Well now we know. The dust has settled at Westminster, and, for the time being at least, the age of ‘blockbuster’ Government majorities is over, and a new era of collaboration and coalition is dawning. Whether the coalition which emerges from all of this (I am writing this less than a week after the election) survives and thrives remains to be seen.
Perhaps our politicians should be learning from the pharma industry, as they seek to come to terms with the new order, because the era of the blockbuster – the equivalent of a thumping Commons majority – has been on the wane for some time. Instead, those who are bringing new brands to market are increasingly resorting to co-promotion arrangements.
Licensing deals are expected to account for more than a third of revenue for the top 20 pharma companies by 2012 – up from just 17.5% in 2002.
The motivations for this are clear: the molecule owner is seeking to share commercial risk and exploit their partner’s therapy area experience; the partner gets to maintain a presence in the key therapy area.
When a co-promotion works, it brings all sorts of benefits: maximised share of voice through the promotional impact of a larger sales force, with that increased sales force capacity ensuring a successful launch; reduced initial promotional costs through sharing marketing responsibility; boosting sales force expertise in a new market by working alongside a more experienced marketer; and sharing the promotional investment risk of entering a new market.
And yet, it is estimated that 60 per cent of co-promotion alliances fail within five years, as defined by a failure to achieve the revenues expected by the partners at the start of the collaboration, which then leads to each partnering company viewing the agreement as ineffective.
Clearly there are some specific challenges to making a co-promotion work. The prospective partner has to be attracted to the deal in the first place, which can mean a relatively low profit share being offered to the molecule owner. Obviously, there will be an element of reliance on the more experienced partner in the market to drive the promotional strategy. And last but certainly not least comes the challenge of integrating and managing two essentially separate sales forces.
Given that the industry is set to see many more of these co-promotion and licensing deals, it is vital that we learn how to manage them effectively. There are some core skills and competencies which need to be developed to make it work, encompassing branding (to develop a shared vision), people management (to enable conflict resolution) and negotiating skills (to ensure a fair deal for each partner).
A Shared Vision
One driver of success commonly identified by participants in successful partnership is the development at the outset of a shared team vision for the partnership. This can provide a clear understanding of what success will look like for each participant, and also for the partnership.
As a general rule, it is differences in company culture which lead to the biggest points of potential tension. If one culture is slow-moving and the other rapid, for example, or, one takes a more scientific approach and the other a more commercial approach, then unless these differences are addressed, the partnership could be headed for failure.
To avoid this requires common goals and objectives for the co-promotion brand team working in the local market. It also demands that the partners align their ways of working on each topic where there is interaction between the two companies, as far as is achievable given the constraints imposed by the rest of each partners business, before they implement the co-promotion.
It is likely that the co-promotion will support a global brand with a global brand vision. To complement this brand vision, the local co-promotion team could well develop a team vision setting out what the goals of the local team are, based on insights about the individuals within the team and the organisations they work for. The components of the brand and team visions will be the same, but the focus of the team vision will be those who work within the team and the wider audience across each partner company
The two key words there are ‘goals’ and ‘insight’. If these can be brought together to create something which is sustainable, credible, differentiating, motivating and meaningful, then a powerful team vision will emerge.
That means establishing early on the scope of each partner’s aspirations for the alliance, in both a quantitative way, answering the question ‘how big?’ and a qualitative way, defining how significant the aspirations, and how the hoped-for success of the brand will alter the organisation for which individual team members work. It is a question of agreeing not just what the partnership can be, but what the partners want it to be to meet each individual company’s goals.
Insight is important because it allows each partner to understand their own and their partner’s thinking, how each will look at the market opportunity, and what each party’s strategy really is.
Out of this should come a set of core values, which are the active words which reflect the shared team vision, and which both partners wish to associate with the team over time. Crucially, these need to be demonstrated not just in the brand vision, but also in the tone of voice and style of all communications associated with it.
Getting The Structure Right
Guaranteeing a harmonious co-promotion team at the start of the agreement may be impossible, but taking the time at the outset to design the processes which will facilitate collaborative working and help efficient decision making is likely to pay dividends for the team in the long term. Putting in place conflict resolution procedures often serves as a good way of avoiding conflict in the first place; the development of a team charter setting out how individuals should work within the team acts to limit the frustrations which could poison the effective working of the team..
To determine what the team structure might look like, it is necessary to think about a number of factors, including the key activities and outputs that the joint team will be expected to deliver, which of these will be delivered collaboratively and which exclusively within one of the partners, and what overall behaviours will assist in that delivery.
A good starting point is to allocate the key tasks and outputs which have been identified in the co-promotion’s marketing plan by discipline. So, for example, the strategic plan and the marketing communications plan will need to be undertaken by the Marketing function; Phase IV and KOL management by the Medical function; customer management and targeting by the Sales function; tracking and monitoring, along with ad hoc research by the Business Intelligence function; AE reporting and licence renewals by the Regulatory function; and so on.
Once you have identified these functional responsibilities, you can now start to create a structure where it is explicit whether each activity will be the responsibility of one partner (and if so, which one), or a shared responsibility. This way there is no room left for doubt about who is responsible for what, and thus far fewer opportunities for conflict further down the line.
It is important here to think about the informal structure as well as the formal structure. Often, informal contact plays a big part in oiling the wheels of success for partnerships, but if you don’t think about how that informal contact will work in advance, you risk losing control of the situation, with the possibility of conflict, misunderstanding, or worse.
So a structure and protocols need to be put in place that cover communication, approval and sign off procedures, conflict resolution and reward and recognition.
Negotiating A Solution
“In business you don’t get what you deserve, you get what you negotiate” – wise, if slightly clichéd, words from the negotiating guru, Chester L. Karrass. But it has some resonance here, because the initial negotiations to set up the joint venture are vital if it is to be long-lived. After all, it will only flourish if both partners feel that they are getting something out of it.
Experience suggests that these first negotiations can be tricky, as each side comes to the table with a relatively fixed idea of what the co-promotion will look like. But it’s worth remembering that however committed the other party appears to be to their position, they would not be involved in negotiating if they were not willing to consider moving towards an agreement.
Preparation is the key here, and each party should enter the negotiations having identified and prioritised areas that need to be agreed under a local contract. It is important to have examined the likely position of the potential partner, as well as identified their underlying interests. Such negotiations often break down either because a lack of confidence leads to concessions being given away too quickly and/or easily, or because an inflexible position is adopted, which focuses on the party’s own wants, rather than on achieving an outcome which is a genuine win:win.
12 Steps To Clarity
If open communication is vital to a successful partnership, then clarity is the underlying foundation to this. To make a co-promotion work, you must develop an action plan which sets out clearly the responsibilities within the partnership (i.e. who does what), the key deliverables, and the timing.
With this in mind, let me close by suggesting 12 questions which you should be confident you can answer in order to manage successfully a co-promotion:
- Do you have a shared vision, values and strategy for the brand?
- Have you aligned your financial and market share goals and milestones?
- Have you identified the investment requirements and budgets by year, and agreed the percentage splits between partner companies?
- Have you undertaken joint strategic and operational planning, including approval processes and an implementation plan?
- Have you aligned the operating teams across the various functional disciplines?
- Have you agreed whether individual companies will have any independent operating freedom within the joint venture, and if so, are you clear in which areas, under what circumstances, and to what budget level?
- Have you aligned the sales teams and territories; established reporting systems; clarified how ETMS and CRM information will be exchanged; agreed sales KPIs?
- Have the sales teams been trained, and their language aligned?
- Are contract terms watertight? Are roles and responsibilities clear? Is authority – by discipline and overall –sufficiently clear?
- Have inter-company communications channels been set up, including establishing a co-promotion ‘dictionary’?
- Are financial and reporting procedures aligned?
- Have processes for arbitration and conflict resolution been put in place
Managing A Co-Promotion: Some Dos and Don’ts
Do:
- Agree in advance:
- The contribution of each party to promotional and market access programme, and why
- The competencies and skills each partner will provide
- Individual measures of success, and contribution to the overall programme
- Define and agree clearly the parameters for negotiation
- Define at the outset timelines and deadlines for process, and identify interdependencies
- Identify and outline scenarios, contingencies and triggers
- Define what is outside the scope of the agreement
Don’t:
- Allow ambiguity in the ownership of the agreement
- Indulge in opportunistic conversations – keep communications within the scope of the agreement
- Allow egos to get in the way, especially if this leads to ignoring customer needs
- Hoard information
The Author
Gerard Doherty is Managing Consultant at The MSI Consultancy.
Originally published in PM (Pharmaceutical Marketing), June 2010
Managing a Co-Promotion
Well now we know. The dust has settled at Westminster, and, for the time being at least, the age of ‘blockbuster’ Government majorities is over, and a new era of collaboration and coalition is dawning. Whether the coalition which emerges from all of this (I am writing this less than a week after the election) survives and thrives remains to be seen.
Perhaps our politicians should be learning from the pharma industry, as they seek to come to terms with the new order, because the era of the blockbuster – the equivalent of a thumping Commons majority – has been on the wane for some time. Instead, those who are bringing new brands to market are increasingly resorting to co-promotion arrangements.
Licensing deals are expected to account for more than a third of revenue for the top 20 pharma companies by 2012 – up from just 17.5% in 2002.
The motivations for this are clear: the molecule owner is seeking to share commercial risk and exploit their partner’s therapy area experience; the partner gets to maintain a presence in the key therapy area.
When a co-promotion works, it brings all sorts of benefits: maximised share of voice through the promotional impact of a larger sales force, with that increased sales force capacity ensuring a successful launch; reduced initial promotional costs through sharing marketing responsibility; boosting sales force expertise in a new market by working alongside a more experienced marketer; and sharing the promotional investment risk of entering a new market.
And yet, it is estimated that 60 per cent of co-promotion alliances fail within five years, as defined by a failure to achieve the revenues expected by the partners at the start of the collaboration, which then leads to each partnering company viewing the agreement as ineffective.
Clearly there are some specific challenges to making a co-promotion work. The prospective partner has to be attracted to the deal in the first place, which can mean a relatively low profit share being offered to the molecule owner. Obviously, there will be an element of reliance on the more experienced partner in the market to drive the promotional strategy. And last but certainly not least comes the challenge of integrating and managing two essentially separate sales forces.
Given that the industry is set to see many more of these co-promotion and licensing deals, it is vital that we learn how to manage them effectively. There are some core skills and competencies which need to be developed to make it work, encompassing branding (to develop a shared vision), people management (to enable conflict resolution) and negotiating skills (to ensure a fair deal for each partner).
A Shared Vision
One driver of success commonly identified by participants in successful partnership is the development at the outset of a shared team vision for the partnership. This can provide a clear understanding of what success will look like for each participant, and also for the partnership.
As a general rule, it is differences in company culture which lead to the biggest points of potential tension. If one culture is slow-moving and the other rapid, for example, or, one takes a more scientific approach and the other a more commercial approach, then unless these differences are addressed, the partnership could be headed for failure.
To avoid this requires common goals and objectives for the co-promotion brand team working in the local market. It also demands that the partners align their ways of working on each topic where there is interaction between the two companies, as far as is achievable given the constraints imposed by the rest of each partners business, before they implement the co-promotion.
It is likely that the co-promotion will support a global brand with a global brand vision. To complement this brand vision, the local co-promotion team could well develop a team vision setting out what the goals of the local team are, based on insights about the individuals within the team and the organisations they work for. The components of the brand and team visions will be the same, but the focus of the team vision will be those who work within the team and the wider audience across each partner company
The two key words there are ‘goals’ and ‘insight’. If these can be brought together to create something which is sustainable, credible, differentiating, motivating and meaningful, then a powerful team vision will emerge.
That means establishing early on the scope of each partner’s aspirations for the alliance, in both a quantitative way, answering the question ‘how big?’ and a qualitative way, defining how significant the aspirations, and how the hoped-for success of the brand will alter the organisation for which individual team members work. It is a question of agreeing not just what the partnership can be, but what the partners want it to be to meet each individual company’s goals.
Insight is important because it allows each partner to understand their own and their partner’s thinking, how each will look at the market opportunity, and what each party’s strategy really is.
Out of this should come a set of core values, which are the active words which reflect the shared team vision, and which both partners wish to associate with the team over time. Crucially, these need to be demonstrated not just in the brand vision, but also in the tone of voice and style of all communications associated with it.
Getting The Structure Right
Guaranteeing a harmonious co-promotion team at the start of the agreement may be impossible, but taking the time at the outset to design the processes which will facilitate collaborative working and help efficient decision making is likely to pay dividends for the team in the long term. Putting in place conflict resolution procedures often serves as a good way of avoiding conflict in the first place; the development of a team charter setting out how individuals should work within the team acts to limit the frustrations which could poison the effective working of the team..
To determine what the team structure might look like, it is necessary to think about a number of factors, including the key activities and outputs that the joint team will be expected to deliver, which of these will be delivered collaboratively and which exclusively within one of the partners, and what overall behaviours will assist in that delivery.
A good starting point is to allocate the key tasks and outputs which have been identified in the co-promotion’s marketing plan by discipline. So, for example, the strategic plan and the marketing communications plan will need to be undertaken by the Marketing function; Phase IV and KOL management by the Medical function; customer management and targeting by the Sales function; tracking and monitoring, along with ad hoc research by the Business Intelligence function; AE reporting and licence renewals by the Regulatory function; and so on.
Once you have identified these functional responsibilities, you can now start to create a structure where it is explicit whether each activity will be the responsibility of one partner (and if so, which one), or a shared responsibility. This way there is no room left for doubt about who is responsible for what, and thus far fewer opportunities for conflict further down the line.
It is important here to think about the informal structure as well as the formal structure. Often, informal contact plays a big part in oiling the wheels of success for partnerships, but if you don’t think about how that informal contact will work in advance, you risk losing control of the situation, with the possibility of conflict, misunderstanding, or worse.
So a structure and protocols need to be put in place that cover communication, approval and sign off procedures, conflict resolution and reward and recognition.
Negotiating A Solution
“In business you don’t get what you deserve, you get what you negotiate” – wise, if slightly clichéd, words from the negotiating guru, Chester L. Karrass. But it has some resonance here, because the initial negotiations to set up the joint venture are vital if it is to be long-lived. After all, it will only flourish if both partners feel that they are getting something out of it.
Experience suggests that these first negotiations can be tricky, as each side comes to the table with a relatively fixed idea of what the co-promotion will look like. But it’s worth remembering that however committed the other party appears to be to their position, they would not be involved in negotiating if they were not willing to consider moving towards an agreement.
Preparation is the key here, and each party should enter the negotiations having identified and prioritised areas that need to be agreed under a local contract. It is important to have examined the likely position of the potential partner, as well as identified their underlying interests. Such negotiations often break down either because a lack of confidence leads to concessions being given away too quickly and/or easily, or because an inflexible position is adopted, which focuses on the party’s own wants, rather than on achieving an outcome which is a genuine win:win.
12 Steps To Clarity
If open communication is vital to a successful partnership, then clarity is the underlying foundation to this. To make a co-promotion work, you must develop an action plan which sets out clearly the responsibilities within the partnership (i.e. who does what), the key deliverables, and the timing.
With this in mind, let me close by suggesting 12 questions which you should be confident you can answer in order to manage successfully a co-promotion:
Managing A Co-Promotion: Some Dos and Don’ts
Do:
Don’t:
The Author
Gerard Doherty is Managing Consultant at The MSI Consultancy.
Originally published in PM (Pharmaceutical Marketing), June 2010