Strategic options for getting the most out of late-stage licensing deals
Sarah Hanson, Partner, CMS Cameron McKenna LLP
Ian Scoular, Director of Business Development, Protherics Ltd
In the current pharma and biotech environment companies are facing declining growth, meaning that a number of options to deliver shareholder value have to be considered. These can include consolidation activities such as mergers, acquisitions and alliances, but also nearer term licensing of late-stage opportunities. Opportunities are evolving with the demand for deals remaining high.
The current macroeconomic situation also supports deal making. Big pharma share prices are strong, and are seen as defensive stocks by analysts and these companies still have substantive cash piles. They have a need for new products in the light of the impending ‘patent cliff’ in 2010-2012 and opportunities are looking relatively inexpensive with the credit crunch.
Companies who do decide to enhance shareholder value by carrying out nearer term licensing or entering into collaborative agreements must consider a number of issues when entering into such arrangements. Specifically the parties will need to bear in mind that the focus in a late-stage licence differs to that for an early-stage deal in that there will be a much greater focus on the marketing and promotional aspects of the product. Also, the parties need to think about factors outside of the contractual arrangements as between the licensor and licensee to ensure that the market potential for the product is fully realised.
Trends in the therapeutic area focus of leading pharmaceutical companies
John Ansell, John Ansell Consultancy
Insight into how the therapeutic area focus of a pharma company’s late-stage R & D is changing can be valuable for licensing and other pharma industry professionals. How can we expect the therapeutic direction of leading pharmaceutical companies to change over the next few years as their new products emerge onto the market? And how does this compare with the situation five years ago? As well as examining changes within the Top 20 companies, this article draws some overall conclusions.
Royalty recovery and audits
Raja Sengupta, Equal IP
Audit processes and procedures arise as a consequence of the royalty returns and payments (or the lack of such) that are made under licence agreements on a regular basis. The specific terms of the audit and the rights to access the relevant documents should be set out in the licence in fairly precise detail however when this is not the case, this then gives rise to uncertainty on the rights.
Managing and motivating negotiators
Andrew Gottschalk, Group AG
The starting point of this paper is the assertion that it is essential to align the management and motivation of the negotiator with the long-term strategic objectives of the organisation for which they work. In comparison with the financial services business development executives in the pharmaceutical and life sciences sector may allow themselves a slight sense of superiority but we cannot ignore that we have also made mistakes that may have had serious consequences. If we use long-term satisfaction of the partners with their deal a thirty percent rating is not good news! In these turbulent economic times we might be naive enough to claim that individual and organisational negotiating competencies can and should make a small but significant strategic contribution to a company’s competitive position and performance. However, when you next visit a bookshop you will find a number of books on negotiating but one that is conspicuous by its absence is a slim volume containing practical insights on how to manage and motivate negotiators. Their anxious and stressful time spent “getting to yes” does not appear merit a space on the bookshelf. Clearly they are perceived “self starters,” the organizational heroes who can cope with marginality and systematic neglect without it having any impact on their performance. If there are costs they are to be carried by the individual, in terms of deteriorating health, fractured relationships and truncated careers. The representatives who conclude deals on which our corporate future depends appear to operate on the corporate dark side. Leave them there and we can also ignore complex issues such as corporate ethics and accountability that are associated with the negotiating process. Alternatively because negotiating is an occasional business activity for all of us we should operate on a “don’t ask don’t tell” policy!
Prepare to meet your partner
Cori Gorman, Cammie Edwards, Robert Meister, DNA Gateway
More and more collaborations are born from partnering meetings, but the size and hectic pace of these events can be overwhelming. To make the most of your time, go in prepared.
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