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Forming Partnerships, or Strategic Alliances, is one of the key elements that make up the business development function in technology companies. I believe that alliances are underutilized, in many ways. Conceived and executed properly, alliances can greatly extend the partner companies reach in the marketplace.

VARIOUS AND SUNDRY PARTNERSHIPS

There are many types of collaboration that fall under the umbrella of “Partnering”. Let’s examine a few of t

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

he most common:

Third Party Programs—Probably the best understood category of partnering. Partnering in this manner is generally low risk, but low reward for both parties. A program usually consists of many smaller partners gaining modest benefits from a larger company. The larger company gains (or at least the illusion) from having a large number of partners working with their product/technology.

Industry Consortiums—Represents ano

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

ther well-understood category. Mild benefits are usually obtained by the participating parties, including some publicity, a stamp of approval, and the opportunity to network with other consortium members. The unique aspect of this form of partnering is its one-to-many relationship, as opposed to “one-to-one” or “one-to-few” relationships found in most partnerships.

Sales Agents—Many people might not consider sales agent relationships partnerships, at

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

least not strategic. But they certainly are. There is usually a minimum of entanglement here, simply a contract that provides a commission for sales generated or leveraged. The product doesn’t change hands between the partners, and there is often less training and support involved, relative to other partnership types used for product distribution.

Service Agreements—These agreements occur when a company doesn’t want to relinquish the sales function

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

for its products, but for some reason it needs a third party for servicing. These agreements are common in high-end hardware markets, where 24/7 on-site support is critical. Storage Hardware or Mainframes are good examples. They are also seen in more commodity markets, where a company has decided that service/support isn’t their core competency, and that a third party can handle service/support at a lower cost. The use of Indian Call Centers by PC manufacturers such a

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

s Dell is a recent example of this concept.

Distribution Agreements—This is a common, but often poorly executed form of partnership. The errors usually occur when the Channel partner is treated like an end-user, rather than the true partner they should be viewed as. Distributors and Resellers need to be treated as an extension of a company’s sales force. Sadly, they often are not, leading to such misguided policies such as channel stuffing and over-d

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

istribution, which lead to problems that become extremely difficult to resolve.

Joint Marketing—Cooperation on marketing matters should be where most companies reap the greatest benefits. Partnering in this area is really low risk, can have great benefits, and is a great way to get started with a new partner. There are so many ways that companies can cooperate in joint marketing; the list is really only limited by your imagination. Some of the ways I

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

’ve been able to utilize these types of partnerships include discounted product promotional bundles, trade show space cost-sharing, joint press releases (of course!), sharing of prospect and customer lists, referrals, and joint direct mailings. The great thing is that there are many areas to explore, to find overlap in the two companies interests.

Product Integration—Integrating the products of two companies is what often comes to mind when you think

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

of partnerships. It can make great sense, and the potential rewards are great. However, there are some reasons for caution, prior to jumping straight into this, as I’ll discuss below.

POTENTIAL PITFALLS

As discussed above, a partnership or alliance can take many forms. As a result, there is a lot of confusion and disagreement as to what even constitutes a “good” partnership. Let’s take a closer look at two partnering categories, and some common mis

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

steps:

The Partnership

You see a great many press releases go out trumpeting the partnership between company A and company B. The release goes on to discuss the great benefits that will accrue to customers and the two companies making the announcement. The language tends to be vague and laced with terminology like “synergy” and “market leading value proposition”. More often than not, that initial press release is the high point of the partnership,

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

and little is heard about it subsequently. You may have heard the term “slide-ware” to describe products that exist only in PowerPoint. This type of partnership is the alliance equivalent to slide-ware—I call it a “PaRtner-ship.”

Product Integration Fiasco

On the other end of the partnership spectrum, technical folks usually think of alliances in terms of product integration. Technical integration can be the basis for a great partnership. However,

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

it’s a lot of work and a big commitment for both parties. The danger is that the partners too quickly dive head long into the product integration work, basing their decision on an impulsive belief that it “makes sense”.

In a typical scenario, the two products are complementary, and from an engineering (and often customer) perspective it looks like a marriage made in heaven. Several dangers are lying in the weeds, however. First of all, any product development effort

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

runs a high risk of failure. When you put together two disparate engineering teams who have never worked together on a project, that risk rises exponentially. Usually both engineering departments have their own product releases to worry about concurrently, which are always higher priority. Lack of communication, low priority, cultural differences and ego can easily conspire to lead to a failed integration project, or at least one lacking the features to be of much lev

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

erage in the market. At this point, the partners have spent a lot of money and precious engineering resources with little in return, leaving finger pointing, and a search for scapegoats as the next step.

In addition, it takes much more than good product integration for commercial success by the partners. If there isn’t a solid plan for marketing cooperation and distribution (see above!), even technically elegant product integration partnerships will leave both partie

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

s disappointed. Alliances that are born from product integration, unless carefully thought out and efficiently executed, can lead to disappointment by one or both of the partners.

There are many “gotchas” involved with working together to push and pull the combined solution in the market. It helps to have some practice working together prior to making the big bet on technical integration. That’s why I often recommend to my clients that product integration be a step d

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

own the road in an embryonic partnership, not a beginning.

PARTNERSHIPS MAKE SENSE—BUT EXECUTION IS KEY

So are partnerships to be avoided? Not at all! They are one of the areas that can make be a huge differentiator for your company in a competitive market. But the take-away message here is that too many partnerships are conceived as great ideas—and peak right there. Like most business activities, the devil is in the details, and execution is the ke

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

y to success. When I’m working with smaller clients with limited capital for marketing and sales, I often recommend an aggressive partnering program. If executed correctly, the company and its partners can gain cost-efficiencies and marketing economies of scale far exceeding their own size. But I have two key pieces of advice before you embark on a new partnering program:

1) The very definition of a partnership is a “win-win” relationship for BOTH parties. Takers don

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

’t build winning partnerships—givers do. Offer to take the first step, do the first piece of the project. A partner that believes you are acting in his best interests will be very impressed, and willing to provide support that you never dreamed of. Build that relationship by being the first to “give”; the trust you build will came back to you multiple times and set the stage for a profitable, long term partnership.

2) Do start, but start small. I’ve discussed above t

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

he many pitfalls of moving too fast. It’s best to pick something easy, with obvious benefits to both parties. Working successfully on a small project creates momentum, and helps build the trust and familiarity that is crucial to success on more ambitious future projects. I will often suggest a simple list swap of prospects as an initial step. If either party views even that with suspicion, a blind mailing can be done to each other’s list, where the actual lists don’t

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

change hands. Building a prospect or customer list is very capital-intensive; by partnering with just one other company, you can both double your lists overnight. It’s almost a certain Win-Win, creating excellent leverage, and no financial investment by either party. It’s easy to succeed, and sets the stage for discussions on additional collaboration.

I’m sure you get the picture—does this make sense to you? Send me a comment below so we can get this discussion going

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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