Pharmaceutical Industry: Exploring Prevailing Trends in Licensing Practices

What are the Current Practices?

Understanding the prevailing licensing trends is integral to assessing sectoral movements in the pharmaceutical industry. The larger players, colloquially referred to as Big Pharma, continue to primarily leverage licensing to gain access to innovative products and technologies. This approach helps them sustain their product portfolios and offset the inherent risks of drug development, given the inevitably high attrition rates.

Where does the Future Lie?

Over the past few years, a shift has been observed wherein Big Pharma increasingly licenses early-stage development assets. By doing so, they utilize the entrepreneurial energy of smaller biotech firms to yield high-risk adjusted returns. The scrutiny here lies in selecting the right partner and ensuring clarity of responsibilities and terms in contractual agreements.

Any Modifications in Licensing?

Interestingly, licensing agreements are no longer limited to traditional one-off, upfront, milestone and royalty terms. Instead, we see a rise in more flexible models. These include options-based deals, profit and loss-sharing agreements and co-promotion rights. These bespoke structures can allow pharmaceutical companies to be more competitive and diversify their risk exposure.