From a consulting perspective, here is how we view business development, using the acronym LUNCH:
Learn what the client wants: What is the objective? Is it cash now in the form of a hefty upfront payment? Is it long-term value? Is it a regional deal? International? What do the other members of management want? Or the Board? Are there concerns about what will happen if the company is acquired?
Understanding what everyone wants is an important factor in how the process runs, who is contacted, and how a transaction should be structured.
Understand what is possible: Now of course, a rationale management ream wants the most value possible from their assets. But do these expectations and desires jibe with what the market is willing to pay? We see this a lot at conferences when companies are present conference after conference, presenting the same data to tired ears, achieving nothing. Why? Sometimes it’s the message and how it is delivered. But it’s also (and quite often) a vain attempt at trying to out-license an asset which is not valued by the market.
It’s difficult when we have to tell a client that the market does not value their asset. Things can get emotional when so much has been invested. But, as we’re seeing in several markets (such as hepatitis), innovation can cause large shifts in treatment paradigms. Those companies with assets that cling to old paradigms will undoubtably struggle, irrespective of how the message is packaged and presented.
Never be afraid to challenge: This is a tough one, and stems from the previous paragraph. More often than not, a process that struggles to gain traction is based on assumptions that are improbable, or just plain wrong. Common assumptions that should be regularly challenged include clinical development times (especially subject recruitment rates and costs), pricing (both at launch and rates of price inflation), and strength of competitive entry (current and future pipeline).
The recent hubbub over the $21 billion acquisition of Pharmacyclics by AbbVie may be an example of assumptions that are going under challenged, especially by investors and other external audiences who may not be fully aware of the details.
Charge!: Once all of the ducks are in a row (marketing materials, data room, process, conferences, etc., etc.), it’s time to charge forward with all speed and energy. Phone calls, emails, newsletters, LinkedIn…all of the tools have to be pulled out of the tool box to build momentum and move the process forward.
The early days of a project can be fun. There is always a lot of activity, inquiries, and calls to return. But when the phone stops ringing and the emails don’t receive replies…that’s the time not to get discouraged, but to instead continue to charge forward with alacrity.
Hone in and analyze carefully: In our business, we get a lot of inquiries from individuals and small companies who, frankly, do not have the resources or connections to execute. Similarly, overly enthusiastic prospects should be treated carefully. It’s critical to perform due diligence on the party, even when the other party is from a well-established, well-capitalized company with a history of licensing assets just like yours.