54% of Drug Companies Pursue In-Licensing Deals to Accelerate Development Timelines

RESEARCH TRIANGLE PARK, NC--(Marketwire - Aug 3, 2011) - New data show that 54% of drug companies sign in-licensing deals to accelerate development timelines, according to Cutting Edge Information.

Cutting Edge Information's new study, "Pharmaceutical Business Development and Licensing: Strengthening Pipelines and Managing Relationships," examines drug companies' strategies for entering into and managing successful licensing and alliance partnerships. It also includes metrics on alliance resources and team structures to support partnerships.

Several strategic reasons drive the desire to enter into licensing deals, but the full advantages of moving a drug from early-stage development to registration and launch together may only be fully apparent after the two companies fully engage their partnership. Once the benefits of success are clear, both the developing company that out-licenses the drug and the commercializing company that in-licenses it are strongly motivated to ensure a successful product launch.

In addition to employing licensing partnerships to accelerate development timelines, 62% of companies pursue these alliances to fill gaps in their development pipeline, 77% look to gain access to new compounds and 92% of drug manufacturers' end goal is to strengthen their existing portfolios.

"When companies select a deal partner, the temptation is always to go for the biggest name in the field," said Jeremy Spivey, senior analyst at Cutting Edge Information. "For out-licensers, this might be the top-selling company in a therapeutic area. For in-licensers, the hottest compounds or therapeutic areas may seem most enticing."

However, as the study points out, licensing endeavors should not be entered into on name recognition alone. Many deals are not as attractive as they would seem on first glance. For example, a top-selling company in a therapeutic area may only pursue an in-licensing agreement as part of a plan to limit losses due to an expiring patent. Companies seeking to in-license compounds should consider the following factors:

• How the compound fits into the company's long-term strategy.
• Whether the out-licenser can meet obligations under the deal terms.
• The strength and clarity of the company's balance sheets.

"Pharmaceutical Business Development and Licensing: Strengthening Pipelines and Managing Relationships," available at http://www.cuttingedgeinfo.com/research/portfolio-management/business-development/, is designed to improve processes at pharmaceutical and biotech companies' business development and licensing teams.