martin Austin 2008. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without the prior permission of the publisher. Published by Gower Publishing Limited Gower House Croft Road Aldershot Hampshire GU11 3HR. England Ashgate Publishing Company Suite 420.

2 101 Cherry Street Burlington, VT 05401-4405. USA. Martin Austin has asserted his moral right under the Copyright, Designs and Patents Act, 1988, to be identified as the author of this work. British Library Cataloguing in Publication Data Austin, Martin Business Development for the Biotechnology and pharmaceutical industry 1. Biotechnology industries 2. pharmaceutical industry I. Title '0684. ISBN-13: 9780566087813. Library of Congress Cataloging-in-Publication Data Austin, Martin. Business Development for the Biotechnology and pharmaceutical industry / by Martin Austin.

3 P. cm. Includes bibliographical references and index. ISBN 978-0-566-08781-3. 1. Biotechnology industries. 2. pharmaceutical industry. I. Title. 2008. '4--dc22. 2007051369. Printed and bound in Great Britain by TJ International Ltd, Padstow, Cornwall. Contents List of Figures ix Foreword xi Chapter 1 The Role of Business Development 1. De ning Business Development 1. Knowledge 6. Analytical skills 8. Communication 12. Project management 14. Process improvement 15. Chapter 2 Planning the Portfolio 17. Portfolio management 17. Evaluating the company's products 18.

4 Responding to changes in the market 21. Balancing the portfolio 23. Chapter 3 Identifying the Needs 29. Portfolio objectives 33. Quantifying SWOT 34. Locating gaps 38. Gap analysis 39. Functional advantages 41. Segmentation 43. Portfolio constraints 44. Internal landscape 47. External landscape 54. Intellectual property 58. B U S I N E SS D E V E LO P M E N T F O R T H E B I OT E C H N O LO G Y A N D. P H A R M A C E U T I C A L I N D U S T RY. Chapter 4 Pro ling and Searching for Opportunities 65. Search database 67. Search targets 69.

5 Web-based research 70. Contact management 72. Conferences 76. Competitive intelligence 79. Con dentiality 81. Initial due diligence 84. Chapter 5 Modelling and Valuation 89. Valuation 89. Approaches to modelling 91. Complex models 93. New product issues 96. Measures of value 98. Di erent value perspectives 99. New ventures 99. Steady state 101. Buying or selling 101. Enterprise value 102. Strategic value 103. Redemption value 104. Structure 105. Chapter 6 Structuring the Value 111. Deal structures 113. Other deal structures 130. Chapter 7 Due Diligence and Negotiations 135.

6 Due diligance 135. Negotiations 141. vi CONTENTS. Chapter 8 Sealing the Deal: The Contract 155. Contract structure 156. Dra ing the contract 162. Chapter 9 Making the Transaction Work 165. The nature of the alliance 165. Making the alliance work 167. Alliance management 170. Dealing with problems in alliances 172. Glossary 181. Index 185. vii This page intentionally left blank List of Figures Figure The structure of the book xii Figure Unseen market competitors 4. Figure SUI forecast 9. Figure Term sheet 10. Figure Quadrant chart 19.

7 Figure Product cohorts by vintage 20. Figure Patent expiry 21. Figure Discovery success 22. Figure Mergers and acquisitions 24. Figure A61k patent oppositions 25. Figure Objectives, strategy and tactics 30. Figure Traditional SWOT 35. Figure Numerical SWOT components 36. Figure Numerical SWOT chart 37. Figure Numerical SWOT interpretation 37. Figure Growth circles 40. Figure CNS organization chart 43. Figure market segmentation by product function: a gap analysis 44. Figure Opportunity a ributes 47. Figure Search plan by segment 67.

8 Figure Search strategy, by segment, by product, by company 70. Figure Opportunity anatomy: emergency contraception 71. Figure Mind mapping 80. Figure Genetic reduction of market opportunity 86. Figure Evaluation array 87. Figure A cocked hat' 90. B U S I N E SS D E V E LO P M E N T F O R T H E B I OT E C H N O LO G Y A N D. P H A R M A C E U T I C A L I N D U S T RY. Figure GPS triangulation 91. Figure market share penetration 92. Figure Probability of failure 107. Figure Distribution of licences 112. Figure Valuation of an asset for sale 113.

9 Figure Take-out versus earn-out value 124. Figure Special purpose vehicle 133. Figure Negotiation mind map 142. Figure Term sheet issues 148. Figure Do's in negotiations 153. Figure Don'ts in negotiations 153. Figure A licensing program' 156. Figure Alliance types 166. Figure Alliance structures 167. Figure Joint steering commi ee 170. Figure The terminal cascade 173. x Foreword This book has come about through the creation of a course in pharmaceutical Business Development . In 2004 I met with Luc de Lange who was establishing CELforPharma a new management training rm where he is the CEO.

10 Luc was seeking new courses for the new company. He had identi ed that no speci c courses were being o ered for the industry in the area of Business Development and asked if I could develop such a course for him. The result is a 2-day course which covers largely the same content as this book and has evolved since the initial versions to be a high-level overview of Business Development with special emphasis on the needs of the pharmaceutical and Biotechnology industry. In developing that course I received a great deal of help from Luc in re ning the structure and delivery of the messages.