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Hot Topic: Non-Compete Clauses

Pharma companies don’t want competitors in house at the same time, but hotels need to fill their space. What’s a planner to do?

When pharmaceutical and life sciences companies hold a meeting, they don’t want another pharma or life sciences company anywhere in sight, and they work to ensure that by negotiating non-compete clauses in their hotel contracts. Like it or not, though, the reality is often less than ideal. 

Sometimes, hotel sales reps push back on the non-compete, under pressure to fill rooms or to take more lucrative business. Other times, mistakes and oversights happen—it’s not unusual to hear about a catering department booking a last-minute pharma event without checking what other meetings are in house. Unfortunately, the national sales team doesn’t hear about it until the client calls outraged that a competitor is hosting a luncheon down the hall. 

The contentious topic of non-compete agreements came up in several sessions during Pharma Forum 2019. Planners and suppliers looked at the issue from both sides of the aisle, trying to find middle ground and answering these three questions about the pharma meeting booking process.

Why are non-competes necessary?

Negotiating non-competes can be contentious, but the competitive pressure in the pharma world makes privacy essential. “It’s about confidentiality,” said Louise Padilla, sourcing manager for BCD Meetings & Events, during her session on contracting at Pharma Forum. “Companies need to protect trade secrets—information that’s used to develop products, strategies, and branding.”

“The golden rule in pharma is privacy,” echoed Valli Ferrara Chapjian, HMCC, manager of conventions & meeting operations at GlaxoSmithKline, during a panel discussion on building planner-supplier partnerships. “Our meetings include new ideas, new knowledge, and training. If my competitor is next door, there’s a chance someone could pick up a handout or snap a picture when the door opens to my general session.” 

Does the non-compete apply to every pharma and life sciences company?

At the proposal stage, hotels can ask for a list of competitors that cannot overlap on site, but in many cases there’s a give and take depending on the sensitivity of the meeting. To consider hosting a meeting in the same hotel with a competitor, Padilla says a pharma company needs key information:

• Name of the competitor, if it’s not confidential

• Area of therapy the meeting covers

• Dates of overlap

• Whether the meeting space overlaps during those dates or just the room block

• Type of meeting 

That last element is critical. Some companies won’t tolerate any compromise on a non-compete around an investigator meeting, but if the meeting is a gathering of, say, the company’s human resources professionals, there might be no issue at all.

What solutions are possible?

If competitors are booked into the same property over the same dates, the situation doesn’t have to be a disaster, depending on the nature of the meetings and the space available. “We’re flexible within reason,” Padilla says. Sonal Humane, director of meeting management for Merck & Co., said that “in places like northern New Jersey, many of the companies have a presence and you just have to deal with being in close proximity to each other. Our planners will sometimes waive a non-compete with a property as long as we are meeting on a different floor than another company, or if we are at opposite ends of the property.” But if the groups are on the same floor, it still might be okay as long as the two firms occupy non-adjacent meeting rooms. Padilla says she would also consider suites for small pharma groups if that would ensure a private environment.

Overall, planners want information on the likelihood that competitors will be exposed to one another; in turn, they want hotels to proactively plan to minimize any conflict. “What we would like to see is for the hotel to present a solution,” Padilla says. “We can tell you everything we’d like to see, but what we really need to hear from them is how the property can handle the situation.”

The bottom line is that there must be good communication between the hotel and the pharma planner, with well-educated hotel sales professionals who understand the business of healthcare meetings and the importance of privacy, as well as checkpoints along the way—from RFP to the day of the event—to ensure that there are no surprises.  

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