Stretching Intellectual Property to Maximise Royalties

The life sciences sector has long embraced the use of licensing throughout the drug discovery pipeline, from the in-licensing of promising new compounds to eventual out-licensing of manufacture of the approved product. With increasingly diverse techniques now employed in the drug discovery process, licensing specific technologies and expertise is becoming ever more popular. For instance, a biotech company concentrating on innovation and research might also out-license access to its library of lead compounds relating to a particular target. This provides revenue for the biotech company for development of its own compounds, and establishes the relationship with Big Pharma for potential out-licensing deals in the future.

Some commentators believe the industry's love affair with licensing is set to become even more intense. Recent consolidation e.g. the merger of Pfizer and Pharmacia, they say, will inevitably lead to those products with smaller potential markets being out-licensed for development to smaller companies. Such merger activity could mark a new wave of consolidation towards ever-larger companies, increasingly dependant on blockbuster products, whether home-grown or in-licensed. Combined with the need to encourage innovation, particularly in the early stages of drug discovery, Big Pharma is becoming increasingly reliant on licensing deals with biotech to supplement its ailing product pipeline.

Given the increasing use of...