Overview

Companies

Metrics

Practices

Purchase

Incorporating Therapeutic Strategies
A commonality among most companies analyzed in this study is that the business development and licensing strategy-setting process is owned by each company’s respective therapeutic areas or business units. While the BD&L strategy is usually approved by senior management, business unit leaders know their own pipelines and competition best. It makes sense that therapeutic area senior management should identify pipeline gaps and assets to divest, set a strategy for pursuing in- and out-licensing deals, and hand off that strategy to the BD&L to develop and execute a plan that meets each business unit’s pipeline needs.

Among larger organizations, therapeutic area strategies help to determine licensing plans. This is the case with Company A, which relies on therapeutic area strategies to build its licensing plans. Each therapeutic area’s plans aim to establish dominance over specific treatments and their markets. The company makes its licensing decisions based on pipeline gaps around those therapeutic categories.

Licensing figures into the company’s plan for therapeutic area growth. As part of its strategy, Company A in-licenses and partners for compounds anywhere from discovery to commercialization. Executives from discovery, clinical research and marketing ultimately decide how licensed products will fit into and benefit the overall portfolio. All three determine with whom the company should partner. The three groups form a committee that works in concert with a separate group that identifies new opportunities. The committee also ensures the business development group is activated once the company approves a deal.

(Excerpted from Chapter 1, Section 2: Deal-Making Strategy) In the full report, a discussion follows on how companies focus on business development’s role in annual therapeutic area pipeline planning.

Business Development and Licensing Structure
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, have the luxury of structuring by process to enable specialization and to build expertise and knowledge. For example, Company B’s BD&L function is divided into three sub-departments: search and evaluation, negotiation, and alliance management. Several companies have recently migrated to this structure or a similar one, and several 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 – 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 companies by region. Their drawback, however, is that they do not build expertise in each stage of the BD&L process.

The ideal structure, according to a majority of BD&L executives interviewed in this research, is a process-based specialization combined with therapeutic area alignment. A couple of companies have begun to move in this direction and have built specialized, process-based competencies within one to three of their largest business units. The trend in BD&L structure points to more companies evolving toward this point in the near future; but such large-scale structural change must be driven by increased demand and deal volume, a merger, or an executive to champion the change.

(Excerpted from Chapter 2, Section 1: Business Development and Licensing Structure) The full report contains detailed discussion of different organizational structures for BD&L groups.