Business Development and Licensing Journal:

Issue number 11

January 2010 sees not only the start of a New Year but also the start of a new decade. So it’s time to dust off the crystal ball and see what predictions we can safely make for the future - if any!

Well as everyone knows, M&A is right back in fashion but the cost cutting shows no sign of abating. Both AZ and GSK have recently announced yet more major cuts in the work force so the pharmaceutical industry goes into the new decade significantly leaner. And of course, it is not only the jobs that are going, AZ will be cutting its R&D costs by $1 billion over the next four years with a commensurate shift to externally sourced products.

This move has been well received by industry commentators such as Morgan Stanley who are predicting more out sourcing across the board as a means of addressing the increased pressure on revenues and margins.

The concept of externalising research is not new but the view that this model could create material value through higher earnings and multiples will depend on the cost of the deals that are struck for gaining access to new pipeline opportunities. And if this model is adopted by many major companies then this dependence on externally sourced compounds may become self defeating. Unless the number and quality of new opportunities increases there will be a limited pool which will tend to drive deal values up through the normal operation of supply and demand.

This may also be exacerbated because successful external sourcing of new products depends not only on the deal but also the availability of opportunities which requires funding at the source of innovation i.e. in biotech companies and universities.

To keep up with the trends we are now including a new feature - Deal Watch that captures and reviews current deal activities. All in all this promises to be an interesting time to work in Business Development and Licensing

Sharon Finch

Editor

Contents:

New Oilfields in Pharma
William Bains, Rufus Scientific Ltd.

The biotechnology industry is in trouble. For pharmaceutical companies, which generally are not in trouble and indeed whose stock prices promise to do quite well over the next 12 months, this is a good thing, a bad thing, and a good thing, depending on the timescale.

Licensing Deal Valuation
Roger Davies, RED Pharma

The Effect of the Credit Crunch, US Healthcare Reform and the Shortage of New Innovative Products This article was borne from personal experience negotiating deals from both sides of the table between biotech and pharmaceutical companies. It is our perception that the licensing behaviour of biotech companies had changed over the past two years as a result of the credit crunch.

A Revolution in Healthcare
Ian Rhodes, PA Consulting Group

It is much spoken about within the pharmaceutical industry that the model is broken. After years of unparalled growth and high profits, the industry faces a range of pressures which are forcing it to change.

Innovation in Negotiation
Riccardo carbucicchio, Bausch & Lomb Swiss AG

As innovation is a key part of the agenda for pharmaceutical companies, business development managers play a vital role in scouting for innovative solutions to contribute to long term healthy growth. In the competency profile of a BD&L manager, one of the preferred key prerequisites is to have obtained a significant amount of experience in the industry in various roles, to have basic knowledge of every aspect of the business, in order to have a good, broad understanding for assessing the potential of new business opportunities. A BD&L professional should also show a close proximity to the legal issues, as he/she should own the contract discussions and negotiation, in all levels of detail.

Paediatric Legislation – A Potential Roadblock to New Drugs in Europe
Dr.Irina Staatz, Staatz Business Development & Strategy and Dr Klaus Rose, Granzer Regulatory Consulting

Imagine that you are considering licensing a promising new drug from an American biotechnology company that has managed to push it into clinical phase 2. The licensor company is in serious discussions with the FDA to obtain an accelerated approval if the results of the second pivotal phase 2 trial are as promising as those from the first one. The prospective licensor expects to file an NBA (new Biological Application) in the USA in 12 - 24 months time and they suggest you as the potential licensee plan for comparable timelines in Europe.

Deal Watch
Jill Ogden, Medius Associates

Despite difficult financial times, the months of November and December 2009 were reasonably buoyant in terms of licensing deals and their headline values. This article focuses on selected deals that were announced during this period and specifically those that included financial details.

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