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The following excerpt is taken from Chapter 1: Business Development Budgets, Structure and Strategy. The full report examines business development organization in greater detail.

Business development and licensing organizational structures grow organically, out of need and culture, and evolve rapidly as a company’s alliance and licensing activity increases. In recent years, alliances and licensing have become more prevalent across the biotechnology and pharmaceutical sectors. During this time, BD&L functions’ evolution has been influenced by corporate culture, their own merger and acquisition activity, and leaders championing change to improve operating efficiency and effectiveness.

Industry research into pharmaceutical business development and licensing organizations reveals interesting variations on similar structures. The largest organizations — which also happen to be those that have found a need to restructure in the past few years — are better equipped to structure in ways that enable specialization and build expertise and knowledge. For example, Company L’s BD&L function is divided into three subdepartments: search and evaluation, negotiation, and alliance management. Several companies have recently transitioned to this structure or to a similar one, and many others are considering it.

Other companies divide their BD&L functions not by process but by therapeutic area or geographic region, and licensing executives are expected to handle a deal from beginning to end, through search and identification, deal evaluation, negotiation, and sometimes even alliance management. These structures enable expertise to develop in therapeutic areas and foster stronger relationships with partners at decentralized levels. A drawback, however, is that they do not build expertise in each stage of the BD&L process.

A majority of interviewed BD&L executives report that the ideal structure is…

 

The following is excerpted from Chapter 2: Opportunity Identification and Evaluation:

Consider the Alignment of Internal and External Players
Alignment is a key factor in any deal. An early analysis of whether the potential partner is seeking resources your company is willing or able to provide can save time that would be wasted on cross-functional meetings. Quickly removing these companies from lists of prospective partners also makes long lists of partners more manageable. Business development teams can then devote sufficient attention to deals where both partners can potentially benefit.

An executive at Company E provides two questions that help winnow down poor partner choices…

 

The following is an excerpt from Chapter 3: Due Diligence:

Due diligence is conducted over a short period of time, considering the amount of information that has to be processed, the number of departments involved in analyzing it, and the impact a deal can potentially have on both the in-licensing and out-licensing companies. Figure 3.4 [Note -- data figures appear in complete report] shows that this process can take as few as two weeks and as long as a year. On average, the process takes under four months, and 75% of companies report that the process takes four months or less.

The cost of this diligence varies widely, depending on the whether the respondent is the in-licensing or out-licensing company, the size of the deal, and the point in drug development at which deals are typically pursued. As seen in Figure 3.5¸due diligence investments range from $50,000 to $500,000…