Strategic alliances in life science industry on the rise

Strategic alliances are the best opportunity to tackle some of the challenges that companies in the life science industry are currently facing in Switzerland and Western Europe. The joint venture between GlaxoSmithKline and Novartis, made public this spring, is just one of many examples. In a new study, Deloitte in Switzerland has analysed strategic alliances in the life science industry.

We have seen numerous life science companies adopting a multi-track approach to cope with the current and anticipated drop in sales revenue, including: cutting costs and staff; expanding business into emerging markets; recalibrating business models and research priorities; and using real-world evidence and emphasising a product’s clinical, safety and economic impact to articulate their value proposition.

The first Deloitte study on strategic alliances in the life science industry in Western Europe shows that, next to classic mergers and acquisitions (M&A), strategic alliances have proven to be a viable path to follow in coping with the challenges that companies are currently facing.

Clear increase in strategic alliances activity

• A great majority of the interviewed industry leaders (82%) expect an increase of strategic alliances in the life science industry. According to the study, alliances will most likely play a great role in markets such as China, India and Latin America. The access to markets which have been less served up to now is the main driver behind this development.
• For around half of the study participants (51%),, alliances are a viable solution to address the challenges of new product development, risk diversification, cost reduction and shorter product development time.

“Strategic alliances are a great opportunity for the life science industry to cope with the current situation,” explains Frank Herrmann, Director in Deloitte’s Strategy & Operations Life Sciences team. “The critical question however is, if organisations are ready to address alliance-specific challenges such as governance, people, funding and reward topics.”

Not money, but people are most crucial success factor

• According to the study, the main success factors of strategic alliances are: 1. mutual trust; 2. strategic fit; 3. shared responsibilities and 4. cultural fit.

Frank Herrmann explains: “What is mostly forgotten is the culture and people fit which, in essence, is the make-or-break factor for many alliances.”

About the Deloitte “Strategic Alliances in Life Sciences” study

The report analyses the challenges and opportunities that strategic alliances pose for companies in the life science industry in Western Europe. The findings are based on personal interviews with senior industry leaders and substantiated by previous research. The interviews were conducted with life science industry experts based in Switzerland (46%), Germany (27%) as well as the UK, Belgium and France.

For the full results of the study, please see here.

About Deloitte in Switzerland

Deloitte is a leading accounting and consulting company in Switzerland and provides industry-specific services in the areas of audit, tax, consulting and corporate finance. With approximately 1,300 employees at six locations in Basel, Berne, Geneva, Lausanne, Lugano and Zurich (headquarters), Deloitte serves companies and institutions of all legal forms and sizes in all industry sectors. Deloitte AG is a subsidiary of Deloitte LLP, the UK member firm of Deloitte Touche Tohmatsu Limited (DTTL). DTTL member firms comprise of approximately 200,000 employees in more than 150 countries around the world.

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The information contained in this press release is correct at the time of going to press.