Leading Biotechnology Alliances: Right from the Start / Edition 1

by Alice M. Sapienza, Diana Stork, Joseph G. Lombardino

Overview

Since the early 1990s, research and discovery collaborations between biotechnology and pharmaceutical companies have increased to the point that they now provide more than half of the total capital invested in the biotechnology sector. Although smaller biotechnology companies may be engaged in only a few alliances at a time, some of the most active pharmaceutical players may be engaged in anywhere from thirty to forty alliances at once. Any single alliance relationship may be the lifeblood for a small biotechnology company, while the same relationship may be just one of many for the pharmaceutical partner.
Research alliances with small, close-to-the-science companies are the source of many of the innovative ideas of today and the future, but they present formidable challenges. Successful collaboration depends not only on the solution of scientific and technical problems, but also on the successful resolution of many leadership and organizational problems.
Leading Biotechnology Alliances presents a tightly focused discussion regarding issues and questions that are unique and critical to the effectiveness of alliances, including:
* Power differences and other asymmetries between partner firms and some implications for alliance dynamics
* Sector history and evolution as a basis for understanding the cultural divide that characterizes many biotechnology-pharmaceutical relationships
* Why leaders on the biotechnology side must assume the greater leadership responsibility in these alliances
* Different - and predictable - challenges over the alliance life cycle, from start to completion/termination
* Leadership roles needed for productive and effective collaboration across groups, locations, and companies
From societal and economic perspectives, it is important to lead biotechnology alliances right, right from the start. The intent of Leading Biotechnology Alliances is to help scientists and executives from large and small companies do just that - collaborate productively and effectively. This book includes a case study, numerous interview excerpts, general theory and background, a delineation of alliance responsibilities, and a set of alliance effectiveness questions. Together, these ingredients provide the reader with a clear understanding of the complicated dynamics of alliances and leadership issues and roles within the alliance life cycle.

Product Details

ISBN-13:	9780471182481
Publisher:	Wiley
Publication date:	04/09/2001
Pages:	216
Product dimensions:	6.25(w) x 9.30(h) x 0.80(d)

About the Author

ALICE M. SAPIENZA, DBA, is Professor of Health Care Administration in the Graduate School for Health Studies at Simmons College in Boston, Massachusetts.

DIANA STORK, PhD, is Associate Professor at the Graduate School of Management at Simmons College.

JOSEPH G. LOMBARDINO, PhD, is retired from the pharmaceutical R&D division of Pfizer, Inc.

Read an Excerpt

Chapter 1: A Case in Point: The Lucida-Pharma Alliance

Research alliances between small biotechnology companies and large pharmaceutical firms play a crucial role in helping to "close the innovation gap" in the biopharmaceutical industry; and, they are expected to be a major source of new therapeutics in years to come.¹ But, these efforts are very difficult to lead well. A typical research alliance or discovery alliance (we will use the terms interchangeably):

• Is fraught with uncertainty, ambiguity, and risk (typical of early stage research efforts)
• Involves dissimilar organizations (in terms of culture, size, power, and expertise)
• Is extremely important to the small partner (a failed alliance can be fatal to a biotechnology company)
• Is only modestly important to the large partner (these companies manage a portfolio of alliances with a number of biotechnology firms).

The task of leadership is even more complicated than the points above suggest, because the responsibility for keeping an alliance on course should not be shared equally by the partners. In fact, we have concluded that responsibility should rest on the shoulders of leaders in the biotechnology company. For a number of reasons that will be discussed in this book, alliances should be led and managed by the "little guys," even though it is the "big guys" who are experiencing the innovation gap and are concerned about their pipelines.

We begin this book with a real case, written from the perspective of the biotechnology partner. We want to introduce the people and the issues involved in the alliance between Lucida Biotech (the small partner) and Pharma Sciences (the large partner) right away, for several reasons. First, in and of itself, the story should be instructive. The case should provoke you to think about what happened, what was done, what might have been done differently, what you would have done, and so on. Second, we refer to this case throughout the book, for purposes of illustration and emphasis. Third, although this is the story of only one alliance, its characters, plot, and ending are all too familiar in this industry. The experiences of the real (but disguised) people in these real (but disguised) companies are, unfortunately, not unusual.

The Case of a Troubled Alliance

Lucida History

The Startup. In the early 1980s, Lucida Biotech was one of many companies emerging in and around "Genetown" and its world-renown universities. Lucida was formed when Dick Rosenbloom, an expert in a particular type of protein, was funded by venture capitalists hoping to "catch the wave" of promising biotechnology discoveries (refer to the cast of characters).

For the next 6 or 7 years, Lucida was essentially Rosenbloom's company. There was a group of six senior scientists-some of whom came from other biotechnology startups and the rest from universities-each in charge of a research program. They all began as project leaders and "advanced" to managers at the same time. This group, plus Rosenbloom, constituted the senior management of the company.

In 1988, the venture capitalists on the company board urged Rosenbloom to take Lucida public, but the banks strongly recommended that he hire a business person first. A new president with business expertise was hired; however, he left about a year later, after taking the company through a successful initial public offering (IPO). Dick Rosenbloom found himself president, again.

Around 1990, money was tight, and some of the staff had to be let go. At about the same time, Geoff Pitchly, a lawyer from an international subsidiary of a big pharmaceutical firm, was hired as president. Rosenbloom took on the title of Chief Scientific Officer, equivalent in rank (at least in the way the company worked on a daily basis) to Pitchly. Rosenbloom was then working on a project of interest to a large health care company, not Pharma Sciences, and an alliance was struck between the two organizations.

That deal was a collaboration in name only. No scientists from the other company ever worked with or even met any of the Lucida scientists. As described by a Lucida project manager, money was provided by

...a conservative, solid, methodical company that regarded Lucida as someone hired to perform a service for them. Their idea of motivation was to fire the bottom 10% of their own people every year. But, they experienced a 20% compound annual growth rate for nearly two decades!

There was never a meeting between our scientists and theirs. This was strictly a senior management deal. Their top management did insist on attending all quarterly meetings of Lucida's research program, and they brought Meng their consultants as experts. Those meetings were incredibly formal-the reports were so thick and detailed that we hated the approach of the quarterly meeting. It was very difficult to keep the Lucida scientists motivated, because everything stopped for 2 weeks while they assembled the report.

Compared with other biotechnology alliances, this deal was anomalous in two important ways. First, there was no scientific collaboration; second, the duration was almost a decade. Not until 1998 was the crucial clinical trial completed, demonstrating the hoped-for efficacy of the original compound. People in the company expected that this would become Lucida's first product.

Evolving Company Structure. One of Pitchly's tasks as CEO was to build a leadership team that could begin to craft a strategy for Lucida. A scientist who had been there almost since the inception of the company described what had been Lucida's approach as an organ of the month club strategy. Not atypical of other startups, Lucida's early R&D direction was not so much set in advance as described in retrospect. The company had expertise that was applied to whatever currently appeared promising. However, Rosenbloom expected that Lucida's expertise would be broadly useful, and he encouraged researchers to patent aggressively.

Although many were speculative patents, they did put Lucida far ahead of other biotechnology firms. These patents also caught the eye of the chief executive officer of Pharma Sciences, Phil Dean. Dean had been hired a decade earlier from a multinational medical products firm and sat on the Board of Directors of Lucida, so that he knew Pitchly. (In addition to his professional relationship with Dean, Pitchly had a social relationship with Pharma's chief operating officer, H. Ross Johnson, who had been at Pharma for about two years.) When Dean recognized how strong Lucida's patent position was, he initiated the process that resulted in a formal alliance between the two firms starting in 1997.

Pitchly had hired vice presidents of strategy and of clinical development when he first joined Lucida. In 1998, a few months after the Lucida-Pharma Sciences alliance was signed, he actively recruited someone to lead research, with the encouragement of Rosenbloom. (It should be noted that Rosenbloom's strength was more in his conception of research experiments than in the actual leading of research scientists.) Following intense interviews with both Pitchly and Rosenbloom, Mark Santoro was hired as vice president of research, at the same level as the VP of development. Santoro came from an academic laboratory, where he was professor of molecular genetics at the medical school. He had a track record of bringing in large National Institutes of Health (NIH) grants, had an excellent reputation for leadership in the teaching hospital where his laboratory was located, and was interested in moving to industry.

Lucida Scientists. When he first interviewed at Lucida, Santoro was told about several people in the company, and one of Pitchly's comments stuck in his memory. Pitchly remarked that their lead bench scientist, Will O'Brien, was a difficult person and someone he would have to "deal with." O'Brien had been hired by Rosenbloom from the NIH and was considered a Rosenbloom protégé. Santoro assumed that Rosenbloom could not, or would not, manage O'Brien, and Pitchly appeared very unwilling to deal with him. He felt that one reason for hiring a VP of research was that someone needed to take on this job. The other remark Pitchly made was that O'Brien had expected Santoro's job; in fact, he had formally applied for the position.

When Santoro actually met O'Brien, it was not an auspicious beginning for their relationship. A luncheon was set up with him and two other scientists who had been there from the company's beginning. When they walked in, O'Brien did not meet Santoro's eyes, nor did he speak a word. Santoro tried to engage him in conversation, but only when O'Brien talked about a new research program did he become animated. However, the other two scientists did not appear to share his enthusiasm for the project....

¹ Van Brunt, Jennifer. Innovation Drives Alliances, Signals magazine, Mnvw.SignalsMag.com 1999.

Table of Contents

TROUBLE IN ALLIANCE LAND.

A Case in Point: The Lucida-Pharma Alliance Cast of Characters.

The General Case: Many Alliances, Many Problems.

ASYMMETRIC RELATIONSHIPS, LOPSIDED RESPONSIBILITY.

Contrasting Cultures.

Partner Differences and Disparities.

LAYING THE GROUNDWORK.

Preparing the Organization.

Individual and Organizational Due Diligence.

The First Meetings.

THE ALLIANCE LIFE CYCLE: LEADING DIFFERENTLY OVER TIME.

To the First Milestone.

Managing Growth and Maturity.

Ending: Completion, or Termination.

Readiness, Learning, and Alliance Effectiveness: A Road Map.

If We Could Turn Back the Clock...(A Hypothetical Coda to the Lucida-Pharma Sciences Case).

Editorial Reviews

"...a discussion of the business of biotechnology..." (Journal of Proteome Research, Vol. 1, No. 2, March, April 2002)

From the Publisher