Top Story : Big Pharma Looks to Out-Licensing to Grow Revenue
In-licensing deals dominate the headlines in bio-pharma partnering, but the news announced at BIO-Europe Spring 2008 that at least two big pharma companies are now looking to out-license drug development programs takes deal-making to a new level.
In the plenary session on new R&D and Licensing Strategies, both Dr. Greg Wiederrecht, Vice President for External Scientific Affairs, Worldwide Licensing and External Research at Merck & Co. s and Jules Müsing, Vice President for Licensing and Business Development at Johnson & Johnson, said their companies are actively seeking partners to take on forward programs previously developed internally.
Both companies in the past year realised 65% of sales revenues from in-licensed programs, and out-licensing existing programs may create a new source of revenue.
Panelist Denise Pollard-Knight from Nomura Phase4 Ventures, cited the example of AstraZeneca that in February spun out a group called Albireo AB focused on developing innovative drugs for GI disorders.
AstraZeneca attracted $27 million in its first closing and anticipates receiving up to $40 million in a Series A financing round. Albireo holds several early-stage compounds and one drug in early clinical trials.
The Wall Street Journal greeted the news as a “swan song” for AstraZeneca’s research operations and said outsourcing research ” is a sign not only of the dis-integration of the global drug industry, but also of AstraZeneca’s particularly tough economic position.”
WSJ writer Jacob Goldstein opined, “We may be moving toward a day when Big Pharma limits its work to running late-stage clinical trials, dealing with regulators, and selling and marketing drugs.”
Ellen Bergmann, an attorney with Mayer, Brown, Rowe & Maw LLP, told Partnering News dealmakers can expect opportunities to flow out from big pharma in projects “where they either do not have any priority assigned to the program or where they simply do not have the capacity to move it forward.”
Big pharma is looking for sources of revenue other than developing products through in-licensing, which takes years, she said, “so they are opening their closets to see what they have on the shelf and where they can find value.”
“What will be interesting is to see is what kinds of terms they will be seeking in these out-licencsing deals,” she continued. “Are they looking to sell the entire asset? Is it co-development they seek? Do they want lump sum payments or are they going to license on a limited basis?”
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