BD Cooperation in Japan | Small Details, Big Impact
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Recently, Ms. Deanna Petersen wrote an article on LifeSciVC, a well-known blog, sharing some experience of BD cooperation in the Japanese pharmaceutical market. It can be said that she is sincere and full of dry goods. Ms. Deanna Petersen is the Chief Commercial Officer (CBO) of AVROBIO. She has rich experience in business development and strategic planning, and participates in leading 40+licensing and M&A transactions.

Deanna Petersen

It is envisaged to go to Japan for business cooperation, get off the plane, run to the hotel, have a rest, and then go straight to the restaurant to meet potential Japanese partners. Shake hands, sit down, share delicious food, talk about business matters, and even reach a deal, which seems to be the beginning of a perfect cooperation.

However, there are many crucial factors in business cooperation and negotiation, such as the tactics and strategies for reaching a deal. Moreover, international cooperation has a unique set of rules, and there are also some subtle differences between different countries. For example, in Japan, shaking hands to introduce yourself for the first time is usually considered inappropriate. The correct approach is to understand the address of the other party before contact. It is OK to exchange business cards when meeting for the first time. Business cards can show the identity of the other party, which is the focus of Japanese culture. In addition, if you host a business dinner in Japan, don't expect to talk about business, nor put the bill on the table, nor tip.

Japan is the world's third largest pharmaceutical market (the first in the United States, the second in Europe, the author notes) and the main business target market of American pharmaceutical enterprises. Japan and the United States have similarities. For example, Japan has an orphan drug act to accelerate the approval process (called Sakigake). However, there are also important differences. The approval of Japanese drugs for marketing includes two important steps. The first step is PDMA approval, and the second step is the development of reimbursement pricing process by the National Health Insurance system.

In addition, before cooperating with Japanese enterprises, it is necessary to understand some unique Japanese cultures, which is a prerequisite for smooth cooperation.

Five basic principles
1. Etiquette culture
Sometimes, in order to avoid embarrassment, enliven the atmosphere and often make a joke to resolve it. However, in the context of Japanese business talks, humor is considered to lack serious attitude. Similarly, in business negotiations, it is also important to avoid disputes and speak clearly. The Japanese also try to avoid an awkward atmosphere. For example, the article said at the beginning that the bill should not be placed on the table to avoid embarrassment. If you want to check out, you should go to the front desk to check out at the end of the business dinner.

The first meeting is more formal. Don't shake hands. Use the last name to introduce yourself, and then present your business card with both hands. In addition, the business card is the display of personal identity in formal occasions, which means that after receiving the other party's business card, you should respect it, not only put it in the briefcase, but make sure that it is not left in the meeting room. If you want to impress your partners with Japanese etiquette, you can exchange business cards and bow to them.

Japanese business culture emphasizes formality, conveys courtesy and respect, with a view to establishing relationship and trust. Traditionally, partners from different companies never use first name to introduce themselves or address each other, unless invited to do so because it is too personal. In addition, adding "San" after the last name can show respect. For example, someone's last name is Tanaka, which can be called Tanaka San.

The Japanese are so polite that they may not even reject a transaction with a direct "no" and will avoid negative responses. A US Biotech executive we know had such an experience: he flew to Japan to reach an agreement with a Japanese company, but found that there would be no meeting -- the transaction was canceled. The Japanese partners feel that they owe the supervisor a courtesy of face to face rejection. Even if it is the cost and inconvenience of two trans Pacific flights, they should make a face to face explanation.

Therefore, learning local customs and etiquette can help build trust in the early stages of building successful partnerships. In addition, it is particularly important to pay attention to details - even some small things, such as writing the date (year month day, all in digital form) and address (starting from the postal code, then the state, city, district name, etc.) in the customary way of Japanese culture, will not go unnoticed.

2. Japan is a consensus driven and risk averse society, and decision-making takes time
Japan is a society that makes decisions through consultation, and all interactions are based on respect. It is believed that it is wiser to make decisions by brainstorming than to make decisions by a leader. Therefore, it takes time to do business with Japanese companies, and we can't rush. According to our experience, there is no so-called fast trading in Japan.

Never expect to reach an agreement in the conference room in Japan, because you need to have a private discussion before making any decision. If you pressure the Japanese to make a decision, they are more likely to slow down rather than speed up, because they feel your urgency is a sign that something may be wrong. Fast decisions leave more room for mistakes. The Japanese are risk averse. Before they take any action, they should DD to ensure that they do not miss important details. In Japan, employees often stay in the same company for 30 years. Under this business culture, employees understand that they must take long-term responsibility for the decisions they make.

3. Know your audience
If you consider the audience, slow decisions are also meaningful. Your partner may be a manufacturer, and you may be engaged in R&D. After signing the contract with the American company, the Japanese company needs to convene a sales team to sell products within the patent validity period, which may be a 20-year commitment.

In addition, BD department and R&D team are equally important in biotechnology transactions in Japan. First of all, any proposal to potential partners needs to be checked by BD and licensing department of Japanese company, which may include license evaluation, license negotiation and license management. After the license agreement is signed, a long-term team will be established to implement and manage the signed contract and license project, which is the last functional team in a transaction.

However, without the assistance of R&D, BD cannot complete a transaction. Although Japanese BD team is more familiar with American customs, it is more important for their R&D team to exercise Japanese etiquette because they may not be familiar with American business practices. Their exposure to English may also be limited. In many companies, R&D technical experts understand your technology by reading English materials, but they can't understand it in face-to-face conversations. Considering the smooth progress of the discussion, translators need to be added in the meeting. Only BD personnel engaged in international business companies can have fluent English - -- domestic companies, even in the largest cities, often do not have many people who have fluent English.

Given the language barrier, speakers can follow the agenda and prepared slides to avoid confusion. Make sure that the oral communication is accurate and consistent with the written materials, and more emphasis is placed on charts and data rather than talking when retelling complex concepts. Moreover, because Japanese enterprises tend to make decisions from a historical perspective, they will compare your data with current standards rather than share forward-looking forecasts, because the latter is of low value.

Finally, keep an open mind and meet with Japanese counterparts on official occasions or outside dinner parties -- international conferences are a good opportunity to contact Japanese counterparts.

4. Business is built on relationships
Good relationship is a necessary factor for successful business cooperation, which can be applied in any corner of the world. However, in Japan, relations are often deeper, more complex and more personal than in other regions. For example, if your negotiation has advanced to a more detailed and advanced stage, the Japanese partner will invite you to dinner, which is considered by the Japanese as part of the transaction. It is important that, based on this, you should also invite your peers to lunch or dinner to deepen the relationship with partners. In Japan, the time spent on banquets is as important as the time spent in the conference room - the Japanese do business with people they like. However, eating is not about business, it is purely about building relationships. A good relationship can make both parties more harmonious.

In Japan, you can participate in the gift exchange culture (reciprocity), which is shared by other East Asian countries. In the United States, you may send a gift to your business colleagues to commemorate a special occasion or celebrate common achievements, but in Japan, gifts are seen as a way to build relationships. Therefore, you should be careful when choosing gifts. As the relationship deepens, gifts will become different. For example, when meeting for the first time, bring a gift that reflects where you come from - perhaps your home team's baseball cap or local food such as maple syrup. With the understanding of partners, gifts can be more personal. In any case, gifts are an effective way to build relationships.

5. Don't fight alone
No matter how capable the BD team is, it is necessary to introduce a local consultant to avoid detours in the Japanese market. I (Deanna, the original author) have been to Japan 4-5 times, including Tokyo, Osaka, Kyoto... Each time, local consultants help establish business contacts and organize trips. As needed, local consultants can appear in the form of individual experts or companies, who have experience in obtaining drug approval in the local market. Along the way, I worked hard to accept Japanese training and Japanese culture, which made my Japanese colleagues very grateful. They were sincerely willing to communicate with a Westerner who learned and respected their customs and business methods.

Biotechnology companies are complex businesses. They usually focus on developing solutions to unmet clinical needs. However, international cooperation can enable more patients to benefit from innovative drugs, broaden the company's business vision, and obtain certain funding sources. If you have completed a transaction with a partner, this may be the best business relationship case in your career.
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