You signed the deal. The upfront payment cleared. Both sides celebrated. Then, gradually, something shifted. Your partner was technically delivering, but they weren’t fully invested. The energy that was there during negotiation quietly drained away. You pushed hard to close this. You did the due diligence. So why does it feel like you’re the only one who really wants it to work?

The problem probably isn’t your partner. It’s the structure.

The Problem

The traditional pharmaceutical partnership model was built around certainty: larger organisations paid a significant sum upfront, secured rights, and expected delivery. The smaller partner received their payment and fulfilled their contractual obligations. For a long time, this worked.

It doesn’t hold up in the market you’re operating in now. Once a partner has received a large upfront payment, their financial stake in the outcome changes. When clinical data comes back complicated, when regulatory timelines slip, or when market conditions shift, the organisation that already received its payment has far less reason to absorb that disruption alongside you. The contract will be fulfilled. The spirit of the partnership won’t.

I recently sat down with Gaurav Jain, Chief Commercial Officer (CCO) at Modavar Pharmaceuticals LLC, on the Active Ingredients podcast. Gaurav has spent 22 years across every side of the pharmaceutical business, closing deals in branded generics, orphan drugs, and multinational companies across Asia, the United States, and beyond. He has watched deal-making shift significantly over the last decade and is direct about what has stopped working.

“The days where companies completely direct the deal structure are no longer successful,” Gaurav told me. “There needs to be enough value, enough skin in the game for the partner to be confident enough to sustain that interest and deliver on their commitments.”

The Solution

Step 1: Define Your Target Zone Before You Approach Anyone

The most common mistake Gaurav sees in pharmaceutical business development (BD) is organisations that begin their search without a defined target zone. They identify a vague growth ambition, survey the market, and reach out to whatever looks promising. The result is poorly matched partnerships, weak due diligence, and deals built on optimism rather than strategic fit.

The preparation needs to come before any approach is made. That means analysing available growth areas, modelling the cost-benefit and investment horizon for each, and arriving at a specific zone of focus before a single conversation begins.

“What we did was really build a groundwork for looking at each growth area… and then very clearly identified the zone that we wanted to operate when it came to acquisitions,” Gaurav explained. “That’s how we focused on specific targets.”

“Doing the right groundwork before you enter a discussion or a partnership or a deal is tremendously helpful when it comes to getting the right output from a particular engagement,” Gaurav said.

This preparation also changes how potential partners perceive you. Walking into a first conversation with structured data, a clear strategic rationale, and well-formed questions signals that the relationship will be managed with the same rigour with which it began. As Gaurav put it elsewhere in our conversation: “It gives [potential partners] confidence, gives them that trust factor, that you’ve done your homework.”

For pharma and biotech teams using AI tools in this process, Gaurav is precise about where the value actually sits. AI can accelerate the processing of large data sets and help evaluate assets more quickly, but it cannot replace the strategic thinking that defines where you should be looking in the first place.

“A lot of times I’ve seen industry professionals look at AI as something that can just shorten the amount of thinking they need to do,” he said. “[It] is not a substitute for strategy, for vision, for thinking. It is a tool which enables you to pass through information.”

Step 2: Build Shared Risk Into the Deal Structure

Once you have a defined target and a well-prepared position, the deal itself needs to reflect a genuine partnership rather than a transaction.

Gaurav describes a shift that has gathered momentum across the industry over the last decade. Large upfront payments have increasingly given way to milestone-based structures tied to actual product performance. Shared risk means that when a product delivers, both sides benefit, and when it falls short, both sides absorb the impact. That alignment sustains commitment across the life of a partnership in a way that a fixed payment at signing cannot.

“Business development has significantly shifted towards… milestones now tied to product performance and long-term goals, rather than fixed values,” Gaurav explained. “It is more towards back-end value, which is based on the actual contribution a product, technology, or asset can bring to the table.”

This applies regardless of partner size. Whether you are negotiating with a large multinational or a biotech startup, both sides need meaningful value at stake throughout the deal. A smaller partner that has already been paid has limited financial incentive to go beyond their contractual minimum when things get difficult.

“It gives enough room for both organisations to grow and risk mitigate,” Gaurav said. “That’s a clear evolution I’ve seen over the last ten years.”

Rather than trying to extract maximum value at signing, the goal is to design a structure that keeps both parties fully engaged for as long as the partnership needs to run.

Step 3: Treat Deal Close as the Start, Not the Finish

A signed deal is not a finished deal. This is where pharmaceutical organisations most often lose the value they worked hard to create during negotiation.

The integration phase that follows an acquisition, or the early operational phase of a licensing arrangement, is where the assumptions built during due diligence either hold up or fall apart. If the BD team hands over to a separate integration function and moves on, the knowledge, relationships, and nuance built over months of deal-making disappear at precisely the moment they are needed most.

When Gaurav closed a significant acquisition that took his organisation into a new therapeutic area, he kept his BD team involved through the entire integration process.

“Even after you close the deal, it’s not the end. It’s kind of the beginning of another major set of challenges,” he told me. “If you don’t follow up on those ideas during integration, you kind of lose value.”

The same preparation that makes a deal worth pursuing is what allows the inevitable unknowns to be managed once the contract is signed.

“The focus was there, and the groundwork was there, which allowed us to handle and make sure that even the unknowns that came through were successfully handled,” Gaurav said. “It was a great acquisition for the business.”

The Evidence

The approach Gaurav describes held up under pressure that front-loaded deal structures would not have survived. Preparation-first deal-making gave his organisations credibility with partners from the first conversation. Shared-risk structures kept both sides invested through operational complexity, shifting market conditions, and regulatory uncertainty. Keeping the BD function involved through integration meant the strategic rationale behind each deal was actually executed rather than archived. Post-close surprises, which are unavoidable in pharmaceutical acquisitions, were absorbed as shared challenges rather than becoming points of conflict between partners with unequal stakes in the outcome.

Your Next Move

If your recent pharmaceutical partnerships haven’t delivered the value you expected, the instinct is to focus harder on partner selection next time. Before you do that, look at the structure.

Ask yourself four questions:

• Did you define your deal zone before approaching any target, or did you start with the target and work backwards?
• Does your current deal structure keep your partner financially invested in the outcome after signing, or does most of the risk sit with you?
• Who is managing the integration or early operational phase, and do they have full context on the assumptions built during due diligence?
• When you last reviewed a deal that underperformed, was the issue the partner, or was it a structure that gave them no real reason to go beyond their contractual minimum?

The answers will tell you where to focus.

Gaurav Jain’s full conversation on the Active Ingredients podcast covers additional topics including how life sciences leaders should navigate rising global trade barriers and what the future of commercial leadership looks like in an AI-driven industry. Tune into the to the full episode.