Industry overview

The pharmaceutical licensing environment is increasingly competitive, with a common recognition amongst multi-nationals (MNCs) of the need for collaborations with BioTechs and research foundations, as they endeavour to de-risk early-stage and expand late-stage pipelines, whilst streamlining R&D resource and associated costs

Late stage assets are still of high strategic interest to MNCs as IP expiry of blockbusters and the subsequent genericisation are set to significantly reduce revenues in the mid-term. Poor translation from PC models is another reason why assets with clinical data secures more traction, especially if the assets under discussion target therapy areas of interest and are associated with recognised mechanisms in line with Major's partnering focus. Poor translation is a particular issue for neurodegenerative disorders and inflammatory diseases. However, progressing promising drugs through Phase 2 trials is overtly expensive for many BioTechs

In order to fill pipelines with innovative drugs, many Majors are keen to collaborate with biotechs, research institutions and academia on early-stage assets - whether collaboration is via part-funding towards defined end-points, with Options for later license, or funded through their Venture arms 

In addition, the generic environment is expanding apace as the emerging regions become more expert in re-formulation & API manufacture, more efficient in their processes and more extensive in their geographic reach. Many MNCs are considering or adopting branded generic strategies, partnering with expert generic houses to prolong revenues of their core mature assets. In addition, as the pricing environment becomes more challenging in the US and Western Europe, combined with a governmental drive for enhanced competition to enable more widespread availability of medicines, MNCs are focussing more attention on geographic expansion into the Emerging World through acquisitions and partnering initiatives. Key considerations for deal making strategies now include commercialisation in China, Korea, India, Turkey, Russia, Mexico and Brazil.



In Central & Eastern European, China, Latin America and, to a lesser degree elsewhere, local manufacturing involvement and / or distribution are key to commercial success of new Brands. In Southern Europe, co-promotion structures are generally replacing co-marketing arrangements, (eg when market share expansion, favourable pricing & reimbursement conditions and / or stronger local payer & opinion leader networking is required), due to the constraints of European Competition Law.

For many BioTech and start-up Pharmaceutical companies, partnering strategy is obviously a vital integral strand of their overall commercial strategy. Although this partnering strategy is commonly based on finding larger companies to co-develop and commercialise their technology, many have an ultimate desire to build selling infrastructures in the larger markets (especially the US) over time and aim to secure sub-Territory co-promotions in multi-Regional deals. Whatever the strategy, revenue generation is enhanced through ensuring a ‘saleable’ package for a Licensee and, for this, solid techno-commercial assessments across Regions is a pre-requisite.

Deal Parties must be able to move efficiently to identify, evaluate, and negotiate deals that create shareholder value. That value is surely enhanced if the asset has been designed to meet commercial, as well as clinical, needs at likely time of launch. The evaluation is pivotal in optimising development packages and deal value. It is ultimately responsible for determining the opening position and tactics, laying out the foundations for minimum performance levels and associated penalties or incentives, determining Regional deal strategies - establishing the minimum and optimal TPP for development and assisting in go / no go decisions.