Negotiation Process In Pharmaceutical Companies

Describe the process by which your company:

1. Chooses and
2. Trains its negotiators.

Make recommendations as to how each of these processes could be improved and why?

If they do not have processes to both choose and train negotiators, suggest how they might put them in place, and what they should comprise.

Outline the process which your company currently undertakes before any significant negotiation. Recommend ways to improve it, and support your recommendations.

Describe your company’s post negotiation review process, or state the absence of such a process.

Explain why it is so important to review the negotiation process, and how best to do so, with supporting references.

Use the example of a negotiation in which you have personally participated to illustrate how your company negotiates.

Suggest ways in which this could be improved and why?

In the unlikely event that you have no personal experience (and this would include your job interview), then interview a more experienced colleague. You can use either an external or internal example.

Choosing and training negotiators

The pharmaceutical industry recently has been experiencing varied challenges in the past decades, including expiring patients on several blockbuster drugs, a rise in competition from generic drugs along with a pressure to lessen prices from the financially strapped governments. Governments who have previously compensated companies for clinically approved drugs having been emphasizing significantly to reduce prices (Alostad, Steinke and Schafheutle 2018). Pharmaceutical negotiations tend to occur in an extensively multi-faceted regulatory context, whereby technological, policy, regulations, economic along with political agenda collide with each other. However according to Zubair, Ahmad and Ahmed (2014), in such a multi-stakeholder environment, pharmaceutical companies tend to become highly aware of the need to efficiently prepare more systemically for negotiations. Pharmaceutical companies fundamentally choose their pharmaceutical licensing professionals who seek to enhance their negotiation performance in order to deliver improved value and further alleviate risk.

Pharmaceutical companies reveal that successfully negotiating skills necessitates practice in real negotiations. Four vital interactive sessions are primarily included in the programme of training negotiators as example of the type of negotiation situation which can emerge in Pharma or Biotech licensing. Furthermore, course participants will further be briefed in order to assume roles as Licensing Executives in pharmaceutical companies who are involved in critical negotiations on licences for drug delivery technologies (Alostad, Steinke and Schafheutle 2018). Furthermore, these pharmaceutical companies are engaged in internal negotiations in order to prepare term sheet proposals for regional as well as global product licences. Negotiation with third parties for regional or global licences for the clinical development, manufacture as well as marketing of finished pharmaceutical products whereby forms of payments, milestones will be negotiated as well as valuation splits will be determined (Geesi et al. 2018). The exercises for the training course primarily will include opening contracts along with negotiations with third party agencies, working with workplace peers as well as working with counterparts in order to resolve mutual problems and team negotiations with third parties on comprehensive term sheets. However according to Zubair, Ahmad and Ahmed (2014), the result of negotiation exercises will be enumerated to facilitate participants can target progress in their individualistic personal development as a proficient negotiator.

Gleeson et al. (2015) have noted that any training sessions after 3-6 hours per month has failed to make significant differences in sales results of any pharmaceutical companies. Thus companies must give and receive feedbacks has always been sensitive and challenging. Upward coaching provided to negotiators possessing ‘challenger skill’ requires being distinct about their feedback and strategizing plans in advance with specific examples.  Negotiators with challenger skills in pharmaceutical sectors require certain competencies in comparison to subordinates who might not essentially have attained at the early stage in their professional career (Abrol, Prajapati and Singh 2017). Negotiators further in this field need to develop the sense of safety in order to offer upward training along with a structured approach. However, Zubair, Ahmad and Ahmed (2014) have stated that Training & Development and HR can facilitate in building techniques as well as a culture where it is endorsed. Furthermore, according to Abrol, Prajapati and Singh (2017), it is quality not quantity that is identified as the most important outcome. Thus compelling negotiators to spend time in field on ‘training course’ may not generate anticipated results. However, the success of the training session programme in general must be evaluated. It has been noted by Dafny, Ody and Schmitt (2016) that as with any negotiating training intervention, it is not usually easy to evaluate the rate of success of the intervention. Pharmaceutical companies in Bahrain namely Waelpharmacy, Bahrain Pharma should focus at both qualitative as well as quantitative measures wherever feasible. However, qualitative evaluations of Pharmaceutical companies primarily involve written feedback concerning the way trainer or employee perceives these training sessions (Waelpharmacy.com 2018). In addition to this, if pharmaceutical organizations seek to reveal revenue on investment, then they should focus on evaluating outputs such as sales or production alongside developments in individual competency ratings where feasible. Alostad, Steinke and Schafheutle (2018) have revealed that pharmaceutical companies have been relentlessly being forced and challenged to ensure revenue on the substantial investment that the company had generated.

Improving negotiation skills

Zubair, Ahmad and Ahmed (2014) have noted that successfully attaining most effective outcomes depends greatly on preparing efficiently in advance of the negotiation process. This process further involves in having distinct goals for the deal, arranging pharmaceutical companies’ documentation for accessing easily by potential partners and further considering that non-financial terms are as crucial as financial ones.

Getting ready- The most vital step Pharmaceutical companies must undertake while preparing for a deal depends on distinctly stating the objective for the deal. Dafny, Ody and Schmitt (2016) have noted that the goal requirement is highly essential as negotiating deals tends to progress forward as a watermark that signifies way the negotiation process is developing and whether it will be staying on track and continues to the resolution that accomplishes most efficiently with the goal of the company. However, Abrol, Prajapati and Singh 2017) have claimed that the company must ensure that the whole team not only supposes on the goal statement but can state it distinctively.

Defining Wants and Needs- The next step of the process must ensure that the company define its wants and requirements for the negotiation. It has been revealed that needs pertaining to Pharma companies needs have the tendency to vary from deal to deal as an evaluation of whether the business associate is professional enough to cooperate and share strategies or whether they constitute credibility with investors or whether the company is aiming to efficiently retain co-promote rights of Bahrain (Gleeson et al. 2015). Furthermore, Dafny, Ody and Schmitt (2016) noted by author that when a potential partner typically initiates the due diligence procedure, these associates not only intends to understand the asset of the company in greater details but rather aims to attempting to evaluate accuracy of the data. Thus the most efficient way to present information about negotiation process is in a comprehensive virtual data room (Maréchal and Thöni 2018). However, a contemporary virtual data room is preferably suited for the due diligence requirements of bio-pharmaceutical companies that engages partnering or licensing or other application which necessitates secure sharing of documents with other Pharma agencies. Being proficiently equipped for the due diligence process before the negotiation process is important to deal success. Thus Dafny, Ody and Schmitt (2016) have noted that having virtual data up and prepared raises the level of deal momentum and increases potential of the company.

Term Sheets- As per reports by Morris (2017), Pharma companies previously used to apply term sheets which defined a collective understanding of the negotiation shapes in easy to take hold of terms. However Chandra, Prabahar and Rao (2015) emphasized that Pharma firms must keep in consideration not to focus on pricing at this stage. Once both the parties are successfully aligned on these primary determinants other particular factors such as financial, regulation, control along with disputes resolutions can be incrementally added.

Full Agreement- Once the development of term sheet through wide-ranging iterations it is become highly evident to prepare the draft for full agreement. The full agreement or negotiation deal will be exceptional and will primarily seek four major categories: the Asset, Compensation, Control and Diligence as well as Conflicts and Termination (Chandra, Prabahar and Rao 2015).

• The Asset (Scope and Exclusivity)- The scope or dimension of the agreement typically involves licensed products, particular compounds along with derivatives. Further to this, as per the study conducted by Maréchal and Thöni (2018) patents as well as patent applications have propensity to be included. However, Pharma organizations must ensure peculiarity of the patent applications.
• Sublicensing- This factor however can be defined as a complex domain to successfully navigate as it often necessitates a renegotiation of a prior enterprise license (Dafny, Ody and Schmitt 2016). Typically business enterprises put significant restrictions on sublicenses, however pharmaceutical companies demand sublicenses to resourcefully develop a compound for growing or advertising in another territory or to seek considerable amount of investment trails (Maréchal and Thöni 2018). However, sublicensing share typically declines with time along with the partners’ comparative contribution to the asset value is larger.
• Compensation-However at this stage according to Chandra, Prabahar and Rao (2015), negotiating cost might appear to be one of the highly demanding determinants of the negotiation procedure. But in practicality such negotiation process has the tendency to perform in less complex manner in relation to many of the other areas which the full agreement seeks to focus. Meanwhile Feigenbaum (2015) has witnessed different ways to get remunerated for companies’ asset that involves upfront payments, profit sharing and wages based on development of sales milestones, royalty revenues along with a combination of these.
• Control and Diligence- Studies conducted by Tully (2016) have stated that major diligence requirements of Pharma business firms in Bahrain such as Waelpharmacy, Bahrain Pharma in full agreement must be distinct, purposeful, detailed as well as reportable. However, it is essential for organizations to note that few diligent requirements of these companies incorporate a time-frame for the growth of the compound against developmental processes whereby time frame are identified to be mutual in corporate Pharma licenses (Maréchal and Thöni 2018).
• Disputes and Termination- It is important to note that while outlining the strategy process several negotiation deals will be terminated as its fundamental that full agreement essentially specifies factors to remove and under what factors and contexts (Abrol, Prajapati and Singh 2017).

Preparing for negotiations

Alostad, Steinke and Schafheutle (2018) have revealed that global pharmaceutical companies comprise any official negotiation planning mechanisms which enhanced the parallel deficit of development in the arena of negotiation training. Any organization of Pharma domain can easily access evidence-based as well as lucrative training solutions through post negotiation review procedure can easily avail any evidence-based approach. Thus the value of process is distinct however in implementing this form of extensive strategies, pharmaceutical companies must not lose the focus that comprehensive behavioural abilities persist to be important for those members of the negotiator or sales team on the negotiating front line (Zubair, Ahmad and Ahmed 2014).

Pharma companies must perform post-negotiation evaluation with the following Evaluation Checklist to facilitate them re-evaluate their negotiating behaviour-

1. Was the company’s pre-negotiation research satisfactorily systematic? Did the company fully recognize its own side’s value system?
2. Did the company circumspectly verify its own side’s bottom line? Did the company aim to position itself in the conflicting side and try to assess their bottom line? (Morris 2017)
3. Did the company practise an upright opportunity offer that rationally clarify the foundation for the position the company is taking?
4. Did the company’s pre-bargaining prognostications confirm accuracy? If not, what caused miscalculations in the Pharma company? (Chandra, Prabahar and Rao 2015)
5. What particular negotiation techniques have been implemented by the company to advance its position? Did the opponent Pharma Company recognize the diverse negotiating techniques it has used?  If so, how did the company endeavours to reduce their impact? In addition to what other strategies might the company has used to advance its position?

Chandra, Prabahar and Rao (2015) have observed that price discounts for patented pharmaceuticals recently is common among the financial developed countries such as the United States and UK. However the routine use of such form of pricing has been considerably recent in some centres but an established policy in others. Being engaged to a renowned pharmaceutical company in Bahrain confidential discounts have been more widespread and multifaceted for pharmaceutical firms rather than primary care pharmaceuticals (Feigenbaum 2015). Abbott being a multinational company implements a unique strategy of negotiation process in sales to gather greater level of profits (Dafny, Ody and Schmitt 2016). The initial step executed by Abbott is Price- Although the prices of Pharma products is not widely known to customers but can be well-equipped by suppliers and distributors. Thus it is highly essential for sales negotiators to drive buyers away from the original price and sell them value.

Delivery Time- For the Pharma company delivery timing can act as a critical challenge when buyer is purchasing or making any agreement. As majority of goods belonging to pharmaceutical industry have an expiration date, on time delivery with strict time frames plays a crucial role for Abbott. Furthermore, sales negotiators of Abbott tend to set up a negotiable platform with its supplier base as because of their wide recognition for on-time successful delivery (Dafny, Ody and Schmitt 2016).

Payments/Credit- The increasing rate of lending, negotiation on payment terms has emerged as one of the most vital ways whereby customers can set up a negotiation platform, various Pharma companies have been facing challenges in negotiating for certain products which have huge demands medical samples, pharmaceuticals and temperature-sensitive products (Maréchal and Thöni 2018). Thus sales negotiators of Abbott tend to negotiate with the buyers who are ready to finance highest rate and then base the negotiations on the price of products.

Through these steps of negotiation process, negotiators try to create win-win scenario which helps the success rate of the company to increase and further develop greater number of loyalty as well as referrals for the sales negotiators.

References

Abrol, D., Prajapati, P. and Singh, N., 2017. Globalization of the Indian pharmaceutical industry: implications for innovation. Institutions and Economies, pp.327-365.

Alostad, A.H., Steinke, D.T. and Schafheutle, E.I., 2018. International comparison of five herbal medicine registration systems to inform regulation development: United Kingdom, Germany, United States of America, United Arab Emirates and Kingdom of Bahrain. Pharmaceutical medicine, 32(1), pp.39-49.

Bahrain-pharma.com 2018. Welcome to Bahrain Pharma - Home. [online] Bahrain-pharma.com. Available at: https://www.bahrain-pharma.com/ [Accessed 15 Nov. 2018].

Chandra, K., Prabahar, A. and Rao, N., 2015. A breif analysis of regulatory structure and approval process of pharmaceuticals in GCC. World J Pharm Pharm Sci, 4(7), pp.1596-611.

Dafny, L.S., Ody, C.J. and Schmitt, M.A., 2016. Undermining value-based purchasing—lessons from the pharmaceutical industry. New England Journal of Medicine, 375(21), pp.2013-2015.

Drozdoff, V. and Fairbairn, D., 2015. Licensing biotech intellectual property in university–industry partnerships. Cold Spring Harbor perspectives in medicine, p.a021014.

Feigenbaum, A., 2015. Riot Control Agents: The Case for Regulation. SUR-Int'l J. on Hum Rts., 22, p.101.

Geesi, M.H.T., Bakht, M.S.A., Anwar, F., Khamis, E.H. and Gilani, M.A., 2018. Volatiles composition, physicochemical properties, kinetic study and antioxidant potential of endemic artemisia (Artemisia Judaica L.) essential oil.

Gleeson, D., Neuwelt, P., Monasterio, E. and Lopert, R., 2015. How the transnational pharmaceutical industry pursues its interests through International Trade and Investment agreements: a case study of the Trans Pacific Partnership.

Maréchal, M.A. and Thöni, C., 2018. Hidden persuaders: do small gifts lubricate business negotiations?. Management Science.

Morris, E.M., 2017. Much Ado about the TPP's Effect on Pharmaceuticals. SMU Sci. & Tech. L. Rev., 20, p.135.

Tully, S.R., 2016. Free Trade Agreements with the United States: 8 Lessons for Prospective Parties from Australia’s Experience. British Journal of American Legal Studies, 5(2), pp.395-418.

Waelpharmacy.com. 2018. About Us | Wael Pharmacy. [online] Available at: https://waelpharmacy.com/about-us/ [Accessed 15 Nov. 2018].

Zubair, M., Ahmad, N. and Ahmed, R., 2014. Key factors to promote knowledge sharing in Karachi pharmaceutical industry.