Integrative vs. distributive pharma licensing negotiation strategies

Hard adversarial negotiation styles are often considered attractive by business developers first entering the world of pharma licensing negotiation … and by onlookers! But is this really the best way forward as the start of a relationship between a licensor and a licensee which can last for a decade or more?

One trap of following a hard ‘distributive’ strategy is the other party feeling ‘hard done by’! And the outcome … dissatisfaction and the risk and distraction of a renegotiation. This can consume huge amounts of management time and is rarely concluded as amicably as if the deal had been balanced from the start.

Figuring out what is going to maximise value for one party does not always mean gaining value at the expense of the other. Sometimes a negotiation to increase the value for one party can be better achieved by increasing the combined value of the deal for both parties. Negotiating smaller value deals often takes just as long as negotiating larger value deals. So, learn to analyse the financial implications of each move, think big and how to maximise the deal value for both parties.

Of course, not all licence negotiations are between two willing parties. Sometimes you need to negotiate a licence to avoid a patent infringement suit. In that case the negotiation may take on a more ‘distributive’ than ‘integrative’ style.

Experienced pharma licensing negotiators learn when to use the appropriate technique in negotiating the many and various parts of a licensing deal, paying attention to the status and dynamics of the relationship between the parties and deciding issues based on their merits rather than positions.