Pharma-Tech Alliances – Mitigating Deal Risk

The advent of artificial intelligence (AI) and wearable technologies has given rise to a plethora of opportunities in the digital health space, which has potential to transform patient journeys and disease treatment.   With these new opportunities inevitably comes a raft of new challenges as partners from very different industries, with differing regulatory environments, product lifecycles and traditional consumer bases seek to strike up collaborative partnerships and deliver innovative outcomes whilst navigating through previously unchartered partnership challenges.

The Association of Strategic Alliance Professionals (ASAP) UK Chapter and the Pharmaceutical Licensing Group (PLG) brought together communities of deal makers and alliance professionals with colleagues from the legal and financial communities who support them to discuss the challenges and risks that may arise when working between such disparate industries.

Our meeting started with an overview of recent digital health trends, noting a year-on-year increase in funding since 2016, with an increasing trend for few deals of more significant size, noting some of the casualties of early entry AI tools and the continued interest as large pharma continue to invest in the space.  Key challenges and barriers to collaboration were outlined noting the highly regulated environment of pharmaceuticals, leading to lengthy development lifecycles as contrasted with the highly agile and disruptor mindset of the tech industry.    A specific pharma lens was applied to the challenges looking at the key interest uses and current applications from the perspective of our hosts AstraZeneca and the challenges of understanding the inherent value of large proprietary data sets and balancing the need to protect against unlocking the value through novel partnerships.

A panel discussion based on the case study of AstraZeneca’s collaboration with BenevolentAI, announced that morning, to use artificial intelligence and machine learning for the discovery and development of new treatments for chronic kidney disease (CKD) and idiopathic pulmonary fibrosis (IPF). Additional key challenges and mitigations arising from this partnership included:

• the highly cross disciplinary nature of the collaboration and need for very well aligned communications and stakeholder management
• unfamiliarity with commonly used language from each industry, mitigated by an extensive term sheet with very clear definitions, including commonly used terms in each industry
• finding alignment and building in review/gatekeeper steps to support the highly regulated nature of pharma,along with technical points on data protection and handling.

Highlighted as a key risk-mitigating step was the time that the parties spent ahead of contracting to understand each other’s business, vision and objectives and discuss and determine in advance how the partnership would operate in practice before moving to the contractual stages.

The session concluded with a look at partnerships from an alliance perspective, highlighting the key areas of common risk that can lead to issues and disputes and steps for risk mitigation that can be proactively deployed, covering human and business risks, legal uncertainty and special attention that should be paid where collaborations also encounter likely cultural risks.