Business Development & Licensing Journal For the Pharmaceutical Licensing Groups

Issue 18 | September 2012 www.plg-uk.com

Biotech turns to strategic alliances as VCs flee

Licensing deals: make provision for termination

‘Small pharma’ may offer better partnerships

Striking a balance on off-label and unlicensed use

If constructed correctly, a partnership

should allow all parties to pool knowledge

and resources and mutually boost

capabilities. Depending on the deal signed,

the partnership can bring new drugs to

market faster or increase sales. The financial

benefits on both sides can be significant.

When a biotech company makes a decision

to enter into a partnership with either big

pharma or a small to medium-sized firm, it

needs to weigh up all the options. It must ask

whether the company is prepared to share

the same commitment as well as the risks.

During due diligence, a biotech company will

also look at the other company’s financial,

research, development, manufacturing and

marketing resources. Equally important is the

number of successful deals it has achieved.

However, they should be considering not

only signing a successful deal, but also the

chances to extend the success over the long

term for the benefit of both partners.

Open minded approachNow classified as a specialty care

pharmaceutical company, Ipsen has a broad

reach to biotechnology and other healthcare

companies. Some of the partnerships

achieved by Ipsen in the early years now form

the backbone of our operations today. Even

though the whole industry is vocal about

having an open innovation model and fosters

partnership, an organisation the size of Ipsen

must form partnerships to gain access to key

Partnering efforts can be a vital element to the long-term strategy of a biotech company. Small to mid-sized pharmaceutical companies can offer unique characteristics, making them a valid option for consideration.

By Pierre Boulud, Executive Vice-President, Corporate Strategy, Ipsen

competencies and sustain its growth. The

partnership gene goes beyond the business

development teams to include teams in

research, development, manufacturing and

commercial operations.

In addition to these partnerships,

Ipsen’s organic growth allows it to have

the sustainability it needs to search for

partnership opportunities.

In the early days, as now, the people

in charge of business development

opportunities entered into discussions with an

open mind and a willingness to collaborate to

mutual benefit.

In the ten years I have been at Ipsen, our

partnering discussions have held on to the

same spirit and flexibility. Indeed, our present

organisational structure allows for easier and

rapid access to decision-makers. We strive to

move partnering processes forward rapidly.

Our uniqueness extends to our ability

to offer flexibility and creativity in deal

structuring across in-licensing, out-licensing,

joint development, co-marketing and co-

promotion, as well as joint ventures including

spin-outs.

Four key differentiation features On exploring further, we believe that there

are four areas that set a medium-sized

company like Ipsen apart from big pharma

(see Figure 1).

• Dedicated teams – An agreement

between Ipsen and a biotech company

About the authorPierre Boulud was appointed a member of

Ipsen’s Executive Committee in June 2011.

He joined Ipsen in 2002 as a manager in

Corporate Strategic Planning and has since

held positions as General Manager of Ipsen

Spain and Vice-President of Corporate

Strategic Marketing. Pierre is an ESSEC

graduate and before joining Ipsen, he worked

as a Senior Consultant and Project Leader at

the Boston Consulting Group.

T: +33 1 5833 5291

E: pierreboulud@ipsen.com

How smaller companies can stand out from big pharma in deals with biotech firms

16 Business Development & Licensing Journal www.plg-uk.com

in 2011 suggests that fully dedicated and

committed teams were key to the deal.

As a business development team can

be relatively small, the same business

development director is usually present from

the first meeting to assess the opportunity

right up to the closing of the deal. This allows

minimises disruption during the transaction

process on the Ipsen side, and builds trust

with the partner by conveying consistent

messages throughout.

Team commitment also applies to the

wider project team, which includes specialists

from clinical development, market access,

regulatory and finance. Core members

from each team can be fully dedicated

to the project from the beginning of the

due diligence through to deal completion.

Again, this results in minimal disruption and

facilitates the building of open and honest

relationships and trust among the technical

teams.

• Business focus – Business commitment is the

second area in which a medium-sized company

can bring benefits to a biotech firm.

Due to the relatively small number of areas

of therapeutic interest at Ipsen, it is highly

unlikely that Ipsen will review its priorities or

become distracted. This translates into stability

and low risk for prospective biotech partners.

Any in-licensing opportunity selected by

Ipsen must fit well within the scope of our

therapeutic areas. A recent agreement for a

marketed product was signed because larger

potential partners could not give sufficient

confidence and visibility about the resources

allocated to the licensor. For the licensor it was

also about making sure that its partner would

be fully committed to maximising the value

potential of the drug.

• Top management involvement – A third

important area is the level of involvement

given to a potential transaction by top

management. As a mid-sized company, senior

management will have fewer conflicting

agendas and priorities. Key issues can be

discussed at the highest level, allowing speedy

execution and rapid closing of the terms.

Senior level management meetings on

strategic alliances are a key feature at

Ipsen every six months. When terms were

renegotiated with one of our long-standing

partners in early 2012, we stipulated that a

meeting between CEOs should take place.

This meeting led to the key discussion levers

being identified as well as the boundaries

to respect on both sides. The result was an

expedited, successful outcome. Enabling a

biotech company to access decision-makers

easily facilitates not only deal-making but also

successful alliance management.

• Flexibility – This can describe the

interaction among different teams and also

geographic agility.

Whereas Ipsen cannot make the high

investments of the larger companies, it

has deal engineering agility. During recent

discussions with a small biotech company,

The same business development director is usually present from the first meeting to assess the opportunity right up to closing the deal, which builds trust.

Figure 1: Ipsen’s structure

1 2

43

POSSIBLE DIFFERENTIATION

DEDICATED TEAMS

TOP MANAGEMENT INVOLVEMENT

BUSINESS FOCUS

FLExIBILITY

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www.plg-uk.com Issue 18 | September 2012 17

Ipsen was in competition with two larger

companies for a highly innovative, early

stage compound. Our proposal was a

co-development plan to retain the science

that was on their side, their involvement in

future tasks and mutual benefit from our

respective areas of expertise. This approach

was perceived as a favourable alternative to a

straightforward acquisition of the intellectual

property proposed by other partners.

Geographic agility in the deal structure

is also a way to differentiate companies

of Ipsen’s size. Biotech companies in the

US usually like to retain national rights to

maximise their potential value in case of

success. Ipsen’s geographic footprint can

provide them with a single partner to deal

with the geographic complexity outside

North America – Ipsen has a strong presence

in Europe, Russia, China and Brazil – while

having a co-promotion in the US.

Room for improvementMid-sized organisations are also confronted

with specific challenges. At Ipsen, these fall

into three categories.

As a smaller company we are seen as

agile, but are we agile enough given our

size? It is an asset that decision making can

be quick but it also must be well informed.

To tackle this potential pitfall a programme is

currently in place to review our governance

and make our processes more effective.

Small to medium-sized pharma firms

must strive to achieve a high level of

professionalism in order to compete with big

pharma. They will not have the same vast

pool of talent and expertise at their disposal

and so must focus on career development

and constantly be looking for fresh talent. At

Ipsen we have initiated a ‘People Review and

People Development’ programme to ensure

best use of our key talents.

Smaller pharma can also be guilty of

delusions of grandeur. Blue sky thinking

on deals is good, although creativity and

vision inevitably need to take a realistic step

backwards. Alternative financing is therefore

an option we adopt to allow us to consider

bigger potential deals.

ConclusionIpsen’s recent success suggests that

a small to medium-sized company is

a manageable and attractive asset to

biotech firms, allowing them to meet and

adapt to their requirements.

The selection process for partnering

with big or smaller pharma presents many

challenges; no hard and fast evidence has

emerged to enable objective assessment of

why one company should be chosen against

another as a biotech’s partner of choice.

However, the fact of the matter remains

that smaller organisations can bring a

competitive and differentiated value

proposal to most biotech companies.

Enabling a biotech company to access decision-makers easily facilitates deal-making and also successful alliance management.

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18 Business Development & Licensing Journal www.plg-uk.com