Business Development and Licensing (PH154)

Strengthening Pipelines and Managing Relationships

  • Energize your life science business development and licensing efforts


    Whether the target is a new drug or new capital, business development and licensing deals pump lifeblood into pharma and biotech companies of all sizes.

    Everyone has a different motivation for deal-making: larger companies face portfolio gaps, for example, as well as patent expirations, pipeline setbacks and other challenges. Smaller organizations may have wizards in the lab — but limited infrastructure and resources to commercialize their innovations.

    Superior pharmaceutical business development teams address critical strategic needs by aligning goals with deal opportunities, navigating negotiation challenges and establishing clear protocols to manage relationships and create lucrative partnerships.

    Gain access to both sides of the negotiating table with detailed metrics and real-company practices for pharmaceutical business development efforts:


    Build and maintain a top-notch Business Development and Licensing team 

    Explore models of BD&L team structure that bolster communication and streamline reporting relationships. Use detailed benchmarks to discover when other pharma and biotech companies pursue deals — and ensure your Biz Dev team has ample spending and staffing resources.

    Maximize deal position

    Follow strategic recommendations to guarantee a thorough process and a well-negotiated deal. Evaluate prospective partners and see how they’ll evaluate you as you identify red flags and avoid weak deals. See who should be involved in the deal-making process and when — and learn to expertly handle the tough questions that inevitably arise.

    Master post-deal management

    Examine real-company practices for managing partnerships, with or without a formal alliance management team. Get the right personnel involved at the right points — and build institutional memory that will protect the partnership through personnel  turnover and team changes.


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  • Companies Included in Business Development and Licensing Research

    • Allergan
    • Ambit Bioscience
    • arGentis Pharmaceuticals
    • AstraZeneca
    • Baxter
    • bioMérieux
    • Biotie
    • Chugai
    • Dando, Weiss and Colucci
    • Fannin Healthcare
    • Finesse Pharma
    • Genethon
    • Horizon
    • Jazz Pharma
    • Limerick BioPharma
    • Pfizer
    • Pittsford Ventures
    • Ranbaxy
    • Salient
    • Sanofi-Aventis
    • UCB
    • Zagada Markets
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  • Business Development and Licensing Metrics


    Chapter 1: Business Development Team Goals, Structure and Resources


    Chapter Benefits

    • Set your financial and staffing resources while retaining flexibility to pursue attractive opportunities.
    • Track reasons that companies pursue deals
    • Benchmark different structures for BD&L groups.
    • Understand how larger and smaller organizations approach BD&L structure.


    17 charts focused on the following structure, budget, and staffing metrics at development- and commercialization-oriented companies

    • Percentage of companies with a dedicated pharmaceutical business development function
    • Pharma business development budgets
    • Pharma business development FTEs at development-oriented companies


    Licensing Activity by Phase

    • Percentage of companies performing licensing activities
    • Among in- and out-licensing companies
    • Among inbound and outbound co-developers
    • Among inbound and outbound co-promoters

    Motivation Behind Making Deals

    • Financial reasons companies pursue deals
    • Pipeline-related reasons companies pursue deals
    • Capability-related reasons companies pursue deals
    • Relationship-building reasons companies pursue deals


    Chapter 2: Deal Processes and Strategies

    Chapter Benefits

    • Benchmark and control costs at each development phase.
    • Measure cost against ROI when making deals.
    • Get a detailed overview of the current licensing climate.
    • Follow strategic recommendations for every stage of a deal, from partner identification through finalization.
    • Identify and learn to overcome common red flags, including financial concerns, intellectual property and capability deficits.
    • Know who should be involved during the deal process, how much and at which times.


    28 charts focused on the following metrics:

    • Costs for development- and commercialization-oriented companies:
    • Perceptions of deal costs
    • Deal cost by phase
    • Changes in cost of in-licensing (according to commercialization- oriented companies)
    • Functional involvement at development- and commercialization-oriented companies
    • Factors affecting departmental involvement
    • Strategic groups involved in outbound and inbound deals
    • Marketing and sales groups involved in outbound and inbound deals
    • Clinical and medical groups involved in outbound and inbound deals
    • Supporting groups involved in outbound and inbound deals
    • Structure of deal identification efforts
    • Structure of due diligence efforts
    • Tools used by development-oriented companies to evaluate a deal’s potential profitability
    • Tools used by commercialization-oriented companies to evaluate a deal’s potential profitability
    • Structure of deal negotiation and finalization efforts


    Chapter 3: Managing the Deal

    Chapter Benefits

    • Learn the traits of a successful deal versus an unsuccessful one while managing expectations.
    • Follow strategies for cultivating transparent, honest communication between partners.
    • Improve decision-making and post-deal management through structure.
    • Use alliance management teams to continually promote and monitor alliance health, measure ROI and build relationships between partner companies.
    • Follow best practices for preventing conflicts and learn to resolve problems at the right level.
    • Minimize the effects of turnover
    • Plan proactively for the end of the deal, an aspect of partnership that no one likes to address.


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  • Sample from Business Development and Licensing


    The following excerpt is taken from Chapter 2, “Deal Processes and Strategies.” This section discusses a red flag during the due diligence stage of the pharmaceutical deal-making process. The full chapter provides strategic recommendations and red flags to avoid for each stage, as well as benchmarks detailing deal costs, ROI and groups’ involvement throughout the deal-making process.


    Red Flag: Financial Concerns

    Several executives taking part in this study identified financial concerns as a very important element of the due diligence process. Weak finances might indicate that the partner company is not capable of delivering on its contractual obligations after the deal is signed. Many other problems with the compound, such as manufacturing concerns or trial issues, will result in heightened costs that can be tracked through financials.

    Another important consideration when evaluating financial information is the accuracy and completeness of the data. One executive pointed out that if finance is not worked out diligently, it is a good indication that the company is likely not meticulous with other activities, either. After all, the financial books represent the lifeblood of a small company, and if the company has not managed this well, then it may also be careless with clinical data or patent submissions, a trait that will present major problems down the road.

    If a company does not have clean books, it could also lead to billing disputes going forward. In many deals, the in-licensing partner is responsible for certain expenses, which the out-licenser will bill after these expenses are incurred. If the out-licensing company cannot provide very clear expense reports, then reimbursement will become a significant challenge.

    If the finances are in order, companies will use these in conjunction with other information about the compound to evaluate a deal’s potential profitability. Figures 2.26 and 2.27 [data shown in the full repoort] show the ways in which development- and commercialization-oriented companies evaluate profitability. The tools used by development- and commercialization-oriented companies are very similar. Scientific analyses and risk/benefit analyses are used at around two-thirds of both company types, and fair-market value is used in less than half of companies surveyed. The one major difference is in net present value calculations; whereas many development-oriented companies do not evaluate compounds on the basis of net present value, every commercialization-oriented company surveyed uses this tool to evaluate a deal’s profitability. Any out-licensing company should come to the table prepared to present its perspective on net present value and able to discuss how it calculated the figures.

    The following excerpt is taken from Chapter 3, “Managing the Deal.” This section examines the challenges faced by commercialization-oriented companies and development-oriented companies after the deal has been signed. The full chapter contains best practices for managing the post-deal time period. It focuses on such areas as creating formal alliance management teams and/or steering committees, monitoring alliance health, establishing regular communication schedules and preventing and resolving conflicts between partners.

    Figures 3.5 and 3.6 [data shown in the full report] highlight stark differences between commercialization- and development-oriented companies in their review of deal problems. Companies focused on commercialization cite unrealistic goals and market factors as the two most prevalent reasons their deals fall apart post-signing. Larger companies tend to place an incredibly high expectation on each and every deal, expectations that pigeonhole the deal into becoming the crème de la crème of deals. Unfortunately, every new deal cannot be in the top 10% of deals ever signed. The bottom line: In-licensers should not assume their partnerships will fail, but greater success will come from placing more realistic goals on individual deals.

    The second most-cited reason, market factors, is a regrettable side effect of the need to produce more deals to fill gaping holes in the pipeline. Market factors have become harder and harder to predict in recent years. Even so, many deals can still find success when markets shift. In fact, this reason relates to the first; with such pie-in-the-sky goals set for the deal, even the tiniest change in the product’s market can have a profound effect on deal success.

    On the other side of the table, development-oriented companies see more concern in factors that relate to post-deal management. According to survey results, their top reasons for lack of success are poor communication and coordination, lack of leadership involvement and clashing corporate cultures. These problems relate to other issues, such as the product’s development stalling at in-licensing companies and the out-licenser’s impression that their concerns are not being addressed adequately by the partnering company. Having well-structured management plans defined in the contract will help alleviate some of these problems. However, attention should be paid at regular intervals to ensure that the needs and goals of both companies continue to be met as the deal matures.

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