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The pharmaceutical industry is facing extraordinary challenges as a result of healthcare cost-containment polices and other regulatory issues, increasing competition, and the rising cost of licensing deals. All of these precipitously increase the pressure on the pharmaceutical industry to achieve commercial growth while managing investor expectations. Combined with wavering R&D productivity, licensing and partnering strategies, these factors will remain major determinants in the continued success of the biopharmaceutical industry.
The traditional model of relying entirely on internally generated novel products to drive future sales growth is a thing of the past. Increasingly, pharma companies are looking beyond what they can produce internally towards sourcing products through in-licensing new products or even through the use of strategic mergers and acquisitions (see Figure 1).
LICENSING
Licensing has always occurred in the pharmaceutical industry, typically characterised as a complex, increasingly competitive and expensive activity. The success of the biotech industry has, in part, been the result of Big Pharma both anticipating and reacting to a progressively challenging market that requires innovative and novel products for continued market success. As such, licensing within the industry has gained considerable momentum in an effort to sustain and expand revenue sources. The licensing process requires a concrete strategic understanding of both short- and long-term goals in consideration of aspects including therapeutic area foci, geographical expansion and sales generation. There is no ‘one size fits all’ solution for successful licensing, as opportunities arising often require a structured yet flexible approach for the identification and implementation of licensing deals. There are, however, characteristically five core elements of the licensing process:
- Establish the licensing objectives – identify gaps in the product pipeline
- Identify the opportunity – determine the specific need and identify a candidate product that can fulfil that need
- Evaluate – assess the risks, returns and responsibilities
- Negotiation and approval – ensure that the product has been correctly valued, negotiate milestone payments, finalise legal agreements and sign deal
- Implementation and management
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