Although the level of preparation may well depend upon the amount of time available and on the importance of a particular project, there can be no doubt that all licensing benefits from a well thought out, systematic approach, even when opportunities arise serendipitously. All successful licensing involves an element of luck, but the successful licensing manager will use his or her skills to ensure that any available luck is fully exploited!
Licensing requires a range of activities, including strategic planning, targeting of potential opportunities, preparation of supporting material, contact with potential partners, negotiation and management of deals post-completion. Most licensing managers learn the skills needed to fulfil these tasks as they go, picking up advice from colleagues and learning from their own successes and failures.
This report seeks to provide a comprehensive overview of all the activities involved in licensing, highlighting ways in which each stage can be undertaken, with liberal quantities of hands-on advice based on direct industry experience. As a guide to the activities described, the report contains many pro-forma tables for data analysis, checklists and summary headings for dossiers, presentations and to help in the negotiating of agreements. In most cases, these are furnished with example data based upon a fictitious company, but based on real-life examples. The most important pro-forma tables and some Excel spreadsheets to help calculate potential profits are also included in an electronic format, ready for rapid use as a starting point for real-life activity.
The report is structured to take the reader through the various processes involved in both inward and outward licensing activities, but each chapter is also designed to be read as a quick reference for the activities concerned, allowing the reader to 'dip in' to get help on a specific query.
The first chapter outlines some of the background changes that have led to licensing playing such an important part of modern day pharmaceutical activities. This is followed in Chapter 2 by a comprehensive review of the preparations needed before any licensing activity can start, including an analysis of the strategic issues involved in licensing and the resources and management structure required.
Chapter 3 considers how to plan the essential structure of a deal, looks at the pros and cons of various commonly used deal types, and analyses each of the key elements that should be considered when deciding what type of deal to seek.
The report then goes on in Chapter 4 to describe the processes involved in setting out to identify an inward licensing opportunity, looking at ways to use desk research and in-house analyses to identify those potential products that will best fit a company's profile. The process of targeting activity on the best opportunities with the greatest chance of success are discussed, and the review explains to the reader how to derive a suitable short-list of around 20 companies to approach directly.
The process of contacting companies is common to inward and outward licensing, and is discussed along with a proposed outline corporate presentation in Chapter 7. Meanwhile, Chapter 5 describes in detail the process of evaluating identified potential inward-license opportunities, including a discussion of the key issues and how to involve staff from various key specialities. This section also examines the main issues that should be considered most carefully.
Outward licensing is dealt with in Chapter 6, which considers how and when to out-license, and describes the team that should be brought together to do this. A key element in any out-licensing activity is the quality and format of data to be supplied to prospective partners, and the report provides detailed outlines for confidential and non-confidential dossiers covering all the types of information that will be sought by any potential licensee. This section also deals with other preparations a potential licensor should undertake, before moving on to discuss how best to target and manage contacts with potential candidates.
Chapter 8 reviews some of the financial considerations of the licensing process. The best means of reviewing historical data as an aid to preparation of accurate forecasts are discussed, and the reasons why a licensee for a launched product must double sales are explained and illustrated by a worked example. Everyone wants to know what is a fair value for a deal. There is no correct answer to this, because every deal is different, but this chapter considers the parameters that can affect the value of a deal, and provides a guide to potential values for different types of deals, backed with information on some actual examples. Two detailed Excel models are presented (with copies on the disk), covering the calculation of returns for the license of an R&D project and for a marketed product. Both models allow the user to adjust the various elements of the deal to come up with a win-win solution to meet both parties' needs.
No discussion on licensing is complete without a review of the contractual negotiations, and Chapter 9 deals with the key elements from the perspective of a licensing manager (but assumes that legal advice will be sought before any actual negotiations are concluded!) Draft one-way and two-way secrecy agreements that include most of the elements that are normally required are included as appendices (and on disk) and the elements that go to form a contract are discussed individually as part of the preparations to start drafting 'Heads of Agreement'. This section also reviews the preparation of target 'heads' and some tips on the negotiations themselves.
In the excitement of completing a deal, it is easy to forget just how much has to be done after the signature, but Chapter 10 brings the reader back to earth with a review of the best ways of ensuring a successful negotiation leads to a successful outcome. This chapter reviews some of the issues to be aware of before signature, and looks at the use of task forces to build a committed team to drive forward projects.
This report sets out to provide a sound, practical guide to pharmaceutical licensing, allowing the reader to work step by step through the processes. As such, it should provide a valuable insight to all the elements of licensing for those setting out to undertake licensing for the first time. With its wealth of templates and check-lists, the report can also help those with more experience who simply want to cross-check their activities or save time in setting out tables and reports. These appendices include licensing contact points for the top 50 companies as well as a list of the top 180 companies ranked in order of pharmaceutical sales.
CONTENTS
LIST OF TABLES
LIST OF FIGURES
ABOUT THE AUTHOR
ACKNOWLEDGEMENTS
EXECUTIVE SUMMARY
GLOSSARY AND ABBREVIATIONS
CHAPTER 1 A REVIEW OF CURRENT TRENDS IN PHARMACEUTICAL
LICENSING
1.1 Industry consolidation
1.2 The emergence of drug delivery
1.3 Birth of the biotech industry
1.4 Changing competitive pressures
1.5 Internationalisation of patent and regulatory procedures
1.6 Conclusions
CHAPTER 2 PREPARING THE GROUND - FACTORS TO CONSIDER BEFORE
STARTING TO LICENSE
2.1 Strategic issues
2.1.1 Current therapeutic and clinician strengths
2.1.2 R&D issues
2.1.3 Pipeline issues
2.1.4 Geographical and commercial infrastructure issues
2.1.5 Drug delivery issues
2.1.6 Project review
2.1.7 Licensing strategy
2.2 Resources
2.2.1 Licensing
2.2.2 R&D
2.2.3 Legal
2.2.4 Other groups
2.3 Product champions
2.4 Licensing organisation
2.5 Relationships with potential partners
CHAPTER 3 DEAL STRUCTURE
3.1 Levels of exclusivity
3.2 Areas covered by the agreement
3.2.1 Geographical scope
3.2.2 Therapeutic sector
3.2.3 Trademarks
3.3 Shared marketing
3.4 Types of income
3.4.1 Fixed payments
3.4.2 Variable payments
3.4.3 Payments in kind
3.4.4 Equity payments
3.5 Deal types
3.5.1 Distribution agreement
3.5.2 Product acquisition
3.5.3 Licensing agreements
3.5.4 Collaborative ventures
3.5.5 Company acquisition
CHAPTER 4 INWARD LICENSING
4.1 Defining search criteria
4.1.1 Therapy areas
4.1.2 Sales performance
4.1.3 Development criteria
4.1.4 Key performance criteria
4.1.5 Geographical availability
4.1.6 Risk
4.1.7 Obtain internal consensus
4.2 Identifying in-license partners
4.2.1 Desk research
4.2.2 Networking
4.2.3 Universities and medical institutions
4.2.4 Other sources
4.3 Targeting potential opportunities
4.3.1 First-pass review
4.3.2 Opportunity profiles
4.3.3 Internal review
4.4 What do you offer a potential partner?
4.5 Making contact
4.6 Summary of key elements in the inward licensing process
CHAPTER 5 EVALUATING POTENTIAL OPPORTUNITIES
5.1 Resourcing
5.2 Stepwise approach
5.3 Licensing review
5.4 Preliminary evaluation
5.4.1 Background information
5.4.2 Internal approach
5.4.3 Secrecy
5.4.4 Completion of the preliminary review
5.5 Full evaluation
5.5.1 Due diligence
5.5.2 Exchanging information
5.5.3 Technical evaluation
5.5.4 Commercial evaluation
5.5.5 Corporate 'fit'
5.5.6 Profit models
5.5.7 Final evaluation and decision
5.5.8 Summary of key elements in the evaluation process
CHAPTER 6 OUTWARD LICENSING
6.1 Deciding when and how to out-license
6.1.1 Timing
6.1.2 Type of deal to be sought
6.2 The licensing team
6.3 Preparation of presentational material for products in development
6.3.1 Preparation of the Confidential Prospectus
6.3.2 Preparation of the non-confidential brochure
6.3.3 Presentation slides
6.4 Preparation of presentational material for marketed products
6.4.1 Non-confidential brochure
6.4.2 Confidential material
6.4.3 Presentation slides
6.5 Other in-house preparations
6.5.1 Additional material
6.5.2 Due diligence room
6.5.3 Other issues
6.5.4 Draft outline 'Heads of Agreement'
6.6 Identifying out-license partners
6.6.1 Target market sectors
6.6.2 Key selection parameters
6.6.3 Ideal profile
6.6.4 Sources of information on potential partners
6.6.5 Short-listing companies
6.7 Licensing action plan
6.8 Seeking partners
6.8.1 Conferences and meetings
6.9 Managing contacts
6.9.1 Record-keeping
6.10 Evaluating prospective partners
6.10.1 Potential concerns
6.10.2 Optimising potential returns
CHAPTER 7 MANAGING CONTACTS WITH OTHER COMPANIES
7.1 Establishing initial contact
7.1.1 Consultants
7.2 Planning company visits
7.3 Corporate presentational material
7.3.1 Corporate presentation format
CHAPTER 8 FINANCIAL CONSIDERATIONS AND MODELS
8.1 Reviewing sales trends
8.1.1 Historical sales trends
8.1.2 Forecasts of future sales
8.1.3 Obtaining forecast data from operating companies
8.2 Why sales of marketed products need to be doubled by a licensee
8.3 Using split royalties to enhance the value of marketed product licences
8.4 Putting a value on a deal
8.4.1 Parameters influencing deal value
8.4.2 Royalties versus stage payments
8.5 Analysis of recent deal information
8.5.1 Bias in published information
8.5.2 The significance of quoted 'headline' deal values
8.5.3 Actual reported values
8.6 Examples of deal values
8.7 Modelling your product
8.7.1 R&D licensing model
8.7.2 Launched product model
CHAPTER 9 THE AGREEMENT
9.1 Confidentiality
9.2 Samples
9.3 Exclusive discussions
9.4 Clauses for inclusion in a licensing agreement
9.4.1 Development goals and specifications
9.5 Target outline Heads of Agreement
9.6 Heads of Agreement
9.6.1 Heads as a formal or informal document
9.6.2 Negotiating Heads of Agreement
9.7 The contract
9.8 Competition and tax law
9.9 Negotiating techniques
9.10 Announcements
CHAPTER 10 AFTER THE DEAL
10.1 Issues to be resolved before signature
10.1.1 Common goals and specifications
10.1.2 Reporting
10.1.3 Termination
10.1.4 Launched products
10.2 Internal management issues
10.2.1 Allow adequate resources to manage your partner
10.2.2 Ensure internal commitment and understanding
10.2.3 Agreement summary
10.3 Building a team
10.3.1 Cross-cultural issues
10.3.2 Controlling the information exchange
10.3.3 Setting up and managing task forces
10.4 What to do when it all goes wrong
10.4.1 Preventing misunderstandings
10.4.2 Take a positive approach
10.4.3 Resolving conflicts and personality issues
10.4.4 Avoiding litigation
10.4.5 Knowing when to quit
10.5 Learn from the experience
CHAPTER 11 APPENDICES
11.1 ANATOMICAL CLASSIFICATIONS
11.2 DESK RESEARCH SOURCES
11.2.1 PJB Publications/Scrip Reports
11.2.2 IMS
11.2.3 Recombinant Capital
11.2.4 Windhover Information Inc
11.2.5 PharmaVentures
11.2.6 EphMRA
11.2.7 Licensing Executives Society (LES)
11.2.8 Pharmaceutical Licensing Group (PLG)
11.2.9 Other Internet sites
11.3 DRAFT CONFIDENTIALITY AGREEMENTS
11.4 CHECKLIST FOR PRODUCT EVALUATION
11.5 QUESTIONS FOR PREPARATION OF OUT-LICENSE PROSPECTUS
11.6 SUMMARY OF LICENSING CONTACTS FOR TOP 50 COMPANIES
11.7 TOP 180 COMPANIES RANKED BY ESTIMATED PHARMA SALES
11.8 EXCEL LICENSING MODELS
11.8.1 R&D licensing
11.8.2 Marketed Product Model
11.9 TEMPLATES
11.10 DISK CONTENTS
LIST OF TABLES
Table 2.1 Example of analysis of salesforce contact groups
Table 2.2 Example of analysis of marketed product profiles
Table 2.3 Example of product pipeline analysis
Table 2.4 Targeted licensing activities
Table 4.1 Anatomical or Therapy Classifications
Table 4.2 Example of initial product assessment form
Table 4.3 Analysis of potential licensing targets
Table 5.1 Example summary of target competitive profile
Table 6.1 Staff to include in out-license review process, by phase of development
Table 6.2 Example competitive profile for Confidential Prospectus
Table 6.3 Example of product summary registration/launch status
Table 6.4 Example of blank outward license target company 'long list'
Table 6.5 Example of completed outward license target company 'long list'
Table 6.6 Example outward license action plan
Table 6.7 Example of company contact sheet for an outward license opportunity
Table 6.8 Example of summary contact status
Table 8.1 Analysis of income before and after ACME licenses a product to Newco
Table 8.2 Risk profile for NCEs in development
Table 8.3 A guide to payments and royalty rates by type of compound
Table 9.1 Example summary Heads of Agreement proposal
Table 11.1 Product opportunity template (see Chapter 4)
Table 11.2 Summary of target competitive profile (see Chapter 5)
Table 11.3 Licensing Action Plan template for development products (see Chapter 6)
Table 11.4 Licensing Action Plan template for marketed products (see Chapter 6)
Table 11.5 Template for control of issue of confidential documents (see Chapter 6)
Table 11.6 Template for outward license contact (see Chapter 6)
Table 11.7 Template for country sales forecast (see Chapter 8)
Table 11.8 Template for summary Heads of Agreement proposal (see Chapter 9)
Table 11.9 Supporting notes for summary Heads of Agreement proposal
LIST OF FIGURES
Figure 2.1 Example of licensing strategy statement
Figure 3.1 Types of in-license deal
Figure 5.1 The four-step evaluation process
Figure 6.1 Disclaimer for licensing brochures
Figure 6.2 Example of sales chart for non-confidential brochure
Figure 6.3 Example target profile for out-licensing candidate
Figure 8.1 Nuprod - year-end sales values
Figure 8.2 Nuprod - year-end sales volumes
Figure 8.3 Nuprod - MAT sales volumes
Figure 8.4 Nuprod monthly volume sales to July 1998
Figure 8.5 Typical product life-cycle
Figure 8.6 Example of split royalty
Figure 8.7 Analysis of deals by type and stage of development
Figure 8.8 Analysis of deal size for drug and vaccine licences
Figure 8.9 Analysis of deal size for technology licences
Figure 8.10 Analysis of deal size for products in preclinical development
Figure 8.11 Analysis of deal size for products in clinical development or later
Figure 8.12 Analysis of royalties for drug and vaccine licences
Figure 8.13 Analysis of royalties for technology licences
Figure 8.14 Analysis of royalties for products in preclinical development
Figure 8.15 Analysis of deal size for products in clinical development or later
Published: November 1998
Ref: BS986E
Pages: 150
Price: £745/$1,500/¥179,000
© PJB Publications Ltd. 2001 All rights reserved. |