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Integrating competitive intelligence into business development, licensing and M&A strategy

The advantages of partnering with a competitive intelligence or knowledge management team

One of the most profitable areas for biopharma companies to see the greatest return on their competitive intelligence (CI) investment is through its application to business development and licensing (BD&L) and mergers and acquisitions (M&A).

This can be true for larger companies and smaller companies alike, as they search for the best partnerships and transaction opportunities. One could think of larger companies as acquirers and smaller companies as acquirees in such transactions, but in many cases larger companies are acquired in mega-mergers, and small companies frequently acquire technologies or drug candidate assets.

From this perspective, we can focus more on the acquirees and acquirers and dispense with company size.

The search process

From the perspective of acquirers, CI teams are often tasked with assessing the landscape and searching for deal opportunities. In an ever- increasing world of competitiveness between biopharma companies for assets derived from cutting-edge technologies, non-organic growth strategies are essential for current and future growth.

Acquirer BD&L teams, acting in collaboration with CI teams, are tasked with finding the right assets with the most promising attributes and distinct advantages over all alternatives. Opportunity identification can come through many forms and collaborating with the CI teams is only one of them.

BD&L teams typically are great CI sleuths on their own, as they access the same CI databases leveraged by CI teams, and they are very effective in identifying the right opportunities.

BD&L teams have an advantage over CI teams in that potential partner companies reach out to them directly to provide opportunities for potential acquirers to review and assess the progress of available drug candidates, technologies, or products.

However, the opportunity landscape is so vast that a collaboration with a CI team is often required to go through the thousands of possible opportunities and identify the best candidates for deeper consideration.

Partnering with a CI or KM team

Contributions of CI teams to the search processes of BD&L and M&A efforts will largely relate to the size and sophistication of the CI teams.

For simplicity we should consider two extremes: the CI team that can search, assess and recommend or the CI team that is capable of searching and assembling landscapes but cannot assess or recommend. It could be argued that the former team is a true CI function, while the later is more oriented to knowledge management (KM).

In both cases, there can be a distinct advantage in partnering with a CI or KM team in keeping up with the latest information. A best practice
in this respect is to split the monitoring effort into two main categories and get each team to assume responsibility for one area of monitoring.

An example of this might be for the BD&L team to direct most of its attention to a few key areas of interest. In this scenario, the CI team takes responsibility for monitoring in the next tier of interest, effectively broadening the bandwidth of the collective effort and ensuring that nothing important falls through the cracks.

The assessment process

Above and beyond monitoring and flagging opportunities for further review, the CI function can play a critical role in the assessment process once a potential deal is put under the microscope. In terms of the asset of interest, the need for a CI team to participate is largely determined by whether the acquiree is aware of the interests of the acquirer.

In many circumstances, there is a need to make assessments of potential acquisition targets without the acquiree being aware of the initial interest. In these cases, there is a need to scour for evidence from secondary sources (accessible via the internet) or even from selective primary sources (handled by a CI agency specialising in primary intelligence gathering).

Regardless of the source of the evidence used to evaluate candidate assets, the CI team plays an additional critical role in identifying the most relevant alternates to the asset under consideration for acquisition). Target product profiles (TPPs) also play a critical role in BD&L and M&A assessments.

In the acquisition assessment process, the development of a TPP is a collaborative effort between the BD&L team member, the CI expert and other subject matter experts from various functions, including research, clinical development, regulatory, intellectual property, market research and commercial assessment.

The role of the CI expert is to know all viable alternative assets that could compete with the asset under consideration spanning from competing pipeline assets to inline products.

The CI expert may also contribute to the calculation of development, approval and launch timelines, as well as efficacy and safety data that are required in the assessment.

While it is largely the roles of other collaborators to weigh in on the scoring of asset characteristics (eg, efficacy and safety data), the CI expert can play a crucial role in being the neutral observer.

By this, their own assessments of the clinical evidence and timelines for development and approval should be leveraged to ensure that there are no errors in assessment or biases that are introduced into the process.

An example of this was during my experience as a CI expert at the table in a TPP assessment. After hearing clinical and regulatory assessment of a critical competitive asset, it was concluded that we were misinterpreting the aggressiveness of a competitor in terms of its timelines for development.

In the example case, a rigorous debate ensued, and both clinical and regulatory were ultimately swayed to alter their timeline assessments after competitor insights were shared.

In this instance, we conducted primary CI with an agency to test the strength of the development insight and found evidence to support its veracity. The end conclusion was to terminate the deal discussion, and there was attributable return on investment in the CI function in terms of avoiding a deal that ultimately would not meet its calculated market potential.

Such a critical contribution from the CI function was not a daily or even monthly occurrence, but there were enough similar instances where a deal was supported or not supported via key contributions from the CI team.

Potential partners

On the other side of the equation, CI also can play a critical role in the efforts of acquirees as they seek to out-license pipeline or inline assets to be acquired. Perhaps the simplest way to identify and keep tabs on potential acquirers is to partner with an investment bank and get the bank to assume more than one role.

One role is to identify potential partners and to enter preliminary discussions with them about the assets up for offer, as well as their characteristics and development timelines.

Another role is to get to the deal, and indeed any given acquiree may be only one of several or dozens of acquirees being represented by
an investment banker in any given discussion with a potential acquirer.

An alternative to (or supplement to) this is to rely on a CI function to assess the environment for both competitors (putative alternate acquirees) and potential acquirees that may have an interest in partnering.

Especially for smaller acquirees, there can be a broad array of potential acquirers spanning from peer-sized companies to mid-cap and Big Pharma.

Depending on resources, keeping tabs on potential partners can be handled internally or through partnering with an agency.

Indeed, companies with fewer resources may find it more economically viable to partner with an agency when all factors are considered regarding staffing, access to subscription-based CI and clinical trial databases and the potential need for primary intelligence research.

In summary, all parties need competitive intelligence when seeking to find the right partner for a potential deal. Regardless of whether any given party has a CI function, all parties are engaging in CI when making their assessments.

This is seen in the BD&L teams that conduct their own CI, investment bankers that are arguably some of the best CI specialists, or formal internal or agency-based CI teams that operate with independence and have no ‘skin in the game’.

By this it is safe to conclude that no BD&L or M&A deal should proceed without an abundance of CI integrated into the process.

Alfred Reszka is Chief Business Officer of Lifescience Dynamics www.lifesciencedynamics.com

25th February 2021

Alfred Reszka is Chief Business Officer of Lifescience Dynamics www.lifesciencedynamics.com

25th February 2021

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