Geography & Bandwidth

Geography is obviously  an important aspect of any business development effort. For example, the in-licensing of clinical assets by US companies from Japanese companies is a highly successful approach for accessing high quality, high value product candidates. This cross-border business development has greatly expanded over the years, as companies continue to search high and low for interesting opportunities.

Many companies are limited personnel-wise. Hence, their geographic coverage must be limited to major markets. For some companies, this is adequate, especially if they have a highly differentiated new chemical entity that will be of interest to the major multinational companies. Where it gets a bit more challenging is in finding small and mid-size companies. How can a company efficiently identify and target these companies across geographies?

One approach is through major networking and business development conferences. Through attendance at conferences such as BIO International Convention in the US, business development professionals can schedule and conduct 20-40 meetings or more in a matter of days. By judicious use of 2-3 major conferences a year (i.e., one in the US, one in Europe, and one in Asia), many BD&L professionals can generate many leads for  follow up.

However, the assumption that attendance at BIO or similar conference is enough to cover the US is, in our view, grossly flawed.

For example, Lacerta Bio is aware of a company in the US with a focus in a specific therapeutic area, nearly $50 million in sales, and who is actively seeking in-licensing and product acquisition opportunities. However, their CEO has a clear “no conferences” policy.

Thus, companies attending major conferences will never meet with this asset-hungry, cash-rich company!

In fact, there are numerous small companies who have a clear-cut “no conferences” policy for their management teams.

Why have this policy in the first place?

The “no conference” managers believe that these conferences tend not to attract key decision-makers. Instead, they argue that these conferences attract too many scouts, service providers, and job seekers, thereby reducing the value from these conferences.

One can argue the pros and cons of the conference versus the no-conference approach. However, what is clear is that working with local consultancies can help uncover these small, asset-hungry companies who cannot (or do not) attend major conferences. Local representation can be especially valuable for companies looking for business development opportunities outside their immediate geographies, i.e., UK companies looking to out-license a technology to a US company, especially when the obvious, easy-to-find US-based companies  have already been contacted.

One can argue the pros and cons of the conference versus the no-conference approach. However, what is clear is that working with local consultancies can help uncover these small, asset-hungry companies who cannot (or do not) attend major conferences. Local representation can be especially valuable for companies looking for business development opportunities outside their immediate geographies, i.e., UK companies looking to out-license a technology to a US company, especially when the obvious, easy-to-find US-based companies  have already been contacted.

The issue surrounding geographic coverage by business development teams highlights a broader issue, which we refer to as bandwidth. By this we simply mean that many companies have business development teams that are tasked with a multitude of responsibilities, to the point where deal velocity can be negatively impacted.

Consider a hypothetical drug delivery company with a patented technology. This hypothetical company is pursuing opportunities to out-license their technology to companies in order to develop new products. In addition, our hypothetical company has developed a small pipeline of Preclinical and Clinical assets for out-licensing. Lastly, our hypothetical company is pursuing a strategy of using cash generated from the drug delivery business to in-license and develop their own new chemical entities. To summarize, our hypothetical drug delivery company is out-licensing their core drug delivery technology, out-licensing clinical programs based on this technology, and also in-licensing new chemical entities.

This strategy is conceptually sound, especially if the drug delivery side of the company generates sufficient cash for clinical development of in-licensed new chemical entities. However, this model places a tremendous burden on the business development team. How should they focus? Drug delivery out-licensing? Asset out-licensing? In-licensing? All three simultaneously?

Of course, this is an extreme example of the bandwidth problem, but it is remarkably common. Even for companies who are only out-licensing, bandwidth becomes a major problem if the business development team is small, and/or tasked with other responsibilities.

Thus, external help can reduce or eliminate the bandwidth issue. But how? We believe a sensible approach is to carve-out a specific, focused objective for an external firm to worn on. In the aforementioned hypothetical, carving out the in-licensing strategy to an external firm means that the internal business development team can be focused on the technology and asset out-licensing. This results in a much more focused business development team. Also, with both internal and external teams running in parallel, the probability of multiple transactions taking place is clearly increased.

It is true that retaining external consultancies to assist can be costly, but this pales in comparison to the opportunity cost of transactions not taking place due to geographic or other bandwidth limitations.

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