Licensing and Key Factors for Deal-Making

The decrease in productivity in pharmaceutical research and development (R&D) during the 90's has necessitated the need to complement internal pipelines with external products to maintain long-term growth and viability, hence profitability.

It is estimated that the majority of successful drugs are the result of in-licensing activities rather than arising from internal pipelines. Pharmaceutical companies are therefore recognizing the importance of complementing their internal R&D by licensing external opportunities.

Partnering activities have become top priority for all pharmaceutical companies, as reflected in an increase in budgets and capacities allocated to this strategic activity.

Consequently, attractive partnering opportunities have not only become much more competitive, but also much more expensive. 

Nevertheless, there is every reason to believe that the future growth of the pharmaceutical industry will be a balance between internal R&D and licensing. This new paradigm is likely to become a major driver for future pharmaceutical growth.

Key Factors for Successful Deal-making:

• Align search criteria with strategic business needs
• Make the right investment, for the right reason, at the right time
• Implement transparent communication processes internally
• Be aware of time sensitivity to deal making
• Make resources available to fully assess the opportunity value
• Identify and empower key people to drive the deal
• Keep the decision-makers informed and involved from the beginning
• Ensure efficient and transparent communication between the parties
• Be sensitive to your potential partner’s needs
• Stay on top of the process
• Be receptive and flexible to changing circumstances
• Conduct negotiations in good faith to develop trust; and
• Be prepared to go the extra mile; however, be prepared to walk away for the right reasons.

(Abstract from the source: “Licensing—The New Growth Driver for the Pharmaceutical Industry” │A report by Claudia Karnbach , Director, Corporate Business Development, Berlex Laboratories Inc. │ Primary source: Future Drug Delivery – 2006)