Transcript No Slide Title

Preparation for Negotiation
National Research Council February 14, 2001
Presented by:
Marcus Brady, Vice President Corporate Development
Neurochem Inc.
Topics
• 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 the
Puzzle Together to
Reduce Uncertainty
Patients
Fit??
Competitors
Future
Events
Getting 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 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?
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 Market
Stage
Discovery
Preclinical
PI
PII
PIII
Launched
Dbase Consultant Network
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The earlier the product the more
detective work you will need to do
Risk : Reward on
Information Sources
Source
Web
Professional
Network
In house
Consultants
Databases
Accuracy Time Cost
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Variable
+
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Good
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Good
Variable
Variable
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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
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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 Gossip
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Company
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Medical
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Web resources
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Edgar Online
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Biospace
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Recap
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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
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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
Valuation
Market & sales
data
Science
Risk
Intellectual
property
Regulatory review
Consutation
Internal External
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Quantitate Financial Potential
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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
Revisions
$36.3 Million
$100 Million
What to Do With The Info
Now That I Have It
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Reports
Models
Lists
Negotiating strategy
Timing of decision
Team evaluation
Plan for Problems
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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
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Funds
Sales
Recognition
R&D funds
Equity
Timing of deal
Partner and PR
• Social styles of all
involved
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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
Want more information?
The price is one joke
e-mail me
[email protected]