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Thursday, February 20, 2003

By Steven N. Czetli

The most powerful form of business marketing, by far, is direct personal contact and referrals from others, according to consultants Lois Bradley and Deirdra Makowiecki. In fact, 80 percent of business transactions can be traced to one or both of those networking methods, they said at a recent workshop hosted by the North Allegheny Chamber of Commerce.

	Steven N. Czetli

Among their tips for enhancing networking opportunities:

If you attend an event and meet people you know, ask them to introduce you to some of their colleagues.

Arrive early and hang out near the registration table. That way you will hear the names of people as they enter -- and many of them will treat you as a host.

Don't hang out with your own friends or associates; you are there to meet new people. You can catch up with your friends at another time.

Have in mind an exit strategy -- a reason for breaking off a conversation that has gone on long enough. Some suggestions: take a bathroom break, tell them you're going to the bar, excuse yourself to go the buffet table or tell them you want to greet someone else who just arrived.

Have in mind some good questions to ask people you meet. A few suggestions: How did you get your start in this business? What have you found effective in promoting your business?

Exchange business cards and once you stop talking, write down the date, event, and notes concerning any salient personal information you've learned, even including their appearance, on the back of their card.

Mingle and get to know others attending, but don't use the event for hard selling, which could be seen as inappropriate, overbearing or desperate.

Set goals for each networking event: to make connections from specific industries; to find potential partners; to pick up useful business intelligence; to size up your competition; to make a good first impression; to build quality contacts worth following up.

Although there are significant cultural variations from country to country, in the United States a firm handshake, a warm smile and good eye contact are seen as signs of being trustworthy.

Have in mind a 20 to 90 second "elevator pitch" -- a brief, upbeat summary of your business making clear what it is, why it's distinctive and why you are worth doing business with.

The costs of drugs

The often criticized cost of drugs got a thorough explanation from J. Mark Braughler, senior vice president, business development, Tissue Informatics, during the recent BioForum at Carnegie Mellon University. The drug development process is mysterious, challenging, lengthy and highly regulated, he explained, resulting in 14 years and a cost of $800 million for each new prescription drug that makes it to market.

In 2001, major pharmaceutical firms spent $30 billion on R&D and achieved sales of $180 billion; more than 90 percent of drugs fail pre-clinical testing for a variety of reasons; only one of every 12 drugs entering clinical trials gains approval; the approval rate for new drugs is down 50 percent over the last 20 years; and only three in 10 drugs approved make enough money to recover their R&D expenses.

"Basically, it's a miracle that any make it to approval," said Braughler, a 20-year veteran of the pharmaceutical business. "The odds that face any new drug are staggering."

In fact, the amount of money being spent and the decrease in the number of drugs being approved will force speedier development and lower costs .

"What 'Big Pharma' wants, in addition to approved drugs, are more drug candidates in clinical trials, better leads, better targets and better technologies to shorten the process," Braughler said.

Changes coming

An evening panel of experts at the BioForum concurred that change for the industry was inevitable.

Mike Hathaway, general manager of IBM Life Sciences, said the high failure rate of drugs in clinical trials coupled with other drug recalls and the lower rate of drug effectiveness (most are only 40 to 60 percent effective) would require changes in the way drugs are developed and approved.

"Major drug recalls have been on the rise since 1998," Hathaway said.

For Pittsburgh's fledgling biotech industry, those changes could bode well, according to Tim Opler, director of CSFB Healthcare Banking.

Opler said from his perspective as an investment banker, the struggle is to identify who will be the future winners among "Big Pharma," established and smaller biotech companies, and start-up technologies.

"Under the old model, there were the large, fully integrated companies. Under the new model the focus will be on universities, biotechs and Big Pharma."

Some of the segmentation of the industry will be driven by Big Pharma's increasing outsourcing of development of new drugs, which will make biotech companies -- and licensed research coming out of universities such as CMU and Pitt -- increasingly important, Opler added.

Former Pittsburgh Press business editor Steven N. Czetli edits and publishes TechyVent/Pittsburgh, a free, regional e-mail newsletter that recommends and provides detailed information on the region's most useful business events. For more information on these and other events go to newsletter.techyvent.com