preparation for negotiation national research council - february 14, 2001 presented by: marcus...
TRANSCRIPT
Preparation for NegotiationPreparation for NegotiationPreparation for NegotiationPreparation for Negotiation
National Research Council - February 14, 2001
Presented by:
Marcus Brady, Vice President Corporate Development Neurochem Inc.
TopicsTopics
• Getting Started.. Begin with the end
• Objectives and decisionmaking
• Deciding what information to get
• Sources of information
• What to do with it now that I have it
• Getting Started.. Begin with the end
• Objectives and decisionmaking
• Deciding what information to get
• Sources of information
• What to do with it now that I have it
Opportunity Favours the Prepared Mind
…bring the Pieces of thePuzzle Together to Reduce Uncertainty
…bring the Pieces of thePuzzle Together to Reduce Uncertainty
Patients
CompetitorsFuture Events
Fit??Fit??
Getting Started…Begin With the EndGetting Started…
Begin With the End• Decide on the objectives & information
requirements• Who is your client, what decisions must
be made• Packaging the results:
– information a model ongoing resource/system
– presenting the findings
Decide Early on Your Objectives
• Assist in meeting strategic objectives– Find/value /dispense with a product(s)– Prepare for forthcoming negotiation
• What do I need to make/influence the decision
• How will the information be used/ presented & by whom
Potential Objectives
• Securing a new product/technology• Enhancing competitive position • Potential benefits
– Brand name– Block out competition– Revenue – Pipeline
In any event, the qualitative and quantitative evaluation of product value must be determined
What Information Do I Need?
• Analytical due diligence
• Confirmatory due diligence
• Key data may include– Potential new products, partners– Insight on the other negotiators– Info on traditional deal structures – Value of product
• sales, competitors• technology, performance
Taking Stock of Your Resources
Internal• Budget• Scientific and
business reports, conference proceedings
• Staff, Employees• Time• Head office
External• CHLA & other
networks• Subscriptions,
databases, studies• Grants• Web• Consultants, lawyers• Interviews
Setting the Stage for Research
• Understanding your negotiation position and that of your client/partner
• Laying a solid foundation for the desired end result
• Packaging the info• Deciding when you
have enough• Preparation,
Preparation, Preparation
What does it take to get the answers?
• Double the time and increase the units– 2 hour estimate = 40 hour reality
• Always have three alternatives
• Plan for success & for failure
Let Your Priorities Guide the Information You Gather
• Time sensitivity of decision, negotiation, information needs
• Price
• Inter-company synergy
• Competitive advantage in negotiation
• Product: stage, size of market, risk, therapeutic area, market movement, fit of product in the marketplace
Gather Internal Information Needs First
• Pipeline analysis– Revenue analysis
• Time available• Criteria for
selecting product– Funds available– Product searches– Hurdle rate
• Define internal capabilities & resources
Qualify Both Internal & External Information Needs• Short & long term objectives
• Identifying & qualifying alternatives and Critical Success Factors
• Short & long term corporate & product SWOT
Pipeline AnalysisPipeline Analysis
• Objective - Bring the highest potential products to market fast.
• Determine product potential through model building.– Where do you want to be?– Where are you going?– How can we get there faster?– Are resources in line with direction?
• Objective - Bring the highest potential products to market fast.
• Determine product potential through model building.– Where do you want to be?– Where are you going?– How can we get there faster?– Are resources in line with direction?
Lacking Search Criteria
• The product should be– Stage– Medical or market
performance– Patent status
• Product holding company should be– Stage– Experience– Product mix
Decide early how much information you want out there about your needs
An Example: Late Stage CNS Product for Canadian MarketStage Dbase Consultant NetworkDiscovery
Preclinical
PI
PII
PIII
Launched The earlier the product the moredetective work you will need to do
Risk : Reward on Information Sources
Source Accuracy Time CostWeb Variable +
ProfessionalNetwork
Good +
In house Good +
Consultants Variable -
Databases Variable +
Track people from your target company to companies with which you are affiliated
Costly Reports and Low Cost Alternatives
Costly (My order of Q)• Scrip PJB• Windhover• Connect• DR Reports• TMG• SRI• D&MD• D&B• Theta
Relatively Cheap • Federal Government• Economic development
offices• Disease associations• Clinical experts• In Vivo/ Biocentury• Tech. Transfer
Conference & AUTM• Attlas Directory
Other Useful Internet Resources
• Company home pages• SEC’s EDGAR Database (sec.gov, edgar.online.com)
• Mailing Lists and Newsgroups (Dejanews.com)• Analyst reports (stockinfo.standardpoor.com, moodys.com,
dbisna.com)
• Research Databases (Dow Jones, Reuters, Knight-Ridder)
• News delivery (pointcast, excite, biospace, newspage, yahoo, Nasdaq)
Web Sites of Considerable Utility
Site Financial Sales GossipCompany
Medical
Web resources
Edgar Online
Biospace
Recap
Analysts
Efficient use of Consultants
• Define roles and responsabilities– finding products– pricing / valuing the product– preparing negotiation position, market
evaluation….strategy– participation in negotiation
Steps in Due Diligence
• Set up due diligence team
• Size and fit of counterparty/technology
• Financial potential
• Intangible assets
• Validity of dossier
• Quality transactional elements
• Last minute probles
Often Overlooked Pieces of Your Network
• Government (Labs, Industry Canada, Regulatory Bodies & foreign equivalents)
• Legal and accounting counsel• In house recruits• CHLA & Industry associations• Venture capitalists
Take a minute and reflect. Buy a contact manager.
Setting the Network Size in Proportion to Risk
Enlarge It• Secrecy lost• Less control over
message• Increased
opportunities• Too much
information • Inventors galore
Contract It• Too few
opportunities- too late
• Late stage products• Secrecy
maintained?
Try to Use Company Resources & Head Office
• Develop & maintain your network early (Marketing, HR, Sales, Clinical, R&D)
• What info. really makes a difference
• Selling to management- – Knowing what they really want & sell that
back to them– Research the social styles, buying
influences and objectives of internal market
Maintaining Credibility with Targets
• Knowing your own firm and its weaknesses
• Ask. Yes Ask.
• Focus on the product not on the price
• Know competing products and their strengths & weaknesses
• Be prepared to back up “Shadows on the wall”
Serial Contacts-Definitely Contact Multiple Companies
• Put your needs and expectations on the table
• Research internal alternatives both standard and creative
• Ensure proper mix of benefit, price, time to market
• Always develop a plan B
Target Company Package & How to Evaluate it
Set Criteria First ConsutationInternal External
Valuation
Market & salesdata
Science
Risk
Intellectualproperty
Regulatory review
Quantitate Financial Potential
• Revenue potential• Gross margin potential• Operating margin potential• Type of deal to target• Development costs (of technology/product)• Fields of use• To swap or not to swap
RevisionsRevisions
$36.3 Million
$100 Million
What to Do With The Info Now That I Have It
• Reports
• Models
• Lists
• Negotiating strategy
• Timing of decision
• Team evaluation
Plan for Problems
• Overbidding
• Technology or patent problems
• Accounting policies & irregularities
• Foreign currency considerations
• Regulatory issues
• Ownership structure & corporate culture
Reporting Structure & Impact on Internal Marketing
• Corporate Needs– Funds– Sales– Recognition– R&D funds– Equity– Timing of deal– Partner and PR
• Social styles of all involved– Considerate– Direct– Spirited– Analytical
Crisis-Time is Gone, Information is Incomplete
• Establish criteria for completion early
• Plan ahead for this contingency– consultants, additional staff– time, money, pre-approvals– get essential information first & its costs
• What can be done– Stall– Re-evaluate your needs & risks
Information is always incomplete
Caveats
• Encourage your partner to perform this exercise too
• This must be an ongoing activity
• Use your network. Let your hair down.
• Get a PIM/Contact Manager
• Avoid a commission, but ensure that you leave enough time to do the job.
Did I mention preparation and practice
